加载中...
共找到 18,057 条相关资讯
Operator: Good morning, and welcome to Innovex's Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to Eric Wells, Chief of Staff. Please go ahead. Eric Wells: Good morning, everyone, and thank you for joining us. An updated investor presentation has been posted under the Investors tab on the company's website, along with the earnings press release. This call is being recorded, and a replay will be made available on the company's website following the call. Before we begin, I would like to remind you that Innovex's comments may include forward-looking statements and discuss non-GAAP financial measures. It should be noted that a variety of factors could cause Innovex's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Please refer to the fourth quarter and full year 2025 financial and operational results announcement that we released yesterday for a discussion of forward-looking statements and reconciliations of non-GAAP measures. Speaking on the call today from Innovex, we have Adam Anderson, Chief Executive Officer; and Kendal Reed, Chief Financial Officer. I will now turn the call over to Adam Anderson. Adam Anderson: Good morning, and thanks for joining us today. First off, I want to recognize our team, which has worked tirelessly to deliver margin improvement, organic share growth, improved on-time performance and strong free cash flow since the merger with Dril-Quip in September of 2024. We've asked a lot of the organization, and I'm proud of what we've accomplished. In 2025, we made tangible progress against the goals we articulated at the time of the merger and the results we are discussing today are a direct reflection of the commitment and collaboration of our global teams. A defining characteristic of Innovex is our no Barriers Culture, the belief that to drive the best outcomes for our customers and shareholders, we must tear down barriers between ourselves, our customers and internally across the entire company. This mindset of working effortlessly across product lines, geographies and functions has enabled us to build a leading global oilfield service company from a standing start less than a decade ago. Our fourth quarter and full year results demonstrate the power of our no barriers approach. On today's call, I will discuss our fourth quarter and full year results and highlight the key developments shaping our performance, starting with continued market share gains, synergy capture from recent acquisitions, customer-led product innovation and progress against our key operational initiatives. After these operational and commercial updates, I will turn the call over to Kendal, who will discuss our financial results and provide more detail on our balance sheet, capital allocation priorities and our outlook for Q1. Turning to performance. We delivered a strong finish to 2025, exceeding the high end of our fourth quarter revenue guidance while generating substantial free cash flow and further strengthening our balance sheet. Fourth quarter revenue totaled $274 million, up 14% sequentially. That performance was driven by higher-than-expected subsea deliveries, continued momentum in our drilling enhancement and well construction portfolios and revenue synergies from recent acquisitions. Strong Q4 revenues reflected some pull forward of subsea deliveries that were previously expected for Q1 2026, which will impact sequential comparisons. As a reminder, we recognize revenues from those large subsea projects upon customer delivery, which can drive quarter-to-quarter volatility. Despite a softer macro environment, we grew market share across U.S. land, offshore and international markets. We continuously invest in innovation across our portfolio of big impact small ticket products. While our products represent just a small portion of the wells cost, they are critical to a wells function. And therefore, our customers' purchase decision is driven more by product performance than achieving the lowest possible price. We've curated a portfolio of primarily single-use technologies, which allows us to operate in a capital-light manner. We leverage a diverse and nimble supply chain, which combined with our product portfolio keeps CapEx low, historically less than 3% of revenue, which allows us to convert a significant proportion of our adjusted EBITDA to free cash flow. We generated strong free cash flow, which we plan to redeploy into disciplined M&A, customer-led innovation and shareholder returns. Operational execution was strong across the platform. In U.S. land, we outperformed underlying activity levels by realizing revenue synergies and introducing new technologies. The integration of Citadel and DWS provides a clear example of this execution in action. We acquired Citadel for its strong cultural alignment with our no barriers philosophy and its portfolio of highly engineered single-use technologies designed to reduce our customer cycle times and improve operational efficiency. At the time of the acquisition, we noted limited customer overlap between our legacy Innovex business and Citadels, creating a clear opportunity for revenue synergies, which we are now beginning to realize. Our drilling enhancement product line, which largely came to us through the acquisition of DWS has also driven cross-selling opportunities across the customer base. Together, these integrations demonstrate exactly how our M&A playbook is designed to work, disciplined acquisitions translating into execution, revenue synergies and market share gains. In offshore and international markets, execution remains solid. During the quarter, we delivered our first products under our global alliance with OneSubsea, validating the strategic importance of our partnership. The alliance enables us to supply OneSubsea with industry-leading wellheads for EPCI or bundled contracts, increasing our addressable market for subsea wellheads and improving OneSubsea's competitive offering. During the quarter, we also completed our 10 successful XPak expandable liner installation in Brazil's pre-salt fields. XPak is a differentiated technology that we acquired from Dril-Quip, which we believe has broader applicability across offshore basins. We also leveraged this technology onshore, an example of how we create value through innovation, customer relationships and distribution. In the quarter, we successfully delivered our first onshore XPak Express installation for a major independent in U.S. land, adapting this offshore expandable liner technology to support some of the most technically complex wells in the Permian. In Mexico, we substantially completed deliveries of subsea wellheads and large-diameter tubulars for a major offshore development, reflecting strong project execution and coordination across our global supply chain. In Saudi Arabia, we increased revenue sequentially and strengthened our local content position with the inauguration of our manufacturing facility in the Dammam industrial area. Overall, we exited 2025 with strong momentum, a differentiated and expanding technology portfolio and a clear runway for continued execution. I'm excited about the trajectory of our Subsea business with new orders in Q4 and at the start of Q1. We have been awarded significant projects for subsea wellheads and associated specialty items in Asia Pacific and the Mediterranean. In Brazil, we signed a landmark subsea contract with an IOC we have not worked for in over a decade. We have additional significant opportunities in the subsea pipeline we expect to win this year, setting up a strong outlook for our Subsea business. We plan to build on our commercial momentum this year while remaining focused on improving margins, enhancing the customer experience and unlocking long-term value for our shareholders. Our execution in 2025 gives me confidence that we're building a platform capable of delivering value for our employees, our customers and our shareholders. I will now turn the call over to Kendal, who will walk through our financial results and outlook in more detail. Kendal Reed: Thanks, Adam, and good morning, everyone. I'd now like to review our fourth quarter and full year 2025 financial results. For the fourth quarter of 2025, revenue was $274 million, which is a 14% sequential increase from the third quarter and a 9% increase compared to Q4 2024. Adjusted EBITDA for the quarter totaled $52 million, resulting in an adjusted EBITDA margin of 19% and free cash flow for the quarter was $43 million. Our strong Q4 performance was driven primarily by our Subsea business, which over the past several years has seen a seasonally strong Q4 followed by a weaker Q1, an effect further amplified this year by some deliveries occurring prior to year-end, which we previously expected to fall in Q1, a credit to our team's ongoing efforts to improve manufacturing on-time delivery. From a geographic perspective, NAM land revenue increased sequentially by 5% to a record level of $139 million. Our NAM land business continues to outperform underlying activity levels, driven by market share gains, strong execution and increased cross-selling across the Innovex platform. Customers increasingly deployed multiple Innovex solutions together in the same wellbores, reflecting the value of our integrated sales approach and supporting strong margins and cash generation. We do expect slightly lower NAM land revenues in Q1 due to the impact of weather on U.S. land activity, but we continue to improve our market position and feel very positive about our organic and M&A growth opportunities. International and Offshore revenues increased sequentially by 25%, benefiting from significantly higher subsea deliveries during the quarter, including approximately $15 million of deliveries we previously expected to fall in Q1 2026. We want to thank our team for the incredible effort to meet our customers' needs in Q4, and we remain pleased with the long-term outlook of our International and Offshore business with significant orders building for late 2026 and 2027. As expected, Q4 margins were impacted by the completion of several lower-margin legacy subsea projects as well as costs associated with the ongoing exit of the Eldridge facility. These factors will continue to weigh on margins during the first half of 2026. Importantly, the planned exit of the Eldridge facility, which we expect to complete by the end of the second quarter, is a foundational element of our margin improvement plan. Our reduced manufacturing footprint, improved on-time delivery and more disciplined bidding practices are expected to drive meaningful margin expansion as we progress through 2026. Selling, general and administrative expenses for the full year 2025 were $129 million, representing 13% of revenue. This is a significant decrease from our 2024 level of 18% of revenue. This improved efficiency comes as a result of our focus throughout the year on fully realizing synergies from all recent acquisitions and improving our cost structure wherever possible. As a result of these cost savings, despite a challenging product mix in Q4 and ongoing Eldridge exit costs, adjusted EBITDA for full year 2025 was $188 million, resulting in margins of 19%. Capital expenditures in the fourth quarter of 2025 totaled $9 million, representing approximately 3.3% of revenue. Full year 2025 capital expenditures were $35 million, representing 3.6% of revenue. 2025 CapEx was slightly elevated relative to Innovex's historical range of 2% to 3% of revenue related primarily to facility integration efforts, and we expect this slightly elevated spending to continue through Q2 2026 as we complete the exit of Eldridge. However, we believe significant efficiency gains and long-term margin improvement will be unlocked by these onetime investments. Free cash flow was $43 million for the quarter and $156 million for full year 2025. We converted approximately 83% of our adjusted EBITDA into free cash flow in both the quarter and full year 2025, a phenomenal result, well above our normalized conversion target of 50% to 60%. This performance reflects our countercyclical cash conversion profile, which we have previously discussed. During periods of slower activity growth, we typically convert a higher percentage of our adjusted EBITDA into free cash flow as working capital unwinds. Conversely, during periods of accelerating activity, we see the opposite effect as we build inventory to meet growing customer demand. In addition to this dynamic, 2025 benefited from harvesting cash from the legacy Dril-Quip balance sheet, driving further outperformance. As a reminder, we do typically see our lowest seasonal free cash flow in the first quarter of each year due to timing of certain annualized cash payments. I'm thrilled with our cash flow performance in 2025 as our high free cash flow conversion reflects the through-cycle strength of our capital-light business model and our disciplined working capital management. We ended the year with approximately $203 million of cash and cash equivalents and no bank debt, providing significant financial flexibility. Our balance sheet strength supports continued execution of our disciplined capital allocation framework, including selective high-return M&A opportunities and opportunistic share repurchases. We continue to see numerous opportunities to enhance our portfolio and drive market share growth through accretive acquisitions of businesses that fit our big impact, small ticket engineered product thesis, and this remains our top capital allocation priority for 2026. Return on capital employed for the full year 2025 was 10%. While this remains below our long-term target, we expect ROCE to improve as margins expand, lower-margin legacy projects roll off, integration benefits are fully realized and we utilize cash for high-return M&A or return it to shareholders. Looking ahead to the first quarter of 2026, we expect revenue in the range of $225 million to $235 million and adjusted EBITDA of $38 million to $42 million, with the sequential decline in revenue driven by seasonality and delivery timing in our Subsea business and some weather-related impacts on U.S. land activity. Our ongoing share gains on U.S. land, further recovery in Saudi Arabia and Mexico as well as the subsea wins Adam mentioned should drive further growth in 2026. While subsea mix and remaining transition costs will continue to impact margins early in the year, we remain confident in our margin improvement trajectory as 2026 progresses. Our M&A pipeline also remains active with several high-quality capital-efficient businesses that align with our strategy under review. I'll now turn the call back to Adam. Adam Anderson: Thanks, Kendal. To close, I want to again recognize the Innovex team for their execution and commitment throughout 2025. We strengthened our foundation, delivered strong financial results and positioned the company for the next phase of growth. We're building a business that can perform across cycles, leveraging our strong balance sheet, disciplined capital allocation and a differentiated portfolio of technology-driven, high-return products. As we move into 2026, we remain focused on continuing to enhance customer experience, capturing additional market share and driving sustained margin expansion towards our long-term target of 25%. Thank you once again to our employees, customers and investors for your trust and partnership. Operator, we can now open the line for questions. Operator: [Operator Instructions] We'll take our first question from Derek Podhaizer at Piper Sandler. Derek Podhaizer: Maybe just to start, hoping to unpack the first quarter margin guide a little bit further. You've talked about the Subsea margins weighing on company margins, these low-margin projects continue to weigh first half of the year. I know you have the exit costs associated with Eldridge. You talked about optimizing your bidding process. I'm just trying to get an understanding of what happened, what's causing these margins to be weighed upon? And how should we think about the improvement over time and just thinking about any structural headwinds to that long-term 25% target that you've laid out? Adam Anderson: Derek, thanks for the question. So first, I would say, hey, point you to Q4, and we had a really strong result in the quarter. Some of that was a result of pulling forward. Some of the subsea deliveries that we were expecting in Q1 got pulled into Q4, which I think on balance is good for us, but makes Q1 a little bit lighter. We'll still have a couple of low-margin subsea deliveries Q1, Q2 that will weigh margins down a little bit. And then as you know, we're working on a lot of things around improving margins. The single biggest of that is the Eldridge exit, which has pushed back a little bit like we were originally forecasting that probably early-ish in Q1. That's probably going to slide into Q2 as we finish out some customer orders here for the Western Hemisphere. So I think all in all, like a very good Q4. Yes, Q1 is a little bit -- we're seeing a little bit of seasonal decline there and a little bit of that pull-through effect we mentioned earlier. But I don't think any of this impacts how we're thinking about the long-term margin progression, both seeing a little bit of improvement as you particularly as you get in the back half of this year as well as in '27 and beyond. Derek Podhaizer: Got it. Okay. That's encouraging. I appreciate that. And then I guess on the integrated cross-selling opportunities, I mean, this is pretty exciting, just given this shows the unique platform that you guys have as far as bringing on these acquisitions and putting them on the larger Innovex platform. Maybe could you help us provide some maybe real tangible examples of how you've been able to expand the drilling enhancement well construction with DWS and Citadel because it feel like this sets the playbook for your future M&A opportunities that I know you guys are focused on as we move through the year. Adam Anderson: Yes, I agree. I think we're really excited about that, both what we've accomplished in the couple of those really great acquisitions we've done over the last 1.5 years or so as well as our pipeline of M&A opportunities. So if you look at the drilling enhancement product line that came to us through the DWS acquisition, that business is performing great. And then we're seeing both benefits in U.S. land, where that team has some really strong relationships with a couple of larger independents Innovex historically hadn't worked for that we're seeing some product pull-through already. So that's exciting. And then conversely, we're seeing really good adoption of those products into the Middle East, which is going to be very difficult for that business to go attack on a stand-alone basis, like we're seeing really good uptake in Oman, UAE. We're doing some good work there with some of those independents coming in to do unconventional work there in the Middle East. And then a similar story, albeit a little bit earlier with respect to the Citadel deal, another business that's performing -- was performing great in the acquisition has continued to do well. And then we've seen some cross-selling opportunity in North America. And then we're really excited with what those -- that product set can do internationally and the likes of Argentina. We're in the middle of a trial test right now in Saudi with the trench foot wet shoe product that came to us through the Citadel acquisition. So yes, we're seeing a lot of good early tangible benefits from those deals, which gives us more confidence not only in where those deals are headed, but also executing on the string of other -- of really other attractive businesses that we see in front of us. And to be clear, we normally don't bake any of these revenue synergies into underwriting new deals. We look at them on a stand-alone basis and any kind of revenue synergies, we usually keep as upside. Operator: Next, we'll move to Don Crist at Johnson Rice. Donald Crist: It's been about 15 months or so since you closed Dril-Quip. And I know a lot of investors probably don't realize the kind of length of order schedule on the offshore side. So just kind of curious as to -- are you fully finalized all of the kind of Dril-Quip initiated orders on the Subsea side now and maybe that's the reason why your margins are coming in a little bit? And kind of when did your sales team really take over after the Dril-Quip merger to where you're actually driving the pencil versus inheriting some of those orders? Can you tell us where you are in that kind of structure? Adam Anderson: Yes. Don, thanks for the question. Yes. So to be clear, like I wouldn't -- some of the contracts, these are long-term 4-, 5-year contracts, some of which are very attractive. Other -- some stuff comes in a little bit less margin. We're going to see margin improvement going forward, both through cost structure reduction, for example, not having as many really large under manufacturing plants and really consolidating a lot of that or all of that subsea demand into a singular manufacturing plant is going to be a really big benefit. We do have a couple of specific one in particular subsea project flowing through the books right now that's at lower margin than we expected. And to be perfectly frank, that was bid under our tenure. That was bid post the deal closing. We just made some assumptions we were too optimistic in some of our assumptions there. So we'll see that order still weigh a little bit in Q1, start to bleed off in Q2, and then we're rebidding that as we speak. And would expect both a little bit of incremental price improvement as well as a little bit of cost reduction on that specific one, but that's kind of the broader theme. Donald Crist: Okay. And then can you give us an update kind of on the Far East manufacturing expansion, Vietnam and China and that kind of where you are in that process of kind of moving everything over? I mean, are we pretty much done with the CapEx on that and ready to kind of go full force there? Adam Anderson: Yes. No, I would -- I think we're kind of mid-innings. I think we've got two big projects going on there. We're moving a lot of the subsea manufacturing to our existing footprint in Singapore. As Kendal said on the call, we saw some CapEx impact in Q4 of that. We'll probably see a little bit more in the first half of this year. Then to be clear, that's both for some manufacturing footprint in Singapore as well as repositioning our Gulf U.S. offshore operations here, we need some CapEx to probably sustain that as we move out of Eldridge. And then on the downhole world, we acquired a business, a manufacturing facility in Vietnam last year. That's still -- we're ramping slowly into that. I think that's one over the next year or 2, we'll see continued growth there. There will be a little bit of incremental CapEx there, but that's kind of baked -- again, kind of baked into our earlier comments. I think both of those, we really haven't started to see any of the impact of the efficiencies that will come with having lower overall footprint and then a really high-quality but low-cost, high-volume facilities there in the Far East that we can lean on. We'll maintain a pretty robust supply chain in many of the markets we operate like the U.S. We'll always have a pretty good-sized manufacturing capability to respond to our market needs here in the U.S. But as we channel some of the higher volume and some of the Eastern Hemisphere demand into these plants, we'll see some nice benefit over the next year or 2. Donald Crist: Okay. That's very, very helpful as you expand around the world. And just one final one for me. We're -- as analysts, we're talking a lot about the broader Middle East and Northern Africa region. And can you just tell us just broadly speaking, kind of when you get brought into conversations if somebody is bidding on one of those big tenders? Is it 6 months before the project starts? Or is it kind of when the project starts? Because I know a lot of the guys from the U.S. are over there consulting and presumably, they like your equipment here in the U.S., they would bring it over there. Adam Anderson: Yes. So it depends a lot based on the project and the operator. For example, if you look -- some of the quickest hit stuff, if you look at some of the IOCs that are putting rigs to work and like a Bahrain or the UAE, we're seeing some benefit from that right now and some guys that we work with in the U.S. have showed up over there, and we're seeing some of that. That's on the smaller side just because that's -- those are smaller dollars. When you look at some of these big, big contracts that are let across the Saudi or Kuwait, some of those, we don't -- the benefit of being these kind of big impact small ticket products is that we're not always included in those big, big tenders that can be pretty aggressively priced. And we have these niche products that are sold a little bit later than those big projects. So it can kind of run the gambit from we get them brought in right away to, hey, we're a little bit more just in time as the rigs are getting stood up and start to go to work. Donald Crist: Okay. But you are seeing demand from friends over there that have moved from the U.S. that like your product? Adam Anderson: Yes. Yes. We have definitely seen some of that. I mean to be -- it's not nearly as big. And these IOCs, you're not running nearly the same rig count as some of the big NOCs in the region. But yes, we're seeing a little bit of benefit from that. And then in general, we're seeing some of that reactivation of rigs in Saudi, continued growth in other countries in the Middle East. So we'll start to see the benefit of that as we progress throughout this year and go into '27. Operator: We'll move next to Keith Beckmann at Pickering. Keith Beckmann: I just kind of wanted to hit around the M&A side of things again. I wanted to know if you could give us a little bit of a better sense on maybe the current M&A landscape you see, whether it's private equity companies in the U.S. or are there even any opportunities internationally? And maybe what areas of the business do you think could be improved? You guys have a lot of products, but maybe is there any areas from an M&A perspective that you think you're missing that could help you improve? Kendal Reed: Yes. Thanks, Keith. So as you know, M&A is definitely a core part of our strategy. So we're constantly looking for opportunities to grow and improve the business through acquisitions. And I would say right now, we're very excited about the opportunity set. Our M&A pipeline is probably as active right now as it's ever been. We mentioned on the call, we have multiple opportunities under review. Some of those are progressing nicely. And I think to your question on what are the most kind of actionable opportunities there. We have a handful of things, but I would say the most near-term impactful ones for us are probably going to be add-on style acquisitions where we can add kind of a specific differentiated product or a small portfolio of products to our overall portfolio and then look to grow those through the global distribution network. That could be private equity-backed, could be founder-backed, but generally speaking, more U.S.-based, a little bit smaller companies that have a lot of the abilities to both help us and we can help them kind of allow the DWS and Citadel playbook. I think that continues to be a really interesting space for us to play. We are looking at a few bigger, more transformative, more international style deals as well. But as you know, those tend to be take much longer or harder to handicap what's going to come to fruition there. But overall, I think based on what we're seeing, we really think M&A remains a great way for us to deploy capital in the near term. But as we've always said, we screen these deals against our buyback program and look to allocate capital in a way that drives the best long-term shareholder returns. Keith Beckmann: Awesome. That's very helpful. And then my second question was just going to be kind of around free cash flow conversion. And I know you guys hit on this a little bit, but the free cash flow improvement, I mean, I think you guys had 83% free cash flow conversion for the year, which is just a substantial structural improvement, along with some help from working capital, I know. But I think you've described 50% to 60% is kind of the normal business run rate conditions. I just wanted to get an idea on throughout 2026, if we should expect some further structural improvement maybe with some self-help still or 50% to 60% is maybe a good way to think about a good chunk of this year? Kendal Reed: Yes, it's a good question. I mean we're thrilled with the free cash flow conversion in 2025, and you kind of see it showing up on the balance sheet gives us a lot of capital to go look at some of these great accretive M&A opportunities as well as do some different things. So very pleased with how that's played out. I do think the 83% is probably on the high end, benefited from harvesting some cash off the Dril-Quip balance sheet, like we said. But that 50% to 60%, that's kind of our normalized through cycle number that we target. So in a year like 2026, I mean, we're not giving out full year guidance, but I think it probably in the market feels generally flattish, maybe some areas of growth, some areas of some slow decline. But if you're not expecting a huge ramp-up, we don't need to build the inventory to support the customer needs in that scenario. And I think we'd look to still continue to have a healthy free cash flow conversion. So yes, probably something more akin to that range, but maybe on the higher end of that 50% to 60% target. Operator: We'll move next to Eddie Kim at Barclays. Edward Kim: We don't get too much detail on the magnitude of your Subsea product bookings. But just curious if you could share even just directionally how 2025 Subsea product bookings trended versus '24 levels? And looking ahead to this year, do you expect Subsea orders will be up versus last year's levels? Or do you expect that to be more of a 2027 event? Adam Anderson: Yes. Eddie, yes, fair question. We probably in '25 in aggregate subsea orders would have been down a little bit versus '24, but it's pretty lumpy. So the first half was down a little bit. What I would say, though, is in Q4 through the beginning part of this year, there's been a lot of projects that have kind of been a little bit slow to come that we've seen show up in Q4, Q1. So we have a number of big projects in the Far East that we've gotten contract awards on. We got a nice project in the Mediterranean awarded, and then we have a bunch of things we're waiting to see what happens in Asia. So I would think that our order volume for '26 is probably going to be up pretty nicely versus '25. And we're going to start to see a little bit of the fruit of that into this year and as we move into '27. So we're really happy with the trajectory of that, but there was a little bit of a lull there back half of '24, start of '25 on those orders, I would say. Edward Kim: Got it. Got it. That's very helpful. And then just with the exit of the Eldridge facility at the end of 2Q, and the slide in your earnings deck is a good one and an 80% reduction in that footprint. I'm sure that facility was set up for an activity environment far beyond current levels. But to the extent we do get an offshore activity recovery here really in 2027 and for the next several years, how confident are you that your reduced footprint is going to be able to support an increase in subsea product demand? Adam Anderson: Yes. We're very confident that we can serve that market even with the reduced footprint that we're seeing here that as you said, that Eldridge a wonderful facility just built for a different time in that market. I think from here forward, we can still sustain a very nice increase in activity levels across the Subsea business globally. Operator: And we'll move next to Josh Jayne at Daniel Energy Partners. Joshua Jayne: Adam, I feel like you've been one of the more balanced with respect to offshore outlooks as we work through this white space period over the last 12 to 18 months from a rig activity standpoint. But I'm curious if you've seen enough things announced recently with respect to term on some contracts and maybe the subsea tree awards that we've seen where you could provide more of an outlook outside of Q1 on the Subsea side and how you see the business going, maybe an international offshore walk-through sort of through the end of this year and into 2027 would be helpful. Adam Anderson: Yes. Josh, Well, yes, fair question. We can be probably qualitative in how we respond to that. We're not putting out quantitative guidance beyond Q1. What I would say is I would -- I think we're seeing some nice project opportunities pop up for us, as I just referenced to Eddie's question that we -- things we've been waiting for a little while that came in, a couple of things that have been a little bit of a nice positive surprise in the offshore award world over the last few months for us that I do think, again, getting back half of this year into '27, we should see some nice growth there in the offshore -- our offshore business, our Subsea business. When you look at the other international markets, I would think the other really important places for us like Saudi and Mexico, which were down in '25, they have started to come back a little bit. They're still probably closer to a trough than a peak, but I think both of those markets will see some nice growth this year. And then we're seeing pockets of other countries in the Middle East that are admittedly smaller for us, but we're seeing some nice green shoots of growth there. So I think in general, yes, probably it will take a little bit of time. But I think, again, back half this year into '27, we'll see some nice overall international offshore growth. Joshua Jayne: And then if you've referenced this before, I apologize what the cycle times you highlighted. But when you think about shortening your cycle times from order to delivery on the subsea side of the business, could you remind me what your initial targets were? So for example, from the time in which an order was placed right after the acquisition of Dril-Quip closed to ultimate delivery, what that time frame was like? And then how you see that playing out sort of for something ordered middle of this year or end of this year and how your targets on ultimately how much cycle times will compress and since you started this journey, if there was upside to your initial target would be helpful. Kendal Reed: Yes. So I think with respect to specifically from the time line from order to delivery, that has not changed too much. I mean it varies to some extent, but rule of thumb, I would say, for a subsea order, we're generally getting that a year or so before delivery, plus or minus. I think the big thing we've really been focused on is improving that on-time delivery in that Subsea business, which we've continued to see really nice progress with that. I think it was very low when the deal started has kind of consistently ticked up and we're around 80% on-time delivery in that subsea product line in Q4 with the target, obviously, of getting that to 95-plus percent. So I think that's the big area we've been focused of really pulling that in, making that run efficiently and consistently hitting that delivery date that we schedule. Adam Anderson: The other thing I would point out, and I don't know that we've talked about this a lot publicly, but it's definitely -- when you look internationally, it's definitely you get an order, you build it over x period of time and then deliver it and that model will probably persist. In the Gulf, the U.S. offshore, we're seeing some transition to more of a consignment model where, hey, we have a contract. We are built -- for example, we're building stuff right now against a contract that will really only recognize the revenue once we install it for the customer, whereas in prior subsea cycles, that would have been -- we've been recognizing revenue as we speak right now for that stuff. So that also is going to contribute to a little bit of this lag in revenue versus what you would historically have seen as the Gulf makes this transition, which ultimately will be good for us and good for our customers as we're able to standardize products, build more things in volume across a wider customer base versus just do one-off project stuff, but there's a little bit of an air pocket there on revenue as you make that transition, if that makes sense. Joshua Jayne: It does. Operator: And that concludes our question-and-answer session and today's conference call. We thank you for your participation. You may now disconnect.
Jonathan Paris: Good afternoon. Thank you for joining us today to review Definitive Healthcare's financial results. Joining me on the call today are Kevin Coop, Chief Executive Officer; and Casey Heller, Chief Financial Officer. During this call, we will make forward-looking statements, including, but not limited to, statements related to our market and future performance and growth opportunities, the benefits of our differentiated data and health care commercial intelligence solutions, our competitive position, customer behaviors and use of our solutions, customer growth, renewals and retention, our financial guidance, our planned investments and operational strategy, generating value for our customers and shareholders and the anticipated impacts of global macroeconomic conditions on our business, results and customers and on the health care industry generally. Any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors section and elsewhere in our filings with the SEC. Actual results may differ materially from any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the cautionary statement included in the earnings release that we have just posted to the Investor Relations portion of our website. We will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release and investor presentation on the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Kevin. Kevin? Kevin Coop: Thank you, Jonathan, and thanks to all of you for joining us this afternoon to review Definitive Healthcare's fourth quarter 2025 financial results. On today's call, I'll provide highlights from our fourth quarter performance, review the operational progress we've made in 2025 and outline our key strategic priorities for 2026. Let me begin by reviewing our financial results for the fourth quarter, which were at or above the high end of our guidance ranges on both the top and bottom line. Total revenue was $61.5 million, down 1% year-over-year. We outperformed our revenue expectations on both subscription and professional services revenues. Adjusted EBITDA was $18.1 million, representing a margin of 29%, which was $1.1 million above the high end of our guidance. Our continued strong profitability performance is a testament to the underlying power of our business model and our ongoing expense discipline. We continue to generate solid cash flow, delivering approximately $55 million of unlevered free cash flow for the trailing 12 months. Our financial performance for 2025 compares favorably to the initial guidance we provided to investors last February. Setting appropriate expectations and delivering consistent financial results with transparency was one of the promises I made to investors when I became CEO, and I'm pleased that we were able to meet that objective in 2025. I would now like to review our operational performance for the year, supported by the 4 strategic pillars of data differentiation, integrations, customer success and innovation that we laid out for investors at the beginning of 2025. Before going into more detail, I do want to emphasize that we have made strong meaningful progress in each area and can confidently report that as we enter 2026 with a much stronger foundation for the future. While we are seeing improvements in all areas of focus, the expected benefits from these improvements will take time to fully be realized and that improvement trajectory is reflected in the 2026 guidance that Casey will review later. Starting with data differentiation. We delivered an important milestone in the second half of the year with the release of our fall expansion pack, which included bringing online a new claims data source. As you know, the claims market underwent a significant data disruption over the past 12 to 18 months. And with these releases, we have now restored our claims data volumes to above historical levels. Continuing to expand and strengthen our data assets with new elements that are not easily sourced remains foundational to our strategy. For example, we recently strengthened our core reference and affiliation data for health care executives and health care providers by adding mobile phone data. Overall, I am pleased with the progress we made in remediating the claims data market disruption, expanding our core data assets with new elements, ensuring our focus remains on maintaining our data differentiation and quality and expanding the value of our data over the course of 2025. This will remain a foundational priority going forward into 2026 and beyond. Our second pillar focused on seamless integrations. A core part of our strategy is ensuring it is as simple as possible for customers to utilize our data sets, proprietary software and analytical capabilities. Being an open platform is a foundational tenet of our product strategy, and we have successfully deepened the number of our integrations in 2025, including Snowflake, Databricks and the recent introduction of an important HubSpot integration in Q4. We launched a new pilot program with physician data and Salesforce, which we expect to be generally available this quarter. And we've been focused on increasing the automation of our integrations, which has dramatically shortened the time to integrate by about 25% over the course of 2025. This improves customer satisfaction and gets our data into the hands of our customers faster. Ensuring ease of integration to our customers' systems of record and systems of insight effectively improves retention as we know that those customers that are integrated will renew at higher rates than those that are not integrated. We are already seeing examples of this in action, including an important win in Q4, a large nonprofit academic affiliated integrated health system operating multiple hospitals, outpatient clinics and specialty service lines selected our population intelligence platform to enable more targeted segmentation within the region and surrounding markets. They needed to drive patient volumes across key inpatient and outpatient service lines while capturing additional market share. A core pain point was the significant internal effort required for data mining, layering, modeling and assumption-based analysis, which limited their ability to align resources around broader growth and strategy initiatives. Our seamless approach to integration and our agnostic capabilities that enabled flexible access to their systems were critical to this win where we delivered clean, enriched and actionable data directly into their existing workflows, allowing them to hydrate records and uncover incremental patient leads more efficiently. Turning to our third pillar, customer success. I am pleased with the improvement we have made throughout the year to improve customer satisfaction, ease of use and value-added services that will increase the stickiness of our solutions. While we will always be looking to iterate and improve our processes, I am confident that the steps we took in 2025 have built a strong, durable and repeatable customer engagement process. Retention improvement is more than just a customer success effort, though. Product development, data quality and GTM execution all play a significant role. The realignment of our focus across all functional groups working in service to a shared goal of improving the customer journey, including how they are compensated, is making a difference. Importantly, we have seen retention rates improve year-over-year for each of the past 3 quarters, including with the larger cohort of renewals we have in the fourth quarter. The impact of our coordinated customer-facing effort can be seen where our newly integrated commercial teams collaborated on an early risk identification, which proved critical in converting what was forecasted as a churn risk into a successful multiyear renewal. This example shows how proactive focus on addressing customer concerns will deliver tailored solutions that restore confidence in service of retention, not individual objectives. The integrated team approach with sales, support and success working together with a shared goal of producing happy customers benefits both the customer and our own retention goals. These changes are complex and took the early part of the year to put into effect with the impact showing improvement in the second half of the year. Intuitively, the improved sales, onboarding, training and success process will begin to show up as those customers experience the benefits in time. Therefore, we expect that the improved trajectory that we can already see will continue to accelerate, especially as the impact begins to show up in the new business we are signing now and starts renewing later this year without the legacy impact of prior disruptions from the claims situation or past organizational miscues. Finally, we had a notably successful year delivering against our fourth pillar, innovation and our focus on digital engagement. This pillar has been focused on several distinct sub areas. The first is digital activations, which enables customers to combine our data with other digital assets to generate actionable customer engagement. Over the course of the year, we signed nearly 30 agencies and already have more than 1/3 of them actively generating bookings for Definitive Healthcare. As a reminder, there is a natural lag between signing up of an activation customer or partner and when they begin generating revenue. We had ambitious growth plans for our activation business in 2025, and I am pleased to report that we outperformed this target. We are also tracking excellent progress in building from the agency activation channel, and we expect our early successes in this channel will make it easier to directly sign customer activation programs in 2026. Second is partnerships where we are building a dedicated partnership team that will help customers seeking syndication rights and new distribution channels. One example of this type of partnership was launched last quarter with Bombora and their curated ecosystem audiences. This platform helps distribute off-the-shelf and fully customizable audiences for activation on a variety of platforms such as The Trade Desk, Yahoo! DSP, Reddit or data marketplaces like LiveRamp. It extends the reach of our specialized intelligence and addressable audiences to the customer bases of these platforms that need to access comprehensive views of the health care organizations and professionals across the entire ecosystem. In addition, we see AI as a core enabling technology for growth that DH can harness with several important incumbent advantages. First, our proprietary data is our powerful foundation. Definitive is a data company first. AI presents a way to retrieve, analyze and harness data. Our advantage is the proprietary data itself, much of which is not publicly available as well as within our data curation system and processes. An AI model is only as good as the data it ingests and our advantage is taking today's high-performing AI models and applying them to our domain-specific proprietary and differentiated data. Second, in addition to the proprietary nature of our data, the longitudinal aspect of our data from over 15 years of intensive accumulation cannot be recreated. This data is critical to a customer that needs to understand how the health care ecosystem and its affiliations have changed over time. Third, contextual expertise. In-depth domain expertise is required to effectively operate as a trusted partner in health care, and our customers rely on us for that expertise. Competing in health care is complex. To provide effective AI workflow and analytics, it is essential to have that deep understanding of the complex relationships among the health care providers and their corresponding use cases, which require years of expertise to develop. Contextual relevancy and accuracy is required by this industry. The importance is evidenced by the fact that 60% of our largest life sciences customers leverage our advanced analytics expertise in addition to our data and half of our top 20 customers across all verticals rely on contextual domain expertise and advanced analytical insights. Finally, embedded customer relationships. As we integrate Gen AI into our products, beginning with our flagship view platform next quarter, our deep relationships with approximately 2,300 customers provide integration points for rapid deployment. Because our pricing and packaging strategy is based on value, not seats, the increased capabilities unlocked with Gen AI will drive both new use cases and adoption of new offerings such as digital activation. Almost 50% of our customers already integrate our data directly into their systems of insight and record via CRM connectors, APIs or lake-to-lake and our next-gen SaaS platform will offer another accelerant to our integrated strategic focus area, which we know drives increased retention. Overall, we have accomplished much in 2025, and I want to thank the entire Definitive team for delivering these improvements and advancing our strategy. In 2026, we expect to build upon the progress we made last year. The signs of success, especially in the second half of the year, have reinforced our belief that we have the right strategy in place. As we look ahead to 2026, our key priorities remain unchanged from our 2025 pillars. As noted above, different pillars are in different phases of maturation and delivering success. But as the year unfolds, we will be focused on investing incremental dollars in those areas showing the most promise. Given the success ramp we are seeing, we anticipate there will be opportunity to accelerate digital activation with our customers, extend our partnership and distribution efforts, and we have confidence that our Gen AI enablement of view will provide new and incremental upsell, cross-sell opportunities later this year. Our primary strategic objective remains that of returning the business to consistent revenue growth. Fundamental to that objective is improving retention, and we remain confident that the steps we are taking can and will deliver that outcome over time. While the macro environment remains challenging, we will continue to focus on those areas we can control, and we will be making the investments necessary to steadily improve operational performance. With that, I'd like to turn this over to Casey to discuss our financial results in greater detail. Casey? Casey Heller: Thank you, Kevin. In all my remarks, I will be discussing our results on a non-GAAP basis, unless otherwise noted. As Kevin mentioned, 2025 was an important year for Definitive that saw tangible improvement on our four strategic pillars and put us in a better position to meet our long-term objectives. I'm pleased by our ability to close 2025 by outperforming on both revenue and adjusted EBITDA, while executing against those core strategic objectives. This reflects the continuation of our disciplined approach to managing the business while we have continued to face top line pressures and a dynamic macro environment. In the fourth quarter, we delivered revenue of $61.5 million, down 1% year-over-year, adjusted EBITDA of $18 million, reflecting a 29% margin and expanding approximately 120 basis points year-over-year and adjusted net income of $8.6 million, resulting in $0.06 of non-GAAP earnings per share in the period, all of which were at or above the high end of our guidance for the quarter. We also delivered $2.5 million of unlevered free cash flow in the quarter and $54.9 million on a trailing 12-month basis. Turning to our results in more detail. Revenue of $61.5 million was above the high end of our guidance range and represents a 1% decline year-over-year. Subscription revenues of $58.5 million declined 3% year-over-year or declined 7%, excluding data partnership contributions and were modestly ahead of our expectations for the quarter. And we did again see modest improvements in our Q4 renewal rates year-over-year, but not to the extent we had hoped. Professional services revenue in the quarter was strong, up 49% year-over-year and outperformed our expectations. This was a combination of delivering on traditional analytics engagements as well as a ramp-up in our digital activations activity. Adjusted gross profit in the fourth quarter was $50.2 million, which was flat from Q4 '24. As a percentage of revenue, the adjusted gross profit margin of 82% expanded about 100 basis points year-over-year, driven by some short-term benefit to our cost structure in the period as we had removed one data source from product, but we're still in the process of onboarding an additional source that will come online in the next month or 2. This temporarily reduced COGS in Q4. Adjusted EBITDA was $18 million and reflects a 29% margin, which, as I mentioned, expanded about 120 basis points versus Q4 of '24 and was above the high end of our guidance, boosted by the revenue beat. Looking quickly at our full year results. Total revenue was $241.5 million, a 4% decline year-over-year. Adjusted EBITDA was $70.4 million, a 29% margin and unlevered free cash flow was $54.9 million. In terms of operating metrics, we saw gross dollar retention improve about 2 points year-over-year, reflecting the initial impact of the actions we've been taking to stabilize the business. At the same time, net dollar retention declined due to the ongoing pressure in our upsell motion. As we discussed throughout the year, the lower upsell opportunities put downward pressure on NDR in 2025. We're confident that the combination of the actions we have taken to restore claims volume and the innovation and products will be releasing in Q2 will provide exciting new upsell and cross-sell opportunities that will positively improve net dollar retention in 2026. Turning to cash flow. Our business continues to generate strong free cash flow due to our high-margin model, upfront billing and low recurring CapEx requirements. Operating cash flows for full year 2025 were $53.8 million, down 8% from the prior year, reflecting the revenue decline but was partially offset by strong working capital performance. And we generated $54.9 million of unlevered free cash flow in 2025. Our conversion rate of adjusted EBITDA to unlevered free cash flow was 78%, which is down about 14 points year-over-year. Adjusting for some onetime CapEx spend that largely occurred in Q1 '25, the conversion rate is 87% over the last 12 months. This cash generation provides flexibility to continue investing in growth as noted by the tick up in capitalized software spend as we restarted our organic innovation engine in 2025. As a result of that, we capitalized about $6 million of software development spend, a $5 million increase over the prior year. At the end of Q4, deferred revenue of $99 million was up 6% year-over-year and total remaining performance obligations declined 18% year-over-year. Current remaining performance obligations of $165 million were flat quarter-over-quarter but declined 12% year-over-year. As mentioned last quarter, we have now wrapped on the initial contributions from our data partnership agreement, which explains the favorable year-over-year cRPO growth that we printed exiting Q3. There are other dynamics impacting cRPO as well. In 2025, we saw a greater percentage of our new logo additions signed 1 year versus multiyear commitments than in prior years. This impacts both RPO as well as cRPO. Let me explain why. If you went back to the end of 2024, there was approximately $100 million of cRPO on our books related to commitments that extended beyond 2025. As we enter 2026, this amount is $85 million. This $15 million difference reflects the lower average duration of our contract portfolio entering the year and is a drag to cRPO growth. Before providing guidance on Q1 and the full year, I'd like to take a moment to frame where we believe the business is as we enter 2026. We made significant progress in 2025 across each of our strategic priorities and are confident we have set a solid foundation for the business to return to growth in the future. However, as Kevin mentioned, based on the timing of when these changes will be implemented, we will not see the full impact of these investments in 2026. This is reflected in our guidance for the year. Now moving to guidance for Q1. We expect total Q1 revenue of $54 million to $56 million, a revenue decrease of 5% to 9% year-over-year compared to Q1 '25. The sequential decline in revenue reflects that the improvement in renewal rates in Q4 only modestly improved year-over-year. As a reminder, a substantial portion of our yearly renewals occur in this time frame. Also keep in mind that there will be a partial period benefit to growth this quarter from the data partnership that began generating revenue during Q1 '25. Taking these factors into account, in Q1, we expect adjusted operating income of $9.5 million to $10.5 million, adjusted EBITDA of $12 million to $13 million or 22% to 23% adjusted EBITDA margin in Q1 and adjusted net income of $4 million to $5 million or approximately $0.03 per diluted share on 143.2 million weighted average shares outstanding. For the full year 2026, we expect revenue of $220 million to $226 million for a 6% to 9% decline year-over-year. For the full year, we expect total revenue dollars to be roughly flat sequentially through the year with a modest uptick in the second half relative to the first half. And we have continued to proactively manage our cost base while making targeted investments in growth areas. From a non-GAAP profitability perspective, the largely fixed nature of our costs mean that most of the revenue decrease will flow through and create negative operating leverage. We expect sales and marketing expense of 32% to 33% of revenue, development expense of 12% to 13% of revenue and G&A expense of 12% to 13% of revenue. We expect development expense to be modestly higher year-over-year as we make targeted investments for growth, while we expect to see sales and marketing as well as G&A expense reduced year-over-year as we drive efficiencies across support functions in each area. Translating that into dollars, in 2026, we expect adjusted operating income of $41.5 million to $46.5 million, adjusted EBITDA of $53 million to $58 million for a full year margin of 24% to 26%. This guide reflects our ongoing commitment to maintaining strong margins while investing in our key growth areas. The decline from 2025 levels is due to a combination of ongoing pressure on revenue and more than 1 point of impact from the onetime expense credits we recognized in the second and third quarter of 2025 that will not repeat this year. Adjusted net income is expected to be between $21 million to $26 million and earnings per share are expected to be $0.14 to $0.17 on 145.4 million weighted average shares outstanding. And while we don't explicitly guide on unlevered free cash flow, it's important to note that we do expect to see adjusted EBITDA to unlevered free cash flow conversion improving by several points in 2026 relative to 2025 given lower planned CapEx spend. As we wrap up, I'd like to reiterate that while we continue to face top line pressures, we remain committed to non-GAAP profitability and maintaining a solid margin profile while balancing investments for a return to growth in the future. We are confident that we have the right strategy and are committed to continuing to make progress against our key initiatives that, over time, we expect will improve customer retention, return Definitive growth and drive long-term shareholder value. And with that, I would like to open it up for questions. Operator: [Operator Instructions] Our first question today comes from Craig Hettenbach of Morgan Stanley. Jialin Jin: This is Jay on for Craig Hettenbach. I was just wondering, can you provide a quick update on the demand environment across your 3 end markets? And then any other common themes you can share from the large cohort of renewals from the December and January? Kevin Coop: Sure. So let me start with the integration strategy and the renewal impact that we're seeing come through our focus on churn improvement. So as we've noted previously, a significant portion of our retention trends were impacted by the industry-wide claims disruption, and we're confident that the actions that we took to remediate the claims data throughout the year will drive improvement in our performance as we move into '26. And as we look at the business from a cohort perspective, the first cohort of renewals, excluding the first quarter of '24 where the disruption occurred was posted this last quarter in Q4. And that performance on a business sold post Q1 '24 basis and up for renewal through 2025 shows about a 200 basis points improvement over the previous comparison quarters, even extending back to '22. So this indicates not only is our strategy focused on -- that is focused on data quality, integrations and improved customer experience that, that's working, we now are very confident that it will continue to build in 2026, and it gives us support for confidence in our plan. Casey Heller: And the only other component that I would layer on there is that we did see, as I mentioned, improvement in our renewal rates in Q4 year-over-year. They were modest and what we're seeing in January is fully incorporated into our 2026 guide. More broadly on the demand environment, no significant change, but certainly a couple of green shoots that we're continuing to monitor. We started to see sales cycles condense, as I think Kevin mentioned earlier in the prepared remarks. So those are just kind of some of the encouraging signs that I think are pairing a little bit of maybe some benefit in terms of what we're starting to monitor from a macro perspective as well as paired with some of our stronger own sales execution. Kevin Coop: And then maybe one other data point, which I think would be helpful is we have been focused on integrations as we know that integrated customers will renew at a higher rate than those that are not. I mentioned that in the prepared remarks. And in Q4, we added over 60 integrated customers. And to give you kind of perspective on that, we added 160 for the full year. So we're seeing the integration focus starting to accelerate. Our commercial teams are promoting that because it's good for the customer as well as good for us. And we're very confident that, that performance in the fourth quarter, which often is a more difficult quarter to get moving, was actually very positive, especially in comparison to the full year. Operator: From Needham, we have Ryan MacDonald. Matthew Shea: This is Matt Shea on for Ryan. Maybe just to start and then I have a quick follow-up. Would love to just double-click on the last question. Anything you can parse out, I guess, between end markets as you went through the renewal cycle? Any end markets that maybe surprised you, either positive or negative? And then I know in the past, downsells have been more of an issue in the life sciences and pharma end market. So I would love an update on how that end market in particular is doing? Casey Heller: Yes. Let me give you a little bit of color as far as what we're seeing in terms of the renewal profile across the business. 2025 for us was a year we're really focused on stabilizing the business. And I think that we were able to certainly accomplish that across a number of metrics. So if we look at gross dollar retention, gross dollar retention improved 2 points year-over-year. That actually was largely driven by our enterprise customers, which are strongly weighted towards the life sciences space, just given the size of the customers that we tend to deal with within life sciences. So that's an encouraging component there. But exactly, as you mentioned, as we've continued to talk about, we were seeing a little bit of the flip side of that in terms of net dollar retention, which declined a couple of points year-over-year due to the lesser opportunities around upsell and cross-sell opportunities. I think that as -- where we stand here today entering 2026, we are in a much stronger position. We have remediated the claims data disruption by bringing on a new data source late in '25. We've got an additional data source ready to come online in the next couple of weeks as well to further add to our claims volumes. And Kevin touched on some of the additional new data that we've added into product as well, plus just more broadly restarting our overall product innovation engine. So we've got a lot more tools in the kit essentially as we stand here at the start of 2026 than we did at the start of '25, and that gives us all the confidence in being able to continue to build upon the stabilization in the gross dollar retention and start to build back that net dollar retention improvement into '26. Matthew Shea: Okay. I appreciate that color. I guess maybe if we think about the inputs to the growth outlook for 2026, I know understanding churn is still a topic. But if I assume customer count declines in, call it, the 6% to 7% range like it did in 2025, to get to the midpoint of the 2026 guidance, I have to then assume year-over-year declines in revenue per customer. And despite the downsell pressure you guys have experienced in the last year or 2, you've been able to consistently grow ARPU through that headwind. So maybe just help us reconcile that. Is there more churn in store for 2026 than 2025? Or is it more so the downsells have finally reached the point where we should start to expect ARPU declines? Casey Heller: I think that there's an element here of one, over the last couple of years, we've continued to put more focus on our larger enterprise accounts. I think that, that is still very much aligned to our strategy, but there's also an element here when you think about the mix of our business. Diversified and provider are smaller than life sciences accounts. We are actually growing in diversified and provider. Both of those printed growth in Q4. So we've got 60% of the business that has returned to growth, which is really encouraging for us. So I think what you're capturing there is less of a churn issue and more of just a business mix element of the diversified and provider pieces of the business returning to growth and us continuing to pick up and add new customers there that do come in typically at a lower dollar value than some of the larger life sciences clients. Operator: Next, we'll hear from Brian Peterson of Raymond James. Brian Peterson: So maybe just starting on AI. I wanted to understand how much of your customer conversations are impacted by AI and what you guys would be able to deliver through your data assets, but also I can see scenarios where AI might be distracting or capturing share of budget maybe away from traditional vendors. I'd love to understand how you're thinking about the net impact of AI so far, at least through 2025. Kevin Coop: Yes. So I think the helpful aspect of our solution set and the type of use cases that we sell into, it's very health care-specific workflow. These are purpose-built solutions and the data that is collected in a way to be delivered in these purpose-built workflows. And it's around sales and marketing intelligence for contact level targeting and territory design. It's population and conditioning modeling. It needs to address market sizing, medical affairs planning, even key opinion leader mapping related to influence patterns and how that evolves over time or automating risk related to things like legal affairs. So we've got -- the type of use cases that we're solving aren't really optional, right? They're very much around commercial execution, product or strategy. And so that's sort of the base layer. Then you also look at it from which I mentioned in my prepared remarks, which was, look, AI modeling is only as good as the data it can mine. And we know that our differentiated data, which is focused on and founded on our best-in-class reference and affiliation data set gives us a clear advantage. And so the conversations that we're having, it's more around how do we apply and what can we do to apply the -- and harness AI as it relates to the existing use cases and workflow and health care suite workflows, which is why we believe that is a competitive advantage and a tailwind as opposed to a headwind for us today. Brian Peterson: Got it. Kevin. And I appreciate all the comments on the NDR and the customer dynamics. Are you guys able at this point to say when you think NDR may actually hit a bottom? It's good that you've seen the gross revenue retention improve. Just curious when that KPI should inflect? Casey Heller: It's fully our expectation that we're able to improve NDR within 2026. So we view 2025 as the bottom. As I mentioned, I think that there's a lot of work that we did in '25 that really positioned us to be starting 2026 on a stronger footing from a product innovation standpoint as well as the work we've done to add additional data, remediate the claims data issue as well as enhance some of the components that we have within our crown jewel, our reference and affiliation data as well. Kevin Coop: Yes. And I think -- I'm sorry, I was going to add on, if it's okay, maybe the contextual expertise and why we see the tailwind with AI, especially as it relates to that, is as we're bringing the Gen AI layer to what is already a highly effective front-end platform, that's going to allow us to -- it sort of democratizes the use today where while the platforms are very powerful, they do require a certain level of expertise and super users to access. And so with what we're doing this quarter, that's going to allow more users to have more access to unlock more value. And the fact that we are value-based pricing anyway, not seat-based, unlocking more value is going to be really helpful, especially as we focus on net dollar retention in addition to gross dollar retention because that will unlock more cross-sell, upsell and value unlock as we delight our customers with more value from the products and the platforms that we already have. Operator: Our next question comes from Jared Haase of William Blair. Jared Haase: Maybe I'll follow up on that point related to the NDR. And I appreciate all the underlying drivers that give you confidence that 2025 can mark the bottom here. I guess I just wanted to contextualize because obviously, we've been thinking a lot about some of the product development and innovation initiatives to help drive that. But just to put a fine point on it, I'm curious if you guys are planning any refinement in your go-to-market, specifically targeted towards the sales motion to drive better upsells as well in addition to the product innovation. Kevin Coop: Yes. So we've got really -- I would think about it in terms of 5 sort of prongs in that area. You've got the confidence coming from several key points. Number one, we continue to have extremely valuable differentiated data that improves our customers' business performance. The second thing that we've got is we are investing to develop purpose-built solutions on top of our purposeful solutions with AI, which will make it easier for the customers to actually value and create value from our data. The third, we have already completed our go-to-market and customer success integration, which allows us to impact the business positively with higher win rates, shorter sales cycles and with a consolidated commercial organization, we're seeing greater alignment, which is showing up in things like radically improved implementation timelines that has already decreased by over 25% year-to-date. And with the extending our AI investments in the product, the data and end user development within our 2026 product road map, which is already in there inside the financials, as Casey has already taken you through, that accelerated investment is going to start to produce real tangible outcomes as we bring these innovations to market starting later this quarter. And finally, we talked about this about a year ago or so, a little bit more than a year ago on our integration strategy, which we know is having a positive impact. You can see, I mentioned we had 60 integrations as opposed to 160 for the full year. And when we look at the retention rates from integrated customers, it's only going up. And we can talk a little bit more about the expansion of the integrations, but I don't think we should underestimate the value that we have as being an agnostic platform where we are able to integrate with the customer systems of insight and systems of record regardless of what those are, and often, they use multiple ways because that's how we start to see the stickiness come in. So whether they're integrating it through lake-to-lake, whether they need direct API integration or whether they're still accessing and oftentimes they do directly through our state-of-the-art soon-to-be AI-enabled workflow products. Jared Haase: Got you. Okay. That's helpful. And then I guess as my follow-up, so you mentioned the fall expansion pack and some of the big updates. You brought on the new claims data source in the fourth quarter as well. When you have big product refreshes or updates like that, I'm just curious how quickly you're able to communicate those upgraded features to the market. I'm wondering how much that factored into the year-end renewal discussions in the December, January time frame. And I guess the specific point around this is I'm trying to think about how much of that is sort of more incremental tailwind in 2026 selling discussions. Casey Heller: That's an excellent question. So given the timing of the fall expansion pack, that really came in at the start of Q4. And most of our customers have already kind of made most of the renewal decisions largely like 90 days out. So I actually don't think that we're seeing the impact from that -- the benefit from that showing up in the Q4 renewals just yet. I think we're going to learn about the extent that, that's going to boost renewals a lot more here in Q1 and Q2. So I think it's how that relates in terms of the guidance we've put together and put out is I think the guidance assumes some modest improvement in renewal rates, but I think that there certainly is still opportunity that we'll continue to monitor based on how quickly we see additional uplift and the impact on renewals. But it's not just the renewals. It's also now we've got -- we did a really good job historically of selling claims as an upsell motion and the cross-sell motion into our customers historically. We didn't really do that last year because we needed to address the data disruption. Now that that's been addressed, that opens up that avenue for us as well. So that will certainly be a boost to us in '26. There's a component of it baked into our '26 guide and we're continuing to kind of monitor results for more potential upside, and we'll talk about that more as the year goes on. Operator: [Operator Instructions] Next up, we have George Hill of Deutsche Bank. George Hill: I've just got two quick ones. Casey, you talked about the NDR improving or bottoming, I guess, in '26. I guess I don't know if you're willing to talk about like order of magnitude as you think about the recovery, like if we're modeling that going forward, kind of what does that look like? And Kevin, on the claims data, are you able to talk about like what amount of enterprise revenue does the claims data product -- to what amount of revenue does claims data underpin like various product revenue? And is the disruption there enough to consider that product significantly impaired? Or is there a resell process around that, like a reintroduction process as it relates to the claims data product? Are you able to just kind of go back to market with the patches that you guys have made? I understand that's the clumsy question. I apologize. Kevin Coop: Well, no, I mean, I get what you're -- the intent of the question is. So maybe what I'll do is I'll start with sort of the philosophical and the rationale and then maybe Casey can kind of quantify it to the question on both NDR as well as how do you size that. So the claims data, it's more -- it's really just a very simple issue that we faced. And it depends on the customer because it wasn't universally spread evenly across the country. So when you have, say, 30% of records that suddenly evaporate from the market and if you've entitled your customers to expect a certain number of records and now there's 30% less. Regardless of the reason, there's going to be pressure on rightsizing and downsell pressure when you renew or they want to be made right. And so remediating the claims data was twofold. One, we needed to get the actual counts back up to historical or better than historical averages, which is where we are now or above historical averages. At the same time, it gave us the opportunity to increase the quality because the one thing that I definitely -- and this relates to all of our data and all of our products. The single biggest reason and the #1 factor that our customers report why they select Definitive is because they rely on us for accuracy, and quality. Our data needs to be as pristine and accurate as possible. So it's not just -- it wasn't a simple answer. So now that you've gotten claims data that's been cross-sold very effectively in earlier years, that now creates a dissatisfaction even if the revenue component was less, it starts to impair other companies that may or other customers that may have acquired that as well. So remediating the volume and the quality at the same time was very important, and we are claiming job complete on that, and we feel very good about it. And I think it's starting to show up in the green shoots in the records going forward. As far as the question on how that impacts NDR and how you would size that, Casey, I don't know if you want to. Casey Heller: Yes. I think as far as what's assumed in our guide around NDR is a modest improvement, a couple of points. I think that, again, there'll be more that we'll monitor as we go through the year to be able to show if we're on track for that or if we've got the opportunity to do better. But we're confident in being able to deliver a couple of points of improvement on an NDR basis for '26. Operator: Next, we have Jeff Garro of Stephens Inc. Jeffrey Garro: I want to ask about renewals and sales activity in the life science end market. And you mentioned positive activity in December year-over-year, but I want to specifically combine that with the idea that we've heard from others, maybe some life science companies were distracted around December as they negotiated most favored nation pricing agreements with the administration. So curious to the extent you saw that and what you could tell us about pipeline development here in the first 50 days or so of 2026 as we get past that year-end 2025 period and start to look forward a little bit more as we've heard there's more budget certainty for these large pharma companies. Casey Heller: Yes. So let me start here around some of the dynamics we've seen in the life sciences space. Again, I don't think there's been a ton of change from the elements that we talked about all year. In Q4, there still was pressure around lack of upsell activity. But we talked about gross dollar retention improving about 200 bps at a total company level. That's a pretty consistent level within Life Sciences as well. So that stabilization and that improvement there, I think, is really important and it's something that we've been very focused on really kind of stabilizing that component of the business. As I mentioned earlier, when we got diversified and provider back to growth, now it's what's it take and what's that curve and really that the slope of that curve look like around life sciences. And that's what we're really focused around kind of executing against while continuing to nurture the growth that we're seeing within diversified in the provider space. But I can't say there's really been too significant of changes. I think we still are very highly engaged. We've got a lot of our relationships in the life sciences space are very long-standing. In fact, if you look at our logo churn rates, our logo -- sorry, our logo retention rates are extremely high in the life sciences space. And that's just an area that I think has been quite consistent for us for a long time. These are customers that have been with us for a long period of time. They value high-quality data. And we really just had these downsell pressures throughout '24 and '25 as a result of claims data disruption. And we feel really good about where we are today and being able to build back the revenue within these accounts over time. And that for us is really just a key component there of what is the slope of the life sciences recovery look like. And from a guidance perspective, we're being pretty prudent on the assumptions within the Life Sciences space until we get a couple of more green shoots under our belt. Jeffrey Garro: Great. I appreciate that. And one more quick one for me. Just the discussion of a return to organic innovation spend. I wanted to see if there's anything you can add more around the focus areas there and around the timing of product releases and eventual return on that investment. You mentioned one release later this quarter. So maybe help us just a little bit more with the cadence of other releases from there. Kevin Coop: Yes. As we're looking at our kind of compute capacity management and how we're deploying our resources, we're balancing the internal deployment of resources by focusing our engineering or problem-solving teams primarily and our AI-enabled product road map. And we're doing so with -- if I was going to give you the guidance on there, I would think of it in terms of Q2 is when we're really focusing on getting this into a more of a GA cycle, even though we are launching certain beta programs currently in this quarter, but I would look at it from a Q2 perspective. Operator: We have no further questions at this time. That concludes our meeting today. Thanks, everyone, for joining.
Operator: Good morning. My name is Gabriel, and I will be your conference operator. [Operator Instructions] This is FHipo's Fourth Quarter 2025 Conference Call. [Operator Instructions] FHipo released its earnings report on Thursday, February 26, after market closed. If you did not receive the report, please contact FHipo's IR department directly, and they will e-mail to you. Please note that this call is for investors and analysts only. Questions from the media will not be taken nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available. Please refer to the disclaimer in the earnings release for guidance on this matter. We are joined by Daniel Braatz, Chief Executive Officer; Ignacio Gutierrez, Chief Financial Officer; and Jesus Gomez, Chief Operating Officer. I would now like to hand the call over to Daniel Braatz. Daniel, please go ahead. Daniel Michael Zamudio: Thank you, and good morning. Thank you for joining us today. Let me walk you through our fourth quarter and full year of 2025. Throughout the year, we maintained a disciplined management of the company, focused on strengthening our balance sheet and optimizing our capital structure, aiming at generating long-term sustainable value for our investors. In the 4Q, we maintained our commitment to delivering profitability. Throughout its history, FHipo has shown solid financial performance, consistently delivering distributions. As of the fourth quarter of 2025, we have distributed more than MXN 7,300 million to our investors on a cumulative basis since 2014, reflecting our long-standing focus on value creation and capital discipline. FHipo maintained a strong capitalization profile. As of the 4Q of 2025, FHipo reported a capitalization ratio of 60% and a debt-to-equity ratio of 0.7x on our balance sheet. In recent years, we have successfully executed a disciplined deleveraging strategy, focused on strengthening our balance sheet and better position the company to pursue attractive market opportunities when conditions get favorable. Our financial margin stood at 54% in the quarter. And on a cumulative basis for 2025, FHipo obtained a financial margin of 54.5%, highlighting the company's operating efficiency. On January 20, 2026, we completed the full early amortization of the RMBS CDVITOT 14U collateralized by INFONAVIT denominated in VSM or Veces Salario Minimo. The execution of the cleanup call was based on portfolio balances as of December 2025. And finally, as of the date of this report, the CDVITOT 13U, 14U and 15U issuances that have been fully amortized throughout the execution of the cleanup calls, significantly reducing the balance of the INFONAVIT mortgages denominated in VSM in our total portfolio. Moving on to Slide 5. We highlight FHipo's consistent track record of generating value to our investors through stable distributions. As I mentioned before, up to the 4Q of 2025, our annualized yield per CBFI stands at 10.9% based on an estimated quarterly distribution of MXN 0.35 per share or per CBFI, subject to the current distribution policy. We have also distributed over MXN 7,300 million to our investors since FHipo was created back in 2014. That is equivalent to MXN 19.68 per CBFI, demonstrating our investor-focused approach and our ability to translate disciplined financial performance into consistent returns for our shareholders. As we move into Slide 6, we take a closer look at FHipo's solid capitalization profile, supported by a disciplined financial strategy management. As of the fourth Q of last year, our debt-to-equity ratio considering both on and off-balance financings was 0.3x and considering on balance financing stood at 0.7x. This result was supported by a balance sheet optimization strategy, which reduced our leverage significantly since 2019 and enhanced our ability to capitalize on market opportunities under favorable conditions. On Slide 7, we continue focusing our strategy on assets with an attractive risk-adjusted profile. Our portfolio collateralization profile remains very strong with an average loan-to-value of 77% at origination and today, an estimated loan-to-value of 28.6% based on current market value. Moving on to Slide 8. As of the 4Q, our nonperforming loan ratio based on the accumulated balances of the total portfolio at origination stood at only 3%, reflecting the historical credit performance of the company. Finally, on Slide 9, FHipo affirms its commitment to sustainability and ESG best practices. Our objective is to generate long-term positive impact beyond financial returns. We have provided more than 100,000 loans, of which women borrowers account for 31% of our overall portfolio, while 46% of our workforce are women, underscoring our commitment to inclusion and gender equality. On governance, our Nomination, Audit and Practices committees are fully independent, and more than half of our technical committee members are independent as well, reinforcing strong oversight and transparency. On the environmental front, approximately 70% of INFONAVIT borrowers have utilized the green mortgage program benefit, supporting energy efficiency home improvements. And internally, we have introduced initiatives to reduce paper, plastic and water consumption. Together, these actions demonstrate FHipo's commitment to responsible and sustainable value creation. Now I will turn the call over to our CFO, Ignacio Gutierrez, who will walk you through our leverage strategy. Ignacio Gutiérrez Sainz: Thank you, Daniel, and good morning, everyone. I will walk you through our funding structure and leverage strategy. FHipo has further reinforced its balance sheet by executing a disciplined deleverage strategy over the past years. As of the fourth quarter of 2025, our total debt-to-equity ratio, including both on and off-balance financing stood at 1.3x. And on a stand-alone basis, our on-balance leverage ratio was 0.7x. This financial discipline strengthens our position and provides us with greater resilience in evolving market conditions. Our diversified funding structure allows us to maintain solid liquidity levels while preserving the flexibility to allocate capital efficiently and focus on long-term value creation. On Slide 12, we will go through the detailed breakdown of our consolidated funding structure as of the fourth quarter of 2025. Our funding sources are well diversified across securitizations, bank facilities and capital market instruments with competitive rates and spreads. As shown on the breakdown, over 90% of our outstanding financings have a legal maturity exceeding 20 years, providing long-term funding stability and mitigating refinancing risks. Given our current capital structure, FHipo maintains additional leverage capacity of approximately MXN 16.8 billion or 1.8x debt to equity in comparison with the target leverage limit of 2.5x. This position gives us flexibility to act prudently and selectively as opportunities arise. Now with this, I'll turn the call over to our COO, Jesus Gomez, who will walk you through the portfolio breakdown before we discuss the financials. José de Jesús Gómez Dorantes: Thank you, Ignacio. Good morning, everyone. Thank you for joining us today. Let's move on to Slide 14 to take a closer look at the breakdown of our mortgage portfolio as of the end of fourth quarter 2025. FHipo's consolidated portfolio comprised 43,849 loans as of December 31, 2025, with an outstanding balance of MXN 16.8 billion, an average loan-to-value at origination of 77% and an average payment-to-income ratio of 24.4%. At the end of the quarter, 92% of the portfolio is performing. Our portfolio remains diversified across several origination programs, including INFONAVIT Total, INFONAVIT Mas Credito, Fovissste and the digital mortgage platforms portfolio, which as of the end of the fourth quarter 2025 represents 20% of the total consolidated portfolio. In over 10 years, we have continuously adjusted our origination and asset acquisition strategy to improve the credit quality of the assets we acquire. Moving on to Slide 15. FHipo's portfolio remains geographically diversified across all 32 Mexican states. Nuevo Leon, Estado de Mexico and Jalisco continue to represent the largest concentrations together accounting for approximately 28.8% of the total portfolio balance. In terms of our partnerships and origination programs, here is the breakdown of our portfolio. INFONAVIT Mas Credito program accounts for 51.7% of the total portfolio equivalent to MXN 8.7 billion. The digital mortgage platforms portfolio accounts for 19.2%, equivalent to MXN 3.2 billion. The INFONAVIT Total pesos program represents 14.3% of the total portfolio, equivalent to MXN 2.4 billion. Fovissste's portfolio accounted for 12.1% of the portfolio equivalent to MXN 2.0 billion. And finally, the INFONAVIT Total VSM denominated loans reached only 2.7% of the portfolio for MXN 0.4 billion, significantly it reduces the balances of INFONAVIT mortgage denominators in VSMs after the cleanup call of the CDVITOT transactions that Daniel mentioned before. This distribution reflects our strategy to prioritize origination programs that offer strong risk-adjusted returns while maintaining a diversified portfolio aligned with market demand. FHipo is well positioned to participate in future growth opportunities while maintaining a strong focus on profitability. I will now return the call back to Ignacio Gutierrez, our CFO, to discuss FHipo's financial results for the fourth quarter of 2025. Ignacio Gutiérrez Sainz: Thank you, Jesus. On Slide 17, our consolidated nonperforming loan ratio stood at 8% at the end of the quarter. As of the end of the fourth quarter of 2025, we continue to maintain a solid reserve and allowance for loan losses with an expected loss coverage of 1.3x and an NPL coverage of 0.53x. If we move to Slide 19 for our financials for the quarter. The total net interest income for the fourth quarter of 2025 was MXN 321.6 million, reflecting an increase compared to the fourth quarter of 2024. The interest expense totaled MXN 148 million, representing a slight decrease compared to the MXN 153.9 million reported in the fourth quarter of 2024, primarily as a result of the decline in interest rates over the past 12 months. Our financial margin stood at MXN 173.5 million, representing 54% of the total interest income, an increase of 3 percentage points compared to the 50.9% in the fourth quarter of 2024. The allowance for loan losses recorded in the fourth quarter of 2025 was MXN 44.9 million, reflecting the underlying credit performance of the portfolio during the quarter and its expected loss. The valuation of receivable benefits from securitization transactions showed a net loss of MXN 8.2 million in fair value during this quarter. This result is mainly explained by the performance of the portfolio and collateral of such trust certificates during the quarter and a net effect derived from the total early amortization of the CDVITOT 14U trust certificates. The total expenses incurred during the fourth quarter of 2025, which include the portfolio servicing and operational services as well as other expenses amounted to MXN 108 million. As a result, the net profit for the quarter amounted to MXN 19.5 million. With this, the estimated distribution for the fourth quarter of 2025, subject to the current distribution policy, as Daniel mentioned, is of MXN 0.356 per CBFI, which considering the average price for CBFI as of the fourth quarter of 2025 and the days of lapse in the fourth quarter results in an annualized yield of 10.9%. With this, I'll now hand the call back to our CEO, Daniel Braatz, for some closing remarks before we move to the Q&A session. Daniel Michael Zamudio: Thank you, Ignacio. As we close 2025, FHipo's business model continues to demonstrate resilience and adaptability. During the year, we sustained a strong financial position and maintain a healthy capitalization profile. Our focus remains on driving profitability and strengthening our capital structure and managing risk responsibly. Through 2026, we will continue evaluating new opportunities aligned with our strategic objectives while enhancing the overall quality of our portfolio. We believe the initiatives undertaken so far have strengthened our position for the future, enabling us to capitalize on future market conditions. Our objective remains clear to deliver stable and sustainable returns to our holders while maintaining the disciplined approach that has defined FHipo since inception. At the same time, we will continue advancing our ESG initiatives and creating long-term value for all stakeholders, including the communities we serve. Thank you for your continued trust. I'll now hand the call back to the operator to open the Q&A. Operator: [Operator Instructions] Our first question comes from the line of Martin Lara. [Operator Instructions]. Martín Lara: This is Martin Lara from Miranda Global Research. I have 2 questions. Could you please share your expectations for this year in terms of loan portfolio, including potential acquisitions of other portfolios or other financial companies? That's the first one. And the second one is that your capitalization ratio is very high at 60%. How do you see this indicator going forward? Daniel Michael Zamudio: Thank you for your questions. In regards of the capitalization, as you know, we've been trying to stronghold our balance sheet in order to take advantage of future leverage opportunities that obviously will reduce the cap ratio that we are holding at the moment. We're working in a couple of financing facilities that will help us lever a little bit more our equity. And the use of proceeds for those financings goes towards your first question, which is we're going to be using part of those proceeds and liquidity that we are holding at the moment to tackle some opportunities in terms of acquisition of new originators and also portfolio on mortgages and real estate-backed loans. Martín Lara: Okay. And your -- I have a follow-up. Your financial margin was very strong. It expanded nearly 4 percentage points year-on-year. What can we expect in the future? Daniel Michael Zamudio: I would say that we need to expect the financial margin to keep at that level. It will depend a lot, as you know, on the interest rate curve that Mexico will be running. As of today, we have a small portion exposed to floating rates. But as we keep performing throughout the year and depending on what Banxico does, I think that could increase a little bit more. But to be in the safe side, I would say that you should target that between the 50% and 54% of financial margin is a target for the company in 2026. Martín Lara: Okay. But more towards 54% instead of 50%? Daniel Michael Zamudio: I would say that, yes, more towards the 53.3%. Operator: We would like to take this moment to thank you for joining FHipo's Fourth Quarter 2025 Results Conference Call. We have not received any further questions at this point. So that concludes our question-and-answer session. Thank you. I would now like to hand the call back over to Daniel Braatz for some closing remarks. Daniel Michael Zamudio: Thank you all for joining us today. Please don't hesitate to reach out to us if you have any more questions or concerns. We appreciate your interest in FHipo and look forward to speaking with you soon. Operator: That concludes today's call. You may now disconnect.
Operator: Good morning, ladies and gentlemen. Welcome to Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available at the company's website at auraminerals.com/investidores. The presentation will also be available for download. This call is also available in Portuguese. [Operator Instructions] [Foreign Language] [Operator Instructions] Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Aura Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO; and Kleber Cardoso, CFO. Now I will turn the conference over to Rodrigo Barbosa. You may begin the conference. Rodrigo Barbosa: Thank you, and good morning, all. I'm super proud to be here sharing a few information, not only the results, but all the strategic advancements that Aura is pursuing. If I remind all the investors here and analysts about our strategy, we are very much executing right on track on our strategy. The strategy is, number one, to increase production through development of greenfield projects. Number two, to increase resource and reserves as we see significant potential in our current deposits to increase the reserves. And number three, continue to grow through M&A and address our daily trading volume or multiple that is still discounted compared to our peers. And doing all these 3 while we continue to pay significant dividends to our shareholders. And I'm glad today that I will be able to walk you through that we've been executed in all of those 3 areas while we pay dividends. So number one, first, going to the results, and I ask to put on the first page. In terms of executing greenfield projects and also improving the results, we see, again, the company going on record high production on a quarterly basis and also on a yearly basis. On a quarterly basis, which we have already disclosed to the market, we produced 82,000 ounces gold equivalent ounces, 11% up compared to Q3 '25 and 23% compared to Q4 last year. On annual production, 280,000 ounces of production, 9% up at constant price. And at guidance prices, excluding MSG acquisition that was not on the budget and was not on the guidance, we were very much in line with the middle and actually slightly above the middle of the guidance with the market. The combination of higher production, cost under control and higher gold prices drove us to hit $208 million in the quarter with a gold price of $4,090, while MSG only 1 month and Borborema is still on the final phase, achieving nominal capacity. When we look to the year, we reached $548 million of EBITDA with the gold price $3,400. If I remind the investors, since '23, we've been doubling the EBITDA coming from $135 million, $270 million, now $540 million. And if you take into account the last EBITDA of $208 million with the gold and put the new gold price and then put a higher production, we'll see that we'll be able to, during this year, perhaps maintaining this gold price, double again our EBITDA if the current gold prices continue to be as strong as it is today. On the all-in sustaining cash cost, we are glad also to disclose to the market that we have not only reached the guidance, but we are slightly below the low end of the guidance, and we will talk more through this during the presentation. Higher gold price, cost under control, we have a very also strong recurring free cash flow of close to $100 million on last quarter, understanding that we are also investing in inventories, investing in developing the mines, which put some low grade into the inventory. So some working capital is allocated as an inventory as low grades -- we leave the low grades of the mines that are entering production to the further years while we now focus on higher grades. And I will talk more about this also during the presentation. Combination of strong cash flows. And although we acquired MSG, we continue to be in a very -- and paid dividends. We continue to be at the low leverage ratio. Kleber is going to walk you through that always being able to grow without even leveraging our cash flows that coming from the operations being more than enough to fund our acquisitions and our greenfield projects, while we also count with leverage to fund those projects, freeing more cash to be distributed to our shareholders. A good news, it's a net loss of $20 million. That means that gold price continues to appreciate. And if you take out the noncash nonrecurring losses, we'll see that during the year, the adjusted net income was $206 million, and Kleber is going to walk you through all the details how to achieve this $200 million. For the year 2026, we have a strong -- continue to have a strong production coming from our operations and some increase in all-in sustaining cash costs, some increase also in CapEx due to positive news. We are now expanding Almas. We are coming from Almas, we built a 1.3 million tons plant. Last year, we finished above 2 million tons. We are now upgrading to 3 million tons to the plant. That means that we have to develop the mine that needs to raise the tailings then. We are also advancing in Era Dorada. We just announced Era Dorada early works. We also acquired MSG for $76 million. MSG has structurally a higher sustaining CapEx and a higher CapEx during the year of the turnaround and structurally will be higher than our average. However, the price that we paid for MSG more than justified this higher CapEx, sustaining CapEx and also higher sustaining cash cost, which we will walk you through also during the presentation. Very important additional events. Again, we closed MSG. We got the license for early works in Era Dorada, which we already started the early works. We are now finishing all the analysis, all the studies to be able to go and approve in the Board the full construction. Yesterday, we also announced a major milestone for Borborema, which we obtained the license to move the road, reaching now 1.5 million ounces just with the reallocation of the road freeing additional 670,000 ounces of reserves into the project, while we continue to analyze during the next few weeks for the AIF or 20-F to be released by the end of March, we are updating our resource and reserves based on higher gold price, which means lower cutoff that will free more reserves into all across our operations. Major milestones that we conquered also is after listing in NASDAQ and after the new issuance in $200 million all came from in 1 year, $1 or $2 million being traded per day, now reaching $100 million per day, addressing the low trading volume that we had now being attractive for major investors to invest in the company. And finally, not least, announcing again a very strong dividend of $0.66 per share on a quarterly basis, which gives us a yield on the last 12 months of 6.2% to our shareholders while we made acquisition, while we ramp up Borborema and while we're doing all these growth projects. So in summary, we can see that we are very much delivering on the long-term strategy. Number one, we are increasing production and developing the greenfield projects. Borborema last year, again, on time, on budget, commercial production in September. Then we also acquired MSG. This is the third avenue is continue to grow through M&A. Add daily trading volume. So on the third avenue, we acquired MSG, and we significantly increased daily trading volume, which is helping us to attract more bigger investors, although yet we are still discounted compared to our peers. And the second avenue to increase resource and reserves, again, with the Borborema, we increased Borborema reserves by 82% of reserves, significantly increasing cash flows of this project. And I can also walk you through a little bit the importance of this additional 670,000 ounces, which I will do during the presentation. So very much increasing production, increasing resource and reserves and address the multiple through daily trading volume and also new acquisitions. In terms of safety, super proud. And again, now -- all those numbers are putting Aura as a benchmark in the world in the sector. Not only we had the full year without any single lost time incidents, but now we're achieving over 18 months with no lost time incidents, which put our in a benchmark in the world in terms of safety. Any well-managed company will give you strong levels of safety and also strong results. In terms of stability of the structures, again, we make reviews every quarter, every month through external consultants and all our geotechnical structures are in satisfactory levels. Next slide. So when we look on the quarterly basis on the production that we have already disclosed, now we see since Q1 2025, a constant growth on production through a combination of the ramp-up of Borborema and lastly, still not only December, the acquisition of MSG. For the further quarters, we should see now continue to grow in terms of production on a quarterly basis as MSG now comes a full quarter and then gradually, we should also improve our production from our other operations. When we look on the guidance, we see that Aranzazu, the production, when you consider the same metal prices of the budget, we see that we were very much in line with the guidance in terms of production. I will get attention for those that are not used to looking carefully our numbers, Aranzazu, we have -- we sell copper and gold concentrate. And then we convert all the copper into gold equivalent ounces. When you do that, you get just the revenues, the revenues from copper and you divide by the gold price. The higher the gold price, the lower the conversion into the gold equivalent ounces. So when you look at the number of Aranzazu and you see the gold equivalent ounces decreasing along the last year, it's not because we are decreasing production, but it is mostly because our gold price is appreciated, which is positive for our whole company and that conversion goes to a lower gold equivalent ounces, which also translates to higher all-in sustaining cash cost because you divide by the total cost by the gold equivalent ounces gives -- and the gold equivalent ounces is lower. So that gives us a higher all-in sustaining cash cost. But that is because of a good news of gold appreciating. Apoena, we've been able to develop faster than where we were projecting during the year, so we could also produce above the guidance. Minosa very much in line with the guidance. Almas also very much in line with the guidance. And Borborema is where we were a little bit below the guidance. That's because we had the project, we had some minor issues with the agitators of the CIL tax that did not jeopardize the ramp-up. But as this drove to a lower -- was driving to a lower recoveries, we decided just to put for a couple of months very low grades instead of high grades, not to lose the long term, not to lose recoveries on that project that droves the production down while we preserved those -- that high-grade gold when we could finish the fix on the CIL tanks, which took us just a couple of months, not jeopardizing the ramp-up again, not jeopardizing reaching our capacity and not jeopardizing the recoveries that we reached after we changed those parts on the CIL tanks. Next. So in terms of all-in sustaining cash cost, excluding MSG, I'm proud also to show the market that we also could not only be within the guidance, which is the next slide, but also slightly below the low end of the guidance, fulfilling what we promised to the market in terms of production and also in terms of cost. If we take out the MSG, our all-in sustaining cash cost for Q4 would have been $1,363. And as we know, as we acquired MSG, we know MSG had over $3,000 of all-in sustaining cash cost, which doesn't scare us. I think that was the positive point on acquiring MSG was to see those high all-in sustaining cash costs and project and believe that during the turnaround of this year, we'll be able to drive that all-in sustaining cash cost to below $2,000 for the years ahead, not this year, but for the years ahead. Next, so just quickly going to the guidance. I just -- I mentioned to you, in terms of production, very much in the middle, slightly above the middle of the guidance. On the cash cost per gold equivalent ounces also, we reached the finish the year at $1,070. The low end of the guidance was at $1,078. All-in sustaining that translates also to a lower all-in sustaining cash cost finishing $1,368 and the low end of the guidance at $1,374 and also very much in line with the guidance in terms of CapEx, understanding that there was a year that we also built Borborema and decided to move forward with the expansion of Almas, the first phase, and now we are going to the second phase of the expansion of Almas. Next. So for the 2026, an overview here of the guidance and then Kleber can go in a little bit more detail in the next slide. But in terms of production, now we project full year of Borborema, full year of MSG, although MSG still during this year on 2026 in MSG, we are not focusing to produce the most at the lowest cost. We are focused on preparing that mine to be able to produce over 80,000 ounces per year and below 2,000 for the next years. So this year is a turnaround, although during this year, imagine that we should we projected a producing 50,000 to 60,000 ounces of production. Even if the cost is above $3,000 per year all-in, we have -- the price -- gold price today is $5,200. So it's $2,200 of free cash flow margin in a turnaround year for MSG. That price converted to 50,000 or 60,000 ounces means that the free cash flow and the EBITDA will be way above this is $120 million, $130 million in this project that we acquired for $76 million in the year that yet we are not focused on production. We are not focused on cost. We are focused on preparing that mine to higher production along the next years. In terms of -- and that higher all-in sustaining cash cost, which Kleber is going to explain, is translated to -- from MSG is translated to higher cash cost in our consolidated levels, higher all-in sustaining cash costs also in our consolidated levels and Kleber is going to explain that 65% to 80% of this increase is explained by MSG. And then we have other factors that we will disclose in more details during the presentation. In terms of CapEx, it's the same situation. It's a year that we are investing in MSG. We are expanding Almas, Almas we're doing the pushback of the pit to fast access also the underground development. We are expanding the capacity of the plant. We are already doing in this expansion project is not the full investment in Era Dorada, but yet already the first groundwork and the first early works. So there's a lot of capital that's been committed for good news, which we are expanding production, expanding to go at 600 or even above 600, preparing the company goes above 600,000 ounces of gold equivalent on the upcoming years. In terms of production, again, Aranzazu, that decrease comes from mostly metal prices, although Aranzazu is where we are more stable and getting more lower grades during the next years, while we continue to explore opportunities to decrease the cost of mine and the cost of plan to offset this slightly lower grades in Aranzazu. Borborema, the range of 65,000 to 77,000 ounces. This is also accounts that we are working, and we should publish our new resources and reserves, the old AIF, now the 20-F by the end of March. That means that we are updating our resources and reserves and all the mine plan of the company based on the new cutoff with a higher gold price. That means with the higher gold price, we reduce the cutoff, we can free and release and convert more resources into the reserves. On the other hand, the grades -- average grade goes down. But all in all, it builds value. It's a positive news because we are now assessing grades that was not economically viable in the past with this higher gold price. We've been able to access more ounces on total, although it's lower than former grades that we were projected in the past. So that is a positive news that has -- on the long term, that has minor impact on the short term. So next slide. Kleber? João Cardoso: Yes. Sure, Rodrigo. So good morning, everyone. So let's start with understanding the main drivers behind the impact of the increase in first in the all-in sustaining cash costs. We expect all-in sustaining cash cost in 2026 is expected to increase between $262 and $407 compared to 2025. And as we can see here on the right side on the top, the main driver for the increase by far is MSG that's bringing up our weighted average cash cost explains 70% to 80% of this increase. Metal price effect that Rodrigo was explaining, the gold equivalent conversion because gold prices on average in '26, if you take market projections are above the average of '25, so accelerated more than copper price, so explains another 5% increase. And the second impact that we have is in Almas. Almas due to mining sequencing this year, we're doing a pushback in the mine and having higher strip ratio. So the costs and lower grades also due to mining sequencing. So the cost is the increase this year. This is not expected to be repeated, for example, in 2027. And we also have tailings dam expansion this year in Almas. So in Almas mostly nonrecurring this effect. And then other impacts are marginal. We have slightly minor worse cash costs in Minosa, for example, but better cash costs in Apoena, so they compensate each other. So then on the bottom, understanding the main increases behind the sustaining CapEx is a similar story. So 75% to 70% of the increase. We're expecting to see an increase in '26 compared to '25 between $15 million and $17 million, of which about 2/3 are MSG. First, because it's an underground mine, so it has a higher sustaining cash cost. So we should not expect going forward to see sustaining CapEx for MSG comparable to the other open pit Brazilian mines. So it's going to be higher. But also it's a turnaround year as we have been communicating, we're going to be allocating some additional capital, especially in maintenance in MSG. And Almas is the same reason Almas explains another 15% to 20% of the increase in the sustaining CapEx for the same reason. The pushback a portion of the waste is capitalized the sustaining CapEx and explain also a portion of this increase. And finally, of course, Borborema is going to be operating for a full year. In '25, we had just 3 years of commercial production for Borborema -- 3 months, sorry. And then in '26, we have 12 months. Of course, that brings a higher sustaining CapEx. And finally, when we look at the expansion CapEx, what is in our guidance for '26 mainly is Almas underground development and the plant expansion that we are investing to increase the plant capacity to 3 million tonnes until the end of the year. Apoena, we have the second year of the North pushback that we are planning in '25, '26 to invest in the North Phase 3 pit to have higher grades from '27. So this is the second year. In Borborema, we have a filter press expansion. So the filter press now is the current bottleneck that we have at the plant. So by expanding the filter press, we can go beyond the nominal installed capacity that we have today at the plant. And also is going to help us prepare for potential expansion of the plant in the future. And also, we're going to be investing in engineering studies for potential expansion now that we were able to get the permits to move the roads. Era Dorada as well, we're investing in the early works, and we have then some other impacts such as Matupa and some investment in the projects. Rodrigo Barbosa: Thank you. So I think one major milestone that we also achieved, again, go to the next slide, is the license that we've been discussing with the national authorities that we finally signed an agreement of partnerships to move the road. That is releasing 670,000 ounces of gold on the mine sequencing. Just hypothetically, if you get the gold price as of today, $5,200 and then you imagine our all-in sustaining cash cost of $1,500, which according to our mine sequencing is below this. We see -- and then you multiply by the 670,000 ounces, you'll see that the company with this is we'll be able to generate along the years more than $2 billion, $2.5 billion pretax in this project. That's the size of the magnitude that these additional ounces can generate. And of course, we don't want to go from -- we already have 15, 16 years old, 16 years of life of mine, that will expand to above 20, 25. We don't want to do this. That's why we made the plant flexible. And now we are advancing our engineering studies and water access in order to expand the capacity of the plant perhaps up to 4 million tons that will drive us to a significantly higher production after we finish and conclude the expansion. We are now working on engineering. We are now working on water access. And we believe during the second semester, more towards the fourth quarter, we'll be able to present a detailed and a new feasibility study for this project using now a higher capacity. While we also were doing and we should expect for the 20-F by March. This project is very sensible to cutoff grades. So as gold price is going up, we are changing the price for cutoff, which means that we can now access, as I was mentioning, lower grades that was not economically viable in this project now becomes viable. So we should expect further increase in reserves by the end of March when we publish the new resource and reserves for the entire company, particularly here in Borborema. Again, I mentioned that we are delivering on the greenfield projects on time, on budget. Remind Borborema, the first Almas now Borborema. We are delivering on new acquisitions. We closed MSG in December. And we also told the market -- we've been telling the market for the last many years that we had to address the daily trading volume. And here, it is the very successful results of our listing in NASDAQ moving from TSX and listing in NASDAQ that coming from $1.52 million per day, now reaching on average in February, $100 million per day with a combination of NASDAQ plus B3. So that will also help us address the multiple. According to the analysts, we are still traded with a discount compared to our peers, and we will not only change the peers coming from the production of 300,000 ounces on average last year or this year to above 600,000 ounces. And then also with the higher daily volume and higher reputation as we are delivering on our projects, we should address this discount compared to our peers and maybe even be with a premium compared to our peers as we continue to grow. So with that, I conclude here the more high-level analysis. Kleber is going to drive and walk you through the details of the results, and then I come back for questions. João Cardoso: Okay. Thank you. So we start with a summary of the main financial KPIs that we are reporting for the quarter, for the year and also comparing with the previous quarters. As we -- Rodrigo mentioned and we see the results here, a combination of higher gold prices in the fourth quarter and increasing production in the fourth quarter as well. There was a substantial increase in our net revenues, closing the quarter with $322 million and bringing our annual revenues beyond $920 million in 2025. The adjusted EBITDA, it's the sixth quarter in a row that we delivered record high adjusted EBITDA at $208 million, considering Q4 average gold prices close to $4,000 per ounce. And bringing our annual EBITDA to $547 million as well and also the last 12 months, also the 6 in a row that we see increasing. When we move to net income, we're reporting a net loss of $20 million basically for the same reason that we reported losses in some of the previous quarters due to the sharp increase in gold prices during the quarter, which is good news, but it brings noncash losses related to our outstanding gold derivatives. Excluding those noncash losses, which amounted about $82 million in the quarter and certain other noncash items, we see that we had also an improvement in the adjusted net income, reaching $73 million in the quarter. And then in terms of cash and net debt, we see we continue in a very comfortable position in terms of balance sheet. There was some increase in our net debt in the quarter, but that's basically because in Q4, we paid for the acquisition of MSG. And unlike many other cases, many other companies when we make acquisitions, there are maybe some reduction in dividends. We didn't reduce the dividends. In Q4, we kept paying dividends above our minimum dividend policy because our balance sheet allows for it. So -- and then we can see, as a result, we closed the year also with a low -- very low net debt over EBITDA in the last 12 months, below 0.3x. Now moving to understanding the main items between the adjusted EBITDA and net income for the quarter. If we see a breakdown of the adjusted EBITDA of $208 million, Almas and Borborema were the top performers, about $50 million in the quarter each. We highlight, of course, Borborema considering it was only the first quarter of commercial production and is almost our highest EBITDA. So it shows all the potential that we have in this mine. Minosa and Aranzazu also coming very strong at $48 million and $41 million, respectively, Apoena delivering EBITDA of $22 million and MSG, $10 million. MSG also, I'd like to highlight for a couple of reasons. First is was just one-off, and one that we didn't see yet any impact of any turnaround in terms of production and in terms of cost. And we already -- with gold prices at much lower levels that we have today, and we already generated $10 million in a month for an investment for an acquisition that we paid $73 million. So it shows the type of returns that we should expect for this acquisition. When moving to financial expenses, I mentioned already, we had $82 million noncash losses related to the outstanding gold hedges. And we also had $22 million realized losses related to derivatives that expired during the quarter. Income tax expenses increased compared to the previous quarters, basically because our results from the operations also increased. So it's in the same proportion. On this quarter, we had nonrecurring other expenses that's mostly related to provisions that we did on year-end related to potential partial nonrecoverability of certain VAT credits that we have mostly in Honduras and also in Brazil. Then with that, we see our net income of minus $20 million, but then bringing back the noncash items, mostly the unrealized losses with derivatives, we come to adjusted net income of $73 million. Now moving to understand in detail the change in the cash position during the last quarter. We see on the left side of the page, we started the quarter with about $350 million in cash. Here on this more left side page, we can see what's the cash flow -- recurring free cash flow, which is the cash flow generated by now the 6 mines in production not including any investment to expand our business. We see we generated $94 million already deducting the realized losses with the gold derivatives. That cash was almost enough to pay for all the capital allocated to growth, the business in the last quarter. We invested $103 million, mainly the MSG acquisition and also expansion CapEx, the first steps in Almas mainly here for the underground mine development and plant expansion. And to the right side, more the financial items, highlighting, as I indicated before as well, $40 million dividend payments. Next page. And then when we move to the year, the cash flow by the mine in production generated over $250 million in cash, which was more than enough to pay for all the investment in growth and 2025 was 1 year that we invested significantly in growth. So we invested to Borborema construction, the second year of Borborema construction, the acquisition of MSG, acquisition of Era Dorada, acquisition of Altamira shares. Investment in exploration to increase our mineral reserves and resources that was funded -- entirely funded by the cash flow -- recurring free cash flow from the operations. And to the right side, the more financial items, we highlight the cash we returned to our shareholders, mainly through dividends, $116 million and the net proceeds we received from the NASDAQ IPO to $100 million, and that brings our cash position close to $290 million at the end of the year. This is the last slide, and then we open to questions. Thank you. Operator: [Operator Instructions] Our first question comes from Henrique Marques with Goldman Sachs. Henrique Tavian Marques: So quickly on guidance. I mean, there's still a lot to be made during 2026. So I just wanted to make sure here, what is already implied in this guidance because there are technical report updates coming up, which should impact reserves and eventually grades, which might weigh on production. But at the same time, you have some processing capacity expansion expected for this year. So I just wanted to confirm exactly try to better understand what is already implied in this 2026 guidance that you guys just released? And also on a second topic, a lot of things going on. I think that's great, but it would be also great if you guys can just help us map everything that is going on. So just any update on timing for Era Dorada or Matupa to be taken to the Board to eventually increase the processing capacity for Almas. What is the timing for that? And just to confirm, is Almas expansion already Board approved, the processing capacity? And lastly, just any timing for Aura to join the GDX index. Is there any prerequisite missing for that? That's it. Rodrigo Barbosa: Thank you for the question, Henrique. And yes, as you mentioned, a lot of going on in Aura. And again, another year that we continue to prepare the company to reach over 600,000 ounces of production. So going step by step, what you should expect. And then first question is for the budget of this year, we are not considering old gold price. We're already using new gold price based in new cutoffs that we will update the market. So there's this lag a little bit on what we forecast on the budget and what we will publish now by March. So we are already reducing the average grade of some of the mines based on lower cutoff and higher gold price, which is a good news because we're going to free ounces in terms of reserves for the long term and for overall, it generates NPV for the company, although in some cases, might slightly be -- drive to a lower production. So that's part of the question that you made that I could answer. Then there are a few things that's going on in. So you also asked about Almas. It's already included on the budget. It's already included on the CapEx for us to expand the capacity and also to raise the tailings dam to prepare the tailings dam for this new capacity up to 3 million tons of the plant already preparing this to receive higher grade material as an underground while underground is not totally developed, we'll put average and medium grade that's already on the stockpile because the mine is working faster than the plant, and we have some important stockpile that to use on the higher capacity of the plant. While we don't want to finish that. We go -- we should finish the year or early next year at 3 million tons per year at the plant. But we have projects to go up to 4 million tonnes, but that will depend on some more positive geological information that we are investing in the project. So we should expect this 3 million tons already hired, approved and should be implemented by early -- should be already in full production by early next year or by the end of this year, while we have projects and we have ideas and have discussions to go up to 4 million tons, but that will depend on more exploration results that we are conducting as we speak right now. On this -- also on this -- for this year, Borborema, we are -- as Kleber mentioned, we are increasing capacity of the filters that will give us a possibility to go beyond the nominal capacity that we should reach along the second semester, while, again, we are also preparing this doing engineering that's already approved in the Board and doing now studies for water assessments to double the capacity, and we would like to be able to approve this in the Board by the end of this year for the new capacity for Borborema. On MSG, it's a year of turnaround. We are -- although we are generating positive cash flows, we are not focusing on production and not focusing on short-term gains. We are focused on building the right plan and the right structure so that we can finish the year with a very good view that for the next years, we'll be able to produce above 80,000 ounces with below $2,000 of all-in sustaining cash cost. So that means that we are preparing the mine, we are doing underground development and advancing. Again, if I remind the investors, one of the reasons that MSG lost productivity and lost production and the plant become idle is that they are doing -- the mine 6 is they lost productivity to doing underground development and they start doing top bottom that increased dilution that reduce the speed. So that creates a lot of complexity. So now we need to do all the proper underground development in order to do from bottom to up. That means 1 year of a lot of underground development and preparing this so that we can do the right methodology underground. And then fulfill the capacity of the plant that will drive us to produce extra ounces and significantly reduce dilution, significantly reduce also the all-in sustaining cash cost. So -- and the final question you made was... Henrique Tavian Marques: It was regarding the index, the GDX -- yes, just if there's a prerequisite missing. Rodrigo Barbosa: No, I think we are reaching, but we need to reach for 2 consecutive quarters. And each quarter, you need to prove that your daily trading volume was higher on the last 2. So we believe we'll be eligible for GDX, although there are some -- it's not 100% sure because there is some analysis that the team do, but we believe that we'll be eligible to GDX by the second semester between third to fourth quarter of this year. Operator: Our next question comes from Edgard de Souza with Itaú BBA. Edgard de Souza: So my first question regarding the -- still on the guidance, production expectations came in slightly softer than what we were expecting, in particular at Borborema. I wanted to understand, I don't know if Glauber is connected here, but maybe if not, for sure, you can help me, Rodrigo. How much of this lower production profile in Borborema is a direct consequence of incorporating material that was previously above the cutoff? And at a broader portfolio level, how are you approaching cutoff optimization in the current gold price environment? To what extent are you trading near-term grade and free cash flow for longer life of mine and higher total value extraction, let's put this way. Then my second question, moving to the main positive news from the release is regarding the expansion at Borborema and the road relocation. So I wanted to understand the next steps from here. What is the expected time line for the physical relocation of the road? You mentioned that the capacity could reach around 4 million tons. How much of this incremental processing capacity could be gradually added in a brownfield scenario similar to what you did in Almas? How much of the expansion would require a more significant CapEx, maybe a new ball mill? And how should we think about water availability as a constraint until which levels can you produce with the current water availability that you have? And for which levels this would require a more significant investment for water availability there? Those are my main questions. Rodrigo Barbosa: Okay. I will start, and then I think Glauber is here with us, he can finish. But on the production for Borborema, mostly of the reduction in production comes from a lower grade that comes from a lower cutoff, right? And then we always -- we don't -- and that's one thing that we do in our and that actually, it's this mine that drove us to be here today with a successful story. We don't take decisions to favor only short term. We think the company as a whole, what builds the best value, although sometimes hurts the short term. And this example of Borborema is a very good example because we know that we have a lower production. But overall, as we should see during the publications of the 20-F, we'll see an increase in resource reserves. So that means we are significantly increased NAV of the company, although that on the yearly -- on this yearly basis means slightly lower grades, which is translated to a lower production. On the CapEx, I'll let Glauber explain, but I'll give an overview of the plant. It takes probably 2 years in terms of construction to relocate the road, which is the same time that we will do a next plant expansion. And the plant expansion will require a CapEx. The plant is not at 4 million tons. The plant was built for 2 million tons, flexible and prepared to receive new investments and then go to 4 million tons. But I'll let Glauber walk you through more and what we are thinking about on this expansion. Is Glauber here otherwise or the mic is off. Glauber Rosa-Luvizotto: Okay. Sorry. Good morning, everyone. So yes, as Rodrigo comment, so we -- this drop on grade is a positive thing. In fact, it's much more ore becoming economical right now with this new price. And what we are doing right now can bring some impact in the short term, but it is a big benefit in the long term. So in fact, we are preparing the mine for higher capacity or higher production that we are doing the engineering in the plant. In the CapEx, to answer your question. So it's basically built a new parallel plant. So now what we are doing is the bottleneck the filter area is the constraint that we have right now to increase capacity, but we already approved. We already hired all the service and construction, and we will build -- we will implement the new filters in this year. We expect to be done in the beginning of the next semester of this year. In parallel, all the engineer to expand the plant. We don't have the total CapEx right now, but we need to expand the CIL circuit, the mill circuit and the crusher circuit it means that everything. It's prepared to expand because we just need to connect without impact the actual production. but it's something that require CapEx to be done. Rodrigo Barbosa: And in the meanwhile, we are doing all the water assessment. That's ideas, there's projects also to do to increase the capacity to treat gray water from the city or receive gray water from other cities. So there are a few discussions going on right now, and it takes time, but we don't believe it's going to be the issue. Operator: Our next question comes from Guilherme Nippes with XP. Guilherme Nippes: Can you hear me? Rodrigo Barbosa: Yes. Guilherme Nippes: Okay. So I have Two questions here on our side as well. My first one is on the reserves report. So could you guys share any key shifts, any takeaways from the reserve report? And also if you have any shifts on geological interpretation and also on long-term assumption for gold prices as well? And if you could guys share also news on the underground mining for Almas, Borborema plant expansion and the increased reserves at Matupa. So any news on the updated reserves report? And my second question is on capital allocation. Of course, you guys have a lot of projects going on, but we still see balance sheet room for -- as gold prices are holding higher as well, we still see room for further acquisitions. So I would like to understand what are the priorities now? And if you guys are also looking for acquiring other assets here in Brazil as well and in Latin America as well. Rodrigo Barbosa: Okay. Thank you for the question. Unfortunately, we cannot disclose what will be on the AIF yet. That will be published on the -- by the end of March. But as you mentioned, we are working on the new cutoff for the current mines that we have that can affect some of the mines and not affecting other mines depending on the distribution of the grades in that mine. Borborema, as I mentioned, has some sensitivity to this. So it can be affected by a lower cutoff than increase, which is already translated on the budget. So we will see already the grades going down. As you mentioned, we are working on Matupa. We're doing analysis on [ Saguis ], doing analysis also in those Pezão Pé Quente that we acquired and perhaps some of those already be able to incorporate into the X1. So we should expect also the new report, including part of the resource and reserves of the X1 and also Pé Quente. Then underground, we continue to do underground development and also reaching the right level, then we continue to do intensify exploration. That -- although we've been having a very important and interesting interception that confirms the underground mine, that takes more time. So we should expect more towards the end of the year that we can consolidate all the information. But we don't want to waste time. That's why we're already doing all the underground development because we believe that this will become a mine, and we don't want to waste time doing all the studies while we develop the underground. So in terms of M&A, as you mentioned, the company, it's significantly increasing EBITDA and cash flows. Again, if you take it back in the last 2 years, we doubled -- every year, we doubled the EBITDA, '23, $136 million, then '24, $270 million, '25 now $540 million with the last quarter of $210 million with the gold price $4,000 and MSG only 1 month, you can already imply that we are significantly already on the running rate above the last year. And that, of course, although we can -- although we've been able to -- if you look what has happened to our in the last 4 years, we have the highest dividend yield in the world, of our gold price. We acquired Borborema, we built Almas, we built Borborema, we acquired MSG and yet we have a low leverage. And that was with a gold price of [ 32,500 ]. Now we are with the gold price at [ 550,200 ] with higher production. So we should expect for the upcoming years more than we've done in the last years in terms of we'll be able to generate higher cash, pay more dividends. Now we have more cash also to do more acquisition. We want to continue to do acquisitions. We know very much how to get to beyond 600,000 ounces that we published last year, but that by itself is going to generate a lot of value to us, but we know that the right multiple starts when you get closer to 1 million ounces. So we want to continue to pursue growth through M&As. We are America players. We don't feel -- we have the knowledge and expertise for the other continents. But in the Americas, we like gold, and we also like copper. So we should expect from our acquisitions, either in gold and also in copper, most in countries that we feel that has democracies, some institutional -- strong institutional entities. So that give us the minimum security to invest. We also like a project that has -- it's well developed in terms of geology, maybe needs further exploration, but just to convert resources into reserves and then implement our projects that are already, as we saw brownfield that we believe that's not perhaps the core of other companies that they might sell. So if you see an angle to buy them and reduce and generate [indiscernible], that's what we see. Basically, what you should see for Aura for the upcoming years is what we've done in the last years with now higher production and higher gold price, higher cash flow, so more intensified. Operator: Our next question comes from Marcelo Arazi BTG. Marcelo Arazi: A few questions on my side as well. We can see that we are seeing a slightly wide range of production guidance than what we were used to. Can we say that is this related to a more conservative approach and a large number of assets or it can be read as a sign of a more challenging or more hard to predict conditions? And a second one on CapEx. Is this level of sustaining CapEx, the new reality for the company or the full year 2026 print is inflated by the turnaround project in MSG? Can this eventually impact the dividend distribution given your policy of 20% of the EBITDA minus the sustaining CapEx? And just a final one, if I can. On the Guatemala CapEx, the guidance is already accounting for the early-stage investments. But with the eventual project approval, can we expect some CapEx revision for this year? Rodrigo Barbosa: Marcelo, for the questions. And I think for this higher all-in sustaining cash cost and higher CapEx, this is neither more challenging, neither more conservative. Actually, it's a good news. It's a good news that the company is being able to buy MSG for $76 million in only 1 month without -- as Kleber mentioned, we have $10 million of EBITDA. MSG structurally has a lower all-in sustaining cash cost. MSG structurally has higher all-in sustaining cash cost and higher also sustaining CapEx. But that's how we generate returns. We put this asset into our consolidated basis, affect negatively, but doesn't mean that it's a challenge. Actually, we see this more as an opportunity because during this year, we'll be able to do the proper work, and we are very confident that for the upcoming years, we will see that we'll be able to reach above 80,000 ounces and below $2,000 of all-in sustaining cash costs. Nevertheless, in a single [indiscernible], we generate $10 million without any new -- any turnaround. So -- and the other increase that we have comes from positive news also again, Almas, we've seen a very strong opportunity to increase capacity. So that increased also our CapEx. Another factor that increased the CapEx is Era Dorada because we felt that we got the license that the former company could not get for several years. So we already started early works. And then going to the final questions that you made, we are -- it is not on the CapEx, the full construction of Era Dorada. So as we go to the Board and as we approve the full construction of Era Dorada, this is when we then we will add a new CapEx for the project as we published already last year, the updated feasibility study, the CapEx of this project is close to $380 million. Of course, it doesn't happen in the full year. Actually, most of the CapEx goes towards the end of the investments. So -- but if we approve the Board, then we will incorporate on our guidance this year. So again, the higher CapEx that you see in this year is way more as an opportunity rather than a challenge. Marcelo Arazi: And just a quick follow-up. Could this impact the dividend distribution given your policy? Rodrigo Barbosa: No, we've been able to do everything. So our policy is 20% of the EBITDA minus recurring CapEx. Actually, we've been able to pay 50%, 60% above the policy. And we see no reason that we affect this for the upcoming years, except that there's some major acquisition that we believe that is super high return and super high value added, then perhaps we go to the policy, but we should expect the policy are above the policy for the upcoming quarters. Operator: Our next question comes from Lawson Winder with Bank of America. Lawson Winder: Could I actually start by asking maybe a bit of an expanded question on the index inclusion. So there are U.S. indices for which Aura would technically qualify like some of the Russells and are even much more widely followed than the gold indices. I mean, is there any discussion of potential inclusion or potential inclusion in the Russells on the horizon? Rodrigo Barbosa: We are monitoring, and we have a plan this year to be included in all the indices that we can fulfill. So we already were included in about 30 different indexes. But as you mentioned, I think we have way more opportunity to reach those major indexes that can not only help with the pricing on the multiple, but we also increased significantly our daily trading volume. So definitely is in our agenda. Lawson Winder: Okay. Fantastic. On Borborema, could you just confirm that the recoveries in Q1 '26 to date are now hitting design capacities? And if not, what's left? And sort of in what quarter should we think about that hitting the design recovery rates? Rodrigo Barbosa: Glauber, do you want to answer this, but we are at the design end... Glauber Rosa-Luvizotto: Yes, we are at the design. So it's not an issue. In fact, to run the plant in the capacity that was designed, it hasn't been an issue for us. So the difference in production is mainly related to the grades that we are feeding into this strategy to expand the pit with these new reserves and new cutoffs. Rodrigo Barbosa: So just continue the answer Lawson, that was a good question. The mill is running super well. Actually, we see room in the mill to run even above capacity. CIL tanks is the same. That's why Glauber mentioned that where we have now, although we are already at a nominal capacity, the filters are the bottleneck. Once we do the investment, the filters, then we can go beyond nominal capacity because everything else is running super well. Lawson Winder: Okay. If I could ask about Matupa from both the point of view of CapEx and annual production. So one, you guys have been investing a fair bit in exploration into Matupa. Does that have any implications for what your anticipated annual production rates will be? Like, I mean, at least, for example, at the Investor Day, you highlighted 55,000 ounces a year from that asset. And then conversely, I mean, if that's the case, what are we looking at in terms of a magnitude of potential increase in upfront CapEx for Matupa? Rodrigo Barbosa: Matupa, I think we continue to have this view of 55,000 ounces. We are not changing the nominal capacity of the plant. What we are doing now is invest in exploration to expand the resource and reserves. This project has a resource of 400,000 ounces, slight below in terms of reserves. But with [indiscernible] and with also, we see a significant room to expand the resource and reserves, which then we feel that's the right time to start the construction. And as we did with Almas, we prefer to build this project, prepare the plant to be flexible and expand because we know that we will even continue to expand resource and reserves beyond what we have today, beyond what we will publish in the AIF so that we can then increase the plant. And understanding that if you change too much the design of the plant as of today, even though we might see an opportunity, it's a whole different new environmental license process. So we prefer to respect what is in the license of environmental. And then during the years, talk to the agency and see opportunities to do amendments and then increase gradually the plant. Lawson Winder: Okay. Fantastic. And if I could ask one more question just on Apoena. I mean, that mine continues to impress. You guys are planning to mine much higher grades than we had modeled at that asset in 2026. Are these higher grades now sustainable into 2027? Rodrigo Barbosa: I think, yes, we should reach higher grades by the second semester, and then we'll last towards a couple of years. So it will be maintained. I think we believe that we can put this mine into 50,000, 60,000 ounces of production on the running rate after the second semester of this year, if not go beyond depending on some of other exploration that we are doing at the mine. It's a difficult mine, but full of potential. Operator: Our next question comes from Matheus Moreira with Bradesco. Matheus Moreira: My first question is on Almas. I would like to better understand the rationale behind the production guidance for the mine. I mean, considering the ongoing plant expansion and the fact that the mine is already operating at an annualized run rate above the published guidance, the numbers appear somewhat conservative to us. Are there maybe any operational bottlenecks or specific factors that you have already identified that could justify this more cautious approach? So that's my first question. And my second question on M&As. I would like to hear to explore a little bit more on this topic. Within Aura's capital allocation framework and considering that the company is now operating at a different level of cash generation than in the past, what type of assets in terms of size makes sense for the company today? And if possible, could you comment on geographic preferences? You've already touched on this a little bit earlier. But in the past, you mentioned the potential expansion into North America. Does that still make sense strategically? Rodrigo Barbosa: Thank you. So in Almas, we are operating at 2 million tons, but we will go through expansion and reach 3 million tons by the end of the year. So this is a process that is going to happen during the year. So today, we are still yet below what we expect to be until the end of the year. So that is also reflected on the production. Almas also first year started with a higher grade. So there is lower grades coming in now during this year. We will add higher grades again when we have the underground coming in. So we should expect Almas for the next year after the underground then continue to increase production together with the higher capacity. And if we have positive results on exploration, then we can even expand further to 4 million tonnes, and then we'll see another step up. So Almas, I think you should see that some conservative scenario during this year, but gradually continue to grow while we continue to expand capacity and then access higher grades when the underground mine come online. In terms of projects, I think we won the way to reach to 1 million ounces. I think that's where companies start to become relevant and then also start to get a fair multiple. We know very much how to get to 600,000 ounces. So to go beyond this, we will need a few acquisitions. Of course, as you mentioned, that we are growing and we have a larger balance sheet, and we have a larger also higher production, so that a meaningful -- more meaningful acquisitions should be coming online. But again, the higher the production, the higher the acquisition is the higher also the CapEx. So we will balance the internal rate of returns where is the right size, 80,000, 100,000, 150,000. We saw sometimes even above 150,000, but that will really depend on the return we see and with the angle for Aura to generate value, right? It's Americas, as I mentioned, and you asked about North America. I think it's intuitive to think that down the road, Aura will expand into North America. But yet, we feel that our multiple is too discounted. We believe that in North America, there's always -- probably always be a higher multiple compared to the players in Latin America in general. However, it cannot be that high gap. So we need to narrow this gap. We have a homework to do first to narrow this gap first to then be able to do accretive acquisition and not a dilutive acquisition to our shareholders. But if something shows up that we believe that it is accretive to our shareholders, we will do. We look and we are ready, and that's part of our strategy. Operator: Our next question comes from Tathiane Candini with JPMorgan. Tathiane Candini: I think most of them were already replied. I would just like to explore maybe a little bit two more. The first one, and again, you already explored a little bit of this, but this is regarding the cost of MSG. So I know that like more long term for 2027 is to reach lower cost. I would just like to understand a little bit of the pipeline for this? Like what are the plans for reach those guidance? And if there is like any type of hurdle that you imagine that you can reach? And the second one is regarding the CapEx of Era Dorada, which again, you already explored a little bit, but I'd just like to understand how is the pipeline for getting this approved for what I understood this year. But this is like a 22-month plan. Do you have like deadlines if it's not approved by any type of months, this could like have a little bit of an impact on 2028 production? Just trying to have a little bit more clarity on the months going forward. Rodrigo Barbosa: Okay. So for Era Dorada, we are now analyzing our internal analysis. We did -- we conducted during the last year, over 1,000 hours of dialogue with community leaders and community representatives. We brought some of the leaders also to visit our operations. So there was a very intense work on socializing this project. We moved back to underground, which drove attention from also national authorities that they understood that was a positive move. That's why that the result of this was the license to initiate the groundwork. I think we feel now even more and more confident to go to full production. It's our full construction. And we should expect this decision between first and second quarter this year. That's how we are thinking. And then it's a moving part, right? Tathiane, as you mentioned, 22 months of construction. And depending on the date that we started, it will affect the final production for sure. And the first question you mentioned was -- I forgot. Tathiane Candini: Regarding the MSG cost, just to try to understand like what is the plan to reach the guidance for lower cost by 2027? Rodrigo Barbosa: The plan is already under execution. We know very much how to improve efficiency. We know very much how to decrease the cost. We are now detailing in executing this plan as we speak. As I mentioned, we need to do a significant underground development because the mine today is connected to the plant. So any problem at the mine means that the plant is going to receive the ore. That's why we've been seeing in the last few years, a decrease on the plant production. So it's becoming idle. It has 20%, 30%, 35%, even 40% of idle capacity at the plant because the mine cannot fulfill. So in order to accelerate the production of the mine, we need 1 year of underground development to proper prepare the stopes, proper dual bottom-up approach. We have prepared the mine also to receive the veins are 1, 1.2 meters .They'll be mining at 1.80 at 2 meters. Now we want to mine at an narrow at 1.5, prepare the mine for 1.5, which means lower dilution, higher average grade. So all of those -- all of those strategies already being implemented, but we need time. We need up towards the end of the year to really see that the mine will be prepared to produce at its full capacity. On the hurdle rate, as we mentioned, we believe that we can prepare this for the medium to long term to be able to produce above 80,000 ounces per year at all-in sustaining cash cost of $2,000 or below. Operator: The Q&A section is over. We would like to hand the floor back to Rodrigo Barbosa for the company's final remarks. Rodrigo Barbosa: So again, thank you for the opportunity. I'm super proud, again, to be diligently executing on our strategy, diligently executing on implementing greenfield projects with the Almas on time, on budget, Borborema on time, on budget and a few others now and Era Dorada now prepared to go and hopefully, during the first quarter, second quarter, approved to implement. Also diligent execution on increasing resource and reserves. We just added 670,000 ounces of reserves, one project that's already derisked, already invested the CapEx, already generated cash flows that will give not only an opportunity to increase the NAV, but we'll also be able to increase production, while we continue to invest in exploration, as we mentioned, on Matupa, underground Almas and also Borborema has also potential to significantly increase. So diligently executing also increasing resource and reserves of the company. And third, also diligently executing on acquisitions. We just acquired MSG now closed in December, then -- we also addressed the daily trading volume now trading $100 million per day, while we've been able to pay dividends. And the higher CapEx and the sustaining CapEx we see today, as I mentioned, is not a challenge, it's an opportunity. We increased this because the company is growing. We increased this because we see opportunity to further expand the plant. We increased this because we see an opportunity to buy one asset that has a significant potential to expand capacity in terms of MSG in terms of production and then reduce the cost. Overall, in terms of results, again, super proud. If you take the EBITDA from '23, you doubled to '24, then we doubled again to $25. And if you take the EBITDA of last quarter with the gold price at $4,000, now you use $5,200 plus higher production Borborema plus higher production in MSG on the full quarter, you'll see that we are already on the running rate also lining going towards maybe perhaps even to double or even more during this year. So very much on track and what we promised to the market, delivering results, delivering on resource reserves, delivering on strategic agenda and also strong dividend. So thank you all. And hopefully, down the road, we have a new calls with the new quarter. And then again, between first or second quarter this year, take a look on Era Dorada and see if we feel ready to go to the Board and approve. Operator: Thank you. Our conference is now closed. We thank you for your participation and wish you a nice day.
Operator: Good afternoon. Thank you for joining Romgaz Group Conference Call on the preliminary results for 2025. Following a brief introduction of our speakers, Mr. Razvan Popescu, Chief Executive Officer, will provide an overview of the preliminary results recorded by Romgaz Group in 2025, after which, we will proceed to the Q&A session. Please be advised that this conference is being recorded for internal purposes. On behalf of the company, the following speakers attend this conference. Mr. Razvan Popescu, Chief Executive Officer; Ms. Gabriela Tranbitas, Chief Financial Officer; Mr. Radu Moldovan, Energy Trade Director; and Mr. Ion Foidas, Production Department Director. With that, I will now invite Mr. Razvan Popescu for the opening presentation. Razvan Popescu: Good afternoon, everyone, and thank you for joining our conference call to discuss the preliminary results for 2025, which we published today, and it comprises the key economic and unaudited financial results for the group in the selected period. Also, an overall presentation will be available on our website in the Investors section. I would like take this opportunity to address certain aspects regarding the market context last year with impact on our group's performance. Natural gas consumption in Romania rose by 1.1% last year according to our estimates, with gas imports recording a significant advance to a 30% weight in the national gas consumption. The Romanian Commodities Exchange posted again weak trading liquidity as a result of the current regulation in force, and we estimate that the average wholesale price increased by almost 30% year-on-year. On the Central European Gas Hub, the average monthly reference price also rose around [17%] in 2025 according to the data provided by the NAMR. With respect to the fiscal environment in the gas and energy sector, Romgaz activity were mainly impacted by GEO no. 27, which was effective from April 1, 2022, and subject to subsequent amendments in GEO no. 6 that started in April 2025. We would like to remind the main provision that applied to gas producers last year, regulated gas selling price of RON 120 per megawatt hour for the gas sold to households and supplier of households, heat producers and their suppliers for the production of thermal energy for households and to the transmission operator and gas distributions to a maximum of 75% of the technological consumption. This price level is applied starting from April 2024 and up to the end of March 2026. For the gas sold under regulated prices, payment of the windfall profit taxes is exempt and gas royalties are computing based on these regulated prices. Regarding the operational and financial performance recorded by Romgaz in 2025, we can highlight the following main activities. Natural gas consumption amounted to 4.95 bcm, marginally adjusted by 0.2% year-on-year, favorably within the strategic objective of the natural decline threshold of 2.5%. We achieved this important performance through continuous efforts aiming to consolidate the potential of our onshore production, which included completion of investment work to extend production infrastructure, allowing us to stream into production 6 new wells, specific investment works in active or low flow wells resulting in reactivation of 175 wells that generated a total flow of over 300 million cubic meters continuous rehabilitation project of our main and mature gas reservoirs in order to maximize production and increase the recovery factor. Also, we completed drilling of one new production well, finalized 7 surface facilities while other 23 are in different proprietary stages. We can also highlight that all these measures led to a significant 47% increase of our condensate production to over 54,000 tonnes in 2025 due mostly to higher production in the Caragele field. Regarding the Caragele Deep, works are progressing with the 76 Rosetti well in production test, 54 Damianca well that is being prepared for production test, and 78 Rosetti well in prod -- that is already in production, while other 7 wells are in different stages of drilling preparation. For the last quarter alone, we can mention that gas production amounted to 1.28 bcm, adjusted only by 0.9% from the 1.29 bcm record output that was recorded in Q4 2024 and significantly up by 7.4% compared to the 1.19 bcm that was produced in Q3 2025. We reported total revenues from gas sold of over RON 6.9 billion, marginally adjusted by 0.3%. This was the combined result of a lower average selling price while gas volumes sold increased by 5.5% to 4.82 bcm in 2025 compared to 4.57 bcm in '24. This is based on net volume extracted and sold from our underground storages and lower deliveries to the Iernut power plant. Thus, we hold a substantial position on the Romanian gas market. According to our assessment, Romgaz continued to rank as the leading gas supplier in Romania in the last year, with a significant contribution of 50% in total gas delivery. Also, we are strongly positioned in gas consumption covered from domestically produced gas, holding a substantial share of 71% last year according to our internal estimates. Revenues from storage services also advanced by 10% year-on-year to RON 562 million with injection-related revenues higher by 56% and capacity reservation activities having the largest weight, 55%. We succeeded to increase our revenues from electricity by almost 2% to RON 382 million, while production of our old power plant has expectedly decreased to 750 gigawatt hour in the last year. The Iernut power plant is still contributing to the security of supply in the energy market in Romania. Overall, the group recorded total revenues amounting over RON 8 billion, higher by 1.2% compared to 2024, based mainly on the strong contribution of our upstream segment. Regarding the expenses, the windfall tax recorded a 36% increase year-on-year to RON 767 million, mostly due to higher gas volumes sold at the regulated prices. Gas and UGS royalties adjusted by 6% to RON 559 million. Altogether, the 3 main taxes, windfall tax, royalties and the duty to the energy transition fund decreased by 26% year-on-year, but still represented a significant expense of RON 1.34 billion in 2025, having thus a positive effect on our profitability. Bottom line, we reported a historical annual net profit of RON 3.35 billion, higher by more than 4% compared to the RON 3.21 billion recorded in 2024 and representing the highest annual value ever recorded by the group. All profitability rates were substantial last year, with net profit margin rose to the highest historical annual value of 41.7%. And both EBITDA and EBIT margin continue to be significant at 54.9% and 46.2%, respectively. For the last quarter alone, we can underline a net profit of RON 912 million, 70% higher compared to the quarterly average of the past 3 years and a net profit margin of 46%. Regarding our CapEx, the Romgaz Group invested a consolidated amount of RON 3.86 billion in 2025. Investment in Romgaz Black Sea Limited, which basically is the Neptun Deep, representing RON 2.74 billion from Romgaz alone. And with respect to our flagship offshore project, we can mention that it is currently in the execution phase, in line with our programs and budget and the execution calendar. During 2025, significant milestones of the projects included not only start of the construction works at the microtunnel in Tuzla, but also the achievement of all 4 reservoir targets in the Pelican South field by drilling all the 4 wells that were in the drilling program. Also, it is important to mention that in December 2025, the Romanian government approved Addendum no. 7 to the Concession Agreement for the Neptun Block, extending the exploration phase in Neptun Deep. Anaconda-1 exploration well will be drilled in the deepwater area with the aim to identify, evaluate and exploit further the energy potential of the Black Sea. Another important objective is the combined cycle gas turbine power plant in Iernut, for which the completion rate is around 98% for the overall Turkey project and 90% that was remaining from the last EPC contract. Following the termination of works contract with Duro Felguera as executive of this project on October 13, Romgaz became the general contractor and we are in process to assign the contracts for the essential subcontractors and directly purchase the services and products necessary for the testing and commissioning of the plant. The commissioning of this investment may not exceed December 31, 2026, according to the government decision that was taken at the end of 2025. Another important event was the approval of the company's decarbonization strategy for the 2050 target on October 22 by the Romgaz Board. This strategy was developed in the context of European and national policies aiming to mitigate greenhouse gas emissions. Our net zero trajectory shall be periodically reassessed based on technological progress, availability of funding and the clarity of regulations. I would also like to mention that the second issue of the bonds under the EMTN program, which were oversubscribed 8x on October 28, our new EUR 500 million issue of bonds has a maturity of 6 years and an annual coupon of 4.625%. The success of the second issuance of bonds confirms the confidence of the institutional investors in the company's development strategy. At the end of the presentation, I would like to emphasize the significant performance recorded by the Romgaz stock on the Bucharest Stock Exchange. SNG share price doubled over the last 12 months period, leading to a current market cap of around EUR 9 billion, Romgaz representing the third largest domestic stock and blue chip on the Bucharest Stock Exchange. With this, I would like to close our presentation, and thank you all for your attention. Thank you. Operator: [Operator Instructions] So we have a question from Ms. Daniela Mandru. Unknown Analyst: What I see -- just compared to my estimates, I've seen some large deviation in the income tax expense. I don't know, you recorded some deferred income tax or something in the last quarter? Unknown Executive: For 2025, it's still in -- still valid, an ordinance issued a few years ago, which provides for certain discounts, let's call them, on taxation if equity increases. Considering the increase in equity from 2024 to 2025, the income tax benefited from a 14% decrease. Unknown Analyst: Sorry, can you detail what equity increase? Unknown Executive: So equity in the balance sheet. Unknown Analyst: Equity in the balance sheet. Yes, please. Unknown Executive: Increased from RON 14 million in December 2024 to RON 17 billion in December 2025. Unknown Analyst: And sorry, I don't know what is this regulation -- not regulation, but this exemption referring to. So if this equity increase, you can -- so can you please detail this tax exemption, or what it is? Unknown Executive: Yes. It's based on an emergency ordinance, 153 issued a few years ago, I don't recall the exact year. Just a second. So it was issued in 2020. And it has several discounts. One of them is if equity increases compared to 2020, it benefits from discount of 3%. Then another discount is if equity has an annual increase between 20% and 25%, it benefits from a decrease of 9%. And there's another 2% decrease if... Unknown Analyst: Okay, I understood. I understood the logic behind. But this discount of 3%, 9% is applied to what, to the full year? Unknown Executive: Yes, for the full year. Unknown Analyst: Yes, to the full year, but applied to what? To the normal income tax? Applied to what? Unknown Executive: Yes, the current income tax. Yes. Unknown Analyst: To the current income tax. Okay. And I was not from the very beginning, but can you disclose the quantities sold at kept prices in Q4, please? And what do you expect for 2026 if it's possible? Razvan Popescu: '26, unfortunately, we can't -- we don't have the final ordinance. So the ordinance has not been published. The ordinance not having been published, we do not have the current quantities right now. For the entire year of 2025, around 80% of our entire production was sold at regulated prices -- over 80% was sold at regulated prices. Unknown Analyst: Okay. And now regarding the -- I didn't see the note, but I believe you don't publish them. Regarding the financial cost, and regarding the capitalized interest costs, can you disclose the total interest cost capitalized in the full year or... Unknown Executive: Yes. Just a second. So of the total income -- finance cost of RON 183 million, we capitalized RON 69 million for the full year. Unknown Analyst: RON 69 million? Unknown Executive: Yes. Unknown Analyst: Okay. So please help me a little bit here. I'm not quite familiar with these capitalizations and so on. So when the investment will be fully functional, these costs will be -- all these interest costs will be reflected in the financial results? Unknown Executive: No. It will be included in the value of the investment, and it will be depreciated based on the useful life of the investment. So it will... Unknown Analyst: Yes, it will be as depreciation, yes. Because I see that [ DG, ] they did the same, but all the capitalized interest, they put in the financial results. So I'm just wondering if you will do the same. I don't know the reason why. Okay. But for the first quarter of the year -- of this year, do you know the volumes at the regulated prices, yes? Razvan Popescu: For the first quarter of '26? Unknown Analyst: Yes. Razvan Popescu: Yes, they are the same. So it's around 80%, 81% for the first quarter of 2026. So they are basically the same. Unknown Analyst: It's basically the same compared with the last quarter, with Q1 2025? Razvan Popescu: A bit over 10 tera for the first quarter of '26, it was a little over 10 tera as well for the last quarter of '25. Unknown Analyst: Okay. And regarding the execution of the guarantee, I don't know because I didn't have time to go through all the notes, the report you published. Have you registered them in -- yes? Razvan Popescu: Yes. We registered them. Unknown Executive: Yes, we recorded the amount that was executed around RON 60 million. We still have to recover around RON 20 million. The provider of the guarantee would not say the amount that he owes us. So that amount was not recorded yet. But we are taking action -- legal action against them. Unknown Analyst: So probably, this amount will be recorded. So there are -- you can record the remaining of RON 21 million in the first quarter of this year or later? What is your estimate? Razvan Popescu: It depends what they are going to pay. We cannot estimate right now. Operator: Ms. Irina Railean, we are ready for your questions. Irina Railean: I hope you hear me well. My first question is regarding these changes on the regulated gas market. I mean, the expected change from regulated gas prices to some kind of administrated gas prices. How does this impact Romgaz? I understand you don't have the volumes for this year. But in general, what is the difference for a producer, let's say? And also here related to your supply segment strategy, I mean I see you plan to expand to the supply business? Will you enter also this administrative price scheme? If you could give us more details here? Razvan Popescu: Yes. Thank you for the questions. From our analysis, the impact for the producer is, of course, going to be the [indiscernible] difference, that is going to be assigned to the regulated price. So this is going to be the impact. But of course, it depends right now on the quantities that are going to be allocated because in the past years, we had a fluctuation from 55% up to 100% of our quantities on this ordinance. We expect for it to be published if it's going to be published probably next month, and we'll have the allocation of quantities in order to have a correct calculation and impact on the profitability. Regarding our supply. For us, we've started works on integrated and creating this line of business last year. The team from a commercial, economic, IT has been working around the clock. From a technical perspective, we will be ready to be able to cover the supply for the small household consumer and nonhousehold probably starting from 1st of April. But of course, this is relative compared to the quantities that are going to be allocated because right now, Romgaz is not a supplier to this household. So we do not have a portfolio in order for quantities to be allocated to ourselves. So probably, the bulk of our quantities will be again allocated to the thermal energy producers and to the suppliers of the house. Also, there is another ordinance, again the [indiscernible] ordinance that was published in November that kept our current workforce number and also the spending that we can make and the hiring that we can have to the levels of the end of November. We have a memorandum that is -- currently, we have pushed it to be approved by the government, but this has not happened as such. So at this point in time, we have a couple of unknowns to the supply business. Irina Railean: So basically, you don't know exactly the quantities, but does this prevent you from further trying to develop the supply business? I mean, even though if you have to deliver some of your -- part of your production, so this heating producers and suppliers of households, does this prevent you from like developing further your own portfolio? Razvan Popescu: No, we will develop our portfolio. It depends on how this ordinance will be published for our strategy for the supply business, we'll see how we'll approach, probably the commercial, the small non-household commercial that will be on the free market. We will not stop developing this supply business, but we need to see exactly how we'll draw our strategy, given the quantities that are going to be allocated because, of course, this will impact our pricing power because we are basing the synergies that we have from the production to the supply business and the fact that we are the producer. So basically, the entire supply, our supply business was drawn up from our own internal production. Irina Railean: Okay. So a lower share in this case will be more favorable for Romgaz because -- okay, because you'll have a remaining larger part to support your supply business? Razvan Popescu: Correct. Irina Railean: Okay, okay. And you said you don't have contracts for households, but what was the situation on the smaller commercial or industrial clients? Do you have any discussions there or potential clients for this supply business? Razvan Popescu: We do have even without having this typical supply and integrated supply business, we actually did offer gas to small non-household suppliers that ask for it. So Romgaz somewhat is already in the non-household let's say, business even now. We have the [ fleet, ] and we also have a couple of thousand people in the [ fleet ] that are registered to Romgaz already. So basically, we have a small foothold in the supply business. But in order to make it commercial on a larger scale, we do need available quantities in order to be able to be, let's say, favorable and get the market share in this respect. Irina Railean: Okay. And regarding Azomures, if you can provide us some update if you have in a favorable, let's say, situation, any estimated CapEx besides the acquisition that you will need to allocate if the transaction concludes? And what are generally the scenarios that can materialize this year regarding this acquisition? Razvan Popescu: We are currently in negotiation. We are negotiating the asset purchase agreement with Azomures. And we have made a nonbinding offer on interval price to them and we are expecting for them to come back. We'll see if it will conclude or not. Until then, I cannot give any details regarding CapEx or other investments. Irina Railean: Okay. And regarding Azomures, there were some discussions in the press and I'm not sure if you could provide more transparency here that you provided or the price was mainly the issue here. And as you view the acquisition price lower than the partner. So that's why I'm asking about the scenarios. What if you don't agree on the price, what if you -- or what are the possible solutions or situations or outcomes here? Razvan Popescu: So the possibilities are 2. We either do the acquisition or not. Of course, it is a matter of price. As I stated on Monday, we view Azomures as a distressed asset. We view the issues that the entire petrochemical industry is having in Europe because of the high gas, prices because of the [indiscernible] regulation, because of the CO2 pricing. So our offer was in accordance with this scenario, with the maturity of the asset and of course, with the modeling that we've done on the asset. Romgaz has to view this acquisition also as commitment to an investment for the foreseeable future. So for us, we took everything into account when we made this offer. Operator: We have a question from Laura Simion. What is your production estimate and what volumes will be sold in 2026 at regulated price? Razvan Popescu: Our production estimate for 2026 is keeping our 2.5% decline in production in check. As you've seen for the last 2 years, we've been doing this actively, and we've not lowered our production. So we are hoping to keep it around to 4.9. bcm for 2026, again with the wells that we need to put into production with workovers that we're going to have on our mature fields. At regulated prices, we really don't know what the allocation is going to be. We have the entire quantity sold for Q1, and around 47% of our production is sold to the end of 2026. So it has to be somewhere in the vicinity of around half of our production probably at a regulated price. Operator: Another question from Ms. Laura Simion. What is your estimate for 2026 power production? Razvan Popescu: This is a bit complicated because for our energy business, we are looking to start the -- restart the works in the Iernut power plant. Right now, our old power plant is shut down. We've been having some technical issues with it. So this is going to be very, very volatile to say so. The moment that we'll start testing in the new Iernut power plant, then the old Iernut power plant is not going to be put into production. We had up until 2 weeks ago, the plant was working at full capacity. We'll probably be trying to have it work again for a couple of months. But after that, given the progress in the Iernut side, it's going to be probably stopped. Operator: The next question from Laura Simion. When will you start retail business for gas? Razvan Popescu: As I said, it depends a lot on the quantities that are going to be allocated on the ordinance in 2026. Technically, we want to be ready starting for the 1st of October. So in terms of processes and in terms of technical capability. Operator: Ms. Simion wants to know what will happen with Trident Block after Lukoil retired? Razvan Popescu: So officially, Lukoil has not retired yet. This is mostly a question for the Naryan-Mar. The concession agreement and the exploration phase for Lukoil and for -- at the end of this year. But it is interesting to see if Lukoil will divest and who will be the new investor in Lukoil. Of course, Romgaz will work closely with any company that is trying to develop that block. We have a 12.2% stake there. So right now, what we can do is only wait to see how these things will work out. Operator: Another question from Ms. Simion. Do you estimate that quantities sold at regulated prices in 2026 will be more or less than 2025? Razvan Popescu: For us, it's probably going to be less because we already have quantities sold in 2025. But if you take into account the Q1 quantities, which is basically at over 80%, they could be in the same vicinity of 2025. Operator: And finally, the last question from Ms. Simion for store quantities, will it remain the obligation to be registered at regulated prices after the 1st of April 2026? Unknown Executive: So far, we have -- we do not have gas at regulated prices in our storage facilities. And we do not know what happens with the remainder. Operator: We have a hand raised from user ending in 85, Mr. Tamas Pletser? Tamas Pletser: Yes. Can you hear me? Operator: Yes. Tamas Pletser: Yes. I got two questions. First of all, you mentioned the Lukoil stake in Trident Block. Would Romgaz be interested to acquire Lukoil stake? I think you suggested on your answer that you may be not interested, but I'm just curious what is the reason that you are not interested, if you are not interested? And if you are interested, please explain us why would it be interesting for you? That would be my first question. And my second question would be regarding the Iernut power plant. Last time you said that you would finish the project by yourself. Is this the case right now? Will you make the last part of this investment by yourself? Razvan Popescu: Yes. Thank you for the question. So regarding the Trident block, from the information that we have right now, Lukoil is also selling this asset in a complete deal with its other assets. So it's not for sale separately and it has not been offered for sale for Romgaz, first of all. So they are looking to have a complete sale of their entire asset. This included, but I cannot talk on behalf of them. The Iernut power plant, indeed, Romgaz will act as an EPC. Yesterday, we went into auction for the site management, which is one of the most important contracts. We have companies that have extensive expertise in offering site management in such recovery projects. And for us, this is one of the most important things that a site manager needs to know is to know how to recover such project that they cut some corners in order to put it into production from the companies that have made the bid for the site management. Some of them have seen the site, and they are confident that the plant can be put into production by the end of 2026. Operator: We will proceed now with Mr. Oleg Galbur. Oleg Galbur: Yes. I hope you can hear me well. I have several follow-ups. First of all, can you please disclose the exact volume of gas sold at regulated prices in Q4 '25? And what level of realized gas price has Romgaz recorded in the last quarter of last year? And also since we don't have yet a full report with a full disclosure, it would be very helpful if you could disclose the profit before tax by segment. I mean by upstream, storage and power for the full year or last quarter of '25. And then I have two more general questions. The first one refers to the production outlook. So it is my understanding that for this year, you would rather expect a flat level of gas production. Please correct me if I'm wrong. But otherwise, it would be also interesting to know what is your expectations longer term, let's say, for the next 3 years, according to your strategy. Do you see the possibility to keep the production stable? Would you rather see small production declines? So putting in the longer-term perspective would be very helpful for us to understand which way you see developing? And lastly, on the upstream production costs and here, I refer to all costs excluding taxes, windfall taxes and royalty expenses. So if I look correctly at those expenses -- production costs, sorry, then I calculate a level of RON 320 per 1,000 cubic meters for the full year of '25 and that would imply a 22% increase year-over-year, which would be in line with the cost inflation seen by other oil and gas producers in the region. So first of all, if you could confirm whether I'm not wrong with my calculation. And second of all, it would be helpful to hear your comments about the cost development, whether you see some high cost inflations coming from labor, from services, coming from other angles and whether you have a strategy in mind or already an action plan how to contain this growth or even maybe improve your cost base? So that would be my -- those would be my questions. Razvan Popescu: So regarding the sales in the fourth quarter of 2025, we sold 10.23 tera at regulated prices, ut on an average selling price of RON 134 per megawatt. In the first quarter of 2026, we expect around 10.38 tera to be sold at regulated prices at a bit higher price, around RON 137 from our estimates. Regarding the cost inflation, we do not publish necessarily our production cost. Yes, it can be computed. You are not far from the truth. We have been seeing inflationary pressures on -- especially on the services side. Given the fact that Romgaz's mature fields need heavy investment, heavy investment in compressors, heavy investment in the well workovers, it's quite hard to keep production at this level without sizable investments. That's why we are investing in the Caragele field as well. That's why we are drilling in the Caragele field as well. We've seen inflation also stepping to the -- to our contracts for drilling the rigs. So yes, we have been seeing pressures. And one way that we are trying to mitigate this is through our SIRCOSS branch. Given the fact that we do most of our well workovers with internal sources, it helps us keep the costs in check. So this is why I think we've not seen such a big inflationary pressures on our production cost. Also, we are working in digitalizing these fields. This is one of the main pillars of strategy that we are trying to implement, and we are implementing right now. We are implementing the well production, well production type of analysis, and this will help us with the well workovers and also to be able to have a more clear picture on the production and what we can do to keep it at this level. Looking forward, onshore production in Romania, except for the Caragele field and the Boteni project, there aren't that much prospects that we can work on. This is why we invested in the Neptun Deep. This is why we have gone offshore in order to be able to have this production capacity and in order to keep gas as a transition fuel up to 2050. But our onshore is getting difficult year after year because of our mature fields and the fact that without having these investments, so we are talking around EUR 200 million each year only in keeping production at this level, we will have a much higher decline somewhere in the 8% region in our mature fields under operation. Oleg Galbur: That's extremely helpful. So in other words, just to check if I understood correctly, the strategy is to continue investing into -- if not maintaining, at least lowering the production decline in the next years and I'm talking about the current portfolio, onshore portfolio, not including the new developments. Razvan Popescu: Correct. Correct. This has been kept in check through well workovers around, let's say, 6% of the, let's say, counter decline of production and from new wells around 3%. So this is how we manage to keep the production, the production in check. We are, of course, investing in new drying station. We are investing in new compressor station and also the deep wells that we have been drilling at Caragele in 2025. We had the deepest well ever to be drilled in Romgaz history, 5,056 meters. We are trying to open the Caragele field deep gas reservoirs in order to counter this decline in production that we have from our mature field in the Northwestern Romania. Operator: Ms. Ioana Andrei has sent us some questions. First, a follow-up question on supply business. Do you have a target beyond the next year? Razvan Popescu: Beyond next year, of course, we're putting into production the Neptun Deep and starting the complete liberalization of the price in 2027. We will keep our strategic approach in order to be the supplier, the main supplier in the years to come for the Romanian household and non-household consumer. Operator: The second question from Ms. Andrei, Ioana. Regarding Neptun Deep, since drilling has begun on the second perimeter, can you confirm whether the drilling results from the first perimeter validate the anticipated volumes? Razvan Popescu: Yes. Operator: Please also share whether there is any deviation from initially estimated volumes? Razvan Popescu: I cannot share that as of yet. Operator: Is there a regional trading strategy? Could you please share? Razvan Popescu: Right now, the trading strategy for the Neptun will be devised after we know what we're going to do with the Azomures and how it will and approach our estimates for the supply business and Moldova. But right now, we are more focused on delivering the Neptun Deep with OMV Petrom, the operator. We are supporting the operator in finalizing the drilling and continuing the drilling on the Domino field. It's going to be, let's say, a year, not necessarily, but very intensive year in terms of investment, technical exploration there, and we are trying to be more concentrating on that. Operator: And the third question from Ms. Ioana Andrei regarding power prices. What is the estimate impact of vertical corridor on gas transit, especially considering the influence of LNG? Razvan Popescu: We see the vertical corridor as a complementary source of gas, but as a possibility of diversification in Europe. And if the -- and when the vertical corridor will be operationalized, it will give, let's say, a connection with the TTF with the Henry Hub prices. So for us in this region, it will have a beneficial impact from the perspective of possibility of gas supply and diversification. Operator: Regarding Caragele, what is the current status of the project? Please share something on the volumes? Razvan Popescu: The current status of the project is evolving. As I said, we have drilled 3 deep wells in Caragele. One is already in production, 2 of them are waiting to be finalized in order to be put into production. So basically, the drilling was finalized in Caragele. Around 8% of our entire production stems from this field and 97% of the gas condensate production comes from this field. So yes, we can expect a continued increase in the Caragele fuel production. Operator: The next question, we will take from Ms. Daniela Mandru. Unknown Analyst: Yes. So regarding CapEx, how much did you invest up to now in Neptun Deep? Yes, this is the question, first. And the other one is regarding an update on Iernut. I'm not sure if I know anymore when this new power plant will be commissioned. So I want some clarification, please, on the issue. Razvan Popescu: So for the Neptun, this year, we've invested around RON 2.74 billion. We've invested around a bit less than RON 4 billion last year. And for this year, we anticipate around RON 3.5 billion, around 70% of our entire investment in Neptun is going to be the highest CapEx here in Romgaz's history. For the Iernut power plant, as I said, we went into auction and procurement for the site management. There, after the site management, we are working on 58 different contracts in order to negotiate with subcontractors that have already worked in the site. And we are confident that we're going to start works in the site starting from late March to early April. When these works will start, we'll update the market, and we will continue to update the investors regarding how works are going to go forward and be finalized. Romgaz is going to act as an EPC, and we are the ones that are going to do all the contracting for this power plant. But of course, with the support of well-renowned site manager and with the support of General Electric that is the producer of the equipment in the site. Unknown Analyst: Yes. Here some more clarification. I've read in the newspapers, I don't know if it's true or not. So regarding the grant for this Iernut plant, I read that if you don't commission the plant by June '26, you will be forced to reimburse the grant? This is true? Razvan Popescu: It's always been like that. So it has been prolonged, but it's 31st of December '26. Unknown Analyst: So now it's prolonged to the end of '26? Razvan Popescu: In December '25, it has been prolonged up to the 31st of December '26. So we have almost a full year in order to finalize and put it into production, but at the parameters, it should work. Unknown Analyst: So just to conclude for now, you don't know exactly when this plant will start producing power? Razvan Popescu: No. We need to have everyone back in the site. We need to have General Electric and the subcontractors in the site, and we need to have the site manager to see if we can put it into production as soon as possible. For us, it's very important to start the test as soon as possible and to be able to put it into commercial production by the end of this year. But of course, it has a number of factors that it depends. Operator: So finally, questions from the user with the number ending in 85. Could you please unmute your microphone? Tamas Pletser: I wanted to ask about dividends. I know what you've been communicating in the recent past that before the start of production at Neptun, you don't see dividend levels coming to the historical of about 50%. But still for last year, for 2025, a year with quite good results. How should we think about the dividend payout? Would you see it staying at the previous 2 years' levels? Or do you still see room for some increases? So any comments on this matter would be very helpful. Razvan Popescu: Thank you. Given the fact that we've prioritized the Neptun Deep project, and given the fact that 2026 is the highest CapEx intensive CapEx years from this company's history, we would like to have a balanced approach of the dividend payout. So in our opinion, the dividend payout has to take into consideration the fact that we still have some long way to go until the Neptun Deep will be put into production. We keep our estimates that just after when Neptun Deep will be put into production, the dividend payout will somewhat, again, be raised to, let's say, more historical standards. Operator: Are there any further questions? So if there are no further questions, we would like to conclude today's conference call. For any additional information, please contact our Investor Relations team. And on behalf of Romgaz, thank you for joining us today. Razvan Popescu: Thank you, everyone.
Operator: Hello, everyone, and welcome to YPF Fourth Quarter 2025 and Full Year 2025 Earnings Webcast Presentation. Please note that this call is being recorded. [Operator Instructions] I'd now like to hand the call over to Margarita Chun, YPF's IR Manager. Please go ahead. Margarita Chun: Good morning, ladies and gentlemen. This is Margarita Chun, YPF's IR Manager. Thank you for joining us today in our full year and fourth quarter 2025 earnings call. Before we begin, please consider our cautionary statement on Slide 2. Our remarks today and answers to your questions may include forward-looking statements. which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in accordance with IFRS, but during the presentation, we might discuss some non-IFRS measures such as adjusted EBITDA. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Marin; our Finance VP, Mr. Pedro Kearney; and our Strategy, New Businesses and Controlling VP, Mr. Maximiliano Westen. During the presentation, we will go through the main aspects and events that shape the annual and Q4 results as well as our updated guidance for 2026. And finally, we will open the floor for Q&A session together with our management team. I will now turn the call over to Horacio. Please go ahead. Horacio Marin: Thank you, Margarita, and good morning. I would like to begin by highlighting that 2025 was a transformational and landmark year for the company. First, we delivered exceptional operating performance, consistently beating our own records across all business segments. Second, we almost completed our exit program from mature fields and secure Tier 1 shale blocks in Vaca Muerta. Third, we have taken significant steps forward in the development of the LNG project. Now, let me translate all these milestones into numbers. During 2025, despite the volatile price environment, we achieved a record-high EBITDA of $5 billion. This is the highest EBITDA in the last 10 years and stands as the third largest in the company history, underscoring our resilience and operational discipline despite the 15% contraction in Brent prices. This outstanding outcome was driven by record shale oil production, growing by 42% in December 2025 on an interannual basis. We produced 204,000 barrels per day, exceeding by far the target of 190,000 barrels per day set at the beginning of the year. Progress on the VMOS project was also remarkable, with completion stage above 50% and the first oil delivery anticipated by early 2027. Moreover, the strategic combination of shale oil ramp-up and exit from mature fields allowed us to reduce by 44% our lifting costs in Q4 2025 compared to last year. Including the recent conventional divestment, such as Manantiales Behr and Tierra del Fuego blocks, our lifting cost would have been below $8 per BOE. This consolidate a structural cost reduction, bringing us closer to becoming a pure share player. In 2025, our Vaca Muerta shale reserves significantly expanded by 32%. It now accounts for 88% of our total peak oil reserves, and we increased the reserve replacement ratio to 3.2x and the reserve life to 9 years. Moreover, when looking the full potential of our shale acreage in the long term, including the recent M&A transaction, YPF holds a total well inventory in Vaca Muerta of 16,500 at a 100 stake and 10,300 at ownership. In parallel, we achieved a strong operational efficiency in our midstream and downstream segments. We reached a record-high refinery utilization rate of almost 100% in Q4, growing by 10% internally. This excellence, together with higher efficiency through disciplined cost management and proactive pricing policy, resulted in outstanding adjusted EBITDA margin of $22.6 per barrel. Furthermore, 2025 was a highly active year for YPF with respect to M&A. We executed a significant acquisition, securing 3 world-class blocks in Vaca Muerta, Sierra Chata, La Escalonada, and Rinco de la Ceniza. More recently, in early 2026, we further reinforced our portfolio by swapping assets with Pluspetrol to fully own 3 wet gas block, key for the Argentina LNG project. We also acquired part of Equinor asset in Vaca Muerta in partnership with Vista Energy. For YPF, Vista Energy represent far more than a strategic partner. It's a trusted ally with a shared determination to accelerate Vaca Muerta development. At the same time, we enhanced our portfolio efficiency through targeted investments, including our 50% stake in Profertil and the conventional Manantiales Behr field. These transactions are expected to generate nearly $1 billion in proceeds, for which around $750 million will be collected during December 2025 and 2026. This, in that sense, it fortifies our balance sheet and provides financial flexibility to focus on our core growth business. Turning to Argentina LNG project, I'm proud to highlight the strong commitment of our international founding partners, ENI and XRG. Together with YPF, we formalized this month the foundational structure of the project. Our fully integrated project is supported by one of the most competitive LNG breakeven prices worldwide, positioning YPF as a future leadership in the global LNG market. Finally, in terms of financing during 2025, we successfully raised $3.7 billion of new funding. This proves the company ability to secure multiple financing sources to comply our ambition plan. The company closed the year with a net leverage ratio of 1.9x. All of these outstanding metrics demonstrate the successful execution of our 4x4 Plan. We are committed to becoming a leading shale integrating company and a significant shale exporter in the coming years. Let me walk through the main aspects of a full year and Q4 2025 financial results. Annual revenues totalized $18.4 billion, reflecting a modest decline of 4% compared to the previous year. This was primarily driven by a significant 15% contraction in Brent. This impact was largely mitigated by higher shale production and record-high processing levels. Similarly, Q4 revenues followed the same trend, decreasing 4% year-on-year, while Brent dropped by 15% in the same period. adjusted EBITDA increased by 8% in 2025, with EBITDA margin growing from 24% in 2024 to 27% in 2025. A clear evidence of our ability to drive value in a lower pricing environment. Q4 was outstanding as adjusted EBITDA was nearly $1.3 billion, reaching an impressive 53% internal growth. This remarkable achievement was due to the outstanding performance of our shale operation, which contribute over 70% of our total production mix, coupled with successful execution of our exit program from conventional mature field. As a result, we achieved a substantial reduction in our total upstream lifting costs. Moreover, our midstream and downstream segment also delivered record-breaking operational results, further reinforcing the strength of integration of our business model. A key factor behind this achievement has been the technological transformation that the company started in 2025. To achieve exceptional results, we must change traditional way of working. In that sense, since December 2024, we now rated 7 real-time intelligence centers to provide 24/7 support of both the upstream and downstream operations. Integrating AI with expertise of our technical team, this center optimize decision-making in upstream, refining, and commercial processes. These impressive operational and financial results were achieved through the disciplined execution of our $4.5 billion investment plan, of which approximately 75% was strategically allocated to unconventional operations. In that regard, let me point out that CapEx for 2025 ended around 10% below our original estimate, mostly driven by further operational improvements and lower costs in dollar terms. Finally, we achieved a strong financial performance in Q4, with free cash flow returning to positive territory at $261 million. This improvement was primarily driven by the partial proceeds from the sale of our 50% stake in Profiltein, collecting $200 million, complemented by our solid operational performance. As a result, our net leverage ratio improved to 1.9x, down from 2.1x record in Q3. Finally, I would like to reconfirm that the safety of our workers is our top priority in the development of the activities of the company. During 2025, we delivered substantial progress in our safety indicator, we achieved a frequency rate of 0.09 accidents per million hours worked. This was driven by our integrated safety culture model, along with preventive action, training, and risk control activities. Let me mention that YPF upholds world-class safety standard across all the operations. In the upstream segment, by the end of 2025, YPF record a lost time injury rate of 0.15 per million hours worked, significantly lower than the international benchmark of 0.24 in 2024, as reported by the International Association of Oil and Gas Producers. In the downstream segment, YPF record an exceptional lost time injury rate of 0.06 per million hours worked in 2025, positioning us among the top performers in Solomon's refinery benchmark. I would like to extend my sincere appreciation to all our employees for their strong commitment and steady dedication. We reaffirm our strong commitment to continue improving our safety standards. Now turn the call to Pedro to analyze in detail our 2025 financial results. Pedro Kearney: Thank you, Horacio, and good morning to you all. Now, let me walk through the primary drivers behind the changes in our EBITDA, liquidity position, and free cash flow in 2025 compared to last year. In 2025, adjusted EBITDA increased by $356 million. This achievement was driven by the strategic shift in our production and cost matrix in the upstream business, enhanced by further operational efficiencies, collectively contributing around $900 million. Additionally, records in our refinery protection levels, strict cost discipline, and higher refining crack spreads in our midstream and downstream business contributed to an additional $220 million to our EBITDA growth. At 2024 international price levels, our pro forma adjusted EBITDA would have reached approximately $5.8 billion. The market pricing environment in 2025 shift downwards. The 15% decline reflected in Brent prices resulted in a negative impact of around $800 million, pushing our 2025 adjusted EBITDA to $5 billion. Switching to cash flow, we reported, as expected, a negative free cash flow of $1.8 billion in 2025, primarily due to exceptional and non-recurring effects. This included approximately $550 million related to the acquisition of premier Tier 1 acreage in Vaca Muerta, net of partial proceeds from the divestment of non-core assets, roughly $530 million in one-off exit costs from mature fields, and approximately $160 million in contributions to the infrastructure projects Vaca Muerta Sur, Southern Energy LNG and Oldelval Duplicar, as well as prepayments of dollarized costs for 2026 as part of our proactive hedging strategy. Adjusting for these extraordinary items, free cash flow for the year would have been negative $500 million, largely explained by the negative EBITDA of about $350 million from conventional mature fields, most of which, although formerly part of YPF's asset portfolio, were strategically exited during the year. From a financing perspective, 2025 was a strong year for the company, as we fully met our financial plan by raising $3.7 billion, one of the largest debt financing secured in recent years. This goal was possible through a combination of cross-border trade-related loans and highly competitive issuances in both local and international capital markets at very attractive financing costs. In the international capital markets, we demonstrated our strong market access and credibility by raising $1.6 billion. Early in the year, we issued $1.1 billion through the 2034 bond. In October, we re-tapped our 2031 bond, adding $500 million. More recently, just last month, we re-tapped our 2034 bond, adding $550 million at a yield of 8.1%, the lowest rate secured by the company in international capital markets in the last 9 years. These proceeds were strategically allocated to prepaid at $325 million for the AB loan with CAF, originally executed in 2023, and to fund the partial acquisition of Equinor assets from Vista Energy. On the local capital market front, during 2025, we issued a total of 10 series of local bonds amounting to $1.4 billion, with an average tenure of 2 and a half years and a highly attractive average interest rate of 6.5%. The depth and quality of these issuances underscore the strong demand for YPF securities in the domestic market. Regarding financial and trade-related loans from relationship banks, I would like to highlight the $700 million export-backed loan closed in the fourth quarter. This transaction marked the successful reopening of the syndicated corporate cross-border loan market in Argentina. As of today, we have disbursed only $50 million from this facility, leaving a substantial undrawn commitment of $650 million available before April 2026. Looking ahead to 2026, the company faces maturities totaling approximately $2.1 billion, primarily comprised of $1 billion in local bonds, around $300 million in international bond amortizations, and the remaining in trade-related and financial loans amortizations. Thanks to our robust financial position, supported by diversified funding sources and nearly fully available bank credit lines, YPF is exceptionally well-prepared to meet its debt obligations over the next 12 months. From a liquidity standpoint, by year-end, our cash and short-term investment totaled roughly $1.2 billion. The positive free cash flow of the fourth quarter, combined with increased EBITDA, allow us to close in 2025 with a net leverage ratio of 1.9x. I am now turning to Max to go through some details of our operational performance. Maximiliano Westen: Thank you, Pedro, and good morning to everyone. Let me start by taking a closer look at our upstream performance. During 2025, we achieved sound production growth of 35% in our shale oil output, delivering 165,000 barrels per day. This impressive expansion accelerated in the fourth quarter, with shale oil output averaging 196,000 barrels per day. By December, we surpassed a major milestone, producing over 200,000 barrels per day and exceeding our year-end target by roughly 7%. The outstanding performance of our shale operations more than offset the anticipated decline in conventional oil production, which averaged 90,000 barrels per day in 2025, dropping 32% compared to 2024. The reduction was even more pronounced in the fourth quarter, averaging 68,000 barrels per day, excluding the recently divested assets, primarily the Tierra del Fuego and Manantiales Behr blocks, our pro forma conventional production would have averaged around 35,000 barrels per day by December. Consequently, the combined strategy of divesting conventional fields and scaling up our sale operations, generating significant savings in our average lifting costs, declining 26% to $11.6 per BOE in 2025. During the fourth quarter, lifting costs dropped 44% inter annually to $9.6 per BOE. On a pro forma basis, excluding the recently divested conventional assets, our lifting cost would have been below $8 per BOE. Swimming into our shale oil hub blocks, we maintained best-in-class costs at $4.4 per BOE, virtually unchanged from last year, driven, among other factors, by the implementation of the real-time intelligence center in Neuquen. Turning to natural gas, production averaged 36.2 million cubic meters per day in 2025, reflecting a modest 3% decline versus 2024. This was mainly due to our strategic exit from mature fields, partially offset by a strong 14% increase in shale gas production in 2025. As expected, the fourth quarter was lower sequentially, influenced by seasonality and the continued progress of our divestment strategy. I would like to expand my comments on YPF's leading position in Vaca Muerta by presenting a benchmark analysis conducted by Rystad Energy, a renowned consulting firm specialized in the energy sector. In 2025, YPF's 4 oil blocks in Vaca Muerta delivered the most efficient lifting costs among the leading operators within this shale formation, reaching $4.4 per BOE. Vaca Muerta's total average lifting cost was $5.9 per BOE, and excluding YPF, would have amounted to $6 per BOE. YPF's lifting cost is lower than the Permian Basin, which averaged $4.9 per BOE. This remarkable efficiency underscores 3 key points. First, although still in early stage of development, Vaca Muerta demonstrates exceptional productivity, closing the gap with operational metrics observed in Permian. Second, the YPF asset premium, world-class quality. And third, the efficiency program implemented by YPF in recent years that allowed the company to further reduce its operating costs. Moreover, it is worth highlighting the outstanding quality of Vaca Muerta's source rock, a geological advantage that positions the play among the most competitive and conventional resources globally. The shale oil EUR levels in Vaca Muerta, at its current stage of development, more than double the average of the shale play in the U.S., accumulating roughly 1 million barrels. YPF's shale oil core hub, including La Angostura Sur block, averages a EUR between 1.2 million and 1.5 million barrels. This indicates, first, that Vaca Muerta is a world-class asset with a unique potential that could translate into further competitiveness towards full-scale development. Second, that YPF holds the best acreage within Vaca Muerta with the highest productivity. Regarding well cost, YPF also stands as the most efficient player on the basin, roughly 10% below Vaca Muerta's average. Moreover, YPF achieved the fastest drilling speed in Vaca Muerta. Since 2021, YPF's growth in this area has significantly outperformed its peers. Let me add that last October, YPF reached a record of 540 meters per day in Barril Grande block, adjacent to La Angostura Sur. The well was drilled in 11 days with a lateral length exceeding 3,000 meters. Finally, it is worth noting that even at its current stage, Vaca Muerta's breakeven price remains highly competitive, slightly above Permian's. YPF holds Tier 1 assets that are as competitive as Permian fields, featuring similar breakeven price of approximately $40 per barrel, when assuming 10% cost of capital. This is because YPF's higher well costs are effectively offset by superior productivity and lower lifting costs. Zooming into our hydrocarbon reserves, total P1 reserves under the SEC criteria grew by 17% in 2025. This expansion was mainly driven by a substantial 32% expansion in our Vaca Muerta shale reserves, which now represent 88% of our total proved reserves, partially offset by our divestment program from conventional reserves. In 2025, proved reserve additions totaled 467 million BOE, largely supported by the continuous expansions, discoveries, and improved recovery of our unconventional operations, particularly in La Angostura Sur, La Amarga Chica, Bandurria Sur, and La Calera blocks. These additions were partially offset by higher total hydrocarbon production of 192 million BOEs, downward revision of 58 million BOEs. mainly due to the changes in project strategy and drilling schedules, as well as 29 million BOE reduction explained by M&A transactions. It is worth highlighting that P1 developed reserves increased by 4% in 2025, driven mainly by development activities, new extensions, and discoveries mentioned exceeding annual production levels. Meanwhile, proved undeveloped reserves grew by 34% as new additions offset the volumes developed in the drilling of new wells. Giving the strong ramp-up in shale hydrocarbon production in 2025 and the continued development of our shale reserves, the reserve replacement ratio increased to 3.2x with a reserve life of 9 years. For total P1 reserves, the ratio stood at 2x with a reserve life of 6.7 years. Notably, when excluding conventional assets under our divestment program, the pro forma ratio for our total P1 reserves improved to 2.7x with our reserves life of 8 years. Now, let me share the progress achieved in the exit program from conventional mature fields. To date, 45 blocks out of 48 involved in the Phase 1 of Andes Program have been completed. This considers the reversion of 18 blocks to the provinces in total, including the agreement for 7 blocks with the province of Tierra del Fuego, completed in January this year. Regarding the 16 blocks under phase two of Andes Program, this year, we signed the sale of Manantiales Behr, which we will discuss in more detail later, in 2 blocks in the Malargue cluster. We expect to complete the divestment of the remaining blocks throughout the year. Now, I would like to present an overview on the main M&A transactions executed during 2025 and expected activity for 2026. In 2025, the company completed a series of significant acquisitions, securing 3 world-class blocks for a combined investment of roughly $850 million. Additionally, we acquired the remaining 50% stake in Refinor, among other minor transactions, optimizing fuel supply logistics in the north end of the country. In terms of asset sales in 2025, we also made progress, selling 49% stake in Aguada del Chanar Block and divesting conventional mature fields in YPF Brazil, among other minor transactions. Moving to 2026, let me start highlighting two key acquisitions that we have recently executed to reinforce our leading position in Vaca Muerta. First, in January 2026, we signed a non-cash asset swap agreement with Pluspetrol in Vaca Muerta. YPF transferred to Pluspetrol a 20% stake out of its 45% working interest in two recently acquired blocks from TotalEnergies, La Escalonada and Rincón de la Ceniza. In exchange, Pluspetrol transferred to YPF a 50% stake in three strategic wet gas blocks, key for the development of Argentina LNG project: Meseta Buena Esperanza, Aguada Villanueva, and Las Tacanas. Second, early this month, we acquired a portion of Equinor's assets in Vaca Muerta, increasing our existing ownership in three blocks for nearly $170 million. We added 4.9% stake in Bandurria Sur, one of our core hub blocks, resulting in a total participation of nearly 45%. We added 15% stake in both Bajo del Toro and Bajo del Toro Norte blocks, elevating our working interest in each to 65%. In terms of sales of assets, it is worth mentioning two other relevant transactions executed in the last months. First, last December, we successfully completed the sale of our 50% stake in Profertil for $635 million with attractive valuation. Second, last week, we executed the sale of Manantiales Behr conventional field, the first performing block under the Andes 2 Program, for approximately $410 million and an earn-out of $40 million. Looking ahead, YPF has publicly announced its plan to divest its 70% interest in Metrogas. This transaction is expected to generate significant proceeds during 2026, strengthening YPF's balance sheet and providing the flexibility to advance with our core growth strategy. Now, let me share the progress achieved in terms of operational excellence and technological innovation across our upstream and downstream segments. In the upstream business, particularly within our shale operations during 2025, drilling speed averaged 324 meters per day, while fracking speed averaged 262 stages per set per month, reflecting consecutive record-setting performances. Last January, we further improved those metrics by reaching 378 meters per day and 282 stages per set per month in drilling and fracking speeds, respectively. And if we compare against January 2023, we recorded an incredible growth of 66% and 61%. In addition, on the back of the continuous operational performance, during 2025, we managed to expand our activity efficiently by increasing 26% the oil wells tied in, reaching 250 oil wells on a growth basis, most of them operated by YPF. In the downstream business in 2025, the efficiency program was at the forefront of our decisions and allowed us to reach outstanding results. We inaugurated five real-time intelligence centers to provide operational support 24/7, highlighting the last real-time operations room inaugurated in December in La Plata Refinery, which serves as an integrated central hub for detecting operational deviations, replacing the previous model that monitors each industrial unit independently. In the fourth quarter of 2025, La Plata Refinery was awarded as the Refinery of the Year in Latin America. This is the first time that our refinery won an international award in its 100-year anniversary. The industrial complex also achieved the first quartile performance in multiple Solomon benchmarking KPIs. As a result, in the fourth quarter 2025, we reached record-high processing levels that resulted in a surplus of gasoline and mid-distillates production, enabling YPF to export refined products to neighboring countries and substitute imports. Turning to our midstream and downstream performance in 2025, our processing levels averaged 320,000 barrels per day, marking a 6% internal growth with a strong refinery utilization rate of 95%. In the fourth quarter, as just mentioned, we set a new 15-year record by processing 335,000 barrels per day, achieving a utilization rate of 99%. Last month, we beat our own record again, reaching 352,000 barrels per day, representing a utilization rate of 104%. Turning to domestic sales of gasoline and diesel, dispatch volumes remained robust throughout the year and the fourth quarter, growing internally 3% and 5% respectively, driven by increased demand across all commercial segments. We remained a solid 56% market share, consistent with our historic leadership in the sector, which increases up to 60% when including gasoline and diesel produced by YPF and dispatched through third-party gas stations. In terms of prices, during 2025, local fuel prices remained broadly aligned with international prices, with an average annual discount of only 3%. Moreover, last month, our local fuel prices stood 1% above import parities. Lastly, our midstream and downstream adjusted EBITDA margin remained strong at $17.2 per barrel in 2025. Notably, during the fourth quarter, our margin jumped to $22.6 per barrel on the back of our record processing levels, coupled with higher diesel crack spreads and lower costs. I am now turning back to Horacio for Argentina LNG 2026 guidance and final remarks. Horacio Marin: Thank you, Max. Before we move on to our 2026 guidance, I would like to share updates on the Argentina LNG project. The first phase, known as the Southern Energy or SESA Tolling phase, where YPF holds an equity stake of 25%, aims a total LNG capacity of around 6 million tons per year. In 2025, the project secured FID for the 20-year available charter agreement, covering two floating LNG and will require the construction of a 100% dedicated gas pipeline. Total CapEx will be around $2 billion. It will be partially financed through a project finance structure similar to VMOS financing. Regarding procurement status, main packages for the onshore and offshore infrastructure have already been awarded. The project is expected to start operating between 2027 and 2028. The Argentina LNG phase consider development, design, construction, and operation on a fully integrated LNG condensate and NGL project. It focuses on [ Wenca ] gas block of Vaca Muerta. The infrastructure involved includes a liquefaction capacity of 12 million tons per year through two floating LNG and dedicated gas pipeline. It also consider a dedicated oil pipeline for condensate, wide-grade pipeline for NGLs, and onshore facilities, including fractionation, storage, and port facility. Once operational, the project cash flow will be anchored by long-term offtake agreement with investment-grade counterparties, including the sponsors of the project. The foundational sponsor of the project are YPF, ENI and XRG, an energy investment platform wholly owned by ADNOC. The partnership structure was formalized this month through the signing of a joint development agreement by the three parties. The CapEx of the project, excluding the upstream investment, is estimated to be around $20 billion, including the financial costs. Project leverage is expected to be around 70% of the total cost, consistent with precedent LNG transaction. The project is intended to be financed through non-recourse financing with multiple sources of funding, including ECAs, development banks, and commercial banks as potential anchors. The FID is targeted for 2026. Commercial operation for the first floating LNG unit is expected by 2030, and the second unit by 2031. During 2026, we evaluate the possibility to expand the project for an additional capacity of 7 million tons per year through a third floating LNG vessel, which FID will take place in 2027 or 2028 and COD by 2032. Finally, let me highlight that Argentina LNG holds one of the lowest breakeven price among the leading pre-FID projects globally, as reported by Rystad Energy. This advantage is reinforced by the efficient monetization of natural gas, condensate, and NGLs. In summary, Argentina LNG emerges as a reliable, robust, and flexible alternative worldwide, with all the ingredients to succeed: strong business rationale, coupled with outstanding economics, and a strong support for multiple stakeholders, including the sponsors and the off takers. Finally, I would like to share our updated 2026 outlook. Let's start by addressing our shale oil production plan. For this year, we are targeting production of roughly 215,000 barrels per day, consistent with what we announced in our last Investor Day. This represent more than double 2023 output. Moreover, our year exit rate is expected to be around 250,000 barrels of shale oil per day. In terms of adjusted EBITDA, we estimate a range of $5.8 billion and $6.2 billion based on an average Brent of $63 per barrel. This substantial increase, achieved despite declining international prices, is driven by our strategic shift in the production mix of our upstream operation and continuing efficiency program across the company. We continue to focus on our most profitable shale oil assets while successfully disposing large scale of conventional fields. Compared to 2023, this reflect an increase between 40% and 50%, reaching record high adjusted EBITDA since the beginning of YPF. Switching to our CapEx 2026, we plan to invest between $5.5 billion and $5.8 billion, consistent with our strategy plan disclosed during the Investor Day. Nearly 70% of these funds will be allocated in our shale operation. Regarding the free cash flow, we estimate a neutral to slightly negative position for 2026, as our increased estimated EBITDA and significant proceeds from the M&A transaction previously described will be offset by our CapEx plan, tax payment, and equity contribution to infrastructure projects. As a result, our net levered ratio will push down to the range of 1.6 and 1.7x, below the net levered ratio of 1.9x record as of December of 2025. Before turning to the Q&A section, I would like to once again tell you that I am especially proud to be working in YPF, and all of YPF employee of their commitment and their effort, without whom the remarkable results achieved in 2025 would have been not possible. We are very focused in transforming YPF as one of the best energy companies worldwide, and we continue driving our 4x4 Plan during 2026 with even more passion and conviction. With this, we'll conclude our presentation and open for floor questions. Operator: [Operator Instructions] Your first question comes from the line of Daniel Guardiola of BTG. Daniel Guardiola: I have a couple of questions from my end. One is on production. I saw you just shared a very impressive exit rate for 2026 of 250,000 for shale oil. I wanted to know if you could please provide us with the expected quarterly pace behind these targets, and perhaps more importantly, what are the key operational or infrastructure bottlenecks that could prevent you from achieving these exit rates? That would be my first question on production. My second question is on well productivity. I wanted to know if you can share with us how many years of Tier 1 drilling inventory you guys have at the current development pace that you have? Once you eventually transition or migrate into Q2 acreage, what would be the expected impact on EURs, IP30s, and eventually on IRR? Those would be my two questions. Horacio Marin: This is Horacio. Thank you very much for the questions. The first one about the production. You have to expect during the half of the year that we'll be delivering between 200,000 and 210,000 barrels a day. Not a big increase at all. Why that? Because of the evacuation. That's why YPF was one of the pusher of VMOS, because we need more evacuation for deliver more production. Also, we have a very good numbers in the new ones, in the last, what is La Angostura Sur, and the plant will be finished by the middle of the year. After that, you will see an incremental, a big incremental that we see this year, and we are going to have, at the end, the 250,000 barrels per day. And next year, you will see more incremental, we are talking next year about that, okay? The second one about the merchant acquisition, I have no know if I'm going to answer your question word by word. Well productivity. Okay, the well productivity, if you see in the presentation, we take data from Rystad that compare the benchmark between all the Argentine companies, we see the well productivity for Argentina, the number one in almost all the benchmark is YPF. If you want to see there, you can see their numbers. In the drilling part, you will see that our cost from them is $4,000 per meter. We are very close, our number. What you don't have there, and you will see now, is that we make a very, I would say, very good bidding process, very pushing with the big, big numbers for the international oil service company. We wait after the bidding, or we finish in December, we have reducing unit cost by more than 20% for those tools. During this year, you will see in the first quarter, we have to see reduction in our CapEx per well. Operator: Your next question comes from the line of Bruno Montanari from Morgan Stanley. Bruno Montanari: I have a few questions on my end. First, on the free cash flow generation, can you help us understand, the profile of cash flows throughout the quarters? I'm trying to get a sense of, if there is any concentration, on CapEx or the contributions with Argentina LNG, that could, perhaps make a more concentration of cash burn in any particular quarter, or if there is any particular quarter where there could be positive free cash generation because of the collections from the divestments? That's the first question. The second question, quick one. On your free cash flow outlook for the year, do you consider the sale of Metrogas or only the transactions that are already closed? If I could add a third one, can you comment on what your current drilling completion cost is for the shale hub? Horacio Marin: Thank you, Bruno, for your question. Number 3, I think I just answered before, okay? I pass there, okay. With number -- with the -- you talk about the LNG. The LNG, we've no big investment this year. We are focused this year for the FID of the 12 million ton per year. I mean, it's not the material for any of the companies this year. It's, you don't have to expect a big investment in LNG for 2026. Regarding CapEx, and you say any contribution, I think it will be, we are going to increase. At the end of the year, we have to increase to between 4 to 5 rigs. In the second part of the year, you will see more CapEx. That's why we see that our guidance for this year is more CapEx than previous this year, even though we are increasing a lot our efficiency in all aspects of the company. Regarding what you want to see -- the other you say about Metrogas, yes, we are now in the strip. We are in the finishing with the government that we will get the extension. After the extension, that is very near. I don't know, it's in a month or so. You will see that we are going to sell this year Metrogas. You ask also about how we get the cash flow positive, so I pass to Pedro, that he has all the figures in his mind, okay? Pedro, your turn. Pedro Kearney: Bruno. Just to put this annual free cash flow position for 2026, let me highlight, assuming that we are going to get an annual EBITDA of $6 billion. Assuming -- can you hear me correctly? Bruno Montanari: Yes. Yes, that's good. Pedro Kearney: Okay, great. How are the math behind this neutral to slightly negative free cash flow position that we are forecasting for 2026? Assuming an EBITDA of approximately $6 billion, a CapEx of $5.7 billion, then interest payment of approximately $800 million, taxes of approximately $200 million, and the contributions to the infrastructure project, as you mentioned, should range on a $300 million, including VMOS, SESA, and a potential also expansion on the other system. That puts you -- and adding some extra costs from material fields and working capital, that puts you in a negative free cash flow position of between $1.2 billion to $1 billion. That will be offset by the collections from the M&A. I'm talking about the whole year, the M&A activity that we started at the beginning of the year, and we expect to continue along the year with the Metrogas sale, as Horacio mentioned. That puts you in a neutral free cash flow position, assuming that the remaining M&A activity, in particular the Metrogas sale, will take place during the year. Operator: Question comes from the line of Guilherme Martins of Goldman Sachs. Guilherme Costa Martins: I have a couple of ones from my side. The first one is on the ongoing investment of conventional assets under this project, right? I understand the company plans to be 100% exposed to shale oil. Could you please provide an update on when should we see this milestone being achieved? How should we think in terms of evolution of conventional production for the next two quarters? My second question is regarding lifting costs. I understand there was some non-recurring events in 4Q, some maintenance in shale that impacted the number for the quarter. How should we think in terms of evolution of lifting costs for the next two quarters as well? Horacio Marin: First question, I didn't understand the question. That's why let me ask in Spanish. [Foreign Language] Okay, okay. I would say personal goal. My personal goal is at the end of the year, not to have any production of conventionals, okay? But, so far, we have very few. We have only in Mendoza, but also we are looking to try to get out very quickly. We have only gas in the north of Argentina, that is not operating part of that, and it's always positive cash out there. That is not marginal, but we want to be pure shale company. Now you will see that it will be during this year, the lifting cost is going down, not only because we are out of conventional, but also because we are improving the production of shale, and also because we are focused a lot in productivity. We think that we will have, at the end of the year, in order of total cost of YPF in order of $7 per barrel. I don't know if it's okay what I answer for your question? Are you seeing that I need to go further? Guilherme Costa Martins: No, thanks so much. Operator: Your next question comes from the line of Andres Cardona of Citigroup. Andres Cardona: I have a couple of questions. The first one is in the reserves report. If you could help us to understand how many drilling locations are certified there, if you could put in the context of the total drilling inventory that the company has. The second one is, the review now includes upstream on the benefits. How does this change your, like, desire to develop projects that maybe were on hold because of the economy? This is a matter of the CapEx capacity that you may need to keep those projects on hold for the need to long-term development. Horacio Marin: Okay. First question. In the presentation, you saw [ 16,300 ] location. That is gross, and it's 10, it's gross, and it's 10,000, the net. The one that you have in the reserve, would be the official in for the SEC, is 5% of the location that you already mentioned. We have plenty of reserves. Now are no reserves for the SEC, for the rule, because it's a rule, not the physical way of calculating the reserve. You will see year by year, that as we are developing, that the P1 is, might be increasing a lot comparing with any company because we have a portfolio that is very huge for Vaca Muerta. In the part of RIGI, from my point of view, I think it's a very, very good decision as a government for all the industry, that it will help for sure to develop the full Vaca Muerta for all the industry. We think that it's a positive decision, and we are analyzing, and we are now because of the RIGI, we are looking at how to develop all Vaca Muerta for YPF in the best way for making value for shareholders. That is the reason why next year in April, we are going to go to New York to explain the full development of YPF from 2026 forward. Okay? Operator: Our next question comes from the line of Nicolas Barros of Bank of America. Nicolas Barros: So just one question here from our side, on your LNG project, right? Given the recent news flow, what are your expectations on bringing a new partner to join the project? Horacio Marin: Now, you know that we have a binding signature between our founder partners, that what they are is ENI, XRG from -- and from the subsidy from ADNOC and YPF. We are analyzing the interest of a 4 partner in this moment, but it's not like it's necessary, the 4 partner, to develop the project. With the 3, we can develop all the projects for the 12 million tons per year size. Okay? That is the answer. Operator: Your next question comes from the line of George Gasztowtt of Latin Securities. George Gasztowtt: I was wondering on the refining side, how you're seeing the refining margin coming so far this year after an impressive quarter. I know that local prices at the pump and global fuel prices have remained attractive, but obviously, Brent has firmed up towards the sort of latter half of the quarter. Are you seeing your cracks hold or starting to compress? Horacio Marin: We have an excellent price policy that we are following, I don't know, it's all around the world also, that we can see all the price of any pump of any gas station in real time. If the spread change, okay, if they reduce, I have to reduce the price. If they increase, I have to increase. If the price of oil go up, I have to go up. If they go down, I have to go down. That is how we manage the price in YPF. The second one is with RIGI attention? George Gasztowtt: No. That's it. Operator: The next question comes from the line of Matias Cattaruzzi of Adcap Securities. Matias Cattaruzzi: First, can you break down the upcoming LNG and infrastructure commitments for 2027 and '28? And then I have another question about sensitivities. But if you want to reply first..... Horacio Marin: Another question or not? On the second question. Matias Cattaruzzi: Okay, the second question is, with Brent at $70 per barrel and fair break-evens at $45, for YPF, what would be the elasticity going forward? Do we take into account the investor day that YPF did? If the production plan can change if these prices maintain over time? Horacio Marin: Okay. The LNG this year, I say, is not material, okay? Really, I prefer to say not material because I have a commitment with all the partners now. I have not to say what is not public, okay? It's not material for any of the 3 companies. For '28, if we get the FID, what is our goal? Our goal during this year, it will be more important, it will be more material, that we will explain in really next year, I don't know, it's April or March in New York. I will explain in detail, very good detail, so there you can get all the numbers, okay? Our goal for all the 3 partners today is to get the FID this year. We have to start after to building all the infrastructure for the LNG to be in 4 years, everything done, okay? The second one, you say the, our break even $45. What is our specific brand? I don't understand what you mean. Matias Cattaruzzi: [indiscernible]. Horacio Marin: Okay, if this break even to $45, we, I think we are going to have another war. There will be no LNG in the life. It would be -- I think it's another war. I don't expect that, but if that happen, this year, why we accelerate going out from the conventional, the more, I would say, more conventional, no, the marginal field, is we prepare for. If the analyst was right that the price was going to be down this year, we prepare not to have problem for the CapEx for this year, are going up, because after this couple of years, YPF will be so strong that you will see in the future. But if Go to $45, for sure, even our pre-break-even price is $45 this year, we have no problem. For next year, we have to change because, even though we are profitable, we don't have the capital unless you give the capital for us. For sure, we will change. Okay? Matias Cattaruzzi: Okay. And if it goes to $70, $75, do you plan on accelerating CapEx or? Horacio Marin: This -- today, this year, no, because we have to finish VMOS, we have to increase the evacuation, okay? As soon as we have the evacuation, if we can accelerate, it's my goal to be as quickly as possible. Remember that I want to be out of YPF in '31. So I have to deliver everything to YPF till '31. That is my goal. Operator: We don't have any further questions. I'd now like to hand the call back to Horacio Marin for final remarks. Horacio Marin: Okay. Thank you very much for all your questions. Thank you very much for all this year to be cooperative and ask questions that are good and challenging for us. I can tell you that I see the figures of the company in more detail than you can see, almost in all the figures, and I see this company is doing very well. Our thing is now the strength of the current YPF is amazing. I will see to make big value for all the shareholders, is our goal for all our team. We are very proud every day working in YPF, delivering our 4x4, and we are very exciting and very proud, all of us, that we are delivering what we say at the beginning of 2024. For you, that they are analysts and for all the investors, that we are going to work very hard to make Argentina exporting more than $30 billion in 2031, and deliver a lot of value for all shareholders of YPF. Thank you very much. Operator: Thank you for attending today's call. You may now disconnect. Goodbye.
Operator: Good morning, and welcome to the disclosures. Before starting, I would like to remind you that once the presentation is over, and as usual, we will move on to the Q&A session. [Operator Instructions] So we're going to start with the presentation. We have Mikel Barandiaran, the CEO of Dominion; and Roberto Tobillas, the Director General; and Patricia Berjon, who's the Director for Corporate Development. Unknown Executive: Well, good morning, everybody, and many thanks for attending this call for 2025, and many thanks for being so patient, too, because we are starting somewhat later because of a technical issue. So many, many thanks, many thanks for waiting. But before talking about the figures of the year and to understand how this evolution has been in the different business areas, I think that what we should do is mention how the year 2025 has evolved and also refer to the many events that have happened at the global level that have had a direct impact on the company's evolution. And I think that compared to previous years, geopolitics has now become an ingredient that we have to take into account because we are facing a context where what is improbable has become something possible. And this global paradigmatic shift also includes other things like elections in those countries in which we have a significant presence like in Chile and the paradox that still exists in France where it's difficult to carry out structural reforms. But as regards to macroeconomic events, the most relevant ones have focused on the tariff war that was kicked off in April by the North American government and the effect that this has had for global trade. But although this has not affected the company directly, it has done so indirectly because it has affected the decision-making of some of our customers or different economic agents. And another consequence, another relevant consequence is the strong depreciation of the North American dollar, which has produced significant exchange rate differences and conversion differences in the figures of this year. And what this proves what we already observed since we presented our current strategic plan or our most recent plan, and it shows that there's more uncertainty, which is not disappearing. It's only increasing. But as regards to the strategic plan, this fiscal year of 2025 has been a year in which we have consolidated the transformation that we initiated in the previous fiscal years, and we materialized many of the objectives that we had set ourselves within the pillars of recurrence, simplification and sustainability, which are the 3 fundamental pillars of the plan. So in the year 2025, we initiated the new reporting where the businesses and environmental activities for the industry have their own strategic area structure on the Global Dominion environment. And the creation of these 2 major areas, Global Dominion Environment and the rest of the businesses under Global Dominion Tech Energy want to simplify and regroup the activities in such a way that it's easier to understand the company and also be able to value its elements. And this also means that we can work on different options to develop the strategic area of GDE, where the company has put its focus on organic and inorganic growth, which is the end result of the potential that we can see nowadays where the buildup opportunities are numerous and where the optimization of markets by geographies and activities is a fact. This process has already been addressed in the second part of 2025 with several acquisitions of companies and infrastructures, and we hope that we will add more in the short and medium term. And at the same time that we are developing greenfields in different strategic locations like the case of Tarragona and the United Arab Emirates. And finally, and as regards to the simplification process, we already made the most relevant divestitures of activities in previous fiscal years. And in the month of July, we carried out the divestment of the PV facilities we had in the Dominican Republic that has improved the balance sheet. And we also divested our activities in France where the possibilities of growth were below our objectives. And this divestment doesn't have any impact on the year's figures because this was as of December 31, but in any case, it's going to change things in 2026. But apart from the qualitative improvements, if we were to have to underscore the figures of the year, well, we are growing organically by 4% and we are doing so because both GDE as well as GDP services, in other words, the recurrent areas of the company are growing above the guidance. They're growing at levels of 6%. And this means that this year, the projects have not contributed as much as in other previous years. And we also have to underscore that the simplification of nonstrategic activities is improving our profitability. It's growing and our EBITDA over sales margin is 13.7%, which is a maximum figure for the company, a historic maximum figure. Thirdly, the depreciation of the dollar affects the balance sheet as well as our net profits and this has a one-off effect because of the correction of the divested assets in the Dominican Republic. And this one-off is EUR 18.5 million. And without that correction, our net profits would have been 10% higher compared to the figure reported in 2024. But an important thing is a strong reduction in the net financial debt, which at the end of the fiscal year is EUR 137 million, and this is 25% lower than the figure reported in '24 and 35% -- sorry, and 34% lower than the figure we saw in the first half of the year. So that means that the leverage ratio is 0.9x EBITDA. But before talking about the figures in detail, I would like to remind you that the figures for 2024 have been pro forma to be able to compare identical parameters because the divestitures are significant. And we have applied a pro forma formula. So in other words, these divestments, it's EUR 134 million and EUR 7.5 million in and EUR 5.2 million in net profits. So we are going to compare this with this figure with this pro forma figure that gives us a real snapshot of what this looks like. We've closed the year with a business figure of EUR 1,045 million, which means that an organic growth of sales of 4% with lots of inorganic growth and also growth of ForEx because ForEx has taken off 2% and inorganic growth, 11%. And although there's been a slowdown of projects whose causes that I will be describing later on in the information divided by segments. And as I said, we are growing at a very good speed over in -- especially in activities, the recurrence of GDE and GDT services and the margins are growing and EBITDA has reached a maximum figure of 13.7% of the sales, which shows that this simplification has been very handy with the divestitures of those activities that had lower margins, and we focused much more on activities and businesses that have much more profitability than are related to the environmental world. And the results of 2025, some of them stand below EBITDA, and it's important to detail this and the most important things would be a progressive reduction of financial expenses that finishes with a reduction of 8%, another EUR 2.5 million less in absolute terms. And this reduction came from the reduction of interest rates, which we expect will continue in the next quarters, motivated by 2 factors because there's been a reduction of the financial debt in our balance sheet and the normalization of the interest rates, especially in the United States, where the company also has debt denominated in dollars, interrupted operations. And well, we have the relative figures for the Cerritos wind farm and losses have been reduced by EUR 3 million compared to 2024. And this reduction is mainly due to a reduction of financial expenses associated with the funding of the wind farm and with the commissioning of it, which would generate income. And this commissioning of the wind farm was one of the necessary conditions to carry out the divestment in the infrastructure, which started in the second half of 2025. And right now, we are working on the negotiation of a PPA with different companies so that we can maximize the value of this infrastructure. And finally, this correction that has been brought about by the depreciation of the North American dollar in the assets of the Dominican Republic represent an extraordinary effect of EUR 18.5 million. So the attributable net profit is EUR 10.2 million without taking into account that one-off of EUR 18.5 million. So the figure would be EUR 28.7 million, which compared to 2024, it's a recurrent profit that is 10% higher. But let's now review -- let's review each one of the segments, each one of the business segments, starting off with Global Dominion Environment. And this segment has a turnover of EUR 472 million in the fiscal year, which is equivalent to an organic growth of 5.9%, which is nearly 6% that we mentioned before, a percentage that stands above the guidance of the strategic plan. And so this, we have to add positive in organic growth totaling 1.1% as a consequence of these acquisitions that we announced in Q3. In other words, we're talking about Ecogestion de Residuos and UREC, which is a recovery unit for water in Cartagena, which is in the area of circular economy and the German company, ZCR that operates in the area of decarbonization. But sales have had a negative impact on ForEx of about minus 3% and this area has reached a contribution margin of 10.3% of sales, which is somewhat higher compared to the figure reported in the previous fiscal year. And as mentioned on other occasions, within this area, there are different activities with very different margins. And we have those margins of circular economy that are higher than the rest. And right now, the circular economy represents 25% in the area of GDE. So as the weight of circular economy grows, the objective would be that this should reach something like 50-50, and then the margins will carry on growing. Regarding the total figures of the company, this segment, GDE accounts for 45% of our turnover and 28% of the total margin of the company. So -- and in relation to what we've already said about the strategy of the company in this area, we are working on a relevant pipeline with lots of acquisition possibilities, and we're looking for new capacities, new capabilities and a new position so that GDE can become a European reference in terms of environmental services and infrastructures. And not only that, we also have the organic development of this area, which is very significant. And I have to underscore that as regards to the circular economy, we're signing new contracts for the recovery of hydrocarbons and both in Spain and Latin America, but especially in Chile and Peru, where this activity -- where this automatic cleaning activity is a new development, and it's something that only we do and where we are consolidating our presence, and this is becoming a recurrent activity. As regards to decarbonization, we're still signing new contracts with existing and new customers. And we've signed the first thermal optimization contract in the United States. So we're opening up this market to this activity, and this has an enormous potential. Let's move on now to Global Dominion Tech Energy. And here, we explain the 2 segments, GDT Services and GDT projects. On the one hand, GDT Services closes the fiscal year with a business figure of EUR 460 million, which is organic growth of 5.8%. And this segment is what actually has the divestitures -- the divestments are focused on this segment, and they subtract 23% of the turnover, and we have to add that ForEx is subtracting 2%. So this year, anything that is related to this area is affecting us in other areas, too. And the GDT Services segment accounts for 44% of the total sales. But if we were to add this segment to GDE, we'd be talking about 90% of the company's turnover. And these segments are recurrent, as I said before. So therefore, we have achieved this objective, this recurrency objective in the plan that is exceeding 60% of our total and also 60% of the contribution margin related to recurrent activities. And these recurrent activities are the ones that have grown organically above the guidance. So this gives us lots of visibility in terms of turnover and in terms of future cash flow generation. So we have the margin -- the contribution margin in the segment that reached 19.7% over sales. And as regards to the total figure of the company, GDT Services accounts for 53% of the company's contribution margin. Finally, GDT Projects closes the fiscal year with a figure of EUR 113 million, which is 14% lower than what we reported a year ago. And as mentioned, not only in this period of time, but this behavior has to do with the temporary slowdown in the execution of projects. And this is a consequence of the situation of geopolitical uncertainty that we're facing and also because there's been a change. There's been a change of strategies in renewable projects where we do not execute anything until we incorporate a financial partner. So we want to have a greater financial discipline. So this slower rhythm of execution does not represent the loss of any projects or the collapse of any projects. So our pipeline is still strong and will eventually become income for us. And on the closing date of the fiscal year, the pipeline is EUR 413 million, which I think is well more than 2 years of project execution. The contribution margin now reaches 28.5% of sales in the year. And in Q4, the percentage has been higher, much higher than the average, and this can be explained by the reversal of some provisions because of costs that we have not incurred in a project that has already finished. So we made an adjustment and the adjustment was positive, and it's the transmission line or transport lines in Angola. As regards to the total figures of the company, GDT projects accounts for 11% over sales and 30% of the contribution margin. So once -- now that we've taken a look at the P&L, both globally and by segments, let's move on now to the main movements of the balance sheet. With regard to fixed assets, we have -- they have remained in line because this has coincided with the amortization of the CapEx of the year and also with the changes of perimeter. And there have been changes in the infrastructural assets where this reduction of nearly EUR 62 million comes from divesting in the photovoltaic assets in the Dominican Republic. The variation of the operational net circulating capital -- working capital is -- represents a net investment of EUR 250 million and there's also variation in the rate of exchange and elimination of the debt positions associated to renewable assets in the Dominican Republic. With regards to financial debt, well, it now stands at EUR 136.6 million, which means that it's a reduction of 25% compared to December of 2024 and 34% compared to the last debt figure reported in June 2025. And this reduction has been brought about by the generation of operating cash flow in the year and also because we've collected EUR 70.3 million because this operation was signed in dollars and in euros, it means that we'll be collecting EUR 70.3 million for the divestment of the wind farms in the Dominican Republic. So that means that the leverage of the company is equivalent to 0.9x EBITDA. So in other words, it's 0.9x for this fiscal year. So this generation of operating cash flow was EUR 71.7 million. So that means 5.4% higher compared to the operating cash flow that we generated in 2024. And of course, in 2024, we generated EUR 76 million in cash flow, but we have to discount a number of activities. So the figure for comparative purposes is EUR 78 million. Cash generation has been used to pay an earn-out totaling EUR 1.2 million that corresponds to the acquisition of the Gesthidro company in 2023 and also for the payment of dividends to the shareholders were EUR 50 million in July as well as the minority shareholders, EUR 1.9 million and the investment of C&O related to the divestment in the Dominican Republic and EUR 6.3 million that correspond to interrupted operations. In terms of CapEx, it has to be underscored that in addition to the EUR 20.1 million of maintenance CapEx, which is a figure that remains stable year-on-year, and we've even managed to optimize our levels, we have destined EUR 37 million to the expansion of different activities, among which we have the renting business for mobile devices, the development of renewable infrastructures and greenfields in the area of circular economy in Fujairah and in Tarragona. So as a conclusion of these results in this year, we have achieved the targets established for the fiscal year. So this is thanks to the transformation we've carried out with a very positive evolution, and we have materialized many actions that were geared towards the simplification exercise established in the plan. And we've done so within the context that is pretty turbulent too, with lots of complications. So therefore, we have reached this final year of the strategic plan with most of the changes made and decisions taken in order to carry on progressing in our focus on the environmental world through Global Dominion environment. And we also confirm that in 2026, we will be presenting a new strategic plan where we will lay down the foundations of Dominion of the future and where each strategic area will play a very important role. And before finishing, I would like to remind you that the dividend policy establishes a payment of 1/3 of the attributable net profit. But even so, the Board is going to suggest or propose to the AGM that we pay a much higher figure, much more than the EUR 3 million that would result from applying that policy. And this is so that we can preserve the remuneration to the shareholders. So we will suggest a dividend of EUR 8 million in 2026, which is equivalent to about 50% of the net profit of the continued activities, in other words, without taking into account those activities that were interrupted. And I would also like to remind you about another operation in the area of our shareholder composition, which was done about 1 month ago with the departure of Mahindra. Mahindra owned 4.16% of our shares. And the relevant thing in this case is that this figure, 4.16% has been acquired by the main company shareholders that is by the biggest shareholder we have as well as by the Chairman and the CEO by the company, therefore, increasing their possibilities. So I would like to thank you for your attention, and we can now move on to your questions. So you can either write them in or you can raise your hand on the screen -- zoom screen. Thank you very much for your attention. Unknown Executive: Okay. Well, let's start off with the questions then. [Operator Instructions] So let's start off with the Q&A session and give the floor to the people that have raised their hand. And please make sure that microphone is muted. Firstly, we have Carlos Javier Trevino from Group of Santander. Carlos Javier Treviño Peinador: I've got a couple of questions. Could you please give us an indication of the levels of growth that you expect for 2026? And could you perhaps give us some reference divided by businesses? That would be very grateful. And the second question is when do you think that growth in project can be reactivated because the 2 quarters have been pretty weak. And I would like to ask you specifically about the situation of the construction of the wind farms in Italy. When you signed an agreement in January last year, you spoke about 2 wind farms that would be built towards the middle of the year. And I want to ask you about that. And then could you please explain the reclassification that you've done with GDT services? And what kind of contracts have you got there? Could you please explain the nature of what's happened there? Unknown Executive: Yes, as regards to the growth guidance for 2026, we are continuing with the current strategic plan. And therefore, we have to be over and above that figure of 5%. And that's what we have in our forecast, too. So we have to grow above that figure of 5%. And then you were asking about the issue of wind farms in Italy. Well, the first 4 projects that we had, we had an agreement with the partner. Well, these are already underway. And we're now seeing what kind of new project we could do. We think that it could be another 4 or 5 projects that could be incorporated once again with this partner with IPT. We'd carry out another search. But in any case, so that we can build these projects based on the fact that we have already identified the majority buyer from 70% to 80% up to 100% even, and this is what we have in Italy. And then -- as regards to the reclassification issue, well, that's a very minor issue. Well, yes, it's -- let's say, that this has to do with the quarterly aspect because this is something that I think that you do perfectly well because we have an activity in which we provide logistics services and these logistics services have to be recognized as an income based on added value. And this doesn't have to do with the logistics business, but it has to do with the added value associated with our logistics services. And in this regard, we've had some accounting entries that came from previous quarters that we've had to reclassify and adjust. But in any case, this is an accounting system. Well, as you can see, the figure for the year is the same one, but it's basically a focus between the third and the fourth quarters. Carlos Javier Treviño Peinador: And when do you think that project growth can be reactivated? And when do you think you'll be going back to normal rates again, normal rates of growth? Unknown Executive: Well, Carlos, the truth is it's very difficult to forecast anything because they are currently involved in public tenders. And you know that these projects are binary. But this year, we have good expectations. And I think that we'll be carrying out a project in Chile. And I think that green after divesting in the Dominican Republic will produce the development of new projects in Latin America. Yes, I would say, in the Dominican Republic, where we've identified the partner, and it's basically the 2 main pension plans of the company -- of the country, and we have the right partner. We have the projects. So well, the -- there was -- 7 or 10 days ago, there was a PV tendering process with storage and we expected this for August or September last year, but this has been postponed 5 or 6 months. And the process -- well, towards the end of April, that's when we'll know what's going on. I think that the prospects are very good, and we will have a very significant reactivation as from the second or third quarter in relation to Dominican projects. We -- in Italy, as I say, business as usual. And in Spain, we have some differences that to the extent that they can become self-consumption things, we could have a minor pipeline too to construct and to execute. Unknown Executive: Let's give the floor to David Lopez from [ JB ] Capital. David Sanchez: I have a question on the growth CapEx because this year, you've invested EUR 37 million in expansion CapEx. But could you please give me some more details on what activities are involved? And especially the level of recurrence, what level of investment or expansion should we consider for 2026 because the levels for this year, the levels were very similar compared to what we saw in 2024. Unknown Executive: Well, yes, in that growth figure or CapEx figure, we have the CapEx that is related to the renting of mobile devices, and that would be well just over 1/3 of that total CapEx of EUR 37 million. And then we have the developments that are taking place in the area of renewables. We have developments in Italy, in the Dominican Republic and which, as you know, we've invested part in that development so that we can then allow our partners to join and then carry out the conversion of the EPC where you allocate much more capital. And we do this in the minority manner by -- well, by the arrival of the partner, we've recovered most of what we spent on developments. And then we have what we have invested in the greenfields in the GDE greenfield in the area of circular economy. And we'd be talking right now about something like, well, in Tarragona, where we've invested in the purchase of land in Fujairah, where we are also going to create a MARPOL plant. In other words, a circular economy facility, whatever is for MARPOL. It has to do with sea pollution. So this is going to focus on the circular economy applicable to polluted water, seawater. And these are the 3 chapters that is devices, renewables and GDE. David Sanchez: And what about 2026? What level of CapEx and expansion should we consider? Unknown Executive: Well, I think that lower as regards to the development of renewables because they are much more mature. And then what we are starting to see now are greenfields that have been better identified in the case of GDE. So I don't know. I think that perhaps and perhaps with a different kind of distribution, we'd be able to reach those levels, although it's very difficult to forecast anything like that straight of the cup. So yes, but as Robert said, it will be a different kind of distribution where GDE would be more present. Unknown Executive: Okay. We're now going to review the questions that have to be answered from the chat. And if you want to send in any more questions, it would be the time to do so before finishing. Let's start off with Luis Padron. He's already asked several things. But anyway, when do we expect to present the new strategic plan? That would be the first one. Why are we reducing the dividend when there's a significant improvement of our debt? And the final one is that would you be considering a buyback of shares. And that's why the dividend has been reduced. Unknown Executive: Well, as regards to the presentation of the strategic plan in the second half of the year, well, after the summer, we'll give you the specific date, we would like to present that on the Capital Markets Day, which is when we'll be able to analyze the different issues in greater depth. And then as regards to the dividend, as you point out quite rightly, I think that there's an issue here, like Patricia pointed out, that has to do with net profits without bearing in mind the interrupted operations, we've increased this up to 50%. And compared to previous year, previous years, cash generation has been significant and the levels of net debt have been reduced, and we're comfortable underneath 1x EBITDA. But I think that on our road map, we have attractive investment ideas. And as Patricia pointed out, we've tried to compensate things. And we've tried to be adequately reasonable in our remuneration to the shareholder, although we know that there are internal projects that will generate value -- more value for the shareholder. Yes. Well, this is linked to an aggressive investment plan. And then we have the issue of the buyback, the buyback of shares. Well, this is also something that is being dropped into. It's an issue that we would analyze under the new strategic plan as from this year. Unknown Executive: Let's move on to the questions from David [indiscernible] from Scotiabank. And both of them are asking us about GDE. So there are questions on Q4 in 2025 with a business figure of EUR 140 million and contribution margin of EUR 8.9 million, which represents 6.4%, which is much lower than previously reported figures. And why has there been this slump in the margin over sales? Unknown Executive: Well, this always happens to us in the most individualized part of GDE and Q2, Q3, well, these are much more powerful in the Central Europe or East Europe. But this is part of the company that we are individualizing and which -- what happens is that in December, when they achieve 100% of what they've committed to, we become a little bit more relaxed, but this doesn't really mean anything else. There's no really no significant element here to be considered. Unknown Executive: There are several questions here on Cerritos. So we're going to group them up. Okay. [ David ] from [ Destino Fortunato ] is asking if the situation in Mexico is affecting the negotiations for the sale of Cerritos. And then Diego Martinez and [ Ignacio Joaquin Andreu ] are asking us about our forecast for the net debt once Cerritos has been sold. Unknown Executive: Well, I'd say this is something that we mentioned with Cerritos. And Cerritos 2, 3 years ago became a problem because of the policies that were in place. It's no longer an issue. Now I don't know if this is going to be done on April 1 or May 1. But as you know, this is a project that is rated as an operation available for sale. So the value is about $100 million with a debt of about $85 million or $90 million because this is in euros. And we believe that the net asset value is properly reflected, and we're also actively working to round off the value of the project and defend its worth with an interesting PPA, something bankable, something that can be much more attractive for sale purposes and the sale for it to be operational. We -- well, we are going to -- we're now talking about 3 or 4 main leaders with whom we are negotiating things. and 3 or 4 bidders. And I think that this is a project that will become liquid. It's going to become liquidity, and we're now focusing a little bit on the details of if we can or cannot recover the accounting value or the book value, and that's what we're really focusing on. And I can't really say much more about Cerritos. Unknown Executive: Let's move on to the last questions from Ruben Alonso. But I would like to remind you if you have any further questions, this will be the time to send them in before we finish. Unknown Executive: Okay. Ruben, we've got 3 or 4 extensive questions. And the net asset value, well, we reaffirm what we have in our books because I think that there's an amount there for infrastructure that we will recover in the next 2 or 3 years. In other words, 20% of the Dominican Republic, we expect to recover this in 3 years. And we are also looking into if we have to perform any operations, as you point out, with the rest of renewable assets, because the idea is to focus completely on this rotation strategy that we initiated in the year '23. So this is what we can see. Although, obviously, together with the operating cash flow and according to the amount we would obtain in these recent divestments, I think that what we would really focus on is a company with 0 debt or 0 cash. And of course, it's very difficult because we're working on a new strategic plan, which I think is what Patricia mentioned and what the CEO said too. And we are focusing a lot on the greenfields and organic growth in the area of the environment where we have a number of interesting ideas that have to be carried out in the next few months, and it's very difficult right now to give you a debt and generation guidance. But we feel comfortable with 1x EBITDA. And I think we said that in the call of the third quarter, we said that we had an EBITDA of 1x. And I think what I'm missing is the debt that we had committed. But in any case, the important thing is that we have the basic elements to relaunch in this simplification strategy, the Dominion that we want to see in the future. Yes. And I think that I've answered practically everything with that comment. Unknown Executive: We have one final question from Luis Padron from GVC. What profitability do you expect from the aggressive investment plan of GDE? Is it possible to have a buyback of shares? Unknown Executive: Well, yes, of course, because we have an ambitious plan, and we have the right people, the right team for that. And we are now -- well, it's like when we were listed in 2017 and the segment -- the sector was highly segmented. And we wanted to achieve a lot of growth inorganic and organic growth. But as regards to this part of the plan, we are going to be aggressive. So in other words, the GDE figures of the last 3 years have multiplied EBITDA by 2, and the EBIT is 2.7x. We think that there are lots of very interesting opportunities on the table. And this is where we believe that it's worthwhile getting something done. So we will obviously remunerate the shareholder, but we think that here that there is -- I don't know, there is the possibility of generating a significant amount of value. Well, yes. And considering that we are in the year 10 since we were listed, we were first listed in 2016, and we reached the market -- we reached the market with a promise of EUR 43 million in EBITDA. It was EUR 150 million plus the green through. And all of that capital expansion via dividend and buyback has gone back to the shareholder. In others, we've given back to the shareholder much more than we initially predicted in 2016. But now we have another plan, which is a very aggressive plan, as Robert has just put it out in GDT, we will have lots of organic growth and very good performance. It's a very good business that we dominate and we are doing things even better, and it's very diversified, too. And the truth is that we're very happy with it. And GDE is a very ambitious project, and we expect to receive some very important news in the next few years. And that's what we're currently working on, and this is what our strategic plan is also focusing on, too. Unknown Executive: There are no more questions. So we will close the presentation here. Thank you all for listening. Thank you. Unknown Executive: Thank you very much. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning, and thank you for joining Becle's Fourth Quarter Unaudited Financial Results call. During this call, you may hear certain forward-looking statements. These statements may relate to our future prospects, developments and business strategies and may be identified by our use of terms and phrases such as anticipate, believe, could, estimate, expect, intend and similar terms and phrases and may include references to assumptions. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those in forward-looking statements. Before we begin, we would like to remind you that the figures discussed on this call were prepared in accordance with International Financial Reporting Standards, or IFRS, and published in the Mexican Stock Exchange. The information for the fourth quarter of 2025 is preliminary and is provided with the understanding that once financial statements are available, updated information will be shared in the appropriate electronic formats. [Operator Instructions]. Now I will pass the call on to Becle's CEO, Mr. Juan Domingo Beckmann. Juan Legorreta: Good morning, everyone, and thank you for joining us today as we discuss Becle's Fourth Quarter and Full Year 2025 results. 2025 was a year of navigating challenges across our key markets. However, we defended or expanded our leadership position in Tequila across our main regions, protected pricing better than the industry average by leveraging our strong brand equity, and delivered solid financial performance supported by the decisive actions and disciplined execution. We are proactively assessing market conditions to reinforce our strong foundation for sustained long term growth. At the same time, it is important to put the current environment into perspective. Spirits continue to take share from other alcoholic beverages, underscoring the structural strength of the segment. Within that context, Tequila continues to outperform other full-strength spirits categories with solid price mix growth, and premiumization trends remaining intact, favoring our core strengths. Cautious of shifting consumption trends, we believe the current slowdown is mostly cyclical, driven by macroeconomic headwinds and inflationary pressures. Historically, the spirits industry has experienced periods of expansion and contraction, and we expect demand to recover as consumers' confidence improves. In the U.S. and Canada, we are implementing changes to better capture both portfolio and route-to-market opportunities. We recently announced a full realignment of our U.S. distribution network with the transition beginning on February 1. In Mexico, we continue to advance premiumization, strengthening our on-premise capabilities and sharpen marketing through innovation. Even in a cautious demand environment, we remain confident in our ability to defend our market leadership and compete effectively. In Rest of the World, we are focusing on our core brands and strengthening our premium portfolio. We continue to execute with discipline as we navigate evolving consumer behavior and macro conditions, and we continue to capture a relevant position in strategic growth markets in the region. 2025 evidenced an unusually complex global spirits sector likely to remain in 2026. However, we've consistently shown that we can drive competitive advantage through uncertain times by focusing on what matters most, the strength of our brands, the discipline of our strategy and the quality of our people. We are entering 2026 with a healthy mix of realism and optimism as we anticipate that the years ahead will continue to require bold adjustments to position us better for 2027 and beyond. Thank you. And with that, I'll turn it over to Mauricio to discuss our U.S. and Canada results. Mauricio Herrera: Thank you, Juan, and good morning, everyone. Our fourth quarter performance in the U.S. and Canada region reflected a combination of continued industry-wide headwinds and delivered commercial actions taken to position the business for long-term success. As full-strength spirits demand decelerated through the back of the half year, we remain focused on the areas firmly within our control: execution, disciplined pricing, targeting investment behind our brands and a thoughtful management of shipments and inventory across the system. U.S. spirits trends deteriorated sequentially in 2025, with a slowdown, particularly evident to our year-end. Against this backdrop, tequila continues to stand out as the most resilient full-strength spirits category, delivering volume growth of 2.3% in the year, according to Nielsen data. While growth in the broader spirits market has skewed towards prepared cocktails, tequila has transitioned from a high-growth phase to a more normalized stabilization phase. It remains an attractive category and continues to outperform other spirits. Within this environment, our own portfolio continues to outperform the market, excluding prepared cocktails. [indiscernible] data for the 3-month period ending in November shows that Proximo continued to outperform the broader industry in value growth within full-strength spirits and more specifically within the tequila category. Nielsen data for 2025 further supports this performance showing that Proximo's volume declined 2.5%, outperforming the overall market by approximately 100 basis points. Pricing discipline remains a defining feature of our approach in the quarter. As demand moderated, competitive behavior intensified with the overall tequila category experiencing a price decline of approximately 9.2%. By contract, our average pricing decline was limited to 5.1%. While this discipline can create short-term volume pressure, we believe avoiding aggressive discounting is critical to protecting long-term brand equity and margin integrity, particularly in an environment where several competitors have leaned more heavily into aggressive pricing actions. At the same time, we continue to invest behind our brands. Our advertising and marketing investment as a percentage of sales remains above peer levels. Reflecting our conviction and sustained brand support is essentially in peers of category softness. These investments are tightly focused on expanding points of distribution, opening new on-premise accounts and improving in-store performance. From a category standpoint, strengthening our leadership position in Tequila continues to be our top priority. At the same time, RTDs represent one of the most attractive growth opportunities where we are currently underrepresented. During the second half of 2025, we increased our focus and investment behind RTDs and delivered solid double-digit growth. To further accelerate performance in this segment, we are building a stronger innovation pipeline and evaluating route-to-market alternatives that enhance coverage and execution. Turning to shipments and inventory. We took deliberate actions during the quarter to ensure healthy alignment across the system. In response to the broader slowdown in consumer takeaway, we adopted a measured approach to shipments with the aim of avoiding further inventory build. This resulted in shipments declining more sharply than depletions on a quarterly basis. Our inventory levels vary significantly across distributors with our highest level sitting in what were RNDC markets. We will actively be working on balancing inventory levels as part of the transition into our new distributors during the first half of 2026. In the quarter, retailers continue to reduce inventory to historically low levels. And in turn, distributors also actively work to reduce their own inventory levels. In addition, we had already anticipated our planned exit from RNDC, well ahead of the formal announcement, and we made a conscious decision to moderate shipments into RNDC during the end of the year to facilitate a smoother transition and mitigate disruption at the time of execution. As previously announced, we have recently completed a comprehensive review of our route-to-market strategy across the United States. As a result of this evaluation and while we value the relationships and history we've built with RNDC, we decided to transition our distribution away from them in all current markets, except for Georgia and New Mexico, effective February 1, 2026. This decision reflects our performance first mindset, aligning our brand with partners who demonstrate strong execution, focus on accountability. And while these transitions may introduce some near-term volatility, particularly in the first half of the year, we believe this change will significantly strengthen our commercial foundation and position us to compete more effectively in an increasingly dynamic U.S. marketplace. Looking beyond current market cycles, the long-term fundamentals of the U.S. spirits market remains strong. We believe tequila is positioned to be the industry's main growth category over the next decade, a trend that directly benefits Proximo as a category leader. We continue to see durable consumer appetite for premiumization and authenticity, reinforcing our confidence in the long-term trajectory of the business. I will now turn the call over to Olga Limon to discuss Mexico and the Latin America results. Olga Montano: Thank you, Mauricio, and good morning, everyone. Moving to our performance in Mexico. I would like to frame our 2025 results within the context of the broader industry landscape. While the spirits industry remained in contraction, it is important to highlight that the pace of decline moderated meaningfully compared to 2024. Within this context, Tequila continues to prove its status as a clear outperformer. Our brands not only held their ground, but consistently gained market share across both Tequila category and Total Spirits. According to [ NisCom ] data through November, our performance in Mexico clearly outpaced the industry. While Total Spirits volume declined 1.4%, our portfolio delivered a 2.5% volume increase. In value terms, we grew 2.0% against an industry decline of 1.6%. The Tequila category specifically remains a growth engine. While the category grew 2.5% in volume, we outperformed with 3.9% growth. These results underscore the continued strength of our portfolio and our undisputed leadership position in our home market. When evaluating our performance, it is essential to look beyond the quarterly volatility and focus on a full year trajectory. Additionally, moving forward to provide a more accurate reflection of our underlying business, it is important to look at results, excluding the b:oost brand. On a full year basis and excluding our b:oost brand, Mexico delivered a 1% volume growth, broadly in line with depletions. We which decreased 1% versus the previous year. While our fourth quarter volumes decreased by 10.3%, depletions declined 7.1%. These figures follow an exceptionally strong third quarter where depletions grew by 5.2%. We evaluated -- when evaluated on a second half basis, shipments increased 0.5%, while depletions decreased by 2.5%. It is also important to note that we are lapping a particularly strong fourth quarter seen in 2024, which created a high bar for comparison. In response to softer depletions observed late this year, we intentionally moderated shipments to ensure that we close 2025 with healthy inventory levels across the system. This disciplined approach to inventory management provides us with a clean runway as we enter 2026. Throughout the year, our shipments and depletions remain well aligned confirming that the underlying consumer demand for our brands remains robust. Looking at the global picture, Mexico continues to be one of the best performing regions for Tequila and for the company as a whole. Overall, our leadership in Tequila and our ability to gain share in a challenging market gives us great confidence. By prioritizing disciplined execution and protecting the long-term health of our equity, we believe we are well positioned to continue building value in Mexico and across the region. I will now turn the call over to Shane Hoyne, Managing Director of EMEA and APAC region. Shane Hoyne: Thank you, Olga, and good morning, everyone. In the fourth quarter of '25, the region sustained its positive momentum with both shipments and depletions growing. APAC continued to deliver double-digit depletions growth while EMEA recorded positive depletions compared to the same period last year. For the full year '25 shipments in the EMEA and APAC region were flat versus '24, while depletions increased by 1.5%, reflecting continued underlying demand despite a challenging trade environment. Inventory remained a key factor throughout the year. Particularly in the first half, elevated inventory levels across the broader industry impacted shipment patterns as distributors and retailers focused on reducing working capital and operating with lower inventory levels. These dynamics were evident across multiple markets and remained a consistent theme over the course of the year. Pricing conditions in '25 remained highly competitive with aggressive discounting across money markets as peers sought to defend volumes. While pricing pressure remains elevated, discounting activity appears to have largely stabilized. From a category standpoint, Tequila is gaining momentum across the region, driven by growing consumer interest and a deeper understanding of the category. And increasingly, tequila expanding into new occasions positioning itself as a more sophisticated option for cocktails and early evening parties. We also see tequila switch consumers from traditional brand spirits such as cognac and whiskey with many entering directly into the aged tequila segment, reinforcing the category's long-term premiumization opportunity. Overall, while the region is operating in a complex and uncertain environment, Becle continues to perform resiliently and underlying category dynamics remain constructive. Looking ahead to '26, we remain optimistic with Tequila offering significant long-term volume and value growth potential across multiple markets. Our portfolio strength and established route-to-market strategy position us well to capitalize on these trends. I'll now hand you over to Rodrigo, who will take you through the financial results. Rodrigo de la Maza Serrato: Thank you, and good morning, everyone. I will now walk you through the financial results for the fourth quarter and full year 2025. In the fourth quarter, the company reported consolidated net sales of MXN 11.1 billion, reflecting a 14% decline year-over-year and an 8.4% decline on an FX adjusted basis. This and other reported results were negatively impacted by the appreciation of the Mexican peso in Q4. Operationally, results were impacted by deliberate inventory rebalancing actions in the U.S., mainly due to a softer demand environment into the year-end. Our price/mix increased 0.4%, reflecting our ability to sustain pricing even under extreme competitive environment, leveraging our brand equity and portfolio. However, this was more than offset by 5.7 points of unfavorable currency translation. This quarter marks our eighth consecutive quarter of year-over-year gross margin expansion, a significant achievement given an unfavorable regional mix and the appreciation of the Mexican peso, which represented a significant drag on margins. We continue to benefit from lower agave-related input costs and ongoing cost efficiencies from strategic sourcing and manufacturing operations, resulting in a gross margin of 55.2%, an expansion of 110 basis points versus a year ago. While net sales remained under pressure, we maintained investment behind our brands to protect long-term equity and ensure we are well positioned for a better time. We have done so while remaining highly selective and focused on investment efficiency. Turning to operating expenses. Distribution costs declined 6.5% and SG&A expenses decreased 6.2%, reflecting continued discipline on overheads and strong cost control across the organization. Other income increased by MXN 438 million during the quarter, primarily driven by anticipated contractual settlements related to U.S. distribution agreements. As a result, EBITDA for the fourth quarter was flat year-on-year, with EBITDA margin expanding 340 basis points to 24.4%. Net income for the quarter was MXN 1.4 billion, benefiting from MXN 148 million year-over-year foreign exchange gain as the appreciation of the Mexican peso positively impacted our net U.S. dollar debt exposure. This benefit was partially offset by a retroactive full year effective tax rate increase to 27%, which was recorded in the fourth quarter. As of December 31, 2025, cash and cash equivalents totaled MXN 10.8 billion, while total debt was MXN 18.9 billion, a decrease of MXN 7.4 billion compared to the prior year. In 2025, the company generated MXN 8.1 billion in net cash from operating activities driven primarily by the setup in underlying operating profit and continued working capital and CapEx discipline. Our balance sheet remains very strong with adjusted net leverage of 0.9x, slightly below our targeted range of 1 to 1.5x. We remain confident in our long-term free cash flow generation and have ample balance sheet capacity to execute our capital allocation agenda, which prioritizes reinvesting in the business and returning capital to shareholders. Before moving to guidance, I want to take a step back and highlight the progress we have made over the past several years. Using 2019 as a pre-Covid reference point, net revenues are up 45%, driven by 10% volume growth and a 35% increase in average price per case. This reflects the significant premiumization of our portfolio with average price per case growing at a 5% CAGR since 2019. Importantly, our Rest of the World business has doubled in size since 2019 in net sales value, reinforcing that tequila remains a high-growth category with substantial long-term potential, particularly in markets where penetration remains low. Gross profit has grown at a 7.5% CAGR since 2019 and gross margin is now 320 basis points above 2019 levels. At the same time, marketing expenses as a percentage of net sales have declined by 90 basis points versus 2019 while consolidated net sales value has grown at a 6.4% CAGR, reflecting a more efficient and disciplined investment approach. Importantly, these improvements were not driven by foreign exchange movements as the average effects in 2019 was broadly the same as in 2025. From a working capital standpoint, we have improved our cash conversion cycle. Total inventory days are back to 2019 levels, even though we have significantly premiumized our portfolio since then. Payables have improved from 36 days to 56 days and receivables have shortened from 110 days to 100 days as of year-end 2025. CapEx has also declined both in absolute terms and as a percentage of net sales from 6.9% to 3.4%. We have continued to deliver consistent dividends and free cash flow has strengthened, improving from a 4% free cash flow yield in 2019 to 14% at the end of '25. When you look at our performance over the past 6 years, the company has evolved into a more mature and resilient business, one that has strengthened its ability to premiumize consistently, invest efficiently, improve cash conversion and capital return to shareholders through a sustainable and disciplined financial model. Finally, moving on to 2026 guidance. This will be a transition year for our business as we execute the previously announced realignment of our U.S. distribution network. Changes of this scale take time to fully stabilize and may create temporary disruptions, shipment volatility, inventory realignment and added complexity. Our priority is to start this new partnerships the right way by maintaining clear communication, aligning closely on execution standards and managing inventories carefully to avoid unnecessary stock build. At the same time, we expect the broader operating environment in 2026 to remain challenging with limited visibility given macroeconomic volatility and continued consumer uncertainty. Considering these factors, we expect net sales value to decline in the low single-digit range in 2026 on a constant currency basis. Additionally, we expect A&P as a percentage of NSV to be in the range of 19% to 21% and our capital expenditures to be in the range of $90 million to $110 million. We are not providing specific guidance on operating income, particularly as we will be lapping nonrecurring gains recorded in 2025 related to the sale of b:oost and distributor contractual settlements. While we recognize the near-term complexity, we believe the actions we are taking are necessary to build a more effective commercial platform positioning us for improved performance in 2027 and beyond. I will now turn the call back to the operator for questions-and-answer session. Operator: [Operator Instructions] Our first question comes from the line of Lucas Mussi. Lucas Mussi: I have one on margin performance this quarter. Gross margin was up about 100 bps year-over-year. And as you mentioned, Rodrigo, on your remarks, it was still heavily impacted by FX dynamics in the quarter, geographical mix. So I wanted to see if you could share more details on the drivers behind the quarter. That would be my first question. So how much could we think about as it pertains to agave contributing to your margin on a year-over-year basis? How much came from headwinds related to FX? So any color on that front would be welcomed. And my second question still on margin is how to think about 2026 from your main drivers, mainly raw material related. As we think about agave, how you're thinking about the spot price in the market today? Has it been stable throughout the year? Do you see -- do you still see more downside to market prices? So any color on how you're thinking about your raw materials into 2026 would also be very helpful? Rodrigo de la Maza Serrato: Thank you, Lucas, for the question. From a gross margin perspective, which was your focus, what I can share is that foreign exchange was a drag in terms of our ability to expand further by 170 basis points. So pretty much all components of gross margin equation worked favorably, the most important driver being the agave input costs which continue to be favorable to us, plus the productivity initiatives that I did mention on my script. So other than FX, the gross margin expansion could have been 280 basis points in the quarter. And looking forward, at this point in time, we don't expect major changes to this environment. Obviously, we rely on volatility from FX, which could continue to play a role. Operator: Our next question comes from the line of Nadine Sarwat. Nadine Sarwat: This is Nadine Sarwat from Bernstein. Two questions from me. The first on your guidance, you talked about this being a transition year to set up your business for the future. So related to that, can you unpack that transition that you referred to? How much of that is a weak macro versus deliberate strategy. And then if we look beyond 2026, are you expecting to return to solid growth? And then just one additional shorter-term question. In the Nielsen data over the last couple of weeks, we've been seeing an underlying improvement in the U.S. spirits market. Are you seeing that in your business? And if so, what do you think is behind that? Rodrigo de la Maza Serrato: So thank you, Nadine. On your first question, I think the way we see it in -- why we mentioned this is a transition year is mostly related to the realignment of distributor network in the U.S. It's mostly that where we expect conditions in terms of macro, et cetera, to remain challenging. Having said that, I'll pass it along to Mauricio to take you through the transition and expectations for 2026 and beyond. Mauricio Herrera: Nadine, it's Mauricio. From a transition perspective, I would make reference to the distributor changes we're making. So I do believe those changes, even though I have stated during the script will cause short-term disruption, they are definitely setting us for sustainable growth in the future. We are aligning with what we believe are the best distributors in each of the states. So as we go through that transition in H1, I think as we go into the second half of the year and especially into 2027, that should actually be reflected in improved performance in a sustainable way for the future. Regarding your question on share, we do see it. What I would say is if you could see the second semester of the year in the U.S., tequila started to decelerate even further. One of the things we have remained extremely disciplined is in managing prices. If you look at our average price has decreased a lot less than our competitors, and we continue to invest behind our brands ahead of industry benchmarks. So I think the combination of 3 things: very disciplined focus on execution, driving investment behind our brands and being able to balance pricing through promotional activity to stay competitive while still not being as aggressive to undermine long-term rapid equity, I think those things combined is what is actually driving our improvement in share in the short term. Nadine Sarwat: Got it. And just to clarify on that medium term looking past 2026, potential to return to growth. I appreciate everything you said on the distributor transitions and distractions this year. But just thinking longer term, you had that slide up that showed your historical growth. So trying to get a sense of what investors can expect after the transition? Mauricio Herrera: So look, from the U.S. perspective, leaving aside the transition in terms of distributors, I think what we will continue to do in 2026 and beyond, we'll continue to invest behind the brands to be perfectly positioned to capture growth as the category returns into growth. We do expect that in 2026, the category will continue to see compression. And what we want to do is make sure we're setting all the fundamentals in place in terms of route-to-market, brand health investment and being very strategic on pricing to actually start capturing, I would say, or disproportionate growth of the industry as it returns into growth, which I do believe we should start to expect happening in 2027. Operator: Our next question comes from the line of Rodrigo Alcantara. Rodrigo Alcantara: I guess the first one would be -- it's Rodrigo Alcantara at UBS. The first one would be follow-up on the RNDC transition in the U.S. We get this transition period, right? But any rough estimate or any number you can give us in terms of how much volume we're talking about that could be impacted just as a way of trying to quantify this transition period. That would be my first question. And the other one, if we could reflect a bit on the performance in Mexico, right? I mean you gave the figures there from a sell-in perspective, right? Just judging looking at performance of beer in Mexico in 4Q, it was not that -- the contraction was not as high, right, as what we saw today. So I mean, if you can help me here, understand, reconciliate the difference in the magnitude of contraction of other categories like beer versus the one we saw at spirits in Mexico? Those will be my 2 questions. Mauricio Herrera: Thank you, Rodrigo. On the first question you had in terms of the RNDC transition, I think providing a number would be very difficult to really estimate what the impact from a number perspective would be. All these transitions really have a very short-term impact, that we will manage. We have a PMO -- very disciplined PMO office in place to try to minimize the disruption. We did see, as I mentioned in my script, that because of this lower depletion, especially in RNDC markets at the end of the year, that's where our highest level of inventories were. So we will be working as part of this transition to rebalance that as we go to the new distributors. So that, combined with a very volatile environment in an industry that continues to actually experiment contraction, it's very difficult to understand or predict what volume impact will be from the transition, industry contraction and competitive dynamics. So for now, what we're focused on is executing this transition in the most disciplined way, making sure that -- and actually, we feel very confident that we have the right distributor in each market. In each of the new distributors, we are, if not the biggest, one of the biggest suppliers there that will guarantee more focus and attention behind our portfolio that gives a lot of confidence that once that transition is behind us, we should start to see improved performance. Olga Montano: Rodrigo, this is Olga. From the Mexico part, regarding the 7.1% decline in Mexico depletions this quarter, I would like to reinforce that we are seeing an improvement in consumer trends. In fact, the industry remains -- while the industry remains in contraction, the pace of decline has moderated significantly compared to 2024. And we continue to gain market share within this context. But I would like to talk about 2 factors that bridge the gap between the minus 7% and the reality of our business. There are 2 specific factors that accounted for nearly the entire decline. As we finalize the exit of the b:oost brand, we focused on clearing remaining inventory rather than commercial prioritization. These brands decline alone created a 200 basis point drag on our total Mexico depletions. The second factor is that we are being disciplined in not engaging in value-destroying activities. We intentionally chose not to participate in specific [indiscernible] promotions where we felt discounting in depth compromised our brand equity. This disciplined approach to price integrity impacted our quarterly depletions by almost 500 basis points. So when you strip away these 2 tactical factors, we are effectively flat. So basically, that would be my answer. Rodrigo Alcantara: That's a good point. So just to clarify, excluding the -- I mean, not participating in [indiscernible] had this 500 basis points impact. Did I get that correct? Olga Montano: Yes, that's correct, Rodrigo. Operator: Our next question comes from the line of Antonio Hernandez. Antonio Hernandez: This is Antonio Hernandez from Actinver. Just wanted to get a sense on nonalcoholic beverages and others that are also declining. Are these following similar trends, a competitive environment? How are you seeing there? And maybe you could provide an outlook on those? And if there are any organic or inorganic opportunities there? Mauricio Herrera: Sorry, Antonio, thank you for your question. If I understood correctly, you're talking about nonalcoholic beverages and how they may be... Antonio Hernandez: Exactly. Yes, how they performed this last quarter and throughout the year underperforming as well and your expectations going forward? Bryan Carlson: Antonio, this is Brian. So that's probably related to the b:oost brand. That was a significant impact for us in the quarter, and that's within the nonalcoholic beverages part that we report in the press release. That's a big portion of it. So it's probably related to that. Antonio Hernandez: Okay. And going forward, do you expect more stable, of course, excluding that comp from the b:oost brand? Olga Montano: Yes, we do. Operator: Our next question comes from the line of Froylan Mendez. Fernando Froylan Mendez Solther: Froylan Mendez from JPMorgan. On the gross margin effect during the quarter and going forward, I read the transcript from 1 year ago, and we were speaking about positive effect from agave. 2025, you also have positive effect from agave. So it's 1 year with positive effects from agave. Should we assume that the positive impact from lower agave in 2026 should be much lower than what we have seen in the past 2 years given just the lapping of the benefit now that your inventory probably reflects a much lower average cost of agave. That's my first question. And secondly, can you provide with some directional color on your top line guidance if it is coming from volume drops similar to last year, but with better pricing or the other way around. And within the different regions, which one are the ones growing a little bit better than the other? Which one is dragging? How you created that guidance of low single-digit drop for next year, please? Rodrigo de la Maza Serrato: Thank you, Froylan, for those questions. Regarding your first on gross margin, yes, in fact, we -- since last year, second -- last quarter of last year, we reported benefits on agave. As you see, overall, agave cost continues to benefit result this year. Excluding FX, as I mentioned, it was a significant contributor to positive gross margin expansion. We don't provide specific guidance on this topic. However, what I can say is that a lot of the -- let's say, extra benefit we've had this year and in particularly Q4, is related to simply higher agave sugar content on agave. And we expect that, that trend should continue going forward. So there is no changes necessarily expected there on agave cost from the market. And regarding your second question on top line guidance, the guidance, it's a combination, of course, in terms of volume, price mix, et cetera. So the guidance is general. We would like to stick with that guidance as it is because considering the volatility in the environment, we continuously manage those levers to deliver on the low single-digit decline that we announced. Fernando Froylan Mendez Solther: And sorry, my ignorance, but the low -- the higher agave sugar content, does that mean that, I don't know, the crop that you are having from agave, it contains higher sugar and so it will remain -- like you have an inventory with high efficiency for the next year? So how does that work? I'm sorry if this is a stupid question. Just to understand. Rodrigo de la Maza Serrato: Yes, no problem, Froylan. I think what's important to say is that market conditions on agave should remain similar. Internally, we do expect some further pressure on agave cost. As we balance the equation out, we have some, let's say, extraordinary, let's say, benefits this year that may not be replicable next year. So we should not expect, let's say, improvement over this year necessarily. But this is obviously something we manage on a day-to-day basis, and we expect to deliver the best possible results given that the market conditions will be similar. Operator: Our next question comes from the line of Nicolas Rodrigues. Nicolas Rodrigues: Nicolas Rodrigues from Citibank. My first question is regarding GLP-1. As the adoption continues to expand across key markets such as U.S., have you observed any change in consumption behavior, particularly in tequila. And my second question is about GLP-1 -- not GLP-1, about development in Jalisco. Could you comment how and if these events have any impact on Cuervo operations? Mauricio Herrera: Thank you, Nicolas. It's Mauricio. And I'll take a question on GLP-1. Look, it is very difficult, almost impossible to estimate what an impact on tequila is on GLP-1. We do see evolving consumer trends. I think there's a lot of different things happening in the market at the moment that consumers are looking for different alternatives. We see the emergence of RTD, we see changes in patterns of consumption. So attributing any sort of impact to GLP-1 becomes, I would say, almost impossible. So it's something that we do monitor closely, but at this point, attributing any impact to that is really difficult. Regarding the incidents in Jalisco, as of today, we have not seen any impact in our operations, and we don't foresee that happening. . Operator: [Operator Instructions] We have not received any further questions at this point. So that concludes today's call. You may now disconnect.
Operator: Thank you for standing by. My name is Jael, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners' Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Robert Wright, EVP, Chief Financial Officer. You may begin. Robert Wright: Good morning, and welcome to the Delek Logistics Partners' Fourth Quarter Earnings Conference Call. Participants joining me on today's call will include Avigal Soreq, President; Reuven Spiegel, EVP as well as other members of our management team. As a reminder, this conference call will contain forward-looking statements as defined under the federal securities laws, including statements regarding guidance and future business outlook. Any forward-looking statements made during today's call involve risks and uncertainties that may cause our actual results to differ materially from today's comments. Factors that could cause actual results to differ are included in our SEC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigal for opening remarks. Avigal? Avigal Soreq: Thank you, Robert. 2025 was an exceptional year for Delek Logistics, highlighted by the achievement of a record adjusted EBITDA of $536 million. These results are a reflection of a strong execution across our businesses and the addition of high-quality business such as H2O and Gravity, but most importantly, because of our hard work of our great employees. During the year, we continued to advance our key initiatives across our natural gas, crude and water businesses, increasing our position as a premier full service provider in the Permian Basin. Now let me talk about each one of those businesses in detail. Starting with natural gas. During the year, we successfully commissioned the new Libby 2 processing plant, increasing the capacity of the Complex to around 160 million scf per day. The expansion in the processing capacity is being enhanced by the comprehensive acid gas injection and sour gas handling solution we are building. We are very excited about providing this comprehensive capability to our customers, further supporting long-term oil and gas production growth in the Delaware Basin. Moving to crude. Both DPG and DDG crude gathering operations delivered strong performance during the year. We have increased our overall gathering capacity and look forward to further optimize and grow the business in 2026. Our water business is also doing very well. We have largely completed the integration of H2O and Gravity into our operation. The combined gas, crude and water offering in the Permian Basin has increased our competitive position and build a strong platform of growth. With strategic foundation, strong operation and record results in 2025, we are well positioned for 2026. Today, we announced a 2026 EBITDA guidance range of $520 million to $560 million. This reflects the growth opportunity we have while managing leverage and coverage. We also intend to remain good stewards of our stakeholder capital. Our Board of Directors have approved our 52nd consecutive quarterly distribution increase, raising the distribution to $1.125 per unit, marking 13 consecutive years of distribution growth. This is an extraordinary achievement, and we are extremely proud of our team and financial prudence that brought us in. As we close the books on 2025 and begin 2026, Delek Logistics firmly positioned as a strong independent full suite midstream service provider. With the foundation we have built and the opportunities ahead, we are confident in our ability to continue delivering sustainable growth and long-term value for our unitholders. I will now hand it over to Reuven, who will provide more details on our operations. Reuven Spiegel: Thank you, Avigal. As Avigal mentioned, we are very excited about DKL's future and are working to increase our advantaged Permian position. Most significantly, I'm very pleased with the rising economic separation we have with our sponsor, DK. In 2026, we expect approximately 80% of our run rate EBITDA will come from third parties. This is an extraordinary achievement for the partnership and its increased independence will allow us to be more nimble in advancing the strong growth path we have been navigating. Turning to our business. We continue to work hard to bring an industry-leading sour gas solution in the Delaware Basin. The first step in the process was to complete our processing capacity expansion. Currently, we're working on completing the first AGI well and building the sour gas gathering infrastructure to fully optimize our capacity. As we have mentioned in the past, while our ramp-up has been slower versus our initial expectations, the need for sour gas solution is urgent, and we expect to see a step change in our utilization once our AGI and sour gas gathering infrastructure is fully complete. We also believe that the step change in utilization is likely to bring forward the need for additional processing capacity. We are looking at our options and have made selected investments that will support future expansions of the Libby Complex. We continue to believe that our expanded gas processing and sour gas handling capabilities provide a unique offering to our customers and provides us with a long runway for growth in the Delaware Basin. Our crude gathering volumes had a record fourth quarter. We are growing our crude infrastructure to provide our customers a more comprehensive solution. Our crude gathering business is in a very strong place, and our combined crude and water offering is yielding great results. Moving to our water business. The integration of 2 water gathering systems from H2O and Gravity has gone well. We are very excited about the opportunities our larger water footprint is bringing to us. We believe produced water gathering and disposal will require more innovation and different approaches as producer water cuts increase throughout the basin. We look forward to updating the market as we bring forward these solutions. With that, I will pass it on to Robert. Robert Wright: Thank you, Reuven. As Avigal and Reuven highlighted, we continue to make strong progress advancing the Delek Logistics growth story. While we are driving meaningful financial and operational growth across the partnership, we remain equally focused on achieving our long-term leverage and coverage objectives. 2025 was a significant year for the partnership. We successfully closed the acquisition of Gravity Water Midstream, which, together with the 2024 acquisition of H2O Midstream, were well timed from a purchase multiple perspective. In addition, we completed construction of the Libby 2 gas plant and are now in the process of converting operations to support sour gas treating, handling and processing capabilities. Our focus now shifts to fully capturing the value of these investments by optimizing synergies and executing our strategic priorities. At the Libby Complex, this includes completing the sour gas conversion and realizing the associated EBITDA uplift over time. From a balance sheet perspective, we ended 2025 in a strong financial position with approximately $940 million available liquidity under our credit facilities. This provides us with significant flexibility to continue executing our growth agenda while maintaining financial discipline. Turning to our fourth quarter results. Adjusted EBITDA for the quarter was a record at approximately $142 million, up from $114 million in the same period last year and $6 million higher than the previous record set in the third quarter of this year. Distributable cash flow as adjusted totaled $73 million, and our DCF coverage ratio as adjusted was approximately 1.22x. In the Gathering and Processing segment, adjusted EBITDA for the quarter was $71 million compared to $66 million in the fourth quarter of 2024. The increase was primarily due to the acquisitions of H2O and Gravity. Wholesale Marketing and Terminalling adjusted EBITDA was $21 million compared to $21 million in the prior year. Storage and Transportation adjusted EBITDA in the quarter was $35 million compared with $18 million in the fourth quarter of 2024. The increase primarily reflects the impacts of the sale of certain assets to DK as agreed to under the May 2025 intercompany transaction. Finally, the Investments in Pipeline Joint Venture segment contributed $26 million this quarter compared with $18 million in the fourth quarter of 2024, driven by strong performance from the Wink to Webster joint venture. Turning to capital expenditures. Total capital spending for the fourth quarter was approximately $32 million. Of this amount, $26 million was growth capital, primarily relating to initiating sour gas capabilities at the Libby Complex. The remainder of the spend was directed towards other growth projects, including advancing new connections across our Midland and Delaware gathering systems. Looking ahead to 2026, as Avigal mentioned, we remain confident in our earnings trajectory and are initiating our full year 2026 EBITDA guidance to a range of $520 million to $560 million. With that, we'll open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Doug Irwin of Citi. Douglas Irwin: I just want to start on guidance and maybe more specifically on growth expectations for the G&P segment. Could you maybe just help quantify how much of the variance within the high and low end of the guidance range is dependent on G&P performance and your ability to ramp up sour gas later this year? And then just with regard to the multiyear growth benchmark that you put out there, how should we be thinking about the ramp to that $70 million of incremental EBITDA over the next couple of years? Avigal Soreq: Doug, thank you for the question. I think it's a great question. But I will touch exactly what you asked, but I would like to start from a big picture standpoint. We defined a very clear concise strategy of crude, gas and water in the most prolific area of the Permian Basin. And if I want to highlight one number in the guidance we gave is the return on the investment that we see with the capital we invest now. You see it around 1 to 3x on the investment we see, which is very good. It's good to our coverage ratio. It's good to leverage ratio and very accretive to EBITDA. You see that over the course of more than 1 year. On a run rate basis, it's a very accretive number. And the main outcome of that is the results of our strategy. Second point I want to highlight is the growth and yield combination that we are seeing, that's probably best-in-class, if not best-in-class, probably among other best-in-class, but very, very good. We are on a very, very good trajectory in pattern. So we are very happy about that. The last point I want to make sure coming across, and then I will hand it to Reuven will be more specific around the sour is the fact that if you are taking the intrinsic value of each asset that we either build or bought, we need to get 7 handle on our unit price. So there is way -- much more room to go. We are very consistent with rewarding our investors. We have a very clear target for leverage ratio and coverage ratio, and we are prudently moving to those targets. Reuven, do you want to talk about sour gas just a little bit? Reuven Spiegel: Yes. Thank you, Avigal. We're actually very excited about the growth opportunity that gas will provide us. We mentioned in previous calls that gas in the region is turning to be more sour than originally anticipated, which made us accelerate our sour projects time line. Presently, we are drilling the AGI well and constructing our associated sour gas gathering and compression system. As we mentioned in the prepared remarks, we expect to see increased utilization as these projects are completed throughout the year. Even with the completion of this project, we still anticipate incremental processing capacity needed in our area. This is a long answer, but the short answer is we expect to be completed over the next few months. And the Delaware gas business will be one of our growth engines for years to come. Douglas Irwin: Got it. And maybe as a follow-up on an item from the DK release, you called out a transaction with DK for some assets that as the Tyler and El Dorado facilities. Just curious if you could talk about the EBITDA impact to DKL from those transactions and the use of proceeds. And then just looking forward, are there more opportunities like this that you could potentially do between the 2 companies? Avigal Soreq: Yes, absolutely, I will let Robert take that question. Robert Wright: Yes. Thanks, Avigal. Yes, these transactions really just helped us further the economic separation of the 2 entities. You'll see in our slides that DKL now has 82% of their EBITDA is now from third-party businesses as a result of this transaction. With this, our view is that we're materially complete with the inside Defense assets being sold to DK. We kind of have the right assets under the right roof now. And from an EBITDA perspective, it's really not material to either entity. Operator: Your next question comes from the line of Gabriel Moreen of Mizuho. Gabriel Moreen: I just going to ask in terms of maybe just pressing you guys a little bit on what the next steps would be on the Libby processing expansion. How big you would think the next chunk of processing addition would be and what would need to happen and when to make that come to fruition? Avigal Soreq: Yes. So I will tell you 2 things. First, you probably remember that we said a few quarters ago about the investment we already put for future expansion for Libby. You remember $15 million. So we will not try to take advantage around that. That's the first nugget I'm going to give you. The other one that I'm going to tell you that we are looking very, very carefully, and it's all public information, what our customer and producers are doing in the area. And in our area looks very good, and which means 2 things, which means more sour and which means more volume, both on the crude and gas. So I'm not going to commit to a time line that you asked, but you didn't expect me to fall into this stress. But I'm going to tell you that we are looking very good in all the macro that we are seeing and also the micro from our customers. So stay tuned. Gabriel Moreen: We do. And of course, I have to ask you, there's been a lot of, what I would say, sour gas midstream M&A over the last couple of months. So I'm just curious what your thoughts are on that, what you're seeing potentially out there in terms of packages on gas or water that they may or may not be out there? Avigal Soreq: Yes. So the cheapest company in the area, it's called DKL. We still don't see -- we are still not close to the valuation versus our peers. Obviously, you probably were very happy about the 2 midstream acquisition that we did, both H2O and Gravity. We do it both on the right timing on the right valuation. We are not shy of doing that, but we are not going to force ourselves into a deal that it's too expensive. So more to come. Every deal that we do needs to be accretive to free cash flow, leverage ratio and coverage ratio, and we are not going to shy from those principles in the future. And I will leave it to that. Operator: With no further questions, I'd like to pass it back to Avigal for closing remarks. Avigal Soreq: Yes. Thank you. Thank you. I just want to thank the great team in this room. Thank you to our great Board of Directors that support with the great support for the DKL journey to the investors and to the -- and mostly the great employees we have, I'm really proud of the progress we are doing and more to come. Thank you. Operator: This concludes today's conference call. You may now disconnect.
Operator: Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the doValue Preliminary Full Year 2025 Financial Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Daniele Della Seta, Investor Relations. Please go ahead, sir. Daniele Seta: Good morning, everyone. I'm Daniele Della Seta, Head of Investor Relations at doValue. I'm joined by Manuela Franchi, our Group CEO; and Davide Soffietti, our Group CFO, as we present our preliminary full year 2025 results. Manuela will begin with an overview of our performance, including key insights into market and business trends. Next, Davide will provide a detailed analysis of our financial results for the period. We'll conclude with a Q&A session to address any questions you may have. Thank you for joining us today. I will now hand over to Manuela. Manuela Franchi: Good morning, everyone. Let me start clearly and concisely - we delivered. We met our 2025 business plan targets for both cash flow and EBITDA, our seventh consecutive year of delivery on the 3-year business plan, and we reached several milestones even earlier than planned. And we achieved this in a particularly challenging phase of our industry while also executing 2 major M&A transactions that will shape the future of our company. Before walking you through the results, which together presented solid and consistent picture, I want to thank all the people at doValue. Their commitment and hard work have enabled us to accomplish what many in the market doubted would be possible. Commercial momentum remains strong with new business intake closing at roughly EUR 15 billion, 1.8x the annual business plan target and a pipeline that continues to support the visibility into 2026. Profitability strengthened with EBITDA ex NRI reaching a record EUR 217 million and margin at 37%, up 3 percentage points year-on-year. The near completion of the Gardant integration is now contributing to improved efficiencies across the platform, setting the strong foundation for the next year. Cash generation was also very strong with free cash flow at EUR 76 million, well above guidance. These results supported both deleveraging and the return to dividend payment in accordance with dividend policy. On a recurring basis, free cash flow was EUR 93 million, bridging the gap towards the 2026 EUR 90 million target. Net leverage stood at 2x at year-end, fully in line with guidance, even after accounting for extraordinary payouts linked to the M&A activities, such as EUR 6 million cash out for Alba Leasing, which was not contemplated when the guidance was announced. As for coeo, I know that just like us, you are eager to see the performance reflected in our numbers. The transaction is expected to close shortly with no execution issues. Coeo delivered another year of strong double-digit organic growth with files intake up 23% in '25 and well ahead of our buyer case but also seller case. Altogether, we entered '26 with a stronger business, a clearer trajectory and the foundation to deliver our next set of targets, including coeo. If you follow me on Page 3, let me start from the bigger picture. DoValue today plays a system-level role in Europe's financial stability. We operate at a scale that very few players in Europe can match, managing over 4.3 million position across individuals and businesses, all of this before coeo, which will more than double the number of data points with a broader scope. This gives us one of the largest behavioral and credit database in the market, an asset that allow us to anticipate patterns, tailor strategies and support the functioning of the financial system with evidence-based decision-making. This is the context in which our portfolio proves sustainable across cycles. It is diversified by design and managed by specialized professionals operating in areas where AI alone is not enough. First, diversification. Our portfolio is no longer a single asset NPL story. Alongside NPLs, we manage a large UTP perimeter, about 1 million positions, where we act as a structuring partner to protect value early. And we are developing a growing reperforming base currently of 400,000 positions that extracts value from proactive debt management. Second, runway and capacity. Look at '25 impact indicators at the bottom, 58,000 positions recovered from individuals, 21,000 from businesses, 12,000 positions restructured and 3,000 [ reperforming ] positions collected. All these figures show a substantial annual throughput. But when you said that against the overall stock of 4.3 million outstanding positions, it's clear there is ample embedded opportunity in the existing book, a lot still to convert, which underpins visibility for the coming years. Third, AI resilience. 88% of our portfolio is made up by loans above EUR 50,000, typically complex, bespoke and legal intensive. Here, AI augments our execution capabilities, but outcomes are driven by highly specialized asset managers who cannot be replaced by AI-only models, also due to the proprietary nature of our data set, which encompass decades of data and is not available to third-party models. In short, our scale, our dataset and the complexity we manage make doValue one of the few players that truly matter for Europe's financial stability, and they give us a long predictable and AI resilient path of value creation. With that foundation, let me turn to the '25 new business inflow on Page 4. In '25 GBV from new business reached almost EUR 15 billion, 1.8x our initial business plan targets, confirming the strength of our commercial engine. New Mandates continued to grow in the fourth quarter by nearly EUR 1 billion, including around EUR 600 million from [ Banco ] Project in Italy and EUR 200 million from the new contribution fund launched in December by doValue through its asset management platform focused on state guaranteed loans. Spain also added EUR 200 million in the quarter with mandates from a major banking institution. We also saw sustained forward flow from existing customers, which totaled EUR 4.3 billion for the year, covering around 80% of collections. This performance was mainly driven by solid contribution across countries with continued acceleration in flows from Santander in Spain, up 60% year-on-year, which has been recently renewed for an additional year without any front payment. If we take a step back, the scale of what we have achieved over the past 2 years becomes even clearer. While bank boost NPE ratios and cost of risk at historical lows, we secured EUR 24 billion of cumulative new business, nearly EUR 11 billion of which from banks. This is not just commercial success. It's a tangible demonstration of the systemic role of our industry in Europe's financial ecosystem. Banks, funds and institutions rely on our and our competitor platform through the cycle, and this is precisely what underpins the long-term sustainability of our business. Let's now turn to Page 5. Here, we outlined our pipeline, already reflecting the broader scope and diversification of the group after the coeo acquisition. What you see on this page is not just the net flows of inflows -- the net wave of inflows, but the shape of a business that is becoming structurally wider, more diversified and more balanced across products and geographies. The NPE pipeline is large and diversified. This pipeline amounts to EUR 50 billion, well distributed across countries and asset classes with almost 1/4 being UTP. I would like to take a moment to clarify the tax credit opportunity in Italy. As part of the '26 budget law, the government has introduced a new framework to recover unpaid tax and property revenues from local authorities with AMCO pointed to orchestrate the collection efforts. A decree expected in March will define the operational parameters, including the potential outsourcing to license operator, a key enabling step for volumes to flow. We are currently working on obtaining a license in order to be among the selected subservicers. For now, the initial stock identified as recovered amounts to roughly EUR 20 billion, and we are prudently including EUR 4 billion of what in our pipeline as the share realistically attainable by the value. But it's important to be clear, these figures represent only the first phase of the opportunity, specifically the local authority receivables that were already assigned to the [ Agencias delle Entrate ]. If the model proves effective and scalable, the pipeline would expand materially, potentially including local authority receivables currently handled by smaller local operators, central government receivables today managed exclusively by [ Agencias delle Entrate ]. Parallelly, on the coeo side, the pipeline is extremely strong with potential for additional annual revenue of over EUR 250 million. This means that with the current dip in the market, coeo could effectively more than double its annual revenue and largely diversified customer base. Indeed, 2/3 of the pipeline comes from sector beyond e-commerce, including telcos, insurance and mobility. All this comes from opportunities in markets where coeo is currently present. Once we look at expanding coeo into doValue, this opportunity further expands. We included a deep dive for Italy and Spain, and you can see there are plenty of sectors with small ticket receivables that coeo could tap with its highly automated digital recovery processes. Let's now turn to Page 6. Here, we have shown the market backdrop. Insolvency have been rising across the EU with bankruptcy declaration up 18% year-on-year in '24 and the '25 run rate reaching the highest level since '19. In Q4 '25, seasonally adjusted declaration were once again up quarter-on-quarter, underscoring that the trends remain live. By country, the picture is fully designed with what to be observed on the ground. Greece recorded an average plus 20% quarterly increase through 2025. Italy is expected to exceed the pre-pandemic insolvency levels. Germany started its upswing later, but is expected to continue. And Spain showed insolvency levels contained but higher versus 10 years ago across most markets. Now an important point of context. Our business plan '24-'26 was built without assuming any macroeconomic shock or deterioration. Despite that, we have delivered new business significantly above expectation in both '24 and '25, even while banks were reporting historically low new NPE ratios and cost of risk. What this means is that in an already benign credit environment, doValue still capture strong inflows and commercial traction. And if the current insolvency trend persists or broadens, it represents potential upside versus the intake assumed in our plan with the usual time lag between filing and onboarding and with the same discipline on mix and pricing, guiding what we choose to service. Now on to a more cheerful note, let's move to Page 7 for an update on coeo. '25 has been another really strong year for them despite management being largely involved with a long and complex sales process to doValue. Coeo grew New Files by 23% to 9.6 million files, reflecting both in-market client growth, notably in telco across Germany, Sweden and the U.K. and client-driven expansion into 3 new markets: Switzerland, Norway, Finland without M&A. On the digital engagement and service quality, coeo is running AI-enabled interaction across Germany, the U.K., the Netherlands, Austria, Sweden and Norway, delivering over 1 million customer interaction completely digital whilst maintaining excellent customer satisfaction metrics. On the financial side, coeo delivered around EUR 60 million EBITDA in 2025, excluding EBITDA coming from the hybrid model with a 35% increase in portfolio investments, which fuel future collection revenue growth. It's important to note that this 35% increase in portfolio investment was entirely funded through the strong cash generation of the business, evidence of the sustainability of the hybrid model. Moving to Page 8. We have initially hoped to close the coeo transaction by January. The closing is still pending without any issues. I'd like to give you some color on the process. The transaction is clearance by 4 major authorities in several countries where coeo operates. We are awaiting clearance from just one last authority in Germany. The time line was extended due to the document collection and examination requirements across multiple jurisdictions and counterparts and administrative multiparty review that simply taken longer than anticipated. Importantly, there has been no change to the perimeter on terms agreed, and we remain fully engaged with the authority on the remaining steps. From an execution readiness standpoint, we are prepared to move quickly once clearance arrives. We have already agreed the integration plan structured along 7 work streams; governance, finance, HR, IT, procurement, AI and business expansion with clear owners detailed checklist and no disruption expected for clients. The AI work stream is set to make coeo, the group AI app for small tickets, digital first growth while presenting our high-touch approach on complex exposures. We will close promptly upon receipt of the final clearance and are operationally ready to integrate from day 1. First, we operate in 2 very different arenas. Now you can see it on Page 9. Here, we want to comment upon the recent noise about what the AI winners and loser will be, and we want to be very concrete about how AI touches our business. On the one hand, we manage mid-large secured loans. Our [ core ] book with an average ticket of around EUR 70,000, where AI mainly improves cost efficiency and workflow orchestration, but outcomes still require experienced asset managers. Here, AI is an enabler with limited impact on economics, not a substitute for human expertise. On small and secured tickets, AI matters more because full automation is needed to make unit economic work. That is exactly why we choose to enter this segment through coeo, a digital AI-driven platform built for scale. In practice, we are already using AI where it moves the needle. Digital debtor portals and channels are live in Greece, about 30% of 0 to 90 days collection are handled digitally. We are also using modeling and advanced analytics for segmentation and propensity to pay, virtual agents to support our teams on [indiscernible] responses and call wrap-ups and document analytics to extract facts from judicial and notarial files. The impact is visible. With the initial adoption of the digital platform in Greece, small ticket EBITDA margin increased from roughly 53% to 89%, a step change that illustrates how automation can lower the cost to collect without compromising governance. It's equally important to explain why we are structurally protected as AI adoption accelerates in 3 ways. First, regulation. Our activities require licenses and human oversight. AI cannot hold a servicing license or assume legal responsibility under certain regulation. So human-in-the-loop is mandatory in our markets. Second, data. AI needs domain-specific training data. DoValue owns one of the Southern most -- Europe's most expensive proprietary credit recovery databases, which is private and not available to third-party models. Third, complexity. Corporate and secured recoveries are bespoke and legal intensive. Local courts filing, multiparty negotiations are at the heart of our business. Automation can manage low-value, high-volume cases. Experts drive outcomes on complex scales. Our strategy is clear: automate at scale where automation wins small ticket by coeo and augment human expertise where value is created. Secured and complex claims add to value, all under a road map with a clear roadway. Regulation, data and complexity will continue to be durable moves as AI promises. Let's now turn to Page 10 with an overview on the German market, which will become very important for us. Germany is now the #2 NPL market in Europe by stock held on bank's balance sheet at EUR 46 billion, up 24% versus 2019 and 21% larger than the current Italian size. Importantly, this EUR 46 billion figure covers banks only. It excludes position held by investors, fintechs and debt purchasers and receivable from nonfinancial entities served by coeo. So the true addressable market is materially larger than on balance sheet number. Yes, the servicing market is underdeveloped. It's highly fragmented with servicers typically specialized by client segments and not meaningfully consolidation to date, leading limited scale platform and clear scope for a consolidator to bring multi-client, multiproduct capabilities. On execution, the regulatory bar is also a differentiator. Since '24, Germany requires a CSI license to operate in credit servicing. We have secured the license, established doValue Germany, onboarded project staff and identified key hirings, completed the first market analysis, upgraded system to run NPL workflows and onboarded an initial client, aiming to make profits already in '27. All these are concrete tangible steps and not simple intention. Strategically, this expansion is the first synergy of the coeo acquisition. Germany is coeo largest market. Sweden ahead of closing. We are not standstill. We are leveraging coeo footprint and digital stack to accelerate entry, demonstrating that we are proactive and already putting the model in motion to scale quickly once consolidation is completed. To sum up, a large and growing German NPL pool plus the fragmented servicing landscape creates room for a sizable opportunity. We are in markets licenses and building capacity using the coeo's first synergy of the deal to ensure that once consolidation is completed, we can scale delivery from day 1. Before I hand over to Davide to walk you through the financials, let's turn to Page 11 and look at the progress made so far on the business plan horizon. This is our second consecutive year of delivering this guidance, and we are ahead on the 2024-'26 business plan. Cumulatively, we have already reached the full 3-year new business target in just 2 years, more than EUR 24 billion of GBV from new business in '24 and '25 only. Engine 2 of growth is delivering. The digital platform is live in all countries. Our alternative asset management company is above EUR 1 million of fee-generating AUM with 2 new funds launched in recent months. FinThesis has already intermediated 2,000 mortgage applications and our advisory unit continues to expand. With the consolidation of coeo, Engine 2 will become the group main business and represent the majority of group revenue from day 1, not over time, shifting the group revenue mix as outlined at the Capital Markets Day. On capital structure, we delivered as well. We refinanced the '25-'26 bonds by summer '25. And in October '25, issued the 350 2031 notes at a coupon 160 bps lower than the February issuance despite the longer maturity. Our bonds trade at a yield to maturity around -- below 5%, sorry; the lowest in the industry, and we still see room to optimize interest costs through further refinancing. Finally, financial performance is in line with guidance. GBV of EUR 136 billion, EBITDA of EUR 217 million ex-NRI, free cash flow of EUR 76 million, net leverage of 2x. So overall, we are delivering what we said. We are ahead on the transformation, and we are doing it with a capital structure and the financial profile that supports the next phase. Actually, we didn't just deliver on the numbers, we overdelivered on our strategic position. We expanded our geographical footprint, strengthened our AI capabilities and broadened our product scope with an acquisition that will open a new chapter for doValue at the next Capital Markets Day. And we did all this while keeping leverage in check and delivering on every stand-alone target. I will now hand over to Davide, who will take you through the financial results in more detail. Davide Soffietti: Thank you, Manuela, and good morning, everyone. Let me start by saying that 2025 was a year of tangible progress and strong financial execution as is clear from the summary of our preliminary full year results on Page 13. 2025 stands out as a year where we delivered strong results and materially enhanced profitability with double-digit increases in both revenues and EBITDA. Gross revenue in 2025 was EUR 580 million, showing a solid double-digit growth of 21.1% versus the prior year. Despite temporary timing effects related to the ramp-up of the collection process on the new Greek portfolios, the underlying momentum remained strong with growth sustained by non-NPL revenue, which continue to expand their contribution to the group's mix as indicated in our plan. Net revenue rose to EUR 524 million, mirroring the gross revenue growth in the presence of a stable impact of outsourcing costs year-over-year. EBITDA ex-NRI reached EUR 217 million, up 31.8% versus 2024. Synergies expected for the Gardant acquisition are playing out exactly as expected in Italy with integration now largely completed. Cost discipline across the other regions continue to support high margin, up by 3 percentage points from the 2024 level. Net income ex NRI increased to EUR 25 million, more than tripling from EUR 7 million in 2024 despite higher financial costs and higher D&A following the consolidation of the Gardant perimeter. This is fully consistent with our M&A philosophy. Every transaction must be EPS accretive, and the performance we are showing confirms exactly that. The coeo acquisition will show in our figures in 2026, and it will be a synergy. Moving now to Page 14, we can find breakdown of gross revenue per region. At group level, gross revenue grew by 21.1% year-on-year, driven by continued growth in non-NPL revenues, both UTP and recurring with [indiscernible]. Non-NPL revenue represents now 36% of gross revenues, up 1 percentage point from 2024, in line with the group strategy shift towards higher growth, lower volatility segments. This will expand further following the completion of the coeo acquisition. In the Hellenic region, as mentioned, revenues in Q4 accelerated due to timing effect in the ramp-up of new portfolios, which we expect to contribute fully to revenue in 2026. Other than that, the regions continue to show sustainable activity across all of the business segments with healthy collections underpinned by different markets. In Italy, gross revenue grew 61% year-on-year, supported by the combined contribution of Gardant and the strong growth in non-NPL revenue, which will continue to expand even excluding Gardant. It is important to highlight that even on a stand-alone basis, both doValue and Gardant recorded low single-digit growth, confirming that the stabilization of GBV and the increasing weight of non-NPL revenues are already shaping a new positive growing dynamic even in a mature markets such as Italy. In Spain, revenue declined EUR 41 million as weakness in REO was mitigated by circa 60% growth in UTP servicing. Revenue in the future will be driven by new business intake in a still fragmented market. On Page 15, you can see the result of the continuous cost discipline efforts at the group level and of the successful integration of Gardant, delivering all the synergies promised 1 year ago. In 2025, operating costs increased only by 14.6% year-on-year, 6.3 percentage points less than revenues despite the inclusion of the cost base of Gardant. More in detail, HR costs grew 17.3%, leading to an incidence on revenues lower by more than 130 basis points, mainly thanks to effective release of synergies in Italy as well as cost savings across all geographies. As for IT, Real Estate, SG&A expenses, we recorded an increase of only EUR 42 million with the incidence on revenues falling 170 basis points as the group listed savings in all markets. On Page 16, we find by country details of EBITDA ex-NRI, which reached EUR 217 million at group level, up by 31.8% year-over-year and landing at upper end of our guidance for 2025. In Hellenic region, EBITDA ex NRI reached EUR 121.4 million with a reduction versus 2024 that mirrors the revenue dynamics, although partially mitigated by cost discipline measures. The region continued to be a key profitability driver for the group, contributing 56% of total EBITDA ex NRI with a solid 51% margin. In Italy, EBITDA increased 50% to the contribution of Gardant as well as the effective release of synergies. Indeed, the Gardant integration has been progressing really well, and the synergies are evident. In Italy, the EBITDA margin increased by 13 percentage points year-on-year with more value extracted from the acquisition than originally expected. This remarkable results demonstrate the high value-creating nature of our M&A activities. In Spain, we achieved a positive EBITDA as cost savings contributed to offset negative trends observed in REO. Nonrecurring items were limited to negative EUR 8 million, originating mainly from consultancy costs related to the coeo acquisition and cost to release Gardant synergies. Moving to Page 17. We show very positive dynamics in net income evolution, which, excluding nonrecurring items, more than tripled to EUR 25 million and increased by EUR 19 million compared to 2024. Analyzing the most impactful items between EBITDA and net income, depreciation and amortization and net impairment on PPE & intangible increased EUR 36 million year-over-year. The increase versus last year is mainly related to incremental D&A from Gardant and its PPA. Net financial interest and commission were higher, reflecting the normal impact of the larger gross debt following recent M&A activities. This includes the term loan paid in 2024 to fund the Gardant acquisition, currently circa EUR 300 million outstanding and amortizing EUR 53 million per annum, EUR 300 million bond due 2030 issued in February and EUR 350 million bond due 2031 issued in November and currently held in escrow until closing of the coeo transaction. Income tax decreased on a recurring basis by 17% year-on-year, while reported tax increased due to adverse comparison effect related to an extraordinary EUR 20 million positive effect in 2024 from a tax claim won in Spain. Net income attributable to noncontrolling interest increased EUR 6 million in 2025 to EUR 18.1 1million due to Gardant minorities. Nonrecurring items for the period amounted to EUR 34 million, up by EUR 29 million, mainly due to the aforementioned EUR 20 million positive effect from the tax claim in Spain related to 2024 and the nonrecurring financial costs related to the 2 recent bond issuance and early redemption of the '26 bonds. As a result, net income, excluding nonrecurring income items, reached EUR 25.3 million, up by EUR 19 million paving the way for dividend payout in line with our dividend policy. Moving to Page 18. Let's have a look at the cash flow dynamics, which, as anticipated in our plan, improved significantly. We are pleased to see the group being back to its previous high cash generation levels with cash flow from operations up EUR 99 million to EUR 181 million in the full year, thanks to positive EBITDA contribution and working capital dynamics and tighter control over the change in other asset and liabilities. Capital expenditure increased by EUR 11 million versus last year, higher than previously guided due to AI and automation initiatives to unlock efficiencies, investment in data strategy, investment to strengthening the group's cybersecurity perimeter as well as investments linked to the Gardant integration, namely the unification of system across the company. Net working capital released EUR 32 million, mainly linked to the recovery of past invoices in Greece and some nonrecurring expenses related to the coeo, which will be paid on closing. Lease payments under IFRS 16 amounted to EUR 17 million, including Gardant perimeter, in line with previous messaging. Payment for redundancy were EUR 11 million, slightly down versus 2024 as the group successfully limited redundancy by relocating personnel across the wider doValue Gardant perimeter, limiting the use of external asset managers. Other change in other asset and liabilities reflect the expected reversal of the MBO effect and include a positive effect related to the coeo transaction which will be reversed in 2026. Minorities were unchanged versus 9 months results as expected. Investments in equity and financial assets accounted for EUR 18 million, mainly from nonrecurring payments for the earnout in Greece and investment in Alba Leasing. Taking all this into account, free cash flow before debt repayment or dividend landed at EUR 76 million, above our EUR 60 million to EUR 70 million guidance range. On a recurring basis, excluding M&A-related effects such as earn-out for doValue Greece, Alba Leasing investment free cash flow for debt repayment would have been EUR 93 million, bringing the gap towards the 2026 free cash flow guidance. Based on the results achieved, doValue currently trades at a free cash flow yield of around 18% or 21% on a recurring basis. To conclude, let's now move on Page 19 and take a look at our financial structure. Net financial leverage at the end of December stood at 2x, down from the 2.4x level at December 2024, reaching the target for the 2025 despite an additional extraordinary M&A related to Alba Leasing. Even after the EUR 53 million term loan repayment, the group maintained a solid liquidity buffer of EUR 277 million, made up of EUR 145 million cash on balance sheet and EUR 152 million undrawn revolving credit facility, including a EUR 20 million new facility agreed in January '26, which remains completely undrawn. Overall, we closed the year with a solid capital structure, BB credit rating, strong performance in the bond market with our bonds trading at the lowest yield in the industry, below 5% and no refinancing needs until 2030, given the recent November issuance to finance the acquisition currently held in escrow. As we continue on our delevering path, we also see further opportunities to optimize our cost of debt by refinancing instruments issued at higher coupon. Importantly, this structure gives us significant flexibility in future capital allocation and shareholder remuneration; topics that will be addressed in detail as part of the next Capital Market Day. This is all our side for today. Thank you all for your attention. We will now take your questions. Operator: [Operator Instructions] The first question is from Tommaso Nieddu of Kepler Cheuvreux. Tommaso Nieddu: I have a few. The first one on free cash flow, which was clearly the main positive surprise. On working capital, the EUR 32 million release in 2025 was, I believe, materially ahead of your prior guidance and our expectation. Can you help us understand with more details what structurally changed there and also beyond the EUR 5 million temporary benefit from coeo? And given the 2025 net working capital release, as we think about 2026, should we assume a broadly neutral working capital? Or do you see scope for further structural release? The second question is on dividends. While you reiterated that the proposal will be in line with policy, could you give us more clarity on how you think about positioning within the 50% to 70% payout range? And for now, the last one on Gardant. You originally guided for EUR 5 million of synergies in 2025 and EUR 15 million at a full run rate. My question is, could you quantify how much has been realized to date and whether there is any incremental upside beyond the EUR 15 million target? Davide Soffietti: Tommaso, I will take your first question. Free cash flow, EUR 32 billion were coming as anticipated mainly from Greece as we guided EUR 15 million to EUR 20 million, the higher level of our guidance. Then we have also a contribution, as I was saying, from coeo, we have roughly EUR 3 million that has been included in the reported EBITDA that will be paid in 2026 at closing. And then we have also positive impact from Italy, both on working capital and also because we were able to use our tax credit that has been transformed in tax credit has been used to pay related to the working capital. For '26, we still expect a positive contribution from working capital, we still need to recover advanced payment we made in Greece. So we would expect still a double-digit contribution of working capital in 2026. Manuela Franchi: On the dividend front, we will propose to be on the high end of our guidance in terms of percentage, probably rounding the numbers up. On the Gardant integration, about 2025, we closed between actual synergies of around EUR 9 million to EUR 10 million. We confirm still the run rate of EUR 15 million, hoping to do better. All the actions have been put in place. The technical aspects to be executed will complete by June. So by June, everything is really closed. And the team is running ahead of guidance on the cost efficiency side. Operator: The next question is from Antonio Gianfrancesco of Intermonte. Antonio Gianfrancesco: Congratulations for these set of results. I have 2 questions. The first one is on new business because new business intake reached EUR 14.5 billion in 2025, exceeding already the cumulative business plan target, a very good figure. But I would be -- it would be useful to better understand your expectation for inflows in 2026, both in terms of volume and product mix and how confident you are in maintaining this commercial momentum in a market where NPE inflows remaining for sure, structurally low, but insolvency trends appear to be rising? The second question is on coeo, because I understand that BaFin approval is the final step before closing. And you have confirmed your guidance for 2026, which includes coeo's contribution. So considering that the actual closing will now take place at least 2 months later than planned or something like that, it will be useful to understand whether you expect this delay to have any potential impact on execution in 2026? And the third one is on the German expansion. You highlighted Germany as a fragmented and consolidated market with CSI licensing obtained and operations starting, if I don't understand worse in January 2026. So some additional color on the medium-term ambition in that geography, let's say, in terms of scale, investment intensity and potential margin profile would be very, very helpful. Manuela Franchi: Thank you for your question. On the business volumes, clearly, there were major transaction this year that we had embedded as probability in our pipeline. But obviously, they all realize in a positive manner that probability will become 100%, and this has brought to doubling the level. Clearly, the level of primary transaction across the core markets, the Southern European one, we see them less in the traditional NPL business, while they will be mostly focused on the UTP and Early Arrears part. And also the pipeline regarding nonfinancial claims from there is quite big given that it's a market we don't touch today or at a very limited extent in Spain and that for us is an open opportunity. So we confirm -- we reiterate still what we had in the business plan of EUR 8 billion. Clearly, this EUR 8 billion is composed by forward flows and the new contracts. On a positive note, the forward flow this year only contributed more than EUR 4 billion. Clearly, this includes UniCredit that has finished in terms of forward flow last October and that is replaced by Sondrio that obviously it's smaller that will start after April. And the renewal of Santander, which this year has done more than EUR 1 billion over our budget. So this brings us to positive expectation also on the forward flow contribution of 2026. If you remember, our original mix in the EUR 8 billion was EUR 2 billion from forward flow and EUR 6 billion from the rest and also this component is much higher. This is without coeo. Obviously, coeo has an end market which is different. And in that sense, is a growing market. And this is all assuming in our core business still not substantial increase in the default rates, which is instead happening. So we prefer still to be conservative on this front. Also because you might remember that the time between winning the contract onboarding and the actual pickup of the activities takes a bit of time. And so it has a more dilutive effect over time. Now on the coeo side, the -- in terms of execution of the integration, we don't see impact on the execution. Why? We have already defined the integration plan, and we are already moving ahead with the business opportunity without waiting the closing. So coeo team has built a division to manage NPL and has already deployed a system which allows them under our guidance to manage our traditional NPL. And they already got new clients from January for which they are managing NPL bank. So we are talking to banks. I was actually in terms of for a conference with banks just 2 days ago because the regulator is telling them to prepare themselves for this increasing weight because they have not used those internally to manage more NPL. And to do it more efficiently based on other models and Italy was portrayed as a reference model for the servicing industry. So that activity is developing. On the other side, we are deploying in Italy and in Spain, the coeo models and system. And we can say that already from April, we will start managing 2 of the major clients in our jurisdiction. So this is major results. Then if you look from a pure accounting standpoint, clearly, the figures we have given are pro forma, and it depends on the timing of close, we will consolidate from that point in time. But in terms of free cash flow generation and the targets, we feel confident given that the contribution of coeo in '26 was pretty much somehow offset most extent from the transaction costs, while the full effect on the free cash flow side is from the year after. So because we already achieved this year, clean for the extraordinary elements, the EUR 90 million guidance, the target for the EUR 2.2 billion, it's pretty much sustainable despite this delay. Now going back to your last question on the German expansion. Clearly, our history in Germany is different now from Southern Europe, where we bought a legacy platform that we will go to make more efficient, more modern. In Germany, we start with a model which is extremely light doesn't have legacy, and we would like to grow our market share, keeping that approach. So we will look to M&A in a very thoughtful and selective manner, but we prefer the organic growth strategy in that specific sector, given that it has proven very successful and the AI-driven collection model in the German market has taken a lot of market share from traditional players in the small ticket business, and we hope to do the same also for the NPL. Obviously, adding the more human-intensive piece that we have explained is critical for when you manage larger tickets. But on that front, as I said, the team has already hired a few people, has already [indiscernible]. So -- and all of this is -- all these costs are included already in the guidance we have given. Operator: The next question is from Davide Rimini, Intesa Sanpaolo. Davide Rimini: Just a few. One is on cash flow. I was just wondering, you mentioned already your guidance in terms of working capital contribution for this year. I just wonder whether you might mention a few other building blocks to get to a rough guidance for this year versus the EUR 76 million reported today? The second question would be just a clarification on the pro forma confirmed guidance for this year. I just wonder whether you might add on coeo business, whether there is any seasonality in the business that we should be aware of within the year? And that might affect sort of this message? And the third question, still on coeo. I noticed that you put sort of a slide on the potential pipeline in the 18 months forward on EUR 250 million. And at the same time, you highlighted the opportunities in extended the business in countries like Italy and Spain. I just wondered whether the EUR 250 million is including these opportunities or is excluding those? Davide Soffietti: Davide, I will take your first question. '26, as we mentioned already in 2025 shows that we are able to -- excluding nonrecurring items to be at EUR 90 million. So in 2026, we still have CapEx that will be quite in line with this year, probably around EUR 30 million. We will have a positive contribution from working capital between EUR 20 million and EUR 25 million. We'll have change in other asset liabilities that are always the IFRS EUR 70 million plus redundancy that expected around EUR 60 million. We have tax income to pay around EUR 30 million. Financial charge expected roughly EUR 36 million, EUR 38 million. And we still have the earnout to the grid that is the last one we need to pay this year is EUR 12 million. The next one will be in 2030 of EUR 60 million and minority that is quite in line with this year, so roughly EUR 8 million. On coeo, as Manuela was mentioned, we get free cash flow that will be mainly compensated by the transaction cost and by higher financial charge. But from 2026, we will benefit from the cash flow. This is why we are confirming EUR 90 million. Then we will have the benefit of the proceeds for the portfolio sales that this is in line with our guidance. So we reduced the gross debt. Manuela Franchi: On the guidance for '26, if I understood the question correctly, -- this year, we closed for the doValue Group at EUR 217 million. In terms of EBITDA, we indicated in the guidance last year that the EUR 300 million included the bottom end guidance we had given before of EUR 240 million to EUR 250 million. And in coeo, there is no seasonality effect. There are some mild effects related to [ an uptick ] of e-commerce transaction around Christmas and the like, but nothing as typical as the [ core ] activity in the traditional business. In relation to your last question, if you're looking to Page 5, the pipeline of the EUR 250 million does not include the expansion to Southern Europe. Davide Rimini: And if I may just have a follow-up sort of on the CapEx that you mentioned, the EUR 30 million is -- could you give us sort of a sense why sort of it should be off versus the EUR 35 million sort of spend this year? Davide Soffietti: Sorry, can you say it again? Davide Rimini: I just wonder, if I picked up correctly, sort of you are pointing to EUR 30 million CapEx this year off versus the EUR 35 million reported today. I was wondering whether there's any reason for... Davide Soffietti: The main [delta ] this year we included all the costs mainly related to the Gardant synergies that was a one-off to integrate platform to have the positive effect of the synergies. So from next year, we will save this money. So we continue to spend our Gardant CapEx plus investment in technology... Manuela Franchi: Yes. Just to be clear, we don't expect a lot of cost from the integration of coeo because it's a different platform. So we will have some integration of unification of back-end platform, but it's more deployment and it's much more contained than in the Gardant case, which included a significant, obviously, FTE reduction effort and related integration of in-market platforms that in this case, we are not going to have. Clearly, you have some costs related to the development of the -- of their platform in our countries and of our platform in their country. The second one has already been expanded in their P&L in 2025, given that we moved ahead just after signing. So this impact of integration is much less. Another important point is differently from -- with an increasing trend vis-a-vis the past, the component of development, new technologies, AI projects as part of the CapEx has materially increased. Last year it was probably around 30%. This year will be more than 50%. This is obviously a function of bringing better processes, better technologies in our core system rather than integrating what we had. Operator: The next question is from Davide Giuliano of Equita. Davide Giuliano: I have 4. The first one on gross revenues. Revenues were a touch below your guidance, but more than offset by remarkable efforts on costs. Can you give us some color on the like-for-like trend in revenues? And are you seeing a more pronounced slowdown in recent quarters compared to your guidance? Where do the difference come from? The second one on Greece. In the release, you reported that there are still slowdowns in the onboarding of portfolios, I guess, still related to the Alphabet tranches. In addition, we have also seen a market drop -- a marked drop, sorry, in the collection rate compared to last year. Why are you experiencing these difficulties in onboarding? And in general, what trajectory do you expect for the Greek business going forward? The third one on tax credits. Has there been any relevant developments for state tax credits? And can you give us your expectation on profitability of local tax credit servicing, which will be assigned to AMCO? And the very last one is just a quick comment on coeo results were very good in 2025. And I was wondering in light of Klarna's recent results, if your long-term assessment of the coeo business model or concentration risk with Klarna has changed? Davide Soffietti: Davide, I'll take your first question on revenues. As we anticipated in Greece, the reduction is not a -- tax reduction is mainly correlated to the -- as you mentioned, we have onboarded a huge amount of portfolios in 2025, very big, more than EUR 5 billion. So all the portfolio are onboarded, and we are managing those portfolio. The only difference is when you onboard this big portfolio, you need to work on those portfolio to have up and running revenue. So the expectation was to anticipate revenue during 2025, but because they are very, very big portfolio, we need to work on those portfolios, start the judicial action to also reach an autologous agreements with the borrower. So this created a temporary delay of those revenues from 2025 to 2026. And this is also impacting the collection rate you were mentioned because for sure, we [ existing ] portfolios that are still not having a run rate collection rate. So the first year will be lower, then we will pick up and go back to the previous collection rate. So we will consider this only really temporary effect that will not be any more in 2026. And then we have also, as I mentioned, in Spain, the reduction of revenue arrears, but that one has been also a choice for us because that part is not high margin. So we prefer to reduce these revenues, increasing other type of credit to manage that have lower revenues, but higher profitability. Manuela Franchi: On the tax credit, we are waiting or waiting the operating metrics and that the laws to be published by March will indicate on how to execute what was in the budget law. So based on that, they are defining the operating model on which the services they will use will work on. And we assume that after June, that type of business will be moved to them and they will allocate to subservicers. We have, as you know, a good relationship with them, given that we even increased last year or we even doubled the amount of portfolios that we were managing for them after they reassessed the number of services they work with. So we are keeping ourselves for -- to manage that business, which is not included in our budget estimates. And the margin we are hoping for is driven not by the type of receivable, but the operating model that we want to create on the back end on our side, we should be a digital model. So to confirm the margin we have on the rest of the business in Italy. Now on the coeo results, maybe Daniele can comment. Daniele Seta: Klarna results, you mean? Manuela Franchi: Yes. Daniele Seta: We watch very closely the quarterly results of Klarna, of course, because it is a key customer of coeo. First, let me begin by saying that as you have seen from the pipeline, coeo is diversifying much from Klarna. Nevertheless, it is still an important customer. What we watch for in the quarterly results of Klarna is the growth in the transacted volume. And this is growing very healthy across all of the regions where coeo operates. Specifically, the most important are Germany, U.K. and Sweden. In those regions, Klarna is already very profitable with its flagship product which is Pay in 3 installments. But a good news is that they launched recently the Klarna card. It's a debit card that sits in your phone and allow you to purchase in normal brick-and-mortar shops, with buy now pay later installment. And this is already producing an increase in purchase frequency by 8x in Germany. And this is driving a solid growth of transacted volume in U.K. by 40% and in Germany by 20%. So we are happy about Klarna growth. Of course, their profits are suffering from expansion in other products such as consumer financing in the U.S. We think that there's a clear rationale in expanding in those products. And we hope that at a certain point, coeo will be able to expand its product offering towards the more profitable products. Operator: The next question is from Simonetta Chiriotti of Mediobanca. Simonetta Chiriotti: Looking at the guidance for 2026, excluding coeo, you projected growth from EUR 217 million to EUR 240 million. Could you elaborate a bit more on the trends in the various markets? So should we expect growth in the Hellenic region, for example, and a further growth in Italy? And my second question is on tax receivables. In the past, I think that you have mentioned that there is an opportunity also in Greece on this segment. Could you just give us an update on this? Manuela Franchi: On the Hellenic front, we see 3 type of growth. One, the full action on the EUR 7 billion new portfolio onboarded in 2025 will have a collection effect on certain younger vintages that we didn't have before. And this was what Davide was explaining that you need to put activities in place before you see the actual results. On the other side, don't forget that Greece is probably the country where we are diversifying more the product offer. We have the real estate company, the mortgage broking company, the advisory company. We are offering a data proposition out of the advisory company from this year. We have created another company which they manage small ticket unsecured starting from next year, which is called doServe and will open the market for nonfinancial receivables and also the tax receivable opportunities you were mentioning where the process shall start next month. But this is as an upside is included in a very small amount in our budget given that it's a public tender process, and it might take a bit longer. On the Italian front, the extra value perimeter, but also the Gardant one have been growing this year, mildly vis-a-vis last year. And we are now deploying at full speed also the revenue synergies that we had in the Gardant perimeter. Then in Italy, we have the asset management company. So that falls under that perimeter where we have developed now 2 new funds recently actually 3, and we have a pipeline for next year, too. And last, on the data side, we think we will increase significantly the product offer to noncaptive clients. We have already developed the products. And remember, we also are launching in Italy the Stage 2 product, which has now might be -- we might be closing with 2 banks contract. So this is in our assumption. So it's exploring as much as possible the stocks we have and the inflows from BPM, doValue and Sondrio, but also to grow these other revenue lines. While in Spain, apart from the fact that we have developed digital collection now in all the countries with the marginality increase, which is very strong. We mentioned -- I think Davide mentioned that on the 0 to 90 days past due, the margin on the digital channel is more than 80% versus less than 40% before. There, we are deploying a JV, but we will discuss in more details in the next call on the legal servicing side because the structure of the legal services in the Spanish market allow us to develop this type of proposition. So it's really professional services type of revenues, which -- where we are going to use the capacity we have inside with strong lawyers with expertise in this sector for other sectors, which are not NPL related. Operator: Mr. Della Seta, there are no more questions registered at this time. Daniele Seta: Thank you all. We wish you a good day. Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
Operator: [ Welcome to the bioMerieux 2025 Third ] Quarter Sales Conference Call. The call will be structured in 2 parts. First, a presentation by bioMerieux Group management team. Afterwards, there will be a Q&A session. [Operator Instructions] I will now hand over to Aymeric Fichet, VP, Investor Relations. Please go ahead. Aymeric Fichet: Thanks. Hello, everyone. Good afternoon, good morning, and thank you for joining this call. I'm with Pierre Boulud, CEO; together with Guillaume Bouhours, CFO. Please note that this conference call will include forward-looking statements that may change or be modified due to uncertainties and risks related to the company's environment. Accordingly, we cannot give any assurance as to whether we will achieve these objectives. I also remind you that today's call is being recorded and that the replay will be available on our website, www.biomerieux-finance.com. I will now hand the call over to Pierre, and then we will open the call to questions. Pierre? Pierre Boulud: Hello, everyone. Good morning, good afternoon. So I'll start with giving you the highlights for the year 2025. So I'll start with the sales numbers. We've reached a very important milestone, EUR 4 billion company now, bioMerieux growing 6.2% organically, significantly outpacing a market that we're seeing way around 1% when we look at the diagnostics results from most of the competitors. This growth would have been 7.8% excluding China. What is very positive we see in our performance for 2025 is we've made a very profitable growth, reaching 17.9% of our sales contributed EBIT and growing 16% organically. And finally, on the numbers side, very strong cash flow generation, reaching EUR 460 million, growing 40% versus 2024. So now if we go into the commercial dynamics and the 4 growth drivers that we selected in the context of GO.28. So if you put them together, they've actually been growing 9.4%. So let me start with non-respiratory BIOFIRE. What I'd like to highlight here is an increase of the net unit installations. As you know, this is an indicator that we follow very closely. We've managed to install an additional 1,800 units of BIOFIRE in 2025, to be compared with 1,350 in 2024. So we have successfully grown installed base by 7% in 2025 only, which is very consistent with the growth perspective that we project for the years to come. And we've done that. We'll come back to that with very limited price erosion. The second growth driver, as you know, is SPOTFIRE, point-of-care system. So what I'd like to highlight here is a very significant improvement of the installed base, 110%. We've installed 6,400 instruments in 2025 with the successful launch of the nasal swab in the U.S. in the summer. The third growth driver is Microbiology, where we have a very strong leadership position. As you know, we've been impacted by the decline in China. Excluding China, we've managed to grow 6.3% We are very satisfied actually with the instruments growth in the region of 14% in 2025, growing 14% in 2025 versus 2024. So demonstrating very strong momentum for our Microbiology solutions moving forward. And an additional 2 percentage point price increase in Microbiology, which is also a very positive factor. Finally, Industrial Applications. What I'd like to highlight is a very strong performance on the Pharma segment, where our launches are demonstrating a very strong impact in the market and the pharma sales growing at mid-teens again, very strong level of [indiscernible] for the future, together with 2 percentage point of price increase. Now the 2 additional areas of sales that are not a growth driver, but we still obviously monitor very carefully. Respiratory panels, we've actually managed to grow 1%, building on very strong performance already in 2024. The epidemiology was broadly in line, distributed differently between quarters but broadly in line for the full year between 2025 and 2024. What is making us very positive on this one is, again, very limited price erosion, below 2%. And of course, the installed base increase that I was mentioning will also benefit the respiratory panels for the future. In immunoassays, we've been struggling with immunoassays franchise, as you know, in the last couple of years, minus 6% in 2025. A positive factor that I wanted to highlight here is the VIDAS KUBE, a new system for VIDAS that we have launched now a couple of years ago, is growing very nicely. There are replacements obviously there, but mid-teens sales growth in instruments in 2025, demonstrating that we are actively managing the replacement of the old VIDAS in the market. So what are the comments on the top line? If we look at the bottom line, 16%, as I was commented -- commenting an improvement of CEBIT. Together with the 6% of sales, so definitely a significant operating leverage. We are deploying our GO.28 initiatives. We are progressing on the automation with regards to manufacturing costs, reaching 40% of the pouches fully manufactured now on the automated lines, which is good news, bad news. I mean, good news is we keep improving. And we still have an opportunity to grow this in the next few years and further improve our costs with regards to BIOFIRE and SPOTFIRE pouches. We are also progressing in R&D following the decision to close the San Jose site, we are moving forward with adding 1 unified team for Microbiology. And we are progressing also with the transformation of our global customer service that will translate into a better service to our clients and efficiency improvement. Overall, we've increased our headcount around 2% in 2025. So to be compared with a 6% sales growth that we are posting. Finally, on 2025, I wanted to give you an update on very significant progress on our CSR agenda. We are actually, for nearly all KPIs, either at or above target. I'd like to highlight especially the CO2 greenhouse gas emission that has been reducing close to 30% since 2019, while our sales have been growing 50% since 2019. So a very significant improvement, and we're talking absolute emissions, which, by the way, I'll come back to that, will lead us to review and upgrade our CSR ambition for the years to come. So before handing over to Guillaume, who will give more granularity on the information on the financial performance. It's been 2 years now that we've communicated GO.28 plans. So we have -- it's a good opportunity to step back after 2 years. So if we look at the different dimensions of the GO.28 ambition, after 2 years, we've been growing sales 8% on average in the last 2 years. So significantly very much in line with the plan. We've grown the EBIT by 20% in 2024, 16% in 2025. So overall, an improvement of 260 basis points versus 2023, very much in line. In terms of team engagement, we wanted to be in the top quartile of the industry. At the end of 2025, our engagement ratios within the top 5% of the industry. And as I said, I will come back to that, 29% reduction of greenhouse gas emissions versus 2019, very much in line with the ambition to reduce by 50% by 2030. So with this, I hand over to Guillaume, who will share with you more insights on 2025. Guillaume Bouhours: Thank you, Pierre, everyone. So let's look at our financial performance. Pierre already explained very well the commercial dynamics of our different ranges. So you see actually a wrap up on this page. The only thing I can highlight is that BIOFIRE overall without SPOTFIRE, which represents 37% of our total sales as our first product range. And we take everything together, grew 5% in 2025. And of course, our second range is Microbiology, which represents 33% of group sales. Now looking at maybe some kind of by geography on the next page. So North America grew an organic plus 8%. Of course, it's our first region for SPOTFIRE, so fueled by SPOTFIRE super high growth. Also a very good performance of industrial applications in North America as well as non-respiratory panels. Latin America, as you can see, is super dynamic, quite a stunning plus 18% organic, and it's actually very solid on all product lines in this region. EMEA delivered a 5% organic growth in 2025. We can see notably double-digit growth of BIOFIRE non-respiratory. And I remember, we always have questions on the internalization, meaning outside of the U.S., the push outside of the U.S. for BIOFIRE. So I think this is also pretty visible here in the figures. In EMEA, we should mention a solid performance of Industry Applications as well as Microbiology being mid-single digit. Asia Pacific, maybe let's stand there, had a contrasted overall 1.5% organic. Really contrasted because, of course, we discussed China all over the year. Just to remind everyone, China declined, so for us, minus 40% is a market downturn with a lot of pressure from authorities to decrease the spend of hospitals, which actually translated in our field, which is mainly Microbiology in China in a volume decline in 2025, so down 14% in China. But very dynamic actually in Asia Pacific outside of China, plus 11% overall. We can mention India with plus -- which is 12%, so above double digit. And of course, Japan, which has now delivered about 30% -- above 30% organic growth in 2025 with a great success of BIOFIRE and SPOTFIRE. Noting that there was the exceptional instrument sales of SPOTFIRE in Q1, but yet a great dynamic in this country. With that, let's turn to the P&L. So with 6% organic on the top line, we have delivered a solid improvement in gross margin. You can see 8% like-for-like growth of gross margin, which is actually a 90 bps improvement in the margin itself on a like-for-like basis. How do we explain that? We have a product mix effect. As you saw, we had a higher share of BIOFIRE, SPOTFIRE, which I remind everyone is a slightly higher margins than the rest of the group. And we also have in gross margin, a number of GO.28 efficiency that Pierre illustrated earlier that improved our cost of goods sold. We had notably, really nice procurement savings in 2025 and supply chain, international transport savings. And this is all despite the impact of tariffs which we had in H2, of course, in this gross margin part. Below, we have the SG&A in, let's say, contained increase, I should say, at plus 4%. That also includes some of our GO.28 efficiency initiative, and then you had examples earlier from Pierre. R&D is up 3% on a like-for-like basis. So we continue to invest strongly in R&D at 12.5% of total sales and we deliver innovation. And yet, we have Innovation Powerhouse initiatives to make R&D more efficient overall. So CEBIT, our main indicator is, so contributive EBIT is up 16% like-for-like, as Pierre said. CEBIT margin, as you can see, improved to 17.9% on a reported basis, which you can break down as 160 basis point improvement on the like-for-like FX and scope compare constant, which -- plus impact of foreign exchange, which was actually a negative EUR 33 million due to the strength of the euro currency against many other currencies. And we can -- we'll come back to FX later on this presentation. And also a second effect, which is the effect of acquisitions, maybe mainly the impact of SpinChip, in which we invest a lot of about EUR 20 million. So altogether, we publish 100 basis points of margin improvement on a reported basis. With that, turning to the rest of the P&L. So the operating income, the reported one was impacted by VITEK REVEAL impairment that we had already reported and explained in first half this year. Just to remind, it's a lower-than-expected commercial start of this fast AST product. Yet, we still believe in this product. We believe there are high unmet medical needs on this product, and we continue to invest. But we also decided in H2 to close the site of San Jose of SPECIFIC REVEAL and to combine the teams under our Microbiology franchise in St. Louis in the U.S. We took the associated charges, let's say, impairment and restructuring charges that you see in the nonrecurring line for EUR 40 million. Our net financial results improved from minus EUR 9 million to plus EUR 4 million. This was -- it's mainly linked to the positive impact of euro increase on our internal cash flow, so more technical topics. Income tax is at 24.5% effective tax rate, down from 26% last year, but very stable when you look at the recurring part of effective income tax rate. And so overall, our net income group share reported is down 8% due to the REVEAL impairment and associated charges. We have decided with the Board to publish for the first time, an adjusted net income and therefore, an adjusted EPS. We decided that to align with market practice. And actually, some of the -- our investors were asking for that. So basically, the adjusted net income excludes the amortization of acquired intangibles and nonrecurring, but we are very tight on nonrecurring. So with that, adjusted net income and adjusted EPS is up 9% in 2025. By the way, the decision of the Board is to propose a dividend to be voted at the AGM of 0.98% -- sorry, EUR 0.98 per share, which is exactly a 9% increase, in line with the increase of the adjusted EPS. Turning to free cash flow. And Pierre said it earlier, we had a really strong free cash flow generation in 2025, up 40% at EUR 462 million, driven first by an increase in EBITDA, pretty close to EUR 1 billion of EBITDA for bioMerieux now, EUR 960 million, up 5%. Working capital was a negative consumption of EUR 66 million, linked to mainly activity, actually, a small increase of inventory. Almost EUR 30 million increase of receivables. So we collected better when we look at days or overdue, we collect it better from our customers. But of course, we had the higher activity at the very end of the year, so ended up the year with this higher receivables. And in other working capital, we had more payments of social debt, means mainly variable compensation in 2025. Tax. So I commented on the P&L tax with no major change on the tax rate. On the cash tax, there is a major positive impact of the changes of U.S. tax regulation. It's a bit technical, but basically a more acceleration of R&D expense deduction, which drives a significantly lower tax payment in the U.S. in '25 and probably more of the same in '26, and then it will come back to more normal in 2027. In terms of CapEx, we will zoom on it in the next page, but EUR 328 million and 8% of sales. So overall, EUR 462 million, again, free cash flow that you saw. You see we invested about EUR 155 million in business development and financing activities. So business development was SpinChip, Neoprospecta and Day Zero Diagnostics acquisition. And overall, bioMerieux turned now officially into a net cash positive situation on the balance sheet at EUR 108 million net cash. With that, we wanted to give you a zoom on CapEx. So this EUR 328 million is split, just to remind everyone between about 2/3 in what is the usual manufacturing CapEx, as you can see, which supports capacity increase for future growth. Automation, that Pierre mentioned, for especially the manufacturing automation in Salt Lake City, and also internalization. You see here, I have a photo of our ongoing work of a new building in Marcy-l’Etoile, for enzyme manufacturing that were previously built outside. 1/3 of our CapEx is actually instrument placement. So it means it's our investment to put instruments, let's say, for free, more or less, at our customers. Of course, with a slightly higher reagents price, that was total EUR 110 million in 2025. M&A. So we have announced earlier, and its opportunity to discuss a bit more, the acquisition in January of Accellix, a company which strengthens our offering in the Pharma Quality Control segment for the cell and gene therapy market. And we believe it will address new applications and unmet needs in this market. It's basically a point of need. So it's not like clinical. Where we say point-of-care here, we say point of need instruments, which delivers an automated results in less than 30 minutes with lab like quality. It will be used in cell and gene therapy, both upstream when the -- to send the patient blood into production and downstream to verify the success of the operation and thus release the batches. It's a company that we knew. We've been working with them since 2021. We had a minority investment and a targeted distribution of their product. We believe this product range will serve as an accelerator for the Pharma Quality Control franchise inside our GO.28 plan and even beyond. You see the price that we paid, about EUR 45 million for 100% value of the company. And it should be basically around 2029, around EUR 20 million sales and breakeven by that year. And with that, I hand over back to Pierre. Pierre Boulud: Thank you, Guillaume. So it's now a moment to talk a little bit about 2026 outlook. And of course, key product launches to start with. So beyond Accellix, that we are excited to launch the pharma customers, we are finalizing following the acquisition of SpinChip, the CE filing to be CE marked. We expect by the end of the year that we can do a commercial launch end of the year, Q4 '26, maybe Q1 '27. We also wanted to update you on the fact that we have initiated already the clinical study in the U.S. so that we are -- the objective, as we said at the time of the acquisition of SpinChip, to be ready for a commercial launch in 2028 for hs-cTnI with SpinChip in the U.S. The second big launch that we expect in 2026 relates to SPOTFIRE. It's a bit of a strategic launch for us because it will be the first time we go into women's health with vaginitis. It will also be an opportunity to expand the use of the SPOTFIRE platform beyond respiratory and sore throat. The plan is to file during the summer, so that we -- again, depending on the length of the regulatory review, we can launch at the end of 2026, early 2027. Last piece of launch, we had SPOTFIRE available in Europe with what we call the high-plex panel for respiratory and sore throat. We are expecting to have in H1 2026, the CE marking for the low-plex panel, 5 targets, nasal swab, that will allow for European customers to address new opportunities and to use this point-of-care solution with a lower plex panel. And for instance, in France, we had in February, a new decree that allows to do point-of-care testing under certain conditions for certain diseases and the financing still needs to be refined, but it's now regulatory approved to have those panels used outside of the hospital and the labs. So guidance for 2026. We plan to grow between 5% and 7%, so around 6% with an improvement of the EBIT of at least 10%. And if we go to the details of the performance, we expect non-RP to grow around 10%, building on the cross-selling and out of U.S. expansion, knowing that we are, at the end of 2025, we've been growing the non-RP panels 13%. So very much since 2023, so very much in line with the guidance. For SPOTFIRE, we expect to grow our sales by between 40% and 60%, which is very much in line with the trajectory that we have to reach EUR 450 million by 2028. Microbiology, we expect to grow between 3% and 5% with China still declining, but softer than what we experienced in 2025. We are expecting mid-single-digit China decline. That will also come together with a high comparison basis in terms of new instruments, as I said, in Microbiology, we grew instrument sales by 14% in 2025. Industrial Applications, very much in line with the plan between 7% and 9% sales growth. Moving on to respiratory panels. We are actually expecting between minus 3% and 2% and plus 3% evolution, knowing that we had a very strong Q1 2025. So we have a very high comp basis. We were -- just to remind you, we were growing 21% respiratory sales in Q1 2025. So to be -- to keep in mind, for those of you who look at quarterly evolutions, Q1 '26 is expected to be very much impacted by this. In immunoassays, minus 5% to 0% and still a little bit of the same story of PCT in China decline. And finally, last but not least, we expect currency effects to have an impact on the CEBIT. Our estimate at this stage, and we update on a regular basis during the quarter earnings calls, is EUR 50 million to EUR 60 million negative impact. So I leave Guillaume to give you a bit more color on this one. Guillaume Bouhours: Thank you, Pierre. So we tried to update you on our FX exposure. And we know it's a complex topic. So as you all have in mind, we have a very high exposure to U.S. dollar on revenues. But much smaller net of cost on the CEBIT because we have a high cost base in the U.S. We try to give -- and again, its estimates, of course, the impact of a 5% variation versus the euro on the CEBIT. And it's, for example, on U.S. dollar, you can see that if you compare U.S. to India exposure, it's 12x more U.S. than India on the revenues, but it's only 3x more on the CEBIT. So keep in mind that we are much more sensitive to the rest of the world than the U.S. And now beyond this, let's say, theoretical variation, we try to give you a bit of a view on the right on where the current rates and some -- depending on the currency, these are the current rates for the spot ones or the forward rates for the more volatile currencies versus the '25 average. So you see the changes, and therefore, how it translates into a forecasted FX impact. Again, bear with me, they are estimates. So the total today is actually pretty negative, very negative, due to the really, really high euro currency strength against most of the world. And so a guidance which we estimate today between minus EUR 50 million and minus EUR 60 million. And as Pierre said, we will do our best to update regularly these figures during the year. Pierre Boulud: Thank you, Guillaume. And as we have -- we have now, as I was sharing earlier, we have 2 years into the plan. We felt good opportunity to give you an update on our GO.28 ambition. So first of all, I mentioned the CSR new conditions and milestones. We are very much in line, in some cases, above the plans that we articulated before. So we decided, especially on 2 pillars of our CSR ambitions to review towards the ambition. So on the planet side, what we want to do is to expand beyond Scope 1 and 2, which is, as you know, very much the control zone of the companies wanted to add a target with regards to Scope 3, which is the CO2 emissions of our suppliers and our clients. So we'll work on helping them to reach minus 35% by 2034. And we've added, it was approved by the Board, a CO2 net zero objective by 2050, including Scopes 1, 2 and 3. On the health side, we wanted to strengthen the dimension of accessibility in our CSR ambition. So we wanted to make sure that for antimicrobial resistance impacts, we're capable to improve for low-end middle-income countries the results that we provide. As you know, in those countries, there are significant challenges with antibiotics resistance. We want to make sure that bioMerieux solutions are well available there. As well as we've increased the coverage of antibiotics from 80% to 90% because it's very relevant, again, in the spirit of making sure that antibiotic resistance is well managed everywhere in the world. So that's for the CSR ambition. With regards to the more financial ambition, by building on the performance '24-'25 and the guidance that we gave for '26, we are very comfortable to confirm the ambition in terms of sales growth, 7% on average between 2023 and 2028. For the EBIT improvement, we said we would grow at least 10% every year. So for the years to come, we -- based on what we've already initiated in the context of the efficiency program that we have, we are also very comfortable to confirm at least 10% every year. Now with regards to the margin improvement, as you can see, when you put together 2024, 2025 and 2026, we are almost after 3 years, at the level of 340 basis points improvement versus 2023. So we have upgraded it to around 500 basis points to be reached by 2028. I'll remind you, at constant exchange rates at constant scope. And this is pretty much what I wanted to share with you before we go into the Q&A session. Operator: [Operator Instructions] The next question comes from Kavya Deshpande from UBS. Kavya Deshpande: I've just got 2, please. So first, just looking at your group organic revenue growth guidance and comparing it to the flu headwind you've estimated in a very weak respiratory scenario. Is it fair to say that the bottom end of your 5% to 7% range is driven mostly by the flu? And in that case, you would expect no sort of underlying slowdown in the rest of the business? And then just also on your EBIT guidance, so you're guiding in line with your GO.28 plan for at least 10% organic EBIT growth even though the floor of the top line guidance is a bit lower at 5%. So would you be able to share the levers that you have that give you confidence you can sustain that level of profitability, especially if we do end up at sort of the lower end of the revenue guide because of weaker flu and lower contribution from high-margin RP sales? Guillaume Bouhours: Yes. So on the top line, definitely respiratory season that, let's say, decreased, and it's visible in the stats in January. And again, as Pierre said, we are comparing to Q1 2025, which was a high comp basis for respiratory. So yes, when we look at our guidance and the range between 5% and 7%, the main element that could change between the lower or higher performance in this range is definitely the strength of the respiratory season, which we have to remember is actually throughout the year, yes. We see January and February, let's say, lower than last year, but I mean it varies quite a lot. 2 years ago, we were surprised by strength in Q2, Q3. Last year, October, November were pretty low and then December super, super high. So yes, let's see throughout the year overall, and that's what we, let's say, try to take in our assumptions, as you could see on RP between minus 3% and plus 3% depending on the full year. On EBIT guidance, thank you for the question. Yes, definitely, we commit to -- we want to confirm we commit to the at least 10% organic CEBIT growth with sales that can be between plus 5% and plus 7%. So even with plus 5%, it's more difficult. But even with plus 5%, we would commit to plus 10%. Why do we feel confident? Because of our GO.28 plans. As said and as illustrated by Pierre, we have quite a lot of initiatives ongoing, efficiency improvements that we believe we can push, and that will continue to deliver in our third year of GO.28 in 2026. Operator: The next question comes from Aisyah Noor from Morgan Stanley. Aisyah Noor: My first one is on BIOFIRE, specifically the 1,800 placements you made in 2025. This number was strongly ahead of your 2024 number of 1,350. We know that your European competitor also launched a multiplex system in the U.S. in mid-2024. So could there be a dynamic here where you lost some customers to this competitor last year, and they've now come back because those 1-year contracts have run out? I'm just trying to understand if the 450 run rate per quarter for BIOFIRE is sustainable for 2026 or if there were any one-off dynamics here? My second question is on the flu season. So your U.S. competitor has called out a 20% decline in respiratory sales for the first quarter. Does that sound realistic to you? I understand you don't guide on quarters, but given the flu volatility, it would be great to get your insights here. And then my third question is on China. You are guiding to a mid-single-digit decline in 2026. How does this compare between the Immunology and Microbiology business? And what gives you confidence that the decline is due to a weak market and not market share loss to local competitors? I asked this because some of your Chinese -- or some of the Chinese IVD companies are forecasting positive growth in 2026? Pierre Boulud: Thank you. So I can start with the first 2 ones, and maybe we can together with Guillaume and so on the third one. So the 1,800 installation that we've seen, and I remind you, it's a net on, so it's between the tenders we lose and the tenders we win. Very strong performance, but we are not seeing what you are suggesting, i.e., customers would have left in 2024 and come back in 2025. What we're seeing is it's either new customers or customers who increase capacity in terms of testing units in their labs. So it's primarily a signal of competitiveness, I would say, of our solutions in the context of competition that you're describing. So for us, now we don't project, you know, It also depends on the market dynamics. We don't give estimate, as you know, in terms of installations from 1 year to another. But it's definitely a positive. As I shared earlier positive signal on our capacity to grow sales on BIOFIRE in general in the next few years. Flu season, yes, it's complicated to comment the impact of the flu season in the middle of the flu season. But for sure, as Guillaume was alluding to, we are seeing, especially in the U.S., a level of flu season which is below what we've seen in 2025, and I think we should account for that. And by the way, very similar when you look at the data from the CDC website, very similar to the '23, '24 respiratory season, probably mimics this one. So this is what we're looking at. But of course, when we publish the results for Q1, we'll be in a position to share more perspective on what the flu season looks like for Q1. And finally, on China. What we -- maybe 2 words. As you know, it's mostly Microbiology, I would say, in China. We are not seeing a significant shift in market share, to be honest. It's really a market decline. By the way, we've also seen, if you look at the Q4 results, China declining around 5%, mid-single digits. So very much in line with the projections for 2026. So we're seeing the stabilization of the market. So -- but unfortunately, still declining mid single digits. So as we speak, this is what we plan for 2026. I don't know, Guillaume, if... Guillaume Bouhours: Just on the majority of sales, as Pierre mentioned, it's actually 90%, 9-0, Microbiology. So it's really a vast majority, Microbiology versus Immunoassay in China. Operator: The next question comes from [ Rashid Anwar from Infi ]. Pierre Boulud: Let's move to the next. Operator: The next question comes from Hugo Solvet from BNP Paribas. Hugo Solvet: Just on pricing, please, to get a bit more details, what does the FY '26 guide imply for respiratory and non-respiratory, and Microbiology pricing? Have you seen also reagent pricing getting worse, probably sequentially in Q4, Q1, given replacement cycle competitions, and competitors launching products? And second on immunoassays, when do you think would be a realistic timeline for the business to go back to growth again? Guillaume Bouhours: Thank you, Hugo. So the first question is easier than the second one. The first question, pricing erosion. Basically, for respiratory panel, which is the most competitive panel, we have a price erosion, which is below 2% in 2025. For non-respiratory, it's below 1%. It's been -- I mean, as you follow us, it's been very stable actually in the last couple of years, so we don't expect a significant degradation on these front. And beyond BIOFIRE on Microbiology or Industry Applications, we are working on pricing improvement in the same order of magnitude as what we've seen in 2025. So that's for the pricing questions. With regards to immunoassays coming back to flat, but actually Q4 was better. It's only 1 quarter. It's also -- we are still suffering the -- even though it's, we are still suffering the PCT decline, even though it's 17% of immunoassay sales, it's still impacting us significantly less than in the past, but it's still there. And it's still impacting us in China. So we have those 2 headwinds. So as I said, the guidance is minus 5% to 0%. So there is still -- we are still seeing a realistic option to stabilize sales for immunoassays in 2026. But a midpoint, if you wish, for immunoassays is minus 2.5%. Operator: The next question comes from Jan Koch from Deutsche Bank. Jan Koch: I would like to try my luck with the flu season again. Could you help us with the phasing of your sales guidance in 2026? So is it fair to assume that sales growth in H1 and especially in Q1 is below the lower end of your sales guidance, given the tough comps? And then secondly, on the planned launch of the vaginitis panel and the point-of-care market, could you speak a bit about the size and the dynamics of this market? And how does your test compete with existing solutions? And if I remember correctly, your midterm targets for SPOTFIRE only include RP sales. So should we assume that sales from vaginitis come on top of your targeted number? And then lastly, on syndromic testing, one of your competitors has recently received FDA clearance for a GI panel, which detects 11 different pathogens. Since your panel is able to do test for 22 targets, I'm wondering how important are these additional 11 targets you have which your competitors does not have? Pierre Boulud: On the flu season, you want to give a try? Guillaume Bouhours: Yes. On the phasing of sales guidance, so definitely not balanced. It was not in -- because it was not on the -- the comparative basis is not balanced. We had a very strong Q1 last year, so a very high comp basis in Q1. So obviously, yes, Q1 should be lower than the full year guidance, of course. And then Q2, Q3, Q4 should -- we will see in these quarters, but should be higher than the average overall. That's very clear. Point-of-care, maybe the prospects, Pierre? Pierre Boulud: Yes, vaginitis and, high-sensitivity troponin. So what we have said is when we get very close to the launch, at the time of the launch, we'll probably update the market on the expectations in terms of sales, in terms of market share, and giving a sense of how our products compare with the competition. Obviously, it's also depending upon the label that we get from the regulatory authorities. So as soon as we are ready to launch, we'll share with the market perspective. We don't expect a significant impact of vaginitis in our sales forecast for SPOTFIRE. GI panel, I was not sure I was fully getting the question because there are a number of GI panels in the market actually. What we've done last year, actually, what we did in 2025 was we launched a midplex, so 11 targets panel on GI, and we had a 22 panel for higher plex, when we need to have -- when the doctors want to have a more comprehensive review of the potential pathogens. So we believe we have the portfolio for GI that allows to compete and to address the competition. Yes, that's basically what I can share on the GI panel. Operator: The next question comes from the Natalia Webster from RBC. Natalia Webster: The first one on microbiology. You reported double-digit growth in blood culture, reagent sales and mid-teens sales growth in instruments. How much of these are coming from competitive wins? And are you able to provide more detail on the wider market environment for blood culture? And if there's been a change to the lower utilization that you reported previously? And then the second question, just on that 3% to 5% Microbiology guidance. Do you see this as conservative given the 8% growth that we saw in Q4? And sort of how much of that range is dependent on China performance specifically? And then finally, on SPOTFIRE, on your 900 placements in Q4. Have these predominantly been driven by McKesson versus those in hospital settings? And are you able to provide an update in terms of what you're seeing in the uptake of 5 versus 15 plex panels? Pierre Boulud: Let me start with the Microbiology questions. So yes, we're very pleased with the good dynamics in terms of instruments, which we believe confirm the leadership that we have taken in Microbiology. There is within those numbers, competitive wins, but to be transparent, especially since we have a leadership position, a number of those installations are also replacement of all the instruments. So we don't communicate or share exactly what's the split, but it's definitely good dynamics in terms of future reagent growth. The 3% to 5% guidance, you're right, we did actually a very strong performance in Q4 with 8% growth. But there was a little bit of a rebalance with China, which was declining less. And also, as I said, very strong instrument sales that we don't expect to happen again. So we are very comfortable with the 3% to 5% guidance for Microbiology. That's what we believe should -- we should see in 2026. Finally, SPOTFIRE placements, 900 installations, Guillaume? Guillaume Bouhours: So overall in the U.S., for the U.S. part, yes, the majority, about 2/3 were actually driven by McKesson. You've seen we put on the slides that in terms of installation, we put on the slide that in terms of sales, the indirect channel is now 60%. It grew very nicely. It's a successful partnership. It grew very nicely, this part in 2025. And I think the second part of your question, if I heard correctly, was about the mix effect inside SPOTFIRE. We have now a balanced sales, 50-50 between the 15-plex -- with therefore a growth of the share of 5 plex in '25. Pierre Boulud: Okay. Yes, please. Natalia Webster: Sorry, just to follow up on the Microbiology blood culture as well, whether you're seeing an improvement in utilization there? Pierre Boulud: Sorry, your question is, do we see a degradation? Improvement? Yes, it's too early to say. As you know, I think you probably referred to the Waters closing the acquisition of BD. You know, we are obviously, we're watching it, and it's a bit early because it just closed. We'll see what's the impact in terms from a commercial perspective with regards to new deals. But as we speak, what we're seeing is very much the continuity of very strong performance. Just to highlight, our 8% growth in Microbiology, I mean, I don't think we have the details for BD, but I think they've communicated a decline of diagnostics business by 10% in Q4. So we see the performance, even though we are disappointed with the overall performance in 2025 in Microbiology, which as you know, it's below initial guidance. We're seeing it as actually a very positive competitive evolution in the market. Okay, moving to some online questions. So we have 4 questions from Christophe Ganet of ODDO. Inflation of personnel cost, what should be the most likely pace of evolution for 2026 and 2027? What is the installed base of BIOFIRE FILMARRAY full year? What is the level of price effect on FILMARRAY in Q4 and full year? And the last one, can we have an update on savings efficiency plans in terms of million euros? And what is the rest of the journey up to 2028? Guillaume Bouhours: So I can take some of those. Thank you, Christophe Raphael. So inflation of personnel cost. So basically, with our global footprint and of course, more weight of U.S. and France, we see kind of average, we call it merit increase or I think inflation of personnel cost around 3.5%, to give you an idea. To come back to the other question, the level of price effect on FILMARRAY. So as we said earlier and just to repeat on the respiratory panels, we see a price erosion below 2%, and that's been -- there's no significant acceleration on the quarter. It's a regular and consistent trend. And on non-respiratory, the price erosion is actually very minimal. It's below 1%. Savings and efficiency plans due linked to GO.28. So actually, we have never reported in million euros. As we said from the start, we measure it through our CEBIT margin increase. You saw that, as Pierre said, after 2 years and when we had our target of '26, we will have likely, let's say, delivered the 340 basis point of organic margin improvement that we were targeting in 3 years instead of 5. So as Pierre stated, we have actually logically increased the 5-year target to 500 basis points organic improvement versus 340. So we still have -- it's also to be very clear. It's not the end of the journey after very well delivering in '24, '25 and likely, '26. It's not the end of the journey. We still have a lot of topics ongoing. Some of our initiatives have delivered earlier than expected. I'd like to mention in '25, the procurement savings. We gave the numbers, it's quite a number of millions delivered in 2025. Some of those were ahead of our plans. There are other topics that are more, let's say, going to produce their effects in '26, even some in '27, and we have plans even, I can tell you, for initiatives that are in the making that have preparation steps in '26 that will actually deliver full year '28. So with that, I would say, rest assured that we still have a number of positive effects from GO.28 plants that are to come in this 500 basis points improvement. Pierre Boulud: And the installed base of BIOFIRE is 28,500, right? End of '25. Guillaume Bouhours: One question from Arnaud Cadart, CIC. What about the recent decree authorizing the point-of-care testing in France? What are the business opportunities for bioMerieux and what could be the update? Pierre Boulud: Yes. So it's a very recent development, very French, but very recent development where we are seeing that's good news, good news for the patients, good news for the business. That is now in France a decree that allows to do point-of-care testing. So it's organized, and it depends on the disease. It also depends on the settings. It's not -- yes, it's a very regulated and organized way, but still allows to do testing outside of the lab. There are 2. Obviously, SPOTFIRE is impacted, but also SpinChip for myocardial infection could be authorized, but also the respiratory test, especially for elderly patients in the -- we call them EHPAD, in the houses for elderly patients. So there are -- those opportunities are opening. The decree was published actually 2 weeks ago. So we still need to work together with our clients on what it means. And as it sometimes happens in France, it's authorized, but it's not funded. So there is a funding mechanism to also organize and refine. So we are working on it, but it's very positive news that the market is opening outside of the U.S. and Japan to point-of-care testing. So we see how it goes. Guillaume Bouhours: Another question from Arnaud. What loss to expect in 2026 at the CEBIT level from the recently acquired company? It was around minus EUR 20 million in 2025. Pierre Boulud: So basically, the company is acquired in '25 and especially SpinChip, which is a major one, was in January 2025. So it's now embedded as an organic contribution in 2026. So it's fully embedded in our figure and in the target of plus 10% organic in 2026. The one that will be on the scope change is actually Accellix, which will be a loss for the first year, probably a few million euros of losses contribution in 2026. I remind you, we have said that we will target a breakeven in 2029 for this group.. Guillaume Bouhours: Okay. One question -- 2 questions from Charles Pitman-King from Barclays. The first 1 is on the BIOFIRE non-respiratory panels. With the increase in competition in the U.S., will the recent launches of the GI Mid and WATCHFIRE panels be sufficient to maintain double-digit growth as the installed base matures? So this is the first question. The second one is on tariffs and pricing. So we are projecting for 2026, a negative currency impact of minus EUR 50 million to minus EUR 60 million on CEBIT. We assume the 15% U.S. tariff rate, and we mentioned the procurement savings in full year 2025. So the question is, could you elaborate on the mitigating actions being explored to protect margins? And to what extent price increase could be further leveraged in a more cautious hospital spending environment? Pierre Boulud: I'll take the first one, Guillaume, you take the second one. For non-respiratory panels. So basically, the -- you're right to say that the recent launches of GI Mid and WATCHFIRE are not going to be sufficient to maintain high -- to maintain double-digit growth. And I mentioned, we've actually grown the installed base by 7% in '25 only. So the main driver for growth, actually not market share, it's market growth. We expect the market on non-respiratory panels to keep growing, be it meningitis, be it blood-culture infections, be it GI, pneumonia. So all those markets are growing actually faster than regulatory panel. We are the only ones with such a broad menu of panels. Best competitors have 3 to 4 panels. We have 7. So we keep working on cost savings, expanding the market and the growth of the installed base, which is, again, 7% in 2026 versus 2025. Guillaume Bouhours: So that's tariffs pricing. Actually, there are a lot of sub-questions in this question. So I think FX impact, we give visibility. Tariffs, we have not discussed. So thank you. It's a good opportunity. The impact in 2025 was approximately EUR 10 million, EUR 11 million exactly in our P&L of additional U.S. tariffs that we had to pay, mainly in H2. What we see for 2026 and that we have embedded in our guidance is about a bit more than double that, EUR 20 million, EUR 24 million. This impact is after the negotiation with our suppliers who take, let's say, their own share and we take out. But it's before, let's say, the effects of price increases, which are not specific to tariffs, of course. On price increases, just to mention that we have, as Pierre said earlier, you know that where we can push on price is in Microbiology and Industry Applications. It's not easy, but we are disciplined to do that. Around 2% in Microbiology and Industry Applications in '25, and we should be ballpark in the same target in 2026. And then there are many other, let's say, actions on the margin improvement, we call them efficiency improvements, as part of our GO.Simple pillar of GO.28. And as I mentioned earlier also, they are part of the margin improvement that we have that we have in our guidance, and that we have even improved for the 2028 target to 500 basis points over the 5 years. Okay. Moving to the live question. That should be a question. Operator: The next question comes from Philip Omnou from JPMorgan. Philip Omnou: Can I just ask, given your net cash position, can you share an update on your capital allocation priorities? And then how are you thinking about opportunities for larger scale M&A? And then my second question, maybe going back to your comments on the margin. But if we just think about the bridge for '26, how should we think about that balance of margin improvement coming from operating leverage or mix and cost efficiencies? Pierre Boulud: So I can start with the capital allocation and M&A. Basically, our strategy is very much to continue what we've been doing, i.e., we call them bolt-on acquisitions. We have strong balance sheet. So we are looking at companies that bring differentiated solutions that support our core business. And that's very much the continuity of it. We are very much in that spirit. And Guillaume mentioned it, we are going to increase our dividends by 9%, which is also a way to give cash back to the shareholders. So it's the other element I would mention on capital allocation. With regards to 2026 margins improvement? Guillaume Bouhours: So it's actually mainly a cost efficiency initiative on top of, of course, of volume growth and, let's say, the scale effect that comes with it. We'll see on the mix. But when you look at it overall, especially with the RP, that could be, again, around neutral. It's not the mix effect that drives the margin improvement. It's mainly our own initiatives. And let's say, yes, proper cost management and cost control. Okay. One question from Maja Pataki. On the vaginitis panel, can you share how it compares to what is in the market now? And how should we see about the pace of uptake? What's the biggest difficulty with the rollout? Pierre Boulud: So it's too early to share the details of the vaginitis panel, and we'll -- when we get closer to first of all, the filing and then the approval, we'll share more details. But what I can share is we're excited actually with the vaginitis panel because it will be an opportunity to leverage the very unique features of SPOTFIRE outside of respiratory and sore throat. So we expect time to results to be very competitive, and we expect the plexing capacity of SPOTFIRE to bring an additional differentiation to what exists in the market. So time to result, point-of-care, plexing capacity, as you know, we like to launch products at bioMerieux that are differentiated. So we'll come back to that, but we expect to launch a differentiated solution in the field of vaginitis. Guillaume Bouhours: Okay. And with that, we can close the call. So we'll be on the [ road ] next week, so we will have the opportunity to meet with some of you. And our next call will be on April 23 to comment on Q1 sales performance. Pierre Boulud: Thank you, everyone. Guillaume Bouhours: Thank you. Bye-bye.
Operator: Hello, and welcome to the Northwest Natural Holding Company Q4 2025 Earnings Call. My name is Harry, and I'll be your operator. [Operator Instructions] I will now hand over to Nikki Sparley, Director of Investor Relations. Please go ahead. Nikki Sparley: Thank you. Good morning, and welcome to our fourth quarter and full year 2025 earnings call. In addition to the press release, a supplemental presentation is available on our Investor Relations website at ir.northwestnaturalholdings.com. And following this call, a recording will also be available on our website. As a reminder, some things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not occur. For a complete list of cautionary statements, refer to the language at the end of our press release. Additionally, our risk factors are provided in our 10-Q and 10-K filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these measures, including reconciliations to comparable GAAP measures, please see the slides that accompany today's call, which are available on the Investor Relations page of our website. Please note, our guidance assumes continued customer growth, average weather conditions and no significant changes in prevailing regulatory policies, mechanisms or assumed outcomes or significant changes in local, state or federal laws, legislation or regulations. We expect to file our 10-K later today. With us today are Justin Palfreyman, President and Chief Executive Officer; and Ray Kaszuba, Senior Vice President and Chief Financial Officer. Justin will provide highlights from 2025 and a look forward, and Ray will walk through our financial results and guidance. After Justin and Ray's prepared remarks, we will host a question-and-answer session. With that, I will turn the call over to Justin. Justin Palfreyman: Thanks, Nikki. Good morning, and welcome, everyone. We are excited to share our results for the year and our expectations for the future. Northwest Natural Holdings began a new chapter in 2025. We delivered record adjusted earnings per share at the top of our guidance range, deployed a record amount of capital to support our customers and reported our strongest organic customer growth in nearly 2 decades. Those results aren't an accident. They were driven by deliberate strategic decisions we have made as a company, reflect our management team's focus on execution and foreshadow the strength of our platform going forward. Over the last few years, we have taken steps to diversify into the water utility business, expand into multiple jurisdictions and add Texas Gas utilities to further enhance our long-term growth prospects. What began as a single utility in the Pacific Northwest has evolved into 3 thriving businesses serving customers across 6 states. Our 2025 performance is a result of these strategic decisions. We've set the stage for growth while fulfilling our mission of delivering safe, reliable and affordable service to our growing customer base. And we're still in the early chapters of our success story. As you know, we are in an age of tremendous energy demand. Natural gas plays a critical role in meeting that need, and we're uniquely positioned to address it. That's why we are excited to announce our new MX3 storage expansion project in the Pacific Northwest, a project that will enhance regional reliability and capacity and one that has the potential to drive our long-term earnings growth target to 5% to 7% once we receive notice to proceed. As our story progresses, we remain focused on disciplined execution and delivering consistent growing earnings and returns for our shareholders. The momentum we've built positions us for even greater success in the future. Moving to our Northwest Natural Gas utility, which now more than ever plays a critical role in energy affordability and reliability across Oregon and Washington. As we noted on our last call, we successfully settled our Oregon rate case in 2025 with new rates effective October 31. In Washington, I'm pleased to report that we've been working collaboratively and productively with parties and have reached settlement in principle, resolving the revenue requirement in the case. We expect to file the multiparty settlement in the coming month. Both cases set Northwest Natural up to recover significant safety and reliability investments in 2026 with a focus on maintaining customer affordability. In fact, on average, Northwest Natural residential customers are paying about the same today for their natural gas service as they did 20 years ago. We are also diligently working on dockets with the Oregon Public Utility Commission to complete rule making for multiyear rate cases. We believe moving to multiyear rate cases will ultimately provide greater clarity and certainty for both customers and utilities. While the rule-making process is taking shape, we filed an alternative rate mechanism to recover certain capital investments made in the interim period. The proposal results in a modest 1.5% increase to customer rates with an effective date of October 31, 2026. Stepping back, we feel very good about our positioning over the next several years. Historically, our earnings trajectory relied on a single large Oregon rate case every few years, which created uneven growth and limited predictability for customers and shareholders. The transition to multiyear rate cases in both Oregon and Washington, combined with the growing earnings profile of our SiEnergy and Water businesses should create a more balanced and linear consolidated earnings profile year-to-year, while maintaining rate affordability and predictability. As I mentioned, we are excited to announce that Northwest Natural intends to expand its gas storage facility at Mist. This project, which we call MX3, is the third major gas storage expansion we've undertaken at Mist since its initial construction in 1989. MX3 will add 4 to 5 Bcf of storage capacity and serve customers across the region. Northwest Natural's gas system is more essential to the region than ever, especially given the heightened focus on reliability and affordability. Our system delivers about 45% more energy than any other Oregon utility, gas or electric over the course of a year. Today, the region's energy system is struggling to reliably meet demand during peak events and the Pacific Northwest Electric grid faces a potential 9 gigawatt capacity shortfall by 2030. That's why our storage capabilities are so important. They are uniquely positioned, expandable even beyond MX3 and offer a cost-effective solution to our region's growing energy challenges. Our customers for the MX3 storage expansion see this clearly. They consist of large investment-grade regional utilities and midstream providers. Once we receive notice to proceed, these customers have agreed to 25-year contracts, underscoring the demand for long-term affordable energy solutions. We are in the development phase of the project with signed customer agreements, the Energy Facility Siting Council permit secured, FERC approval received and engineering, procurement and construction or EPC providers identified. These new storage services will be regulated by FERC and are expected to provide stable returns with customer agreements that specify a fixed 12.5% return on equity and a 50% equity layer. Our Northwest Natural team has deep experience with the geography of the Mist storage field and its depleted gas reservoirs. We expect to work with major EPC contractors who know our operations well. We are working to obtain the remaining permits and early-stage engineering and design work is already authorized and underway. The project is estimated to cost approximately $300 million, and we expect the facility to be in service by the end of 2029. I am very excited about this project and the value it provides to the region. MX3 is not included in our long-term guidance today, which we are reaffirming at 4% to 6%. However, we do expect the project to have a meaningful positive impact on earnings growth and plan to include the project in our guidance when we achieve notice to proceed, which would raise our long-term EPS outlook from 4% to 6% to 5% to 7%. Another important growth engine for Northwest Natural Holdings is SiEnergy, our Texas Gas utility. We closed the SiEnergy acquisition in January 2025. And in June, we supplemented our Texas expansion with the acquisition of Pines. Both utilities have been successfully integrated into our business. Texas is one of the most exciting growth drivers in our portfolio. SiEnergy provided 18% organic customer growth in 2025 and contribute 11% of our consolidated adjusted earnings per share. At the same time, SiEnergy posted a sizable increase to its customer backlog nearing 250,000 future meters. That's more than a 30% increase in customer backlog in a year, a testament to SiEnergy's strong relationships with developers and the expected growth in the Texas housing market for years to come. I'm very pleased with SiEnergy's performance in our first year of ownership. We expect our LDC in Texas to continue to scale rapidly and produce 15% to 20% customer growth each year through 2030. For 2026, we expect SiEnergy to generate between 10% to 15% of our consolidated earnings per share. We are strongly considering filing a general rate case for SiEnergy sometime this year. We will carefully weigh several factors, including customer affordability in our decision. SiEnergy has been supported by exceptionally strong customer growth. And today, their rates are among the lowest of our Texas LDC peers. In 2025, our water and wastewater utility platform achieved a scale that allowed us to drive business efficiencies through standardized processes and centralization and is well positioned for continued growth. The Water segment outperformed our expectations, contributing $0.35 per share or 12% of our consolidated adjusted earnings per share in 2025. Last year, we completed 7 rate cases for our water and wastewater utilities and expect to process another 5 in 2026. We continue to follow a steady regulatory cadence to recover key safety and infrastructure investments while maintaining affordable and predictable customer rates. The water business has a clear runway for growth, supported by organic customer additions, significant greenfield opportunities and a healthy acquisition pipeline. Looking ahead, we expect water to produce between 2% to 3% organic customer growth through 2030 and provide 10% to 15% of consolidated earnings per share in 2026. We expect both SiEnergy and Water to outpace the overall consolidated growth rates of the company in the next 5 years, further diversifying our customer base and footprint. Confidence in our outlook is driven by strong organic opportunities across all 3 of our utilities, including 2% to 3% consolidated organic customer growth and rate base growth of 6% to 8%. These fundamentals are supported by a record $2.6 billion to $2.9 billion of planned capital expenditures through 2030 and underpinned by healthy customer growth and critical safety and reliability spend. Importantly, we believe we can achieve our growth targets while keeping our services affordable for customers and maintaining a strong balance sheet with solid investment-grade ratings. For 2026 specifically, we expect another record year for both capital investment and earnings. At the same time, we are focused on returning capital to shareholders. 2025 was the 70th year in a row of dividend growth for Northwest Natural Holdings. We are 1 of only 3 companies on the New York Stock Exchange with this impressive record. In 2025, our dividend payout ratio moderated, supported by strong earnings growth across the business. As earnings continue to grow, we expect to deliver steady dividend increases, outpacing our trend in recent years as we target a long-term dividend payout ratio of 55% to 65%. In summary, we have built a powerful platform, a strong set of businesses positioned for long-term growth. This marks the start of an important new chapter, and I have never been more confident in our strategy, our team and our future. With that, I will pass it off to Ray for a more detailed update on our financial performance. Raymond Kaszuba: Thank you, Justin, and good morning, everyone. I will start by echoing Justin's sentiment about our strong performance in 2025. This was a year defined by disciplined execution as we delivered record adjusted earnings per share and are creating a strong platform position for long-term growth. For the full year 2025, we reported record adjusted earnings per share of $2.93 compared to $2.33 per share for 2024. Earnings growth was fueled by new rates in Oregon, healthy rate base growth across the business and continued strong organic customer growth. For our Northwest Natural Gas Utility segment, adjusted earnings per share improved $0.45, primarily reflecting new rates in Oregon, partially offset by higher operations and maintenance and depreciation expenses. SiEnergy contributed $0.33 per share for 2025. In our first year of ownership, margin and net income was strong, driving results above our expectations of $0.25 to $0.30 per share. Our Water segment earnings per share increased $0.21 and contributed $0.35 per share to 2025 results, which was also above our expectation of $0.25 to $0.30 per share. The key drivers were new rates at our largest water and wastewater utility in Arizona and additional revenues from an acquisition late in 2024. Finally, the adjusted net loss of our other segment increased $0.39 per share compared to the same period last year, primarily due to higher interest expense at the holding company. For 2025, we generated approximately $270 million in cash provided by operating activities, about 35% above 2024. We invested a record $467 million in our systems related to safety, reliability and technology. Roughly 75% of those capital expenditures were for Northwest Natural Gas with about 15% for SiEnergy and 10% deployed for Water. We invested nearly $340 million for acquisitions. Cash provided by financing activities was $533 million, including $47 million of equity through our ATM program, which was less than we originally expected. On December 31, 2025, we had liquidity of approximately $590 million with significant availability on our lines of credit and cash on hand. Turning to our 2026 guidance. We are initiating 2026 earnings per share guidance of $2.95 to $3.15. Together, we expect SiEnergy and Northwest Natural Water to contribute approximately 25% of consolidated earnings this year. As Justin mentioned, we are reaffirming our long-term earnings per share growth rate of 4% to 6% compounded annually from 2025 adjusted earnings per share through 2030. We are seeing the benefits of our strategy resulting in a more consistent linear year-over-year earnings trajectory. Our long-term growth target is supported by multiple durable drivers, including healthy consolidated rate base growth of 6% to 8%, including significant investment at Northwest Natural Gas and substantial customer growth from SiEnergy of 15% to 20% and strong 2% to 3% organic customer growth at Northwest Natural Water. Resulting in a robust consolidated organic customer growth rate of 2% to 3%. Our guidance is grounded in projects we have clear line of sight into. For 2026, we anticipate consolidated capital expenditures of approximately $500 million to $550 million in 2026. Our 5-year CapEx plan has between $2.6 billion and $2.9 billion in investment through 2030, with about 65% related to Northwest Natural Gas Company, approximately 25% related to SiEnergy and the remaining 10% related to Northwest Natural Water. As Justin mentioned, we are not including the impact of MX3 gas storage expansion project in our guidance today. Including MX3, our expected long-term EPS growth rate is projected to increase to 5% to 7%. Once approved, the project is expected to cost approximately $300 million. MX3 is expected to be earnings accretive and credit positive, improving cash flow quality through long-duration contracted revenue streams. Related to our financing, our balance sheet and funding strategy support our growth. We are committed to maintaining strong investment-grade credit ratings across our rated businesses long term. For 2026, we expect to support our CapEx program through strong cash from operations, incremental net long-term debt of approximately $150 million after considering modest maturities of $160 million and issuing equity off our ATM in the range of $40 million to $50 million. Over the 5-year planning horizon, capital expenditures will be funded largely through operating cash flows, along with a balanced mix of long-term debt and equity. Through 2030, we expect to meet our equity needs through our ATM program. We also remain committed to returning capital to shareholders. With continued earnings growth, we expect dividend growth to be at a higher pace than shareholders have seen recently, while moderating our payout ratio to 55% to 65% over the next several years. With record adjusted earnings in 2025 and multiple sustainable growth drivers expected to result in a strong 2026 and beyond, we are excited about the future. With that, we will open up the line for questions. Operator: [Operator Instructions] Our first question will be from the line of Chris Ellinghaus with Siebert Williams Shank. Christopher Ellinghaus: Congratulations on a great year. Given what you've said about potentially raising the guidance or the growth range, where did you guys see yourselves within the existing range that Mist moves the needle that much? Justin Palfreyman: So thanks for the question, Chris. This is Justin. Without MX3, we are very comfortable with our 4% to 6% long-term EPS growth guidance. With the project, once that achieves notice to proceed, we expect that we will increase that to the 5% to 7% that we just described. And we're very comfortable with our current range with everything else that we've got in our plan. Christopher Ellinghaus: Okay. What is -- what do you -- when do you expect the notice to proceed? And what is the -- any hang-ups that might delay that? Justin Palfreyman: Yes. So we expect notice to proceed by the end of next year. And we have a lot of milestones that we've achieved with this project already, including our Oregon permit, the Energy Facility Siting Council permit. We've got that completed. We have FERC approval in place. We've got our customer agreements executed, and we are finalizing our EPC contracts. So that's one item that we still need to finalize, and then we are also finalizing some local permits before we achieve notice to proceed. Christopher Ellinghaus: Okay. So Si seems to be maybe ahead of the curve, certainly what I was kind of expecting on a pro forma basis. How much ahead do you see it relative to what your expectations were? And are you at a level at this point where maybe the '26 case is not as critical? Justin Palfreyman: So we've been really pleased with the growth that we've seen at SiEnergy despite a slowdown in the housing market in Texas, we had incredible growth this year. We also had record additions to our backlog, which bodes well for the long-term future growth at SiEnergy. I would say we're really pleased with what we're seeing. It's probably exceeded our expectations. However, we have not gone in for a rate case yet, and there's still some remaining items that we want to see on an execution standpoint. So we are contemplating a rate case this year and studying that heavily right now. But I can say that overall, the growth has been strong. It's been a few years since they've been in for a rate case, and there are certain elements of the rate case that we are evaluating that could be more beneficial down the road as well, including using the GRIP mechanism in Texas. Christopher Ellinghaus: If I recall correctly, Texas passed legislation that's constructive, would that bypass GRIP? Or would you stick with that sort of older mechanism? Justin Palfreyman: We're evaluating that now, Chris. But I would expect that when we do go in for a rate case that we would look at the GRIP mechanism. The HB 4384, which I think you're referring to, has been helpful from an earnings perspective, and that is reflected a little bit in our results even in 2025. But I would expect that because of the way the mechanism works for GRIP, that's likely what we would be looking at in a future rate case. Christopher Ellinghaus: Okay. So given the mechanism that you filed for in Oregon, -- your guidance suggests -- I guess, it's kind of silly to look at growth versus 2025, but your guidance suggests considerably lower growth, right? So are you anticipating receipt of that mechanism within the guidance? Justin Palfreyman: Yes. We are expecting receipt of that, the rate mechanism here in Oregon as part of that guidance. It is a relatively modest increase to rates, about 1.5%, and that is effectively just to recover on some capital investments that we are making in this interim period while we're working through the multiyear rate planning and -- so it's actually, we think, beneficial to have this modest incremental increase in the interim so that we avoid a scenario in the future where you have a larger rate shock for customers. Christopher Ellinghaus: Sure. One last question. What's the next step for water? You've always had a robust M&A pipeline. Is it expanding regionally? Or is it just continuing to do tuck-ins in your existing service areas? What are your thoughts on what water is up to? Justin Palfreyman: Yes. We're always looking opportunistically at acquisition opportunities that really add long-term shareholder value and would drive more incremental growth. That being said, we are really happy with the platform that we have built. We are in 6 states now with our water business, and we have some great service territories that have a lot of organic growth embedded in them. So we're very focused on executing, both investing in the business, ensuring timely recovery on those investments and then also looking at expansion. So we're expanding our CCNs or our regulated service areas in a number of our jurisdictions across the water business. And we are focused on greenfield growth as well. So in Texas, in particular, where we've seen incredible growth with our SiEnergy business. Our Water platform is a lot smaller in Texas. So we're trying to find ways to combine our business development efforts down there to achieve greater greenfield growth in the future. And then we always look at tuck-in acquisitions. It's probably a little less of a focus for us right now, given some of the other opportunities that we see to drive shareholder value in the near term and some of the growth that we're excited about in our existing service territories. Christopher Ellinghaus: Okay. One more short question. So mortgage rates have come down a decent amount over the last 12 months. Have you seen some alleviation of the headwinds against house or new customers, housing development expansion in Texas over the course of 12 months? Justin Palfreyman: I would say that we saw a slowdown roughly around the middle of 2025 in new housing starts and completions. It does seem that the more recent moderation in interest rates and perhaps other factors has had a little bit of an uptick back the other way, which we think is positive. But it's pretty early to tell here in 2026 where that's going. Certainly, a reduction in mortgage rates is helpful. The Texas economy more generally continues to benefit from a lot of growth in terms of industrial and commercial activity in the state, companies relocating there, announcing new manufacturing facilities, and that drives residential growth as well. So we are very optimistic long term about the growth in the Texas market. And I think any reduction in interest rates is just going to be a tailwind around that. Operator: The next question will be from the line of Alex Kania with BTIG. Alexis Kania: I have a follow-up question on MX3 or actually 2 questions on MX3. First is just for the perspective of thinking about the earnings profile associated with that project, it sounds like it's a FERC-regulated project. Would you be able to get AFDC over the course of construction? And the second question related to that is just funding plan. kind of whenever the notice proceed happens, you add the roughly $300 million of CapEx. Would you still be able to fund any incremental equity needs through the ATM in that instance? Or would you need to think of alternatives there? Raymond Kaszuba: Yes. So first on the funding plan. In terms of the profile, because we are still working to [indiscernible] and cross some keys with our EPC contractors, we're not providing the actual cash flow profile at this point. But you are correct that we, we would be able to fund any equity through normal issuances under our ATM. And then to your first question, yes, we would also receive AFUDC during the construction period. Alexis Kania: Great. And just so I heard the previous question right. So the idea of the target would be -- notice to proceed would be -- you're targeting by the end of next year, end of '27, right? Justin Palfreyman: Correct. Operator: [Operator Instructions] The next question will be from the line of Selman Akyol with Stifel. Selman Akyol: Just a real quick one for me. So very pleased to see the storage expansion. But I'm just kind of curious, maybe you can talk about other opportunities that you may be seeing like that and one in particular, just thinking about are you having any conversations, anyone approaching you on sort of behind-the-meter opportunities? Justin Palfreyman: Yes. Thanks, Selman. The opportunities that bit missed, they are long term in nature and fairly exciting in that we do have other reservoirs that can be developed for additional gas storage beyond MX3. They all have their own characteristics and cost profile and whatnot with them. But it is something that we keep an eye on. We do believe there is strong customer demand for this. So MX3, all of the capacity is spoken for with our existing customers there. And just what you're seeing in the broader energy constraints in the Pacific Northwest region with one major interstate pipe serving the region, gas storage is uniquely valuable here. So I do think there will be opportunities over the long term. It's very premature to comment on any specifics there. In terms of behind-the-meter opportunities, it is something we've been approached by numerous customers looking for access to really consistent, reliable energy in order to cite data centers and other types of facilities here. We do evaluate that on a case-by-case basis. If there is a storage potential use case there, but there's nothing that we have today to announce on that front. Operator: That will conclude our Q&A. I'd like to hand the call back to Justin Palfreyman for closing remarks. Justin Palfreyman: Thank you. So thanks, everybody, for joining us this morning. We really appreciate the questions and your interest in Northwest Natural Holdings. We're really proud of what we achieved in 2025 and even more excited about the momentum we're carrying into 2026. As you've heard today, we're entering this next chapter with a focus on our strategy, execution and continuing to grow our utility business. Please don't hesitate to reach out to Nikki with any further questions, and thank you for participating today. Operator: This concludes the Northwest Natural Holding Company Q4 2025 Earnings Call. Thank you all for joining. You may now disconnect your lines.
Operator: Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the CubeSmart Fourth Quarter 2025 Earnings Call. [Operator Instructions] I'd now like to turn the call over to Josh Schutzer, Senior Vice President of Finance. Please go ahead. Joshua Schutzer: Thank you, Jordan. Good morning, everyone. Welcome to CubeSmart's Fourth Quarter 2025 Earnings Call. Participants on today's call include Chris Marr, President and Chief Executive Officer; and Tim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening, supplemental operating and financial data is available under the Investor Relations section of the company's website at www.cubesmart.com. The company's remarks will include certain forward-looking statements regarding earnings and strategies that involve risks, uncertainties and other factors that may cause the actual results to differ materially from these forward-looking statements. The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents the company furnishes to or files with the Securities and Exchange Commission, specifically the Form 8-K we filed this morning, together with our earnings release filed with the Form 8-K and the Risk Factors section of the company's annual report on Form 10-K. In addition, the company's remarks include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the fourth quarter financial supplement posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris. Christopher Marr: Good morning, and thank you for joining us today. We are encouraged heading into 2026 that fundamentals have stabilized, and we are positioned to return to growth. Operating metrics have seen improvement over the last couple of quarters. And now that's beginning to flow through to financial metrics. Our more stable urban markets in the Northeast and Midwest continue to outperform, while our more transient supply-impacted markets across the Sunbelt and the West Coast are beginning to see green shoots in the form of second derivative improvement. Across all our markets, our existing customer metrics remain strong with no change to attrition rates or credit. 2025 was a year of stabilization for demand trends. Overall demand patterns were more consistent throughout the year and the environment has been more constructive, leading to move-in rates in the back half of the year moving positive year-over-year. The trend in move-in rates has been very encouraging with year-over-year quarterly growth improving from minus 10% in the fourth quarter of 2024 improving to minus 8.3% in the first quarter of 2025, improving again to minus 4% in the second quarter of last year, continuing to improve and turning positive at plus 2.5% in the third quarter of 2025 and increasing that positive momentum at plus 2.8% in the fourth quarter of 2025. In the early part of 2026, we have seen similar trends with the occupancy gap continuing to narrow with positive move-in rates. Specifically, the occupancy gap at the end of January of this year improved from year-end when it was down 70 basis points to end January at 88.7%, 40 basis points below January of 2025 with rental and vacate trends consistent with our experience during '25. With a few days left here in February, overall trends continue to be encouraging, with the occupancy gap continuing to narrow and the quarter-to-date move-in rate trend continuing to be positive with year-over-year move-in rates growing generally in line with what we reported with fourth quarter results. The improvement in operating fundamentals is beginning to show up in the financial results. It will be steady, gradual improvement as we typically turn over approximately 5% of our cubes in any given month. We started to see that momentum play through in the fourth quarter and would expect that gradual improvement to continue through 2026. Demand does vary across markets and submarkets with continued outperformance from 4 urban markets in the Northeast and Midwest and more supply impacted through the Sun Belt and Southwest. However, we saw improvements in fundamentals across many markets. With over 75% of our top 25 markets seeing revenue growth accelerate from the third quarter to the fourth quarter of 2025. As trends in our markets have been quite positive over the last 4 or 5 months, I am optimistic that we are inflecting and see a path to return to more historical levels of revenue and net operating income growth. In 2026, only 19% of our same stores are projected to face an impact of new supply, the lowest percentage since we began articulating this metric back in 2017. The magnitude of the impact of this competitive supply continues to lessen as more of the delivery is in that 3-year rolling impact from 2 or 3 years ago, and those stores are beginning to reach their first level of occupancy stabilization. Our highest quality portfolio and best-in-class operating platform, along with a seasoned management team with senior leadership having multiple decades of experience across cycles against the backdrop of declining impact of new supply and more constructive operating fundamentals has us well positioned to take on any challenges and maximize all opportunities through 2026. Now I'd like to turn it over to Tim Martin for insight on our thoughts on capital allocation and guidance for 2026. Timothy Martin: Thanks, Chris. Good morning, everyone. Thanks for taking a few minutes out of your day and spending it with us. I'll provide a quick review of fourth quarter results, discuss our recent investment activity and then jump in and provide some additional color on our '26 expectations and guidance. Same-store revenue growth accelerated from the third quarter to just shy of flat at negative 0.1% for the quarter, reflecting the continued stabilization of trends that Chris touched on and moving us to an improved starting point for 2026. Same-store expenses grew 2.9% during the fourth quarter, helped by some good news in real estate taxes and property insurance, offset by increases in marketing and R&M spend which are mostly timing related as compared to spend in those areas last year. Same-store then resulted in declining 1.1% for the fourth quarter. We reported FFO per share as adjusted of $0.64 for the quarter. And during the quarter, we announced a 1.9% increase in our quarterly dividend, up to an annualized $2.12 per share. On yesterday's close, that represents a 5.3% dividend yield. On the external growth front, it's been a challenging couple of years to find accretive on-balance sheet opportunities to deploy capital especially on marketed transactions. We had success with structured transactions in late '24 and then early into '25 when we were able to accretively invest a combined $610 million on a pair of transactions. One was a recap and one was a JV buyout. Since then, we've seen very limited opportunities to invest on balance sheet, given the disconnect in public and private market valuations but we've been focused on other creative avenues for capital deployment. We recently announced a new joint venture with CBRE IM with a $250 million mandate to invest in high-growth markets. This allows us to expand our JV relationships and provides another avenue to continue to grow the portfolio with enhanced returns. We also closed on two on-balance sheet acquisitions for $49 million during the quarter. In the fourth quarter, we also executed on our existing share repurchase program as the relative value for our portfolio made it a very attractive investment option. When considering, we own the highest quality portfolio of self-storage assets and combining that with the disconnected valuation reflected in our share price during the fourth quarter, repurchasing shares was compelling for us on a risk-adjusted basis compared to private market values for lower quality assets. Our Board has recently expanded the share repurchase authorization giving us approximately $475 million in capacity to repurchase shares based on current valuation levels. We generated approximately $100 million in free cash flow annually so we could execute under the share repurchase program on a leverage-neutral basis up to those levels. We're also looking at potentially selling some assets or contributing assets to a joint venture and using those proceeds to fund additional share repurchases should the public-private valuation gap persist further into 2026. Our balance sheet is in great shape with credit metrics very favorable to our existing investment grade credit ratings. Leverage ended the year at 4.8x net debt to EBITDA. We do have a few things on the to-do list for 2026. We may look at opportunistically accessing the bond market in the first half of the year and use proceeds to repay amounts currently drawn on our revolver. And then in the back half of the year, we may look to go again and use the proceeds to repay our existing bonds that mature in September. Looking forward, details of our '26 earnings guidance and related assumptions were included in our release last night. Overall, our FFO per share expectation for '26 is a range of $2.52 to $2.60 per share. For same-store guidance, our 2026 same-store pool increased by 16 stores. The midpoint of our guidance range for same-store revenues assumes a generally similar macro environment to last year, a lasting impact from competing new supply in our markets, a continuation of steadily improving competitive pricing, and a narrowing of our year-over-year occupancy gap as the year progresses. On the impact of supply, embedded in our same-store expectations for '26 is the impact of new supply that will compete with approximately 19% of our same-store portfolio, as Chris touched on. For context, that 19% is down from 24% of stores impacted by supply last year, and down from the peak of 50% of stores impacted back at the peak in 2019. We've been keenly focused on expense controls for several years. In fact, we've led the sector with the lowest expense growth over the last 3 year, 4 year, 5 year and 6-year period. So a bit of our growth overall in 2026 is in the context of us setting a really challenging comp for ourselves given our expense controls over the past several years. Areas that are pushing up our expectation for year-over-year growth include real estate taxes, especially late in the year as some of the good news in late 2025 creates a tough comp for us late in '26. Personnel costs coming off, again, a multiyear period of very, very low growth. And of course, the biggest impact is going to come from the winter-related costs from the storms over recent weeks, pretty impactful storms compared to really not much at all in early 2025 from weather events. Thanks again for joining us on the call this morning. At this time, Jordan, why don't we open up the call for some questions. Operator: [Operator Instructions] Your first question comes from the line of Michael Goldsmith from UBS. Michael Goldsmith: Maybe first, can we just start with supply? It seems like supply is coming down or at least new deliveries are. But I guess, at the same time, the demand environment has remained kind of stable, but not particularly strong. So how do you think about like how do you think about supply? Is it just kind of new deliveries? Is it the cumulative buildup over the last several years that's influencing it? And in the numbers that you quote, is that a reflection of expected deliveries this year? Or is that kind of like a multiyear number? Timothy Martin: Thanks, Michael. So the numbers that I quoted of the 19% of stores being impacted, what we have consistently disclosed over time is we look at supply and the impact of supply on our existing stores over a 3-year rolling period. So for the 19% of our stores that are impacted by supply in 2026, those are stores that within their trade ring are going to compete against something that is delivered in 2024, 2025 or 2026. And as Chris touched on, the stores that were delivered in 2024 are going to be less impactful from a headwind perspective than stores in '26 because they will be -- in the third year, they will be starting to approach higher levels of occupancy and tend to start pricing more competitively within the market. So it's not only the 19%, it's kind of the nature of the 19% is going to be a little bit less of a headwind, we believe, than certainly than when we were at the peak back in 2019. So it's a combination of those things, but all the numbers that we quote are on a 3-year rolling basis. Michael Goldsmith: And as a follow-up, the New York City Department of Consumer and Worker Protection filed a lawsuit over predatory practices in the New York market. So I just want to -- you have a large presence there. I just wanted to get your take on it. Has that influenced the way that you operate? And then obviously, this is a lawsuit against you guys, but just kind of how you're reacting to it? Christopher Marr: Michael, we're certainly aware of recent announcements, that specific one out of New York. There's been some similar attempts at legislation in other states around not only for storage, but just in general, pricing and transparency. We continue to monitor those and make sure we're in compliance. We are always focused on providing our customers with the optimum experience, and we'll continue to be flexible in terms of focusing in on that and doing that to the best of our ability. Michael Goldsmith: Good luck in 2026. Christopher Marr: Thanks. Operator: Your next question comes from the line of Viktor Fediv from Scotiabank. Viktor Fediv: I have a question regarding your operating expenses outlook for this year. And it's a bit higher versus, for example, your peers. Just trying to understand what are the key pieces impacting that difference. Probably New York, I see that in 2025 had probably a bit higher operating expenses growth. So can you provide some color on what's driving that? Timothy Martin: Yes. As we touched on in the introductory remarks, you have a couple of things going on. You have, again, having led the sector in expense controls and expense growth over the past several years, I do believe we have created a pretty high bar for ourselves from the standpoint of a baseline from which to compare. I think then the individual drivers of where we're getting a little bit of pressure, again, I mentioned, were on real estate taxes. In particular, in the later part of 2026, we're going to have some tough comps because we had some good news here in the fourth quarter of '25. And then the big one that I mentioned is the weather-related. We're going to have pretty significant year-over-year growth in weather-related expenses in the first quarter as we have a significant portion of our self-storage portfolio in the Northeast states. And frankly, the winter storms were impactful far beyond just the northeastern part of the country. So real estate taxes, weather-related costs are the big ones. And then even on a line like personnel, we've been able to manage personnel at flat to negative growth over a multiyear period of time. This year, we're looking at more inflationary or maybe just a little bit north of inflationary type growth in that line item. So those are the areas that are driving the thought process behind our same-store expense guidance. Viktor Fediv: Understood. And then as a follow-up, if you think about the new reform JV with CBRE, what is actually like your opportunity set? And what should we think about what is achievable for 2026 in terms of incremental investments there? Timothy Martin: Yes. So we're super excited to expand our JV relationship. And now we have what we had disclosed with our new venture with CBRE Investment Management. We've been working together with them for several years on the operational side and have established a great working relationship through our third-party management platform. The venture that we announced is focused on investing across the spectrum of core, core plus value-add opportunities. And ideally, that will result in us being able to assemble a portfolio of geographically diversified assets in high-growth markets. So fairly broad mandate and the $250 million mandate is hopefully #1, and then we're successful there, and we can move on and create additional venture opportunities with CBRE and then, of course, continue to look at creating additional joint venture opportunities with others, including some long-standing relationships that we have. Operator: Your next question comes from the line of Brad Heffern from RBC. Brad Heffern: Can you talk about the assumption for move-in rates during the year? Are they just sort of steady during the year at the levels we see now? Do they decline as comps get more difficult? Maybe do they go up because of supply? Timothy Martin: Yes. So we don't guide to the specific components. We guide to an overall revenue growth range expectation. I think what we have seen is what Chris touched on a little bit, which is we have seen a more constructive environment for pricing to new customers. And so we flipped to positive, and it's a good place to start the year. And then as I touched on, at least on the baseline of our expectations, would be in an environment where we're able to steadily close the occupancy gap throughout the year. That would be at the baseline of our expectation. The reality is busy season is going to come and market conditions are going to be what they're going to be, and our systems are designed to maximize revenue. And so could you get a little bit more rate and a little bit less occupancy, a little bit more occupancy, a little bit less rate? Could you move towards the higher end of the range, the lower end of the range? All that we'll see. But overall, we just guide to the overall number, which you see in our release. Brad Heffern: Okay. Got it. And then sort of sticking with that, you said in the prepared comments, you see a path back to historical growth levels. If we see move-in rates stay flat around where they are now, call it, 3%, when should we see same-store revenue get to 3%? I know there's a huge number of moving pieces, but just wondering, generally, is it quarters? Is it a year? Is it 2 years, et cetera? Christopher Marr: Yes. I think if you operate under the assumptions that you just described, then you see that gradual upward trajectory throughout the first year, which in this instance would be 2026, and then you would see yourself returning to more historical levels as you get into the second half of 2027 on a quarterly basis. And then ultimately, you would roll into that on an annual basis as you go out then another year. Operator: Your next question comes from the line of Todd Thomas from KeyBanc. Todd Thomas: First, just on New York, revenue growth improved from the third quarter, continued to outperform, as you mentioned, with -- along with some of your other sort of core coastal infill markets. Are you assuming that momentum persists in '26? And what's driving the strength in New York City in your view? Is it more the supply backdrop? Or are you seeing better demand? Any sense regarding the outperformance? Christopher Marr: Todd, it's Chris. I would think about New York broadly as continuing to be the MSA that we would expect to be among our top-performing MSAs in 2026 as it was in '25. I think you have 2 things moving in our favor. One is North Jersey and to a lesser extent, Westchester County and Long Island are recovering from the headwind of supply. So when Tim talked about that and I talked about that 19%, a good market that is benefiting from that is that North Jersey, Westchester and Long Island markets as part of the MSA. And then in the city itself, we continue to see very positive trends that we've experienced over the last several years. You have good lengths of stay. Again, folks using the product as an alternative to their living spaces, not as a market that's as reliant on that buying and selling of existing homes. We obviously have extremely good brand awareness there, and we would expect that positive performance in the boroughs to continue. Todd Thomas: Okay. And then, Tim, you talked about buybacks and the buybacks completed in the quarter, potential dispositions, some potentially seeding assets into the joint venture. The stock price is higher by almost 15% relative to the price that you executed at in the fourth quarter. I guess, how actionable are buybacks today? And how do buybacks stack up against some of the other opportunities that you discussed? Timothy Martin: Yes. I think we obviously have a share price, which is a little bit more favorable for us today than where we were repurchasing back in the fourth quarter. But who knows what tomorrow brings or next week brings or next month brings. I think the point trying to make is that we're not sitting around waiting for the day where we get back to having a green light to grow and our share price is such that we can get back to buying $400 million, $500 million, $600 million worth of assets and do so accretively. We haven't seen that environment now for a couple of years. And to the extent that we are in a continued prolonged period of time where private market valuations are very disconnected from public market valuations, then what's actionable for us. To continue to execute on our long-term strategic objectives would be to perhaps improve the overall quality of our portfolio by trimming some things that would have us improve the overall quality of the portfolio and turn around and redeploy that capital to buy back shares because implicit in that is it's an awfully good opportunity when you think about the implied cap rate, even at the levels we're trading today, while not as compelling from a share repurchase as where they were, still pretty compelling relative to opportunities to buy things on balance sheet. So we'll see. It will be great. It would be great for us if share repurchases were never attractive again and the share price continues to get back and we get back to where we believe we should be valued, which is at a premium to the value of our underlying assets. But to the extent we don't get back there and the disconnect remains, we're going to keep working to execute on our strategic objectives, and that might be a path for us to do it. Operator: Your next question comes from the line of Ravi Vaidya from Mizuho. Ravi Vaidya: I saw that in 4Q, your fee income line item as part of your same-store revenue was a bit elevated. Is this primarily from late fees or any other type of fees? And what is your assumption for this particular line item when considering your '26 guide? Timothy Martin: Thanks for the question. So that line, the other property income line in same stores includes a variety of things. So it includes merchandise sales, which would include sales of locks and boxes and other items. It includes fees. It includes truck rental income, among some other things. And so we're always looking at ways to enhance growing our cash flows, and we look at every opportunity, and we've been able to, over time, be successful in finding ways to grow that line item along with growing other revenue line items and controlling expense line items. And so what you're seeing there is the fruits of all of those efforts. Our 2026 expectations would be based on our expectation to continue to build upon what we -- what you see coming through the results in '25 and continue at those levels and perhaps find even additional opportunities as we go forward. Ravi Vaidya: Got it. That's helpful. And I wanted to kind of think about AI here. But from a demand perspective, some of the announcements that we've seen is some of the layoff activity, it seems to be coming in bulk and a little bit faster than what people might have initially anticipated. How do you think about these announcements and how it could reflect demand for self-storage and moving and displacement as part of your portfolio right now? Christopher Marr: So I think the resiliency of our business, and I think it shines through when you think about the last few years pressures on some of the demand drivers for our business and yet the -- in context, really solid results the sector has been able to put up. I think just speaks to the fact that we are a solution to a need for our customers regardless of the pleasurable or unpleasurable circumstances that create that need. So never want anyone to lose employment. -- certainly want an economy that is humming on all cylinders where there are plenty of opportunities for jobs and opportunities for advancement, what's made this business work so well for so long. But the reality is in an instance of displacement, we are a solution to help solve some of the related problems that come along with that. Operator: Your next question comes from the line of Michael Griffin from Evercore ISI. Michael Griffin: Maybe on the revenue side to start, I appreciate kind of the commentary as we've been through about 2 months of the year so far. But as you think about the interplay of rate versus occupancy, clearly, move-in rates are improving, but your occupancy is still kind of below your historical levels even pre-COVID. Give me a sense, does it make sense to maybe push on one of those levers over the other? I realize you're solving for revenue maximization at the end of the day. But in today's environment, does one feel more opportunistic or applicable to drive relative to the other? Christopher Marr: I think in today's environment, given where we've been over the last several years, I think if the opportunity is there, and it clearly has been over the last 5 months or so to be able to focus on maximizing the value of that customer as opposed to focusing in on the volume of customers, I think that's been our focus. I think we obviously, as an industry, need to get -- need to continue this momentum of having positive growth in rates in order to generate those more historic levels of overall revenue growth that we've experienced over time. So that's kind of where the mindset is. But as Tim articulated, those are decisions that are made on a daily, weekly basis, and we're constantly looking at that interplay between volume and rate. Michael Griffin: Thanks, Chris, that's certainly some helpful context. And Tim, I know you touched in the prepared remarks on some debt market activity. Curious what's contemplated in the guide as it relates to interest expense. And if you were to go out and refi those '26 maturities, what you think the interest rate on that would be? Timothy Martin: Yes. So I mean the guide has a range for a reason, and it's a little bit tricky because you're not only thinking about where we might execute from a -- if we were in the market today, is not super relevant for the guidance because it comes down to when do we go, what tenor do we go with and what does the world look like at that time. And so what I was mentioning was kind of at the plan today would be a consideration of going first half of the year, using those proceeds to pay down the line, which would then give us a lot of flexibility and capacity as we look at the back half of the year because if we found a compelling market to go again, that would be our preference and just term out the maturity. But by freeing up all of the capacity under the line, when our bonds mature in September, we would have capacity to use the line of credit if we didn't think that there was a good window for issuance at that time. So the range contemplates a variety of things when we go, how many times do we go, what tenor do we go with and what does the world look like at that time. Operator: Your next question comes from the line of Juan Sanabria from BMO Capital Markets. Juan Sanabria: Chris or Tim, maybe just hoping you guys could expand a little bit on dispositions. You mentioned maybe pruning some noncore assets or markets presumably. So just curious on how you think about that if the eventuality were to come to pass, would you want to sell out of kind of the current underperformers, whether it's certain Sunbelt or Southwest markets? Just curious on how you're thinking about that, recognizing it's kind of a fluid discussion or thought exercise. Timothy Martin: Yes. It is a very fluid discussion and exercise. I think it could it could end up presenting itself in a variety of ways. The reality is we like our portfolio. And so we don't have a long list of assets that we're anxious to get rid of. I think the reality is, as I mentioned, if there's a persistent environment in which there's a disconnect in valuations, then the opportunity for us to execute our strategic plan and to create shareholder value may be to find opportunities to trade assets and repurchase stock. I think the reason I wasn't specifically saying dispositions or necessarily joint venture contributions, the joint venture concept is pretty attractive because we could maintain an ownership position in some of these assets that, frankly, we don't want to sell. And we could also get a little bit of additional economics through a joint venture structure, through management fees, that type of thing. So it is a fluid -- as you -- it's a great word to say it's a fluid discussion. It's just the reality of where we are and just sitting on our hands and hoping for a better day is not what we're doing. Juan Sanabria: Understood. I appreciate that. And just a quick follow-up on the ECRIs. Just kind of curious on the expectation built into '26 guidance and/or the kind of recent history. Has there been any change in cadence and/or the percent increases you're passing through and/or customers' acceptance of those? Timothy Martin: Yes, not much of a change in the contribution that we're expecting going forward is very consistent with the contribution that we've been receiving. So nothing really from a modeling standpoint or an expectation standpoint that it's going to have a meaningful impact from ECRIs one way or the other. Operator: Your next question comes from the line of Spenser Glimcher from Green Street. Spenser Allaway: Yes. Sorry not to beat a dead horse here, but maybe just a follow-up on the share buyback discussion. So I appreciate the rationale you shared regarding your view of the disadvantaged cost of equity. But given you did buy 2 assets in the quarter and while I realize that the purchase price is only $50 million, what is it you're looking for in acquisition opportunities that would sway you to invest versus that simultaneous desire to shrink the asset base and buy back shares? Timothy Martin: Yes. Great question. The horse is not quite dead yet, but let's kick it a few more times. The 2 assets that we bought, it is a process. And so we had those under contract at a value that made sense to us. Inherent in those 2 opportunities are -- there's growth embedded in those opportunities that when they come on to our platform, we get some nice growth out of those. So we're still very excited about those 2 opportunities as the year progressed and the quarter progressed and the disconnect became even larger and more pronounced, then the share buyback was something that we focused on. So it is -- there are still -- there have been a lot of assets that have traded this year that were very attractive to us and would have been very complementary and attractive on our platform. Just the valuation didn't make a lot of sense for us at this time. So the world changes pretty quickly. I was going back to my notes from our year-end call a year ago, and we talked about selling shares on the ATM for an average of $51. So things change pretty quickly. And so next quarter or the quarter after, we could be talking about contributing some assets to a joint venture and repurchasing some more shares. We could be talking about buying a big portfolio and issuing shares under the ATM. We need to be prepared for any of those scenarios. Our investments team is working hard. Fortunately, for us, we do have other options, as we touched upon earlier, with co-investment strategies and the like. And so we're still looking at both. We're certainly not closed for business. We're very involved in underwriting a lot of different opportunities. And to the extent that we found something even on balance sheet that had a compelling enough return that we believe created shareholder value, then that's where we're focused. Spenser Allaway: Okay. That's great insight. And then would you mind providing some color on the stabilized cap rates that you underwrite on those 2 assets? Timothy Martin: Yes. So they weren't stabilized cap rates. I mentioned last quarter that those -- the assets that we had under contract that then we closed 2 of the 3 going in were in the low 5s, and they were stabilizing into the 6% range in year 2, 2.5. Operator: Your next question comes from the line of Brendan Lynch from Barclays. Brendan Lynch: The commentary around 19% of markets facing new supply in 2026 was really helpful. If the pace of new starts doesn't accelerate, what percent of your portfolio do you think would be facing new deliveries in 2027? Timothy Martin: Yes. So one point of clarification, it's not markets. It's not 19% of our markets. It's literally 19% of our assets. You can have assets within a market, some of which are competing with new supply and some are not. So just that is a point of clarification. We just disclosed the 19% and now you're asking for what is it going to be next year. We're never good enough. But the -- I think if you think about that 3-year rolling period for this year, it's deliveries in '24, '25, '26. So next year, when we disclose this number, it will shift to be deliveries in '25, '26 and '27. So you'll add '27 deliveries and you'll drop off '24 deliveries. I would think across our markets and across our portfolio that deliveries in '27 will be a little bit lower than deliveries were in '24. And so my expectation as we sit here today is that, that 19% would trend downward a little bit more. Brendan Lynch: Okay. That's helpful commentary. And then just on the CBRE joint venture, you mentioned that some value-added assets might be contributed as well. My sense is that value-added assets were something that you wanted to kind of hold on balance sheet for the upside that you get as you improve those assets relative to maybe some more stabilized assets being better candidates for joint ventures. Can you just walk us through the kind of the nuances of how you think about which assets are good candidates versus not with your JV partners? Timothy Martin: Yes. Sorry, we're covering a lot of different things. I think we might have mixed 2 things together there. So the venture that we have with CBRE is focused on external opportunities, nothing that we would contribute. So the value-add opportunities that, that venture is seeking are value-add opportunities that we can find that are maybe earlier stages on our third-party management platform or going out and trying to identify those opportunities. So they are external opportunities that would be across the spectrum of value-add, core, core plus. The concept of contributing assets is completely separate from that and is more -- is not as actionable here in the near term as the venture that we announced with CBRE. Operator: Your next question comes from the line of Eric Luebchow from Wells Fargo. Eric Luebchow: So maybe you could touch on the New York MSA a little more. It had some nice acceleration in the quarter. Could you kind of disaggregate where that strength is coming from between the boroughs, North Jersey, Long Island or anywhere else? Christopher Marr: Sure. So really, the acceleration was across the board in each of those contexts. I think when you think about it by borough, Queens has been pretty consistent Q2, Q3, Q4 in terms of its revenue growth, in terms of its occupancy stability, a little bit of supply. 1 or 2 stores, I think, have opened there over the last year or 2, but really not that impactful, seeing good growth in asking rent there. in a little pressure in Long Island City when I mentioned supply because we've had some competitors open some very large stores in the last 2 or 3 years, and they're very close by to the cubes. Brooklyn -- Brooklyn has been the leader through the year, putting up overall same-store revenue growth quarter in and quarter out north of 5% occupancies there, also pretty steady. So a good driver is good length of stay. So able to continue to focus on the existing customer and then seeing some good move-in rate growth there as well. And that's pretty much across the board with the neighborhoods in Brooklyn from East New York through Quantas. Bronx, pretty nice acceleration there throughout the year. That's somewhat going to be just a year-over-year comp. Occupancies there have been pretty steady, growing a little bit in the back half of the year. And when looking at that again by area, saw some strength throughout the year in getting better quarter in Riverdale, also the same a little bit in that Bronx River area. South Bronx, Calo City have stayed pretty consistent. And then I think, as I said, in our store in Manhattan continues to perform consistently and well. Staten Island recovering a bit from supply, which is the same story for the rest of the MSA, which would be that Westchester, Long Island, North Jersey, where new supply has become much less of a headwind than it was certainly in '24 and the first couple of months of '25. So hopefully, that color is helpful. Eric Luebchow: Yes. Very comprehensive. I guess just one for Tim. I know you called out some tough comps and expenses this year. Maybe could you provide us a little more color on some of the expense growth you expect across some of the key line items like real estate taxes, personnel, anything else to call out that we should keep in mind for this year? Timothy Martin: No, I called out the big ones. Those are the ones that were notable that I've discussed a couple of times here. Operator: Your next question comes from the line of Eric Wolfe from Citigroup. Eric Wolfe: You mentioned that your solutions of a displacement can occur during periods of job losses. So I was just curious if when you see accelerated layoffs or job losses in a certain market, how long that increased demand tends to last? And along with that, D.C. has definitely been one of your strong markets the last year, but I did notice that it decelerated a bit this quarter. So I was curious if that was just noise in the numbers, tough comps or maybe the lower employment is catching up there a bit. Christopher Marr: Great question. Thanks. When you think about storage, we're a neighborhood small trade ring business. And then when you think about displacement. Oftentimes, that can either be so broad in terms of where the employees displaced come from. So I'll use DC as that example. You have folks who work in the federal government in Bethesda at NIH in Washington, D.C. proper at other agencies who live as far away as Culpeper, Virginia or Frederick, Maryland or West Virginia, parts of Prince George's County. So when we have our general managers focus on demand and try to inquire from the customer as we always do, what's going on in your life. It's just so dispersed that you just never really see an impact on any particular store there. So the DC overall performance is comps. We just had been on a run there for many, many quarters, and we're -- we just saw a little bit of that tough comp in Q4. But otherwise, it will continue to be a market we expect in '26 to be a leader of the DC, the DMV and a very good market for us. We also saw the ebb and flow of supply there again, just given the broad nature of that MSA. But I think when you think about layoffs, then that might be within a plant or a business where the majority of the workers tend to be concentrated in a fairly tight geographic area, you would have a more correlated demand to the self-storage opportunities in that area. But in terms of like some historic trend, I don't have anything off the top of my mind and that would be super insightful. Eric Wolfe: That was very helpful. And I guess you talked about this a lot today, so I don't need to get too much more into it. But I guess one of the things that I'm trying to figure out is you talked about things improving throughout last year. They've stayed very strong recently improving some more. Is there some kind of common reason as to why? I mean, is it demand that's gotten better? Is it lower supply impact in the markets that are accelerating the most, just easier comps? Like what is actually driving that improvement? And I guess what gives you the confidence to know that you've actually reached an inflection in whatever is going to drive it going forward? Christopher Marr: I think it is all of the above. I think you've really touched on all of the drivers. So what we've seen over the last 4 or 5 months demand and throughout all of '25, frankly. We now have a new but fairly consistent demand profile for the business throughout the 12 months and that baseline of what we've seen in kind of '24, but really in '25 is the baseline that we're expecting here in '26. So if that's your baseline, but the impact of vacant space, new supply continues to ramp down very helpfully. Well then you're just in a better position than from, as Tim alluded to, from a pricing perspective because those new stores that had opened in '24 are reaching a better level of physical occupancy. And typically the savvy operators in our space then start to focus in on getting rate. So that's helpful for the submarket in which we operate. We still see a pretty healthy consumer for our product. And so that's helpful. So I think it's kind of all of the above that is embedded in sort of that range that Tim talked about, and that's been consistent now, as I said, for months. And so we're feeling pretty optimistic as we go into 2026. Obviously, we have a range, and we're comfortable within that. I think the one item that we do not have factored in, and this is more recent news but when you think about, is there an opportunity here for those pent-up homeowners, home buyers, animal spirits to be unleashed as the 30-year fixed rate dropped yesterday below 6% for the first time in 3 years, you sit here and realize that today, more homeowners have a mortgage rate above 6%, then a rate below 3% for the first time in 5 years. So we're not counting on it, it's not in guidance at all, but certainly, the kind of news over the last few days here on that front could be very helpful and would just be pure upside. Operator: Your next question comes from the line of Samir Khanal from Bank of America. Samir Khanal: I guess, Chris, I just wanted you to expand on -- you talked a little bit about the transaction market. Maybe talk about pricing. And the reason I'm asking is, there was a big portfolio that traded in New York, right? And I'm not sure how this is the Carlyle storage [ mark one ]. I'm not sure how that -- how should we think about that portfolio compared to your portfolio in New York? And if that was complementary to your portfolio, do we think about that disconnect, right, between sort of private market valuation and kind of where your stock trades today? Christopher Marr: Yes. Thanks for the question. So the portfolio that you're referencing, we were a manager of some of those assets. So we're a very good partner. And therefore, we don't talk about transactions that we weren't involved in, you can certainly get more take on pricing, et cetera, from the buyer. New York is a great market. We continue to look for good opportunities there in that particular instance. There just wasn't transaction that made sense for CubeSmart, but it made sense for another operator there, and I'm sure they'd be happy to give you insight as to how they thought about what that pricing was, whatever in their mind, they think it was. Operator: Your final question comes from the line of Mike Mueller from JPMorgan. Michael Mueller: Sorry to drag it out. Most stuff has been answered, but just a quick one. Are you likely to only sell assets if you see an opportunity with the stock being cheap or if there is something to buy? Or are there likely some assets you're just going to cycle out of no matter what? Timothy Martin: Yes. I think the last part of that cycle out of assets, no matter what was what I was trying to cover before that. That list is very, very short for us. We like our existing portfolio. So the focus for us and, frankly, the difficulty on executing on the concept that I'm putting out there is the timing piece, right? You can't sell something in a week and by the time you would sell it or contribute something to a venture, public market valuations change awfully quickly. And so the objective for us would be to, again, further the strategic objective, improve the overall quality of the on balance portfolio and doing so accretively, which would combine dispositions or contributions of assets to raise the capital and repurchase shares. So the execution of that is a challenge given the timing. And I'm back to Spenser's question earlier, we did -- we bought some properties and repurchased share in the same quarter. We didn't do them in the same week. But things change, and sometimes they change pretty quickly. So it comes down to if there's a prolonged period where there's a disconnect then -- and there has been the execution of that, we believe would make a lot of sense. Operator: And that concludes the question-and-answer session. I'd now like to turn the call back over to Chris Marr for closing remarks. Christopher Marr: Thank you, everyone, for your insightful questions. We've enjoyed the dialogue here this morning. We certainly are looking forward to the upcoming seasonal busy season for our industry. We've been off to a very solid start here in January and February notwithstanding the unappetizing weather that we've seen here on the East Coast, but spring is strong and sun is coming and the busy season for storage will be here before you know it, and we look forward to continuing our dialogue after we report first quarter earnings. Thank you very much. Have a great day. Operator: This concludes today's meeting. You may now disconnect.
Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the HEI Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mateo Garcia, Director of Investor Relations. Mateo, please go ahead. Mateo Garcia: Thank you. Welcome, everyone, to HEI's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Scott Seu, HEI President and CEO; Scott DeGhetto, HEI Executive Vice President and CFO; and Shelee Kimura, Hawaiian Electric President and CEO; and other members of senior management. Our earnings release and our presentation for this call are available in the Investor Relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings and in the Investor Relations section of our website. Today's presentation also includes references to non-GAAP financial measures, including those referred to as core items. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. We will take questions from institutional investors at the end of this call. Individual investors and others can reach out to Investor Relations. Now Scott Seu will begin with his remarks. Scott W. Seu: Aloha kakou! Welcome, everyone. For today's call, I'll start with an overview of the important accomplishments we've made over the past year and touched on our priorities going forward. Scott DeGhetto will walk through our financial results and then open it up for questions. Over the past year, we continue to execute on the priorities we've communicated since the Maui wildfires in 2023, and I'm proud of the progress we've made. We've advanced key initiatives, including progressing the Maui wildfire tort settlement, pursuing legislative measures that support our communities as we deal with the risk of wildfires, implementing wildfire safety improvements that have reduced the risk of ignition from utility equipment and laying the groundwork for a successful second multiyear rate period under our performance-based regulation, or PBR framework. Our actions to date help ensure our ability to serve and invest in our communities for the long term. Last quarter, we discussed the process to obtain final court approval of the Maui wildfire towards settlement. We continue to make good progress in resolving the remaining contingencies to payment. In late December, the Maui Circuit Court granted our motion for summary judgment on the subrogation insurers direct claims. In January, the court granted final approval of the class settlement agreement and provided a good faith settlement determination. We also received another favorable decision from the Hawaii Supreme Court. As previously disclosed, the subrogation insurers moved to intervene in the class settlement process, and the Maui Circuit Court denied this attempt last June. The insurers appealed, and the appeal was sent to the Hawaii Supreme Court. On February 10, the court affirmed the lower court's denial of the subrogation insurers motion to intervene in the class settlement. In doing so, it made clear that a class settlement transforms an insurer's subrogation rights into lean rights the same way an individual settlement does, which is what the court rule on a year ago. This decision ends the insurer's efforts to derail the class settlement. And because they lack party status in the class action, the insurers should not be able to file a successful appeal to the final approval of the class agreement previously granted by the Maui Circuit Court. This positive result moves us one step closer toward final court approval of the settlement agreements. In sum, we've continued to work through the administrative steps required to see the settlement through to completion and trigger our first payment. We're also pleased that we've been able to finalize settlements resolving both the shareholder class action and shareholder derivative lawsuits filed in connection with the Maui wildfires. As disclosed last quarter, in early November, we signed binding term sheets to settle the litigation. In late December and early January, the settlements were finalized and executed. The agreements provide for complete resolution of both sets of litigation with the company's obligations fully funded by insurance proceeds. Turning to legislation. As we've discussed over the past few quarters, Hawaii's historic wildfire legislation signed into law last July acknowledges the need for legislative measures to protect our communities and support the financial stability of electric utilities in the face of increasingly severe weather events. The PUC's wildfire fund study was completed at the end of December, and this was a crucial first step in implementing our state's milestone legislation. Work continues to establish a liability cap with the PUC rule-making process expected to take 18 to 24 months. Details around the wildfire fund will be established sometime thereafter. The PUC also approved the utility's 3-year wildfire safety strategy in late December, concluding that the strategy can be expected to reduce wildfire risk and emphasizing the importance of continuous improvement. The utility has achieved many of the operational objectives laid out in the strategy ahead of schedule, and we'll continue rapidly advancing the strategy as we progress through 2026. We'll be submitting our next update to the PUC in April. We've also continued to make our company stronger and more resilient through carefully managing our balance sheet. Our successful $500 million utility debt issuance last year as well as our revolver upsize to $600 million support our financial flexibility and liquidity as we look toward the elevated capital cycle ahead. We also continue to advance our state clean energy goals with the utility reaching a 37% renewable portfolio standard or RPS in 2025. We remain on track to meet the 40% by 2030 statutory RPS requirement. Affordability has been essential focus as we've advanced our strategic and operational priorities. Customer bills remained stable in 2025 despite the significant investments we've made in wildfire safety and resilience. The utility continues to offer financial assistance to working families including providing over $1 million in payment assistance. Turning to the next slide. As we look ahead to our objectives for 2026, we'll continue working to resolve the conditions to payment in the tort litigation settlement agreements. We believe we're in the home stretch of this process as the only remaining steps are resolving all outstanding appeals. This includes resolving the appeal the insurers have taken from the judgment entered in our favor in their direct subrogation actions. Turning to our ongoing rate rebasing. As discussed on our last earnings call, we are pursuing an alternative process that could allow for resetting rates without the time costs and resources typically required for a full rate case proceeding. We see this as an opportunity to develop a rate rebasing proposal in a nontraditional manner. Consistent with fundamental PBR tenants set forth by the commission and state legislature, encouraging innovation and honoring a stakeholder-driven process. We plan to submit a joint rebasing proposal with UluPono initiative, a PBR Working Group stakeholder party by March 6. We'd also like to address some of the elements that could be improved under our PBR regulatory framework, including our annual inflationary adjustment and performance incentive mechanisms, or PIMS. This will happen in the process that the PUC has designated as PBR Phase 6. We expect further guidance from the TUC on a schedule for Phase 6 after the rebasing proposal is submitted. Affordability remains a central focus as we look ahead toward the commencement of the second multiyear rate period under PBR, especially given the elevated capital investment cycle projected over the next few years. We are pursuing low-cost financing options that would reduce impacts to customers from critical investments required for safety and results. In the coming months, we'll be submitting a request to finance wildfire safety strategy CapEx and other infrastructure resilience costs via securitization, which is typically the lowest cost of capital available for these types of investments. In summary, in 2026, we'll continue to execute on our key objectives of advancing the tort settlement and our rate rebasing process while implementing the wildfire risk reduction measures outlined in our wildfire safety strategy. Although much remains to be done, I'm optimistic about the path ahead and proud of what our team has accomplished to date. Finally, we'll be seeing an executive transition at HEI at the end of the quarter. As previously determined by our Board of Directors in 2024, Scott DeGhetto's term as HEI's CFO expires on April 1. And as a result, Scott will resign effective April 2. Paul Ito, the current Treasurer and CFO of Hawaiian Electric will resume his prior role as HEI's CFO, effective April 2, 2026. Scott joined us as our CFO shortly after the Maui wildfires in 2023, and he's played a crucial role in helping lead our company through the most challenging period we've ever been through. His leadership and expertise have been critical for our success, and I'd like to thank Scott for all that he's done. And even though he'll hand the CFO reins over to Paul come April, Scott won't be too far as we'll have him support us as our consultant. Again, I thank Scott and I welcome Paul back to his previous role. Scott DeGhetto, I'll now turn the call over to you. Scott Deghetto: Thank you, Scott. And it's been a pleasure working alongside you in serving this company. I'll start with our financial results on Slide 6. For the full year 2025, we generated net income of $123.1 million or $0.71 per share compared to a net loss of approximately $1.4 billion in 2024. The results include $16.5 million of pretax Maui wildfire-related expenses net of insurance recoveries and deferrals. Approximately $12.6 million of that amount was recorded at the utility. Results for the year also include $12.4 million of losses related to the strategic review of Pacific Current. Excluding these items, which we refer to as non-core, consolidated core net income was $149.3 million or $0.86 per share. This compares to core income from continuing operations of $124.3 million or $0.98 per share in 2024. Utility core net income for the year was $177.5 million compared to $180.7 million in 2024. The decrease was driven by higher O&M expenses, primarily due to previously deferred consulting and legal fees, higher interest expense, higher depreciation and the recognition of tax credit benefits in the previous year. Holding company core net loss was $28.2 million compared to $56.4 million in 2024. The lower core net loss was driven by lower interest expense due to the lower debt balance following the retirement of holding company debt in April and higher interest income from cash being held on the balance sheet to make the first settlement payment. Turning to the next slide. As of the end of the fourth quarter, the holding company and the utility had approximately $16 million and $486 million of unrestricted cash on hand, respectively. In addition, the holding company has approximately $530 million in combined liquidity available under its ATM program and credit facility capacity. The utility also has approximately $540 million of liquidity available under its accounts receivable facility and credit facility capacity. Consistent with last quarter, Hawaiian Electric's Board of Directors approved a $10 million quarterly dividend to HEI for the fourth quarter of 2025. There have been no changes to our settlement financing plans since what we communicated last quarter. We still expect to fund the second settlement payment with debt and/or convertible debt and expect that payments thereafter will be funded with a mix of debt and equity depending on market conditions. As Scott Seu mentioned, outstanding appeals must be resolved before we can make our first $479 million settlement payment, which we now expect to make in the second half of 2026. Turning to the next slide. We still expect 2026 CapEx of $550 million to $700 million in 2027 and 2028 CapEx to increase further to $600 million to $800 million and $600 million to $850 million, respectively. This level of spend is consistent with our expectations communicated last quarter and is subject to additional PUC approvals and further resource adequacy initiatives and analysis. At that, let's open up the call to questions. Operator: [Operator Instructions] Your first question comes from the line of Michael Lonegan with Barclays. Michael Lonegan: Just wondering if you could talk about the latest appeal by the insurers. What do you see as the chances the Hawaii Supreme Court takes up the case? Or do you think it's possible that they deny to hear the appeal based on some of the language from the prior appeals or prior cases with the Supreme Court? Scott W. Seu: Mike, this is Scott. Thanks for the question. Yes. So the only remaining item here is that appeal, the subros appeal of the earlier summary judgment, which dismissed their claims, their direct claims against the defendants. There's been no briefing scheduled yet on this appeal that was just filed in January. I do think that ultimately, of course, I don't want to get ahead of our Hawaii Supreme Court. But essentially, this is the last step. And all decisions by the Circuit Court and the State Supreme Court have been very supportive of the settlements. Again, I won't speculate we'll speak for the Supreme Court. But I'm -- maybe I'll stop my comments there. Michael Lonegan: Okay. And then on financing the second settlement payment, what are your latest thoughts on a preference between debt or convertible debt or a combination thereof? And do you think you'll wait until after the settlement is approved to do this financing? Or is it something we could see like with the first settlement capital raise where you did that already with equity? Scott Deghetto: Mike, Scott DeGhetto. So no change in plans from what we've been saying over the past several quarters. It will be a relevering at HEI either through debt or convertible debt. Right now, based upon market conditions, I would say we're leaning more towards convertible debt and doing it all as convertible debt, but that certainly can change. as we go forward. And then in terms of the timing of that payment, we don't anticipate doing anything until after the settlements approved. As you know, that first payment was raised a while ago. It's being held in escrow. And then once the settlement is approved, we have 30 days to make that payment. And so then we would look -- once that payment is made, we'll continue to look at the markets and determine at the appropriate time when we would raise that money. I don't think it will be a year in advance like we did the last one. But you just never know. It depends on where the market is at that particular time. Michael Lonegan: Great. And then you talked about financing your capital program with the prior debt issuance and then also retained earnings, a good portion of it. With the remaining amount, do you expect to use your $250 million ATM program, how much of that -- and what could be the cadence of issuances of that if you were to use that? Scott Deghetto: So in terms -- let me hit the ATM program first, and then I'll kick it to Paul Ito to talk a little bit a bit more about financing down at the utility and his thoughts on that. But in terms of the ATM, the ATMs out there, we have the ability to use it again, we'll be opportunistic in use of that. We may use it. We may not. It just again, depends on market conditions, but that's always an option for us. Michael Lonegan: And then lastly from me, American Savings Bank, you talked about selling the remaining roughly 10% stake of that. Is that assumed in your financing plan? Or how should we think about the timing of that potential sale? Scott Deghetto: So we still intend to divest that remaining 9.9% in calendar year 2026. Again, just depends on market conditions, how the bank is doing, et cetera. So we continue to look at that regularly. And again, we do have plans to divest that this year. Operator: Your next question comes from the line of James Ward with Jefferies. Jamieson Ward: Congratulations, Paul. And Scott wishing you all the best. In terms of the PBR rebasing, what should we think about in terms of what's actually in that upcoming March 6 joint proposal. You've spoken to it at a high level, but the 2 to 3 most material elements may be target revenue methodology, PIM redesign of a follow-up on that, et cetera? How should we be thinking about what's in there? Scott W. Seu: Yes, James, I think we've described the high-level elements of what we're trying to work through. including the inflationary adjustment factor, having a true-up mechanism as opposed to the current structure. Looking at the PIMS and making sure the PIMS are nice and tight in terms of our ability to actually influence outcomes as well as also the potential return from those PIMs if we show that we have truly performed well there. We've also mentioned in the past looking at expanding the scope of EPRM, the exceptional project recovery mechanism. So those are the key elements I'd say. Jamieson Ward: Okay. Got you. I have a follow-up on the pen but just first, in terms of like rebasing outcome, for risk just described this as the final extension. And what are the specific triggers that we should think about in terms of what would cause you to pivot back to a traditional 2027 test year rate case a second half '26. Like how are you managing the risk of that Jan 2027 new rate states slipping? Scott W. Seu: James, let me hand it over to Joe Viola at the utility. He's our Senior Vice President, overseeing our regulatory affairs. Joe Viola: The March 6 day is when we'll be submitting the rebasing proposal with one of the PBR stakeholders, Ulupono, as Scott had mentioned. The commission after that will just take a look. We figure in about 30 days. They'll make sure that everything as a formal matter administratively is in there that they expect and then give us an order to proceed with the rest of the process. We'll make -- the only thing that would cause us to pivot to a 2027 test year rate case is if that rate basing falls over denied. Jamieson Ward: Got it. Okay. That's very helpful. On the per design, we actually hosted a call recently, we posted a number of the past year, Hawaii-focused former regulators, other people attached to the political process and so on. And they were as clear for me, which I'm sure you guys already would be aligned with and happy to hear, but reiterating 150 to 200 basis points of incremental earnings power above your authorized ROE with the original intention for the PIMS and that's coming from on high. With that in mind, and given how the initial ones were often designed with things that were outside of your control, unfortunately. And also the imbalances in terms of asymmetry in terms of downside and upside. What -- on the PIM redesign, what does a more meaningful package look like to you guys in practice? Like what would the top 2 or 3 PIM changes be that you're pursuing? And how should we think about that symmetry in terms of upside versus downside? Joe Viola: This is Joe again. I think in terms of the ultimate reward opportunity, we think -- we believe that the commission should eventually support what they said in the past at 150 to 200 basis points, and we'll support that. We think there's other support for that as well. In terms of what we want to see going forward, we've learned a lot, living under the first 5 years of PBR. So when we say more meaningful package, we want to make sure that the targets are reasonably set and the means to achieve them are reasonably within our control. That's the important part. We're going to look going forward, as Scott mentioned, we'll be discussing with the specific topics and specific priorities would be for those incentives. But it's -- to us, it's the design to make sure that we can achieve them. And that's our main goal. . Scott W. Seu: Yes. The only other thing I'd add, James, is we're also interested to see if we can actually reduce the total number of PIMS because that has been a bit of a challenge over the last few years managing a long list of PIMS. Jamieson Ward: Got it. That's very helpful. Last question I have is the wildfire platform here, legislation passed. So you're now guiding the 8 to 24 months for the liability cap process. wildfire fund thereafter. We obviously saw the PUC report at the end of the year to the legislature. So bringing it back right to the 24 months back to 2026, what are the 2026 milestones we should be watching for liability cap, wildfire fund, securitization. It sounds like wildfire fund might not be on there. I'll leave it open, but I think that's what the other part people would like to on. Scott W. Seu: Yes, James. So as you noted, right, at the end of last year, the PUC filed their report on the fund, the potential for a fund. And in that, they indicated that it should actually be taken up after the PUC rule-making process for a limitation of liability happens, which the PUC has indicated that, that would be the 18- to 24-month period beginning -- roughly the beginning of this year. So as far as critical milestones, I mean a state agency rule-making process, 18 to 24 months, it will involve a lot of information gathering, data gathering. And eventually, they would file a proposed set of rules for comments and review and then they would go back and take those into account and issue the final. Once the final rule making is proposed, there is a certain period of time for the governor to actually be able to weigh in with his own comments. And at that point, once that is resolved, then the rule becomes final. So those are the high-level steps in the rule-making process. As far as other critical milestones this year, it's really all on that PUC rule-making process. And I think I would also say there's nothing that would be teed up for example, in front of the legislature this year. Jamieson Ward: Got it. Okay. I appreciate it, and see you next week at the conference. Operator: That concludes our question-and-answer session. I will now turn the call back over to Scott Seu for closing remarks. . Scott W. Seu: I just want to close by saying again to all of our investors and interested stakeholders. Thank you for your support. 2025, like I said, was a year where we felt we really -- we're able to make a lot of progress in terms of advancing our key initiatives. I also want to one more time, just thank Scott DeGhetto for his service as HEI's CFO, coming to us shortly after the Maui wildfires in 2023. And Paul Ito, I welcome you back to our team at HEI. So with that, thank you very much. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. I'd like to welcome you to Fibra UNO's Fourth Quarter 2025 Results Conference Call on the 27th of February 2026. [Operator Instructions]. So without further ado, I'd like to pass the line to the CEO, Fibra Mr. Andre El-Mann. Please go ahead, sir. André Arazi: Thank you, Luis. Thank you, everybody, for your interest in our call regarding the fourth quarter of 2025. I would like to begin that we are very excited again to release these numbers for you of the fourth quarter of 2025, which has been a very busy year for us at FUNO. This is the first report after the drop-down of our industrial portfolio. I would like you to bear in mind that we need to consider -- we are considering only a few days of the complete revenues in this new structure, in this particular quarter. Nevertheless, we make sure that everything goes as planned, as we will be able to report a complete quarter this very first quarter of 2026 in the next few weeks. That would allow us to reveal that all the efforts made last year will pay back, and our shareholders will be able to see the positive impact that the carve-out of our industrial portfolio will have on the future of the company. I would like to express our excitement on the numbers released yesterday that show a consolidated company with assets close to $25 billion. These are the big numbers, but we are also taking care of the little numbers. 95.5%, our historic high of occupancy level across the board. NOI margin growing by more or less 300 bps and looking good for this year. A healthy growth above inflation on all the significant lines of the balance. I would like to remember you about last year's achievements. We made the liability management of the company, having renewed close to $800 million at the beginning of the year of the U.S. bonds -- U.S. dollar bonds. We renewed also MXN 12 billion of the Mexican peso bonds. We made the repayment of close to MXN 10 billion of short-term bilateral revolving lines of credit, with the issuance of an unsecured line long term. We made the exchange of our bonds across the curve to complete the transfers of debt to Fibra Next. We finalized the internalization process and we expect savings in the order of $400 million to $500 million this year. We did the carve-out of our industrial portfolio. First, with the IPO of Fibra Next in which we raised close to $430 million. Then we made a follow-on equity offering of Fibra Next close to $400 million. We did the exchange of the bonds. And then finally, at the very end of last year, we finally made the drop-down of the industrial portfolio of UNO into Next. All of this done last year, during which we managed to maintain and excel in our metrics, mainly total income, total NOI, total FFO, total dividend yield, all of them improving in a healthy way. And also, we improved at the end of the year in an overall NOI margin. I would like to thank all the team here at Fibra UNO because none of this would have been possible. We made last year very difficult choices and very strong efforts in order to get where we are today. I was sure -- I will make sure to be reporting the first quarter this year, which will be much clearer of all the efforts that we did last year and will reflect on the balance and the performance of the company and of course, of our subsidiary company, Fibra Next. Thank you for your attention. I would like to pass the mic to Jorge to go in depth with the numbers. Jorge, please. Jorge Pigeon Solórzano: Thank you very much, Andrea, and thanks, everybody, for joining our call. As usual, I'll start with the MD&A for the quarter. Fibra UNO's total revenue increased by MXN 348 million or 4.6% compared to the previous quarter, primarily driven by a 50 basis point increase in the total portfolio occupancy, inflation-driven increases on active contracts, rent increases and on lease renewals and this was offset by the peso-dollar exchange rate appreciation and the effect that this has on our U.S. dollar-denominated rents. In terms of occupancy, our operating portfolio stood, as Andre mentioned, 95.5%, which is a 50 basis points increase compared to the previous quarter. If we look at the retail portfolio, we recorded an occupancy of 93.7%, 10 basis points above the previous quarter. The office portfolio recorded 82.9% occupancy, 10 basis points below the previous quarter. The other portfolio recorded 99.3% occupancy remaining stable versus the previous quarter. The industrial portfolio, 97.7%, which is 30 basis points above the previous quarter. And the in-service portfolio recorded 87.7%, which is 330 basis points above the previous quarter. In terms of operating expenses, property taxes and insurance, total operating expenses increased by MXN 97.1 million or 9.8% versus the third quarter of 2025. This is mainly due to increases in the cost of some of our supplies and services that are above inflation. As you know, we've mentioned this before, a lot of our expenses are linked to service providers that have high degree of correlation with the minimum wage. And this has kept some of those expenses higher. In terms of property taxes, fees increased by 6.1% or 3% above the previous quarter, mainly due to consolidation of Fibra Next. Insurance expenses increased by MXN 10 million or 7.6% versus the previous quarter, again, due to the consolidation of Fibra Next. In terms of net operating income, our NOI increased by MXN 498.3 million or 8.9% versus the third quarter of '25 to reach the amount of MXN 6.079 billion. NOI margin calculated over rental revenue was 85.1% and 77.2% compared to total revenues. In terms of interest expense and interest income, the net interest expense line increased by $51.9 million or 1.8% compared to the third quarter of 2025. This was mainly due to Fibra Next debt consolidation and the interest related to this consolidation. And as Andre mentioned, this was not a complete quarter. So we'll see the complete effect on our financials in the first quarter of 2026. This increase was offset by interest rate reduction in pesos and the effect that this had on our variable rate debt. The appreciation of the exchange rate, which went from MXN 18.38 to MXN 17.97 quarter-over-quarter and obviously, the effect that this has on our interest expense line during the quarter, a decrease in the interest capitalization and the impact of the pricing of our derivative financial instruments. The bottom line on our funds from operation as a result of the above, FFO controlled by FUNO increased by MXN 157.4 million or 6.6% compared to the third quarter of '25, reaching MXN 2.55 billion. Adjusted FFO recorded an increase of MXN 121.1 million or 5% compared to the third quarter of 2025, reaching MXN 2.55 billion. A slight difference against FFO is due to the update in the cost of a property that was sold in the third quarter of 2025. FFO and AFFO per CBFI calculation during the fourth quarter of '25, we put circulation, 5.3 million CBFIs corresponding to the ECP (sic) [ EPC]. And with that, we closed the quarter with MXN 3.810 billion CBFIs outstanding. The FFO and AFFO per average CBFI were MXN 0.6690 and MXN 0.6712, respectively, variations of 6.5% and 4.9% compared to the third quarter of 2025. In terms of the quarterly distribution, we reached MXN 2.55 billion or MXN 0.67 per CBFI with a quarterly AFFO payout of 99.8% and a payout of 94% compared to the annual AFFO. Moving on to the balance sheet. In terms of accounts receivable, we totaled MXN 2.131 billion, a decrease of MXN 260 million or 10.9% from the previous quarter. Reflecting the organic growth related to the consolidation of Fibra Next as well as an improvement in collections that we had in the quarter. Investment properties, the value of our investment properties, including financial assets and investments in associates increased by MXN 32 billion or 9.3% compared to the third quarter of '25. This obviously, as you can see, reflects the consolidation of Fibra Next on the balance sheet as of December 31, 2025, CapEx invested in our portfolio and fair value adjustment of our investment properties. In terms of total debt, we finished the fourth quarter of '25 with MXN 152 billion compared to the MXN 147 billion we had the previous quarter. The variation is primarily due to the consolidation of Fibra Next, which included additional debt, the valuation of the maturity effect of financial instruments and the exchange rate effect appreciation that I mentioned before. In terms of total equity, equity increased by MXN 55 billion, almost MXN 56 billion or almost 30%, 29%, including controlling and noncontrolling interest. As you know, this is obviously the effect of the consolidation of Fibra Next, which is one of the things that we wanted to achieve, and we finally have completed that in the previous quarter. This capital includes the consolidation of the Jupiter portfolio, the second part of Jupiter portfolio. Net income generated from quarterly results, the derivatives valuation, shareholders' distribution related to the third quarter results and the employee compensation plan. Moving to the operating results in terms of leasing spreads. Leasing spreads, we had increases of 16.4% or 1,240 basis points in the industrial segment, 8.2% or 820 basis points in the retail segment and 500 basis points in the office segment. If we look at dollar-denominated leasing spreads, we saw 13.9% or 1,390 basis points for the industrial segment, 460 basis points or 4.6% in the retail segment, and we saw negative 320 basis points in the office segment. As you know, this is something that we are very pleased with and something that we have come to expect in terms of what's happened in the office portfolio. In terms of constant property performance, the rental price per square meter for constant properties increased by 5.3% compared to the weighted annual inflation of 3.6%. So we had 170 basis points growth despite a depreciation of the peso about 13%. If we had not seen that this appreciation, we probably would have been closer to about 8.4% constant property performance. So again, very pleased with the performance that we saw in this area. In terms of the NOI at the property level, we saw for the fourth quarter, an increase of 2.9%. It can be divided in Fashion Mall segment NOI decreased by 2.5% Regional segment decreased by 3.5%, stand-alone segment decreased by 3.6%. The decrease is mainly due to extraordinary income recorded in the third quarter of '25, which is obviously a one-off in [ comparison ] to the fourth quarter of '25. The office segment NOI increased 5.2%. And the others segment decreased by 1.2%. The industrial segment NOI increased by 11.2%. And with this, we finalize the MD&A. Now Luis, if we can open the floor for Q&A. Operator: [Operator Instructions]. Our first question is from Igor Machado from Goldman Sachs. Igor Machado: My question here is on leverage as we have seen a relevant leverage process for FUNO in the last quarters. So I just want to better understand here how does management view the leverage target for the end of 2026? And what is the long-term strategy for maintaining this improved ratios? That's it. Jorge Pigeon Solórzano: Well, as you know, part of the -- there were many drivers for the carve-out of the industrial portfolio and the capitalization and the consolidation, let's say, of that industrial portfolio Fibra UNO. One of them is the deleveraging effect that we have by adding roughly $2.3 billion of new equity, which is a combination of the value of the Jupiter portfolios as well as the equity we raised from the market. Ideally, we feel comfortable, obviously, below 40%, and we feel comfortable having an investment-grade credit rating, which is where we are today, both stable outlooks from Moody's and Fitch. And the trajectory that we have for the company will delever it even further based on a couple of events. One is, as you know, this business is inflation indexed. So that will have a deleveraging effect over time. And then the other one is that Next will continue to grow, and we expect that to come with additional equity issuances further down the road, and that equity is going to be consolidated into Fibra UNO. So that's going to delever the company even further. So at this point, we don't have additional deleveraging strategy, so to speak. And we would like to maintain our investment-grade credit rating going forward. So the metrics that we need to be in that world is what we're going to aim to maintain. So let's say, LTV below 40% is where we feel comfortable around 35% to 40%, say, the sweet spot. Operator: Our next question is from Mario Simplicio from Morgan Stanley. Mario Sergio Simplicio: I have my question is, well, in 2025, you achieved a lot of milestones of your long-term strategy and you have the internalization, we have Fibra Next. And I wonder what are the next targets that you're aiming for, let's say now '26 and for the future years? Like how is the long-term strategy for Fibra UNO now that it has already achieved so many milestones? André Arazi: Thank you for the question. We have many, many plans for the future. And I hope that we, first of all, will reduce the gap between the NAV and the price of the share. Once we do that, all of our opportunities will open wise, and we will act on it. Operator: Our next question is from Diego from Citi. Unknown Analyst: I have one on my side regarding CapEx. In the fourth quarter, the CapEx reached MXN 2 billion. And how this level of investment support FUNO's growth pipeline, including expansions and asset stabilization? And additionally, what you guys expect for CapEx in 2026? Jorge Pigeon Solórzano: I think that the MXN 2 billion is a good number for CapEx for the company, let's say, on a normal operating year on the normal status of what we have been doing, which is keeping up or trying to keep up with the demand for new space that we have from our tenants is a reasonable number to expect again for 2026. And obviously, as you know, this does not include any new developments or anything of that nature. Some minor expansions at some of our properties, but not large scale development. For that, I think that's what we need to open the doors for additional capital for the company. Operator: Our next question is from Pablo Mulas from GBM. Pablo Mulas: You already answered my question. Operator: Our next question is from Gordon Lee from BTG. Gordon Lee: Just a quick question. I was wondering whether you have an estimate or even just a ballpark figure of what the total operating expenses that we saw this quarter that were associated with either the next transactions or the internalization transactions that should be nonrecurring on an ongoing basis, just to get a sense of a more sort of stabilized EBITDA margin for, let's say, the new FUNO. Jorge Pigeon Solórzano: Not yet. I don't think we we run that number. I'll get back to you on that we'll work on it and get back to you. Gordon Lee: Okay. Perfect. Just a ballpark is fine. Operator: Our next question is from Anton from GBM. Unknown Analyst: Just a quick one. I mean, as everyone mentioned, you reached a lot of milestones for FUNO, mostly focused on the industrial side. So I was wondering what are your plans for the retail and office and the other segments? Do you expect to do any acquisitions there? Or what's the overall strategy? Jorge Pigeon Solórzano: Well, more than the strategy, let me tell you what we think about what's going on in the retail sector. If you see our logistics portfolio, it's at 98% occupancy and the rents in the Mexico City market have continued to grow. There is very strong demand for logistics assets. Why? Because the companies that demand that logistics, which is basically consumer-driven in Mexico, are -- have been doing well and expect to continue to do well, and there's growth -- a lot of growth coming in that sector. So that means that there's going to be demand for new shopping malls, new stores, new Walmart and so on and so forth down the road. And obviously, we want to be able to capture those opportunities. Opportunities we have been seeing them the last years, and we've had to let those opportunities pass at Fibra UNO because with the deep gap that we have to our NAV, it's -- this is a capital-intensive business. We want to close that gap in order to be able to issue equity. And then as Andre mentioned earlier, that will open up a lot of opportunities for us for acquisitions and for developments, et cetera. So we see a very strong and attractive retail market in Mexico. Operator: [Operator Instructions]. Okay. We have a question from Felipe Barragan from JPMorgan. Felipe Barragan Sanchez: I have a question on an update on the office segment. Just want to hear your thoughts on the trends and what's going on in that segment. Unknown Executive: Actually, as you have seen on the -- our report, we have been increasing the occupancy that we have there. And I think that it's not just us, it's just a tendency already on the market. Obviously, we are above the average of the market in terms of occupancy. But I think the trend is that the offices are getting occupied. And probably we are at 83% occupancy. Once we hit the 85%, we will be seeing increasing the rent levels that we have as of today that has been almost flat in the last 2 or 3 years. Operator: Our next question is from David Soto from Scotiabank. David Soto Soto: Just a quick one and a follow-up on the retail side. Should we expect variable rents to start contributing to your portfolio anytime soon? André Arazi: They are already contributing. We have a very interesting mass of contracts that we changed. If you remember, I've been saying that in the past that we changed our contracts, some of the contracts for a dual rent, one fixed rent, which was lower than the previous rent that the tenant was paying and/or our percentage of their sales, which has been paying off in the last couple of years. But right now, given that we finished the -- for example, the luxury Avenue in La Isla Cancun, we have been receiving the fruits of that, and we have been receiving already percentage of rent. If you add to that, that we exchange many of the regular contracts of regular shopping malls from fixed rent -- pure fixed rent to fixed rent plus a percentage of the sales, whichever becomes higher. So we have been already receiving that in our portfolio. And given that we exchange many of the contracts, we think that we will continue to be receiving those percentages in the near future. Operator: We'll give it a few more moments for any further questions. Okay. It looks like we have no further questions. I will now hand it to the Fibra UNO team for the concluding remarks. André Arazi: Thank you very much. Thank you, everybody, for your interest in our call, and I hope to hear from you in the next call about the first quarter of 2026 in the future. Thank you very much. Operator: That concludes the call for today. We'll now be closing all the lines. Thank you, and have a nice day.
Operator: Good morning, ladies and gentlemen, and welcome to Boralex Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note that the conference is being recorded. [Operator Instructions] Finally, media representatives are invited to contact Camille Laventure, Senior Advisor, Public Affairs and External Communications at Boralex. Her contact information is provided at the end of the quarterly press release. And now I would like to turn the call over to Coline Desurmont, Director, Investor Relations for Boralex. Please go ahead. Coline Desurmont: Thank you, operator. Good morning, everyone. Welcome to Boralex's Fourth Quarter and Year-end Results Conference Call. On today's call, Patrick Decostre, our President and Chief Executive Officer, will provide an update of our business. Afterwards, Stephane Milot, our Executive Vice President and Interim Chief Financial Officer, will present the financial highlights of the quarter. Then we will be available to answer your questions. During this call, we will discuss historical as well as forward-looking information. When talking about the future, there are a variety of risk factors that have been listed in our different filings, which can materially change our estimated results. These documents are all available for consultation on SEDAR. Mr. Decostre will now start with his comments. Please go ahead, Patrick. Patrick Decostre: Thank you, Coline, and good morning, everyone. Thank you for joining us today. It's a pleasure for me to present our results and key achievements for the fourth quarter and fiscal year 2025. 2025 was a year of strong execution for Boralex despite greater quarterly volatility in resource generation and unfavorable year-over-year pricing comparison in France. We remain disciplined in our approach focused on our long-term strategy and continue to deliver sustainable growth while reinforcing our leadership in renewable energy. We have been very active in the fall by submitting projects in 4 different RFPs, 2 in Ontario, 1 in New York State and 1 in the U.K. The demand for renewable remains very solid in our different markets, and we're counting on a very strong pipeline of projects to benefit from for years to come. These results not only reflects the strength and commitment of our talented teams across the organization, but also the resilience of our business model and our strong focus on creating long-term value for our shareholders and partners. In terms of financial performance. For fiscal year 2025, total combined production was 8% higher than in 2024, but 10% below anticipated production. Wind conditions in 2025 improved compared to last year throughout North America and the commissioning of new projects provided a significant advantage. However, overall wind levels in France and in the United States fell short of our projections. As a result, our financial performance in 2025 is below our expectations for a combined operating income of CAD 248 million and a combined EBITDA of CAD 655 million, down 2% from 2024. The increase in production was not sufficient to offset the negative impact of lower selling prices in France, as expected, due to lower prices on our short-term contract. Stephane will cover later in more details our fourth quarter results. On the development side, 2025 was a very good year for Boralex with our portfolio of development projects and growth trajectory now exceeding 8.2 gigawatts. Our installed capacity stands at 3.8 gigawatts, representing an increase of 615 megawatts, driven entirely by organic growth. During the year, our company entered a new phase with the launch of our 2030 strategic plan, building on the strong foundation we have established over many years and setting a clear path for continued long-term success. Since its introduction, we have made significant progress in our 4 key markets. In the United Kingdom, the commissioning of Limekiln wind farm reflects our expansion in that high potential market. Our position was also solidified with receiving ministerial approval for the 189-megawatt Clashindarroch extension, which includes both wind and battery storage. And with the recent award of a CfD for the Sallachy 44-megawatt Sallachy wind farm through the AR7 process. Meanwhile, in France, we have consolidated our leadership position with the commissioning of 2 wind farms, Fontaine-Les-Boulans and Febvin-Palfart, totaling 29 megawatts. In addition, Boralex ranked first by cumulative capacity in the most recent French Wind Auction, securing 2 projects with a total capacity of 125 megawatts. In the U.S., we signed 2 contracts with NYSERDA for the Fort Covington and Two Rivers Solar Project, totaling 450 megawatts. Both projects have advanced to the secured stage within the year. Looking to our progress in Canada. The commissioning of our Apuiat wind farm marks an important step in Quebec renewable energy journey. We are also moving forward with the construction of 2 major wind projects, Des Neiges Sud, for which we secured financing earlier this year, and most recently, Des Neiges Charlevoix. Finally, we reached an important milestone with the successful deployment of battery energy storage technology. This quarter, we have -- we commissioned the Sanjgon battery energy storage system, Boralex's first operational storage project in North America developed in partnership with the Walpole Island First Nation. The Hagersville battery energy storage project also began operations in Q4 2025, and we are very pleased to announce the commercial commissioning of the site as we received yesterday the retroactive confirmation from IESO effective February 18. This project is the largest battery storage project in Canada and has been developed in partnership with The Six Nations of the Grand River Partners First Nations. Together, these projects add 380 megawatts to our installed capacity, making us the largest battery storage operator in Canada. We also highlight the rapid expansion of our storage activities in Ontario and the continued diversification of our portfolio in terms of technologies and also in terms of type of revenues. Both projects demonstrate our team's strong execution and ability to successfully scale new technologies in new regions. Turning to market updates. Quebec continues to show strong momentum in renewable energy development. Hydro-Quebec has confirmed that it will launch a new call for wind power tenders in spring 2026 for Southern Quebec while launching earlier this week a call for partners for its major development zone. With our sustained presence and ongoing development activities in this market, we are well positioned to capture these upcoming opportunities. At the federal level, Ottawa has introduced 25 global tariffs on certain steel derived products, including wind turbine towers, while also tightening import quotas. Partial exemptions have been granted and additional carve-outs may follow, particularly for projects already contracted or currently under procurement. In the United States, NYSERDA 2025 call for tenders closed in December with results expected shortly. Also, NYSERDA has been granted expanded authority to procure up to 5.6 terawatt hour per year by 2029, signaling continued policy support and long-term demand for renewable energy in New York State. In France, after a period of uncertainty, the publication of the third Pluriannual Energy Plan in February 2026 finally sets the country's energy trajectory through 2035. It aims to increase the share of decarbonized energy in final consumption to around 60% by 2030, supported by a mix of renewable energy and nuclear generation. The framework also confirms the relaunch of renewable energy tenders starting in 2026. I will now briefly review the main variances in our development project portfolio and growth path. Our portfolio of early, mid and advanced stages project now represents 7.2 gigawatt. The change was mainly due to the addition of projects in the early and mid-stage totaling 1,383 megawatt, partly offset by the transition of project to the secured stage and by the discontinuation or sale of other projects. The growth path now consists of 1.1 gigawatt of wind, solar and battery storage projects. The evolution of the growth path included the addition of new projects in the secured stage, including Fort Covington and Two Rivers Solar Project totaling 450 megawatts, and the 125-megawatt Oxford BESS project. This increase was partially offset by the start of operation of 6 projects during the year, representing 615 megawatts that moved into operation. At the beginning of its new strategic plan, Boralex is very well positioned to deliver strong organic growth going forward in each of its targeted market. Before handing it over to Stephane, I would like to say a few words on the appointment of Philippe Bonin as the new CFO announced this morning. I'm very pleased to welcome Philippe in the Boralex team. Philippe will bring extensive leadership experience from major companies in a variety of sectors and a strong strategic mindset that will be essential in supporting our 2030 growth ambitions. We look forward to his contribution as we continue to make Boralex evolve to deliver on our key objectives. I also want to sincerely thank Stephane Milot for his outstanding work during the interim period. His dedication and deep understanding of our business has been invaluable during this transition. On a more personal note, Stephane, I want to express how grateful I am to be working with you. Your truly compassionate and people-centered leadership has made a meaningful impact here at Boralex. You are highly appreciated throughout the company, and we are very lucky to have your ongoing support and great spirit well beyond the scope of your responsibilities. Thank you, Stephane. [Foreign Language] Stéphane Milot: Hi, everyone. Thank you, Patrick, for your kind words. It has been a great opportunity with a lot of work, but also a lot of fun, I can tell you. So I truly appreciate it and look forward to continuing our journey together. Special thanks to our finance team at Corporate, North America, Europe. You rock, everyone. We did -- what a past 6 months we had together. So you really made the difference. Thank you. So now back to the quarter. Total combined production was up 17% compared to the same quarter last year, driven by more favorable wind conditions and the impact of newly commissioned sites in Europe and North America. Production was nevertheless 7% lower than anticipated due to unfavorable weather conditions in North America and to a lesser extent, in Europe. Our combined EBITDA amounted to $203 million, up $12 million, and consolidated discretionary cash flows amounted to $56 million, up $9 million compared to the fourth quarter of 2024. The financial results were positively impacted by better wind conditions and the contribution of newly commissioned sites in Europe and Canada, partially offset by the impact of lower prices of short-term contracts in France. I will now provide a more detailed overview of our quarterly production. So in North America, total combined production for the quarter was 5% higher than the same quarter last year, but 9% lower than anticipated production. Production from wind assets in North America was 9% higher compared to the same quarter last year. However, production came in 6% below expectations, mainly due to lower contribution from U.S. wind farms. Production from wind -- not, sorry, from hydro assets was 23% lower than last year and 30% lower than anticipated, mainly due to unfavorable weather conditions across North America. Production from solar assets in the United States was 9% lower than the same quarter last year and 5% lower than anticipated. In Europe, total production was 40% higher compared to the same quarter last year, but 4% lower than anticipated. Regarding our balance sheet, available liquidity and authorized financing amounted to $681 million as of December 31, 2025, an increase of $158 million compared to December 31 of last year. Total debt stood at $4.4 billion, with project debt accounting for 85% of the total. I would like to congratulate again our finance team for delivering [ especially ] results this year, securing $1 billion in project financing and closing $250 million corporate financing jointly led by La Caisse and Fondaction in Quebec. So these achievements highlight our ability to structure sophisticated financings on optimal terms, strengthening our financial flexibility and positioning us well to achieve our 2030 objectives. So lastly, this year was an important one on the CSR front. Boralex was ranked first in the annual Best 50 Corporate Citizens ranking by Corporate Knights, demonstrating our leadership in sustainability among Canadian companies. Other recognitions received this year include an award presented to Boralex France for its diversity initiatives as well as the price awarded to the Hagersville battery energy storage project by the Canadian Renewable Energy Association for the Innovative Canadian Clean Energy Project of the Year. These achievements illustrate Boralex's ability to combine performance, innovation, and lasting positive impact in the communities where we operate. For more information, I invite you to read our 2025 CSR report, which was published earlier this morning along with all the other annual documents that were published. So in conclusion, 2025 was a successful year for Boralex with the launch of our new strategic plan, supported by the commissioning of large-scale projects in our key markets. And looking ahead, we are very excited for the years to come, and we will continue our efforts to execute on our projects. We have been active in recent tender processes in Ontario, New York State while carefully preparing for the upcoming 2026 wind power call for tender announced by Hydro-Quebec. So driven by sustained demand for renewable energy, Boralex continues to grow in a disciplined yet ambitious manner, backed by a renewable team that is fully engaged and committed to implement our strategic plan and achieve our growth objectives. Thank you for your attention. We are now ready to take your questions. Yes. Operator: [Operator Instructions] We are now going to proceed with our first question, and the question comes from the line of Baltej Sidhu from National Bank of Canada. Baltej Sidhu: Looking forward to continue working with you, Stephane. So just a few questions for me here. On the French wind roll-offs, I think the government in France noted that it's going to be focusing on repowering existing wind farms to increase capacity and protect the environment, which we believe is going to be beneficial to your portfolio. So could you just provide a little bit of insight as to how we should be thinking about the French portfolio in that regard and what you've identified to be repowered? I don't know, you have Ally-Mercoeur and also Le Grand Camp. But any other additional details you can provide? Patrick Decostre: Yes, sure. Indeed, the government is looking to this to favor the social acceptability of project and make them easier to be authorized. Our team, as you know, we have had a recurring strategy before the 2022 crisis, and we have postponed it a little bit because the prices were so high that it was interesting to catch this value during -- up to 2025. So no, the team -- in between, the team has worked on roughly 450 megawatts of new project reborrowing that will increase. In this 450 megawatts, there is 200 megawatts of new capacity. So it means that we have taken 250 megawatts of projects in operation and we have worked to obtain an authorization on this project. Half of these projects have already been authorized. So we will be ready to bid them in the next RFP when they will come. And typically, the Ally-Mercoeur project is both a repowering and an extension of a project that we put in service 21 year ago, I was 21 years younger at that time and you too, in France of 39 megawatts and now it's 104-megawatt project that will be put in service in 2028. So this is typically an advantage, as you mentioned, for Boralex going forward. Stéphane Milot: Yes. Just maybe a point on the megawatt that Patrick mentioned. This is like for the next, I would say, 5 years or so, like it will be bid in upcoming RFPs. It's like -- just want to mention that. Patrick Decostre: Yes. And it's a favorable situation also in terms of return. Obviously, We are developing where we are. Thanks, I would say, to the situation in the U.S., there is a little bit more pressure on the price of the turbine worldwide. So we are able to secure good price in France, as you have seen, around EUR 86 per megawatt hour, the last tender. And the price of the turbine are kept down. So it's a good return that we will have to execute with this project. Baltej Sidhu: Excellent. That's great color. So just sticking on with France and the other side of the equation towards pricing. We're looking at merchants and recontracting prices that you've noted. Do you see them coming in line with your expectations? And how do we think about the cadence of recontracting those assets that are now coming off those short-term contracts? Patrick Decostre: Essentially, in France, we have a policy of what we call the reference hedging path. So we are fixing the price every year in advance, up to 3 years in advance. And the percentage of that is hedged is increasing the soon -- the closer you are to the gate closure of the year before. So that is exactly what we're doing. So we are -- you have to understand that our team is always in the market on this with -- this is always pay as produced contract also. We are not taking volume commitment on that, and they are comparing to the possibility also to go with the brownfield PPA. But you understand that 250 megawatts of project that will be repowered in the next years is part of this portfolio of projects that are emerging today because it was the project -- the contract we early terminate in 2022. So that is another avenue for this project is to be increased and securing a 20-year contract with EDF again. Stéphane Milot: But in the current context, it's for sure that the priority is to go with the EDF contract so to build these projects. But we did, as Patrick mentioned, we had for specifically those projects, but not project, but assets where we exited the contracts, we made a lot of money in the past few years. So that was a good decision to push the repowering forward. Baltej Sidhu: Great. And then just one more for me here. Could you give us an update on your 2 U.S. solar farms that I think has secured a contract, Fort Covington and Two Rivers that Patrick had touched on in the prepared remarks. So what conditions do we need to see for those 2 projects products to cross the line towards FID and if there's any expectations on kind of timing, if you can give any details on that? Patrick Decostre: Yes. Essentially, on these projects, we are working on finalizing the investment decision in terms of finalizing negotiation with model suppliers, finalizing negotiation with a BoP supplier and engineering at the same time to optimize them. So the team is working hard on this. And yes, we will provide information when we would be ready to take this investment decision. Operator: We are now going to proceed with our next question, and the questions come from the line of Sean Steuart from TD Cowen. Sean Steuart: A couple of questions. Patrick, hoping you can give some perspective on the upcoming wind tender from Hydro-Quebec, whether it's partnering with them on larger scale projects or advancing your own projects. Can you give us a sense of the magnitude you anticipate participating or at least submitting into that tender and expected timing on -- the clarity on timing with respect towards -- with respect to that tender. Patrick Decostre: Yes. There is 2 things. There is one for large-scale project in Hydro-Quebec as open one area, which is called Wocawson for a partnership selection process. This is -- we are -- Boralex meets all the minimum eligibility criteria for the selection. As you know, we are a partner with Hydro-Quebec since years. And so we know we have good communication with them. We know how to work with them. And our team is presently looking to all the RFP requirements, the governance structure and how we can play this with them. This is a partnership between Hydro-Quebec, Alliance de l'Est, and IPP, and it confirms what Hydro-Quebec has said 2 years ago that for the large project, they will go with IPP. So that is, I think, the good news because I know that in the market, there was a question about this. So this is confirming what we are seeing and what Hydro-Quebec has been saying for the last 2 years that there will be a position for IPPs there. So that's one thing. The other point is they mentioned that there will be consolidation for a call for tender for a minimum of 150-megawatt size of project in Southern Quebec, and this is typically aligned with the Boralex development footprint and experience and the relationship that we have with indigenous community. And the consultation is now. The bid are due in February '27, and the award is scheduled for August '27 next year. So this is also something that is -- it will be, again, long-term contract. So very classical project in Quebec for Boralex, and we will be there to bid. Sean Steuart: Okay. And then maybe a question for Stephane. As you work to move more projects into the secure development pipeline. Can you comment on the funding platform? Any thoughts towards incremental asset recycling or refinancing initiatives that you might have in your thought process towards bolstering liquidity? Stéphane Milot: Yes. So it's really aligned with the plan we presented in last June. So asset recycling, not necessarily in the near future, but they're in the plan. And also, like you've seen with the debt with La Caisse and Fondaction. So corporate debt, asset recycling and potential refinancing, we're working on a large one in France and always looking at other opportunities to get better conditions or flexibility in terms of financing. So pretty much in line with plan. Operator: [Operator Instructions] We are now going to proceed with our next question, and the questions come from the line of Nelson Ng from RBC Capital Markets. Nelson Ng: My first question just relates to Hagersville. So congrats on commissioning the project. I just want to clarify, I guess, given that it was operating since December, but only commissioned last week, will that project make a full quarter financial contribution in Q1? Stéphane Milot: Yes. We got some very limited revenue in the fourth quarter but it will kick in starting more at, say from mid-February with more regular revenue stream. So you can, in your modeling, take this data, the kind of a date to start applying the contribution that we've discussed with you in the past. Nelson Ng: Okay. Perfect. And then just looking at that growth path chart and just looking at some of the bigger projects on the secured list. So I think you were talking about the New York solar projects earlier. The plan is to complete those projects by -- or in 2028, right? Stéphane Milot: Yes. So we're still working on with that schedule in mind. Yes. So we're going as fast as we can. Nelson Ng: Okay. And then for the Oxford battery project, is that also a 2028 completion date project? Stéphane Milot: No. That's a 2027, if I recall. Patrick Decostre: Mid '27, yes. Yes, we obtained all the authorization. There was some final authorization that should be obtained and we were planning to obtain them in March. And finally, in February, we get everything this year. So we are -- the kickoff meeting of the project was this week. Stéphane Milot: It's going really well, financing also, everything is in line. It's going to be -- it's all green, if I could say, on this one. Nelson Ng: Great. And then one other thing. So you were talking about recontracting in France, but I know in Texas and New Mexico, I think there are a few projects that might be selling power on a merchant basis. And I know, I guess it's a joint decision given that you own 50% of the assets. But given the demand for power in that region, like what are your thoughts on whether it's recontracting those assets, repowering them? Stéphane Milot: I will -- just one thing before -- go ahead, Nelson. Nelson Ng: Yes. No, I'm just thinking in terms of from a repowering perspective. Like time is -- I think, time is running out in terms of prequalifying them for tax credit. So can you just talk about recontracting, repowering and some of the considerations you're looking at? Stéphane Milot: Yes. I will let Patrick answer this one. But just before, you talked about recontracting in France. It's really more like our typical repowering project that we're looking at in France, which is really like, you know, it's like almost -- it's a rebuild. It's not a repower like it could be seen in the U.S. So it's a new project where we're looking at it, and we are taking into consideration the fact that when we repower or rebuild, we remove the -- what we had in place and when we looked at returns, it's a net return on the overall project. So I just want to make sure everyone on the line get this part. As far as U.S. is concerned, we're not in a position right now to indicate exactly what's going to be our strategy there, but we're working on different scenarios. Nelson Ng: Okay. Got it. And then just one last question. You mentioned the short-term contracts in France in terms of the pricing headwind. I think I was doing the rough math, and I think the realized European wind price year-over-year was down about 22%, and I presume those short-term contracts are the key driver. But when you look forward into 2026, is there a rough expectation in terms of what the realized wind price would be in terms of -- like is it a smaller step down in '26? Stéphane Milot: Yes. I think as you know, all the pricing effect, Nelson, has different parts to it. For merchant, I think if you look at the forward curves, it will give you an idea. But as far as contract is concerned, we still expect in 2026 a negative but much less important negative effect than what we got in 2025, but still a negative variation because of the way we have set up the contracts when we exited contracts in end of 2022. And also the fact that we had a window, as you know, to like the 18 months measure that we could benefit from. So it's all that, that we got the benefit in a few years back and then now it's like unwinding. So 2026 will be the last year where we'll get this effect. After that, it's going to be more back to normal. Operator: There are currently no further questions at this time. So I'll hand back to you for closing remarks. Stéphane Milot: All right. Let's go, Coline. Coline Desurmont: Yes. Thanks, everyone, for your attention. Our next conference call to announce first quarter results will be on Thursday, May 14, 2026 at 9 a.m. Have a nice day, everyone, and a nice weekend. Patrick Decostre: Thank you, everyone. Stéphane Milot: Thanks. Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.
Maria Carrapato: Okay. Good afternoon. Welcome to our full year '25 conference call. Thank you for being with us again. We have the full Executive Committee with us, Corporate Executive Committee, and we'll kick off with Marco Patuano, CEO, a brief review of results, handing over to Raimon Trias, speakers for our financial overview, and then we're all available for Q&A. Marco Emilio Patuano: Thank you. Thank you, Maria. Good morning, everyone. It's a pleasure to be with you again as we open a new financial year and reflect on our results and our strategic progress. So in 2025, we delivered on all our promises, and we confirm how resilient our industrial model is. In a very volatile environment, we continue to execute our strategy with conviction and clarity and delivered results that demonstrate the quality of our assets and most importantly, the predictability of our revenues and organic growth model and reaffirmed the strength of the relationship with our plus. We successfully delivered on our 2025 guidance, and we reiterate our 2027 outlook. We have returned EUR 1 billion to shareholders through share buybacks, 1 year ahead of the plan, representing a total yield of 4.5%. We initiated dividend payments at the beginning of 2026 as committed at our Capital Market Day, and we continue on track to meet our leverage targets, reducing leverage from 6.39x in 2024 to 6.28x in 2025. We have reached an important turning point where year after year, we will generate increasing free cash flows, giving us greater flexibility to enhance our shareholder returns, fund industrial initiatives and reach our leverage targets. In 2025, we grew organically in all fronts with new points of presence accelerating throughout the year, showing continued demand for digital infrastructure. On a pro forma organic basis, our revenues increased by 5.8%, EBITDA by 7.1%, EBITDA after leases by 7.9% with a 1.6 percentage point increase in margin. Transformational industrial actions focused on boosting top line growth, optimizing cost and proactive lease management are unlocking the operating leverage of our business. Our recurring levered free cash flow grew by 11.5% and on a per share basis by 16.7%. And the free cash flow grew to EUR 350 million, confirming the positive momentum. On our capital allocation strategy, we completed the disposal of the French Data Center business, allowing us to increase our focus on core telecom infrastructure assets. At the same time, we have agreed to dispose our participation in the DIV II fund for circa EUR 170 million. DIV II for memory is a participation in a European infrastructure fund underwritten in 2021 in order for us to explore minority investment opportunities in digital assets. And we successfully issued in 2026, a bond for EUR 1.5 billion in 2 tranches to anticipate funding requirements, extending maturities and securing a pricing at 3.4%. From an organizational standpoint, we also recently announced the implementation of a more streamlined and agile leadership structure, which I will give you more color on shortly. Returning to our guidance for 2025, I would like to highlight our delivery across all the key metrics. And the fact that this guidance was set almost 5 years ago confirms the resilience and the predictability of our business. Consistent execution of our industrial plan is translating into operating results, which combined with normalizing capital intensity, underpins the trajectory of growing cash generation and sustained profitability. As I mentioned, we announced a new organizational leadership structure in February, marking important progress in the next chapter of our industrial transformation strategy. The new model is designed to bring sharper strategic focus, deepen customer relationship, enable faster decision-making and stronger functional alignment, all essential to support continued organic growth. We combined geographic cluster with a pan-European Vertical Solutions division, strengthening execution while ensuring consistency across markets. We are entering in a chapter defined by operational focus, team empowerment and agility, ready to capture the opportunities ahead. I would like to give you a flavor of why we created our new Vertical Solutions division. Several connectivity needs today exceeded the capacity of a traditional macro coverage and require solution very specialized by nature. Transportation, venues, city centers, public safety, defense, resilience, all of them are very different in terms of technical solution, but very similar across the geographies. We are deploying an operational model aimed to scale up every vertical connectivity solution, increase the commercial focus and ensure execution discipline and improve accountability. We are already leaders in Europe, leveraging on our centralized design capabilities and our country execution power, we want to further improve our performance. Now I hand over to Raimon to go over the highlights of our operating and financial performance. Raimon, please. Raimon Trias: Thank you, Marco. Good morning, everyone. I would like to start by reinforcing our very positive performance in terms of organic growth and cash conversion in the year '25. Robust revenue growth, combined with a continuous focus on operational excellence is driving higher profitability, a stronger operating leverage and expanding cash flow. Starting with organic revenues, we delivered a solid 5.8% year-on-year. EBITDA grew by 7.1%, supported by ongoing actions to increase operational efficiency. EBITDA after leases was 7.9% higher, reflecting our proactive lease management activity and recurring levered free cash flow rose 11.5%, supported by the disciplined implementation of our capital allocation strategy. Very important, the recurring levered free cash flow per share grows by 16.7%, underscoring the incremental value we create for shareholders. Moving to Slide 9. As usual, we show you the bridge between reported and organic pro forma revenue growth. Starting from EUR 3,941 million revenues in 2024, the perimeter adjustment for Ireland and Austria brings us to a pro forma revenue base of EUR 3,790 million. From there, the combination of escalators and CPI, colocations and build-to-suit deployments led to organic revenue growth like-for-like of 5.8%. This strong revenue performance, as you can see in the next slide, is led by healthy PoP growth in the fourth quarter '25 and as Marco said, throughout the year. Gross colocation and build-to-suit accelerated to 3,043 in the quarter, demonstrating sustained customer demand and a strong commercial traction across the portfolio. We recorded a strong colocation in France, 220; Italy, 887; and the U.K., 128. We continue BTS deployment across most countries and overall churn was contained at 307 units. Net new PoPs have shown consistent quarter-over-quarter growth throughout the year. Moving to Slide 11. The net PoP growth in 2025 has been 4.5%, fully absorbing a 1.2% churn influenced by the effects of 2 major consolidations in Spain and the U.K. In Spain, despite the Mas Orange network reconfiguration process underway, we recorded year-on-year growth in total PoPs. This reflects the importance of the support we provide our customers in their ongoing network deployments and how we benefit from the unlocked potential for MNOs to invest after-market consolidation. The U.K. also posted consistent quarterly growth, driven by continued 5G deployments, amendment programs and selective new site activity, illustrating the depth of demand and ongoing investment to catch up and improve network quality across the country. If we go to the next slide, the strength of our operational performance is again clear in this slide, which shows organic growth in Towers revenues of 5.5%, driven by contractual escalators, colocation and ongoing build-to-suit rollouts across our main markets. A reminder that these figures are adjusted for Ireland and Austria for comparability. Here, we have selected a few practical examples that show how our industrial strategy is being translated into real-world execution across different areas of the business. First, 5G densification in Italy. Fastweb, Vodafone and Cellnex Italy have extended their strategic agreement for an additional 12 years. This enables enhanced coverage and improved service quality through the deployment of 5G, supported by over 1,000 points of presence across the country. Second, network resilience and power autonomy. Telefonica and Cellnex Spain have signed the first agreement of its kind between a TowerCo and an operator to strengthen power assurance across more than 2,000 sites. This initiative improves network resilience and energy security following the recent blackouts in Spain. There is potential to develop more energy-related business across our portfolio, provide interesting upside to our core tower services. And third, the new markets through nonterrestrial networks. We provide land acquisition and construction capabilities to support low earth orbit satellite initiatives. Cellnex can provide essential gateways between LEO constellations and the terrestrial fiber backbone. Together, these examples illustrate how our operational strategy is being deployed on the ground and how it is opening new avenues for growth while reinforcing our role in next-generation connectivity. Let's move on to Slide 14. Fiber, connectivity and housing services delivered a strong 16% increase in revenues, supported by the continued rollout of the Nexloop project in France. Growth in DAS, Small Cells and RAN as a Service was driven by flagship deployments and the increasing relevance of neutral host solutions with projects delivered across venues and high-traffic locations such as [ Roig ] Arena in Valencia, La Cartuja stadium in Sevilla, PGE National Stadium in Poland, 5G rollouts in Madrid Metro in more than 40 parking facilities as well as multi-operator small cell deployments in Portugal and the renewal of long-term IoT agreements such as Securitas Direct. Our broadcasting business remained stable with a 1.9% growth year-on-year. And importantly, we secured the renewal of our long-term contracts with the leading broadcaster in Spain. On Slide 15, we can see that our industrial plan continues to scale and strengthened by the adoption of AI. The initiatives shown here aim to standardize processes, automate operations and reinforce asset management across the group. This collective effort is making the organization more agile, reducing operational complexity and improving our ability to respond quickly and consistently across countries. It is also visible externally. In 2025, customer engagement reached a new high with customer satisfaction index increasing to 8.3 out of a maximum of 10, the best result of the past decade. We are on a path of coordinated transformation that is elevating efficiency, effectiveness, quality and overall service experience. This industrial platform has helped so that our efficiency initiatives are translating in clear margin expansion, as you can see in the next slide. On a pro forma basis, we reduced cost per towers across all our key cost categories, 1.9% less in staff cost, 1.4% less in repair and maintenance, 4.9% reduction in SG&A per tower and 1.1% reduction in leases. Land management remains a key value driver for us. We deployed EUR 270 million across land acquisition CapEx and efficiency programs, generating around EUR 24 million in efficiencies, displaying how our disciplined capital allocation strategy helps offset volume and CPI-related inflationary pressures in lease cash-outs. These focused efforts have driven an increase in EBITDA margins of 300 basis points to 62.1%, up from 59.1% in 2023. The first part of the next slide shows the bridge from reported EBITDAaL and all the components that shape our free cash flow. In addition to our operating performance, this strong recurring levered free cash flow comes from an efficient capital and tax structure, combined with the continued decline in expansion and build-to-suit CapEx, free cash flow amounted to EUR 350 million. This free cash flow acceleration represents a turning point, as you can see in the next slide. Our operational improvements are clearly flowing down to cash. On a pro forma basis, recurring levered free cash flow grew by 11.5%, almost EUR 200 million. And on a per share basis, the increase was even stronger at 16.7%, also reflecting the share buyback program, which continues to enhance value per share. Looking at reported figures, free cash flow reached EUR 350 million, with underlying free cash flow, excluding or before the remedies, improving by EUR 307 million year-on-year. 2025 marked an important milestone for us with the entry into a new phase of consistent and rapidly accelerating free cash flow generation that supports our deleveraging strategy, as you can see in Slide 19. Net debt to EBITDA improved to 6.28x from 6.39x in 2024 and 6.85x in 2023, keeping us firmly on track towards our 5x to 6x target. I would like to note that the pace of deleveraging could have been faster. If we hadn't brought forward EUR 1 billion in shareholder remuneration, our leverage would have closed below the 6x. Our recent EUR 1.5 billion bond issuance that Marco mentioned before in January '26 successfully [ propounded ] most of our 2026 maturities with a strong appetite from investors on the back of a good market momentum and our strong rating outlook. We managed to extend maturities and secure an attractive 3.4% pricing. Now let me hand back to Marco so that he share our guidance '26 and '27. Marco Emilio Patuano: Thank you, Raimon. I would like to close our presentation with the message of confidence. The strength of our business and underlying sector drivers, the continued execution of our strategy and the power of our customer relationship give us the confidence to firmly reiterate our guidance for 2027 and share our outlook for 2026. Let me highlight that our old outlook has been adjusted to reflect 3 elements: the change of perimeter following the data center disposal, the discontinuation of our operation and maintenance business in Spain and the incremental financial costs associated with the share buyback. As you can see, we are very optimistic about our continued growth, profitability and cash generation. So in summary, 2025 was a great year for us, and we're very confident going into 2026 and 2027. Our business model is intact. Drivers of network investments are healthy and customer relationships are stronger day by day. Our organization is driven with renewed leadership focused on growth, efficiency and customer excellence. Our growth trajectory and increasing free cash flow underpin our commitment to enhanced shareholder remuneration and give us further capacity to outperform our CMD distribution targets. So thank you. Maria Carrapato: Okay. So before moving to the Q&A, I'd just like to highlight that in addition to the main slides in the body of the presentation, we've added a few new slides at the end, some fact slides that cover many of the topics that you often ask us. So we really hope you find them useful. And with that, we're now available to take your questions. Maria Carrapato: So the first question that we have on the line up is from Roshan Rohit -- Ranjit at Deutsche. Roshan Ranjit: I just got 3, hopefully, quite quick, please. Marco, you highlighted the Spanish revenue pick up, so kudos. I guess this is the benefit of the kind of the mergeco ready coming through now. Could you remind us how many ops and the trajectory of that ramp up through 2026, please? Secondly, on the EBITDA pick up, a strong acceleration on the organic growth. Is this now the benefit of the rank of [indiscernible] coming in and we should expect that momentum to continue through '26, or is there an element of timing effect in there, please? And lastly, thanks for the additional color on the backup slides. I'm quite interested in the RAN sharing slide, and you've given examples across Europe. Is it possible to get a sense of the kind of pricing premium across different markets that you attribute from RAN sharing?. Is it kind of a consistent uplift in the pricing? Or does it vary dependent upon market structure? Marco Emilio Patuano: Yes, very good. So on your first question on Spain, I take question 1 and 3, and I leave the EBITDA to lease to Raimon. So on your first question, so Spain had -- the first phase in Spain was the redesign of the network coming from Mas Orange. So you see that at the beginning of 2025, we had a material churn in the -- in our point of presence. We started in the second part of 2025 to activate the RAN sharing agreement we have with Digi, which was a part of the deployment strategy of Digi in Spain, and we started the so-called rural project in Spain with Mas Orange. Now for 2026, we start entering in the densification process project that we have with Mas Orange and we will continue to activate more PoPs with Digi. So 2025 was Mas Orange very much focused on reshaping the network and the activation of Digi filled the gap that was coming from some discontinuation in Mas Orange and 2026 on the contrary will be Mas Orange starting the densification project. Your second question on RAN. The question on RAN is pricing depends very much on -- not very much, to some extent on market conditions. You should imagine something between half of a colocation price and 1/3 of the colocation price, depending on the structure of the market. Normally, they have very, very, very limited activation costs on our side. So it's a pure margin for us. because there are basically no CapEx associated to this. Yes, there are some OpEx because our engineers have to make some little adjustments, but it's pure margin. Raimon Trias: The EBITDA perspective and Landco, as you will have seen this year, we have done up to EUR 270 million worth of initiatives, both on efficiency land acquisition across all the different countries that have allowed us to save approx EUR 24 million in terms of savings of EBITDAL. As you have seen on the guidance, this trend will continue going forward. The idea is that over the next years, since we created Celland, we have accelerated the amount that we are able to buy and we're buying more than prior years. It is true that we need to be careful not to compete with ourselves, and we need to keep certain level that normally we consider rate between EUR 250 million, EUR 300 million for the coming years to keep on achieving this level of savings going forward. Roshan Ranjit: That's great. So just on the last point, Raimon. So the kind of Q4 exit EBITDA growth would be something that we can expect through '26 then? Raimon Trias: I would say, if you take the savings that we have achieved this year, there is part of it, as you are saying, there has been a bit more of activity in the last quarter and a bit more of savings. So you have to consider that for doing the phasing for next year. But then next year, it will depend if we buy EUR 250 million, EUR 300 million, that the new savings of next year will kick in as well. Maria Carrapato: So moving on to the next question. It comes from Rohit at Citibank. Rohit Modi: I have 3, please, as well. Firstly, on the guidance for 2027, I understand the guidance was initially given it was a bit long dated and you have a broader range. Now given you are near to 2027, we have already in start of 2026, we still have, I understand 5% on range on the revenue level, but that goes down to 20% on free cash flow level and with a business like Cellnex where you have a higher visibility. I'm just trying to understand what are the swing factors on recurring level free cash flow and free cash flow for '27 that you expect that number can move from lower end to higher end. That's the first one. Second, again, there's a lot of noise we have seen particularly recently in Italy around renegotiation of contracts. I'm just trying to understand, Cellnex could be any kind of beneficiary if -- from -- if any, anything happens in Italy. And lastly, if you can just remind us around the derivative position that you have taken last year, the swaps just before the buybacks. I mean, is there a kind of termination date do you have on those swaps given you do mark-to-market and you have kind of cash outflow -- potential cash outflow if you move terminate that contract. Marco Emilio Patuano: Okay. So on 2027 guidance, yes, I remember there was a bit of skepticism in the recent past about our capacity to go to target. The more it was long term, the more the skepticism was higher. Today, I think that the level we reached in 2025 give good visibility of how the recurring level free cash flow and free cash flow are achievable. So what are the factors that made them achievable? Well, we defended and protected the revenue growth. The revenue growth despite a worse-than-expected originally expected CPI, we are maintaining a good level of growth. This is important. And as you saw, the idea of making a new organization is in order to keep revenue growth. We are performing well in terms of efficiencies, Raimon just explored. And even more, our discipline in capital allocation was demonstrated more and more. So the range for 2027 is what we confirmed at the Capital Market Day. And the more we get closer to this day, the more we see it feasible, both in terms of recurring levered free cash flow and even more importantly, in terms of full cash flow. So your second question was about contract renegotiation. Look, what I can tell you is that we already renegotiated several contracts. Renegotiated with Telefonica, we had no problems. We renegotiated with Vodafone, we had no problems. We renegotiated with KPN in the Netherlands, we had no problems. With Iliad in France, we had no problems. So our experience is that the renegotiation moment is a moment in which you sit with your client. The client will tell you what he likes and what he doesn't. But the core elements of our contracts have never been questioned. So the fact that it is a long term is a long term, the fact that it's an all or nothing, is an all or nothing, and it has never been questioned until today. On top of these, talking about Cellnex, what I can tell you is that the coming renegotiation are not tomorrow. So we have the next renegotiation we have one in Italy in 2030, and then we go to 2033, 2034, 2035, 2036, 2038, 2042, 2048. So in this moment, of course, we are looking with attention what happens in the industry, but our experience as of today has not been dramatic. And the last, I leave to Raimon. Raimon Trias: Yes. On the last topic, I'm not sure if I understood properly, but I'm going to try to answer what I understood. I think that you were asking why last year, most of the return -- all the return that we have done to shareholders have been through the share buybacks. There are various reasons. The first one, if you remember, in the Capital Markets Day, we committed to a dividend starting 2026. Why is that? You've seen the guidance that we have given. The free cash flow is between EUR 600 million and EUR 700 million. So it allows us to pay a dividend based on the cash generation from the business. Last year, we had cash available that it was coming partially from the cash generation of the business, the EUR 300 million that we have done EUR 350 million, but it was coming also from the divestments of Austria and Ireland. And on top of that, the share price was at a moment that was very attractive. That's why we also decided to use the proceeds for doing the share buyback. I hope it was clear enough. Rohit Modi: Sorry, it was regarding the swap, the swap contract that you entered last year, would you continue to have that contract? Raimon Trias: No, the equity swap, it is still in place. It matures in June '26, and it was bought at EUR 32, and we are today at EUR 31.5. Maria Carrapato: Okay. So moving on to the next question. It's coming from Arnaud Camus at Bestinver. Arnaud Camus: First, I assume the disclosure may be limited, but could you provide some indication of the size of the battery resilience agreement you have signed with Telefonica in Spain? Should we assume this is a replicable model to other countries of your footprint? And two, more broadly regarding the forthcoming Cybersecurity Act. I know it may still be early, but could you share any initial visibility on the potential CapEx envelope and implementation time as you are an infrastructure provider to telecom operators? And is it already considered within your 2027 guidance? Marco Emilio Patuano: So the battery agreement is still -- sorry, it's relatively sizable with Telefonica. We are discussing with them how to expand it more because what we agreed with them is to have modular development of this program based on the network design. Our technical teams are working strictly together. The target is to have several thousand sites covered. And it's a super interesting business model because what we do is like imagine not to be a pure infrastructure or a simplified infrastructure, but to be a service infrastructure provider. So we help to take care of the infrastructure from the bottom to the top. Having a program that allow us to buy batteries on a pan-European basis, we can have very good prices. And even more importantly, we have very long insurance terms for the life protection of those batteries. We agree on life protection up to 15, 20 years. Is it replicable? Yes, it's very replicable. We have several other customers that are interested in this business model exactly because of what I told you. We are negotiating very good prices on very good volumes. don't underestimate the fact that securing volumes in this moment in which there is -- starts to be a certain level of shortage on this type of elements is clear. About the Cybersecurity Act, the CSA, I was in Brussels last week talking about DNA and CSA, so the 2 regulations that are expected going forward. The answer is, yes, we are working very closely with the European community. There are still margins of nonclarity -- nonperfect clarity in what is going to be the final outcome. And to be honest, different member states have a different interpretation of the scope. Some are more strict, some are less strict. What we have in 2027, we are convinced that is full enough for what is going to be the requirement of the CSA. Then if you ask me if the CSA will be fully enforced in 2027, I'm not so optimistic. Maria Carrapato: Okay. So moving on to the next question. It comes from Fernando at Alantra. Fernando Abril-Martorell: Two quick questions from my side. First, on the expansion CapEx. I've seen it is down 6% year-on-year on a pro forma basis. So I don't know if you can elaborate a little bit on the main drivers behind this? And also, how should we think about its evolution for '26 and '27, the split between the different 3 CapEx items? And second, on PoPs growth. So you've accelerated throughout the year. Is it reasonable to assume a similar growth profile in '26? And can you give us an indication of what share of new PoPs will be linked to RAN sharing agreements? Marco Emilio Patuano: Okay. On expansion CapEx, so there are 2 elements. A few time ago, Raimon showed you that on DAS, Small Cells, RAN and other services, we grew almost 5%. The reality is that if you open this number between DAS and Small Cell RAN and other, you would have seen that DAS and Small Cell were growing about 8.1%, RAN about 10% and the other was growing much less. But the real focus for us today is DAS, Small Cells and RAN. So going forward, what we see -- the place we see having the CapEx is those 2 areas; DAS and Small Cells in this order, more DAS than Small Cells. So the Small Cell take-up is still low even though there are some interesting use case in some European countries that we are monitoring very closely of Small Cells covering city center very efficiently and with a very low urbanistic impact and the other is RAN. Our RAN project in Poland is using some CapEx. So this is about the expansion CapEx. Then of course, there is a part of expansion CapEx that is linked to colocation, but its tower expansion CapEx that you know every year, we have more or less the same. About PoP growth, Raimon? Raimon Trias: Yes. So during the year '26, you know that our growth in PoPs comes from 2 things, comes from colocations and it comes from build-to-suit. Build-to-suit will slow down a little bit in the year '26 basically because our programs of build-to-suit are reducing year-on-year as they come from the prior M&A deals. The normal colocation, we're expecting similar growth this year, not a big difference. And you were asking as well from our RAN sharing perspective. This year, the RAN sharing has mainly been in Spain with the entrance of Digi. And I would say that for next year, although you also have a bit in Italy, I would say that for next year, you have to consider that there will be similar RAN sharing coming from Spain and a bit in Italy as well. But I would just consider that from the colocation comes from Spain is what will be RAN sharing. Maria Carrapato: So moving on to the next question coming from Ondrej at UBS. Ondrej Cabejšek: I had to step away for a moment, apologies if I'm repeating the question. Please feel free to ignore. I have 2 questions, please. One is on the news that Iliad has decided to allocate part of the contract that you were mentioning at the previous quarter that you are kind of looking at the 4,000 sites in France. So Iliad has allocated at least half of this to TDF. I was wondering, Marco, if you can again kind of explain to us your thinking about the returns on this project, why this is the second project with Iliad specifically that you are kind of turning or walking away from presumably because of the kind of IR not meeting your standards. So that would be question number one, please. And second question related to France. We heard last week on the CMD that Christel, the CEO of Orange, was talking about again, again kind of investment remedies. And so I was wondering if this is something that is already somehow kind of taking shape in light of various positive, say, developments, for example, the European Council openly suggesting that M&A should be allowed and investment is needed, remedies are needed in that direction. So any kind of color on developing talks around that potential situation would be very helpful. Marco Emilio Patuano: Okay. I answer Nemrod and then today with us, there is also our Chief Strategy, who is French, by the way. So I will leave him to respond Ondrej. So on Nemrod, yes, we have been -- we participated to the tender and the tender itself is an evidence that there is more need of coverage and densification. So this is -- I commented a million times in the past and then there is a tender. So the good part of the story is that densification needs are there. We've been looking to the tender. We submitted an offer, but we submitted an offer that was in line with our capital allocation rules. So did make us not to reach the agreement with Iliad because it was out of our investment criteria and our capital allocation criteria. So we decided that if there was someone offering more, we would have stayed disciplined. So our goal is not to catch up with every investment there is in Europe. There are -- we are disciplined. We know where we create long-term value creation. And so that's it. We will focus on other projects. Vincent, would you like to answer the second question? Vincent Cuvillier: Yes, of course. So yes, we are obviously very -- extremely close to our different customers. We are not directly involved, as you perfectly know, within the discussion of the consortium. But we are also, as Marco mentioned, pretty convinced that any consolidation, if it happens, will come with investment remedies not only in new coverage, but also on the resiliency of the system. So we have shown our proactiveness with all our partner there to support these remedies. And as you perfectly know, in any case, what we will procure is to protect the NPV of our contract and giving some short-term flexibility in exchange of long-term growth that will come from these remedies without any doubt. And this is what we will protect -- this will result in the protection of the NPV of our contract. Marco Emilio Patuano: Okay. Thank you. So yes, I was with some members of the French institutional establishment and what they told me is that they consider infrastructure investment, a high priority for the country. So there's no doubt that there will be more investment coming. Maria Carrapato: Okay. So now moving on to the next question. We have Abhilash from BNP on the line. Abhilash Mohapatra: I just had one, please. I wanted to come back to the topic of the guidance ranges and specifically around the revenues. So about EUR 100 million delta for 2026 between low and high and EUR 200 million for 2027. Just wanted to understand specifically around revenues, what is the key factor there? Is it around inflation assumptions, presumably not given it's so close. So is it mainly around colocations? Or are there any other factors? So any color you could add there around the revenue would be very helpful. Marco Emilio Patuano: Yes. Do you want to Raimon? Raimon Trias: In terms of the guidance, the only thing that we have adjusted, you have it in the presentation is basically the change of perimeter that is coming because of the data center disposal. Also, we have adjusted the discontinuation of the operational maintenance activities that we have in Spain. If you recall, we decided to stop this something like 18 months ago, but it had an impact during 2 years still because it took some time to discontinue the operations. And the third thing that we have adjusted into the guidance is the impact of the increased share buyback that was not considered in our numbers in the Capital Markets Day. The rest of the guidance, '27 has not changed and remains as it was before. Abhilash Mohapatra: Apologies, if it was not clear from the way I framed the question. I was just -- maybe sort of more wondering around what is driving the variance between the low and high end of the revenue range. What are the key factors? Marco Emilio Patuano: Yes. I think that the width of the range depends very much on somehow the future of build-to-suit programs if we are going to allocate more build-to-suit programs or not. A [ Nemrod ] project enters, we have the full capacity in our cash flow to have such a project and it contributes to your growth. The Nemrod project doesn't enter, and we rely more on colocation and the existing commitments that we have. So having -- or maintaining a certain element is absolutely normal. And by the way, so it is also a decision of not to touch what we committed at the Capital Market Day. So if we start touching one point, then we have to make a full revision. So -- but if you ask me what can move us from the low end to the high end, I would tell you that what is going to come from colocation, RAN sharing, et cetera. More or less, we have a fairly clear picture. What are the commitments that are already taken. We know even the [ cent ] is possible that something more materialize in the coming months before -- between here and the end of 2027. Yes, and we will evaluate. We demonstrate we are disciplined. We're not going to make crazy stuff. If we do something, it's because it generates value, long-term value. So I think it's fine. Raimon Trias: If I can add to Marco, it's important that everyone understands the predictability of the business. This year, we have achieved the guidance '25 that was given 5 years ago. So the barrier that can happen within these numbers is very small in that perspective. Marco Emilio Patuano: Good. Abhilash Mohapatra: Thank you both for the color. So just to clarify, so you're saying that the high end of the guidance is more sort of predicated on additional build-to-suit projects over and above what we already have, if I understand that correctly for the revenue guidance... Raimon Trias: For going up to the higher part of the guidance, yes, there are other projects that should be won during the year to be able to get to the higher part of the guidance correctly. Maria Carrapato: Okay. So moving on. We can follow up afterwards if you still have any questions. Now moving on to the next question, comes from Fernando at Santander. Fernando Cordero: My two questions, in fact. The first one is related with a follow-up in the sense that you have been already asked about your confidence on the growth for 2026. I'm going a little bit beyond given that the build-to-suit activity is going to clearly decrease by 2027 and onwards. How confident are you of replacing the current [indiscernible] of growth coming from build-to-suit with colos. And the second question is on active equipment. You have already seen the project in Poland. I just would like to understand at which extent you would be also, let's say, open for additional projects, and particularly, I'm thinking in Spain, just as a way to complement your current portfolio and even to, let's say, to give more visibility in the long term to your current business in Spain? Marco Emilio Patuano: So the build-to-suit programs, as I said, 1 second ago, we are -- we have a program of committed that what has been already committed, has a sharp decline after 2026. 2027 will be materially lower than 2026. And -- so this is why we are working on analyzing future possibility, future opportunities that can appear in the market. On your question on active equipment and especially on Spain, I would say that it's not our sweet spot. So if you ask me if is this your sweet spot? My clear answer is no. We have the project in Poland. We are performing the project in Poland, I would say, fairly okay, okay in terms of how the project is going on, what are the returns, the relation with the client, et cetera. But what I can tell you is that contributing with a material benefit to the client we can do way more on the traditional perimeter than on the active component. Then every case is different. Today, a case in Spain is, I think, more a press rumor than a real case. So as of today, my answer is more no than yes. This is also something that is not so clear if it is a real case or a speculation. But I would say more no than yes. Fernando Cordero: My question on the PoP growth is because [indiscernible]. Maria Carrapato: We can't hear very well. Marco Emilio Patuano: Can you speak a bit louder, please, Fernando? Fernando Cordero: Can you hear me right now? Marco Emilio Patuano: Much better. Fernando Cordero: Okay. Perfect. Now my point is the following. There is a debate that at which extent your current PoP growth in Colors is subdued by the fact that you are deploying the build-to-suit programs. And in that sense, what should be, let's say, the your, let's say, your base case in terms of ops, it is the total growth that we are seeing today or just the colors when the build-to-suit product will be trading down. Marco Emilio Patuano: Well, the color that you see today is what we assume is going to be the rhythm of the colocation. And of course, if you see that the build-to-suit tend to reduce after 2027, we are going to push more on colocation. The point is we are looking to an important market share on new colocation. So what we are doing is maintain or eventually even increase our market share. And in order to do this, our technical team is working with proactive models in order to codesign with our clients better coverage. This is something that if you want, we can explore and explain better separately. Maria Carrapato: So moving on. Next question comes from James Ratzer at New Street. James Ratzer: I have 2 questions, please. So the first 1 is you're seeing some very encouraging growth in the kind of just organic colocation on your Towers. I'd be really interested just to hear more precisely where you're seeing that demand coming? Is this in kind of urban hot spots is this rural areas? Are these transport links. And you're speaking to the MNOs, where are you finding that particularly seeing this demand for organic colocation growth? And then secondly, kind of bigger picture, Marco. Where do you see Cellnex's portfolio of assets going, let's say, over the next 3 to 5 years. I mean if you announced here this morning another small disposal I mean, how do you see yourself at some point ever going back into acquisition mode and growing the portfolio of the business? I'd just love to here a bit more conceptually how you think about the kind of strategic portfolio over the next 5 years. Marco Emilio Patuano: Yes. Very clear, James. So on organic colocation, it's super interesting because when we go with my Chief Operating Officer and we start looking at the detailed figures, we look to our portfolio splitting between towers and rooftops and then urban, suburban, rural and deep rural. So the more you are tower in non-super dense area, the more you have opportunity for colocation, which is good common sense. If I'm in the center of Paris, adding a co-location on an existing rooftop is not difficult technically. It's difficult urbanistically. So you don't get the permit. So colocation are most of all suburban and suburban is the big roads and transportation corridors even inside the cities because these generate traffic congestion -- data traffic, not only car traffic congestion, but also data traffic congestion. And the rural, the rural is going to be a mix of colocation and RAN sharing. The more you go in deep rural, the more we suggest to our client to be efficient. We are making this, for example, in Switzerland. We are telling to our clients RAN share more because the industrial cost is for them, not for me, for them. The industrial cost make the investment having a better return. So the more you look at tower and the more you look at non-super dense urban area, the more you have opportunity for colocation. The more you have -- you are densifying dense urban areas, the more you have to think about more towers or eventually distributed small cell system or distributed antenna systems. I hope I made it clear, James. The second is how do we see the portfolio medium to long term? So point number one, everything that is noncore and you are easy to understand the participation, we were a limited partner in an investment fund. Hard for me to say that this is core. We had a commitment of further EUR 50 million to be invested in the future, and we could repatriate with a nice return, our old investment. So why not to rotate this asset? I think it was a relatively easy decision. We had a very good cooperation from the GP, the general partner cooperated with us very nicely. And so we made it. Now -- when you look at can Cellnex be on the buy side, I would say, for geographic expansion, I'm fairly categoric in saying no. I don't see Cellnex exit from markets and then reentering new markets because -- no, I don't see this that in terms of geography, I think we are pretty much okay. But if the MNO are claiming that there is too much fragmentation in the market, I would say the tower sector in some markets can say the same. In Spain, there are 4 tower players and 3 networks. In France, there are 5 tower operators. And if you count also smaller ones, you can eventually even consider it more fragmented. So those -- U.K. is the same. U.K. is pretty fragmented in terms of tower operators. Consolidation -- in-market consolidation in tower operator can make good synergies. The easy and evident one, I can manage more portfolio, more towers with less than proportional growth of people. This is, let me say, the trivial one, the easy one. The most interesting one is that when you put 2 portfolio together, you start realizing the real overlaps between portfolios and you can start decommissioning part of the portfolio, transfer to your clients part of the benefit. And this is what is -- what make it very, very, very interesting. So this kind of consolidation is not there today because there is nothing there today. But if your question is, how do I see it medium term, I think that this fragmentation, same as the MNO saying that it's unefficient, I can say that it's not particularly efficient even in the tower sector. Maria Carrapato: Okay. So now moving to... Raimon Trias: We have another 2 and then... Maria Carrapato: Yes. So now moving on to Graham at Jefferies. Graham Hunt: Yes. I'll just stick to one, if that's okay. Can I just ask a bit more on the reorganization that you announced that you took at the beginning of the year. Maybe if you could help us understand more about the characteristics of that business unit as to why it suits the cross-market leadership structure and what the challenges were that you're encountering before this that the new organization is looking to resolve. Marco Emilio Patuano: Thank you. Thank you, Graham. The reorganization was based on 2 main drivers. One is at corporate, we need to be more efficient. And to be more efficient, we need to be more focused and more slim, if you want, and then we have to decide what we do and what possibly it's not absolutely necessary. So this is why we made our organization at the headquarter level leaner. Leaner means faster and means also it makes easier to make decisions. So this is why we were reorganized the headquarter. When we were looking to the countries, we had some, let me say, some combination -- geographic combination that were a little bit hazardous. So we had a Portugal together with Poland, instead of being together with Spain, which is honestly not very geographically natural. So we've made some adjustments because it could make available some synergies that are not to imagine enormous synergies, but there can be some synergies. And the last and most interesting part was what we call Vertical Solutions. So Today, what happens is that if you take a large country like -- let's take 2 large countries, one is Italy and one is France. In Italy, the non TowerCo business accounts for a sort of EUR 40 million to EUR 50 million. In France, it accounts for less than EUR 5 million. Do you mean that the French market is 10x smaller than the Italian market? Or do you think that with the EUR 40 million to EUR 50 million, we covered all the opportunities we had on the Italian market? The answer is no and no. So -- but the problem was that sometime each and every country is very specialized and very focused on the day by day and sometimes some opportunities are simply not big enough, not priority enough, not to specialize -- we are not specialized enough to make it possible. So the idea was, okay, we are -- altogether, if I take all my countries, we are the #1 in Europe, but we don't play as the #1. We play 10x as a small operator, and we want to play one time as a big guy. But in order to do this, you have first to think big. If you think small, you remain small. So we need to think big. And in order to think big, I need to put all the volume together. And think central, act local is going to be the route. So I think that, yes, like every matrix organization, there are challenges, but it can work well. Do we have an example? Yes, Celland. It was a lot of small initiatives, each of them small. Now we have Celland and it's doing phenomenal. So let's try to capitalize on good experiences. Maria Carrapato: Okay. So now to end the call. I'll ask a question from Andrew at Goldman Sachs. Andrew Lee: I just wanted to -- just one question, just to dive in a bit more deeply into the Spanish densification reacceleration. You've obviously seen the equivalent PoPs in Spain tick up, I think, as was mentioned in an earlier question. Could you just give us a bit more insight? Because obviously, this is a key metric for us to be thinking about whether -- as to whether consolidation is a good or bad thing for telcos. And obviously, consensus thinks it's a bad thing and you think it's a good thing. So we're obviously all looking for evidence of densification acceleration. If that's happening now, what exactly does that look like? So what will be the equivalent PoP growth in Spain that you see in 2026 and 2027. I think -- sorry, the company average or Cellnex average is 3.7% equivalent PoP growth in the fourth quarter. What does it look like in Spain with that growth acceleration that we're seeing from densification? Marco Emilio Patuano: You are a little bit difficult because you talk about equivalent PoP and they talk about PoP. So the concept of equivalent PoP was a concept that has been used by Cellnex some time ago in order to facilitate the exercise of saying equivalent PoP time average price equal to revenues. The world doesn't work in equivalent PoP nor in average price. So average is a bit tricky exercise because I'm eating an entire chicken, you eat 0 and we had half a chicken each. So it's not true when we see if you're hungry at the end or not. So the growth in Spain or what happened in Spain is point number one, Mas Orange had to take 2 networks, one built at Orange standards and the other built at MASMOVIL standards, which were, believe me, very different and to create the Mas Orange network. So we had to avoid duplications. We had to make new colocations. We had to build -- or we have to build new sites, all at the new standard, which is the Mas Orange standard, which is the Orange standard. So top quality, top everything, carrier grade, top carrier grade. So this is what happened in Spain with Mas Orange, which is first part of the year, an accelerated decommission of PoPs, some of them anchor and some of them second. And then a progressive relocation of some of those antenna, most of them anchor, okay? On top of this, we are partner of Mas Orange in their rural deployment program, rural Spain program. And in the beginning of 2026, we are completing the delivery of this program. And this is the picture with Mas Orange. So going forward, what is going to happen? It's going to happen that they are working on improving -- further improving the quality of their network. We are making available more colocation and we are -- and we both committed that we will build for them some of the new installation that they need. Second, part of the decommissioned sites that Mas Orange made available have been taken by Telefonica. Why? Because it was a good location. There was a space on the antenna, which was made available by eliminating one previous antenna. Telefonica considered it interesting. So this happened in the second part of 2025 and will continue progressively in 2026. Our relation with Telefonica is particularly good, as you saw with the battery program. And so we are discussing with them if we can make available more sites with them. In their case, we are talking about more colocation than build-to-suit, but it's a very healthy relation. With Telefonica, we agreed on the activation of the RAN sharing program they have with Digi. It was -- it is a fairly big program. It started in the second part of 2025, I would say, in the last part of 2025, and it will continue in 2026. Why it took a little bit of time because we had not only to agree on a technical program, but also we had to amend our original contract in order to make available for them the RAN sharing on our network that originally speaking was not confirmed. So we made the agreement. So this is another demonstration that when people say that every time there is to discuss about agreements, it's a fight. No, it's a discussion. It's a discussion between 2 [ adults ]. And this is going to continue. In -- to be honest, our relation with Vodafone Zegona is not one of the largest relation -- business relations we have. So the fact that there is a little bit of noise around this is not affecting us particularly. Of course, if we can support Zegona and Vodafone in their network needs more than happy. As of today, it has been relatively small. But of course, if they need, we do. What we see more? We see more densification coming. This is something we absolutely see. We see more densification coming in Spain. And the big question mark is if Digi someday will deploy not only RAN sharing, but also some proprietary network. They did in other country. As of today, it's not in the plans, at least in the plans shared with us, but you never know. I hope I answered, Andrew. Andrew Lee: I guess the reason why you're using equivalent PoPs was just because it has a more direct correlation with actual revenue growth where these days so much. And it's really what we're trying to ask is like, is revenue growth going to accelerate? What's the revenue growth in Spain post consolidation, post the kind of the rebalancing of 2025? That's the real question. It sounds like you're not able you're not going to -- you can't answer that today, but I guess that's what we're really looking for. Marco Emilio Patuano: Well, what I can answer is that 2025 has been a little bit better than what we expected. So these -- so let's take the small positives. Maria Carrapato: Okay. Well, thank you, everyone. It's been a long call, very, very productive, I think. Thank you for your continued support. And as usual, the full team is available for following up if you have any additional questions. Thank you very much.
Operator: Good morning. My name is Gabriel, and I will be your conference operator. [Operator Instructions] This is FHipo's Fourth Quarter 2025 Conference Call. [Operator Instructions] FHipo released its earnings report on Thursday, February 26, after market closed. If you did not receive the report, please contact FHipo's IR department directly, and they will e-mail to you. Please note that this call is for investors and analysts only. Questions from the media will not be taken nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available. Please refer to the disclaimer in the earnings release for guidance on this matter. We are joined by Daniel Braatz, Chief Executive Officer; Ignacio Gutierrez, Chief Financial Officer; and Jesus Gomez, Chief Operating Officer. I would now like to hand the call over to Daniel Braatz. Daniel, please go ahead. Daniel Michael Zamudio: Thank you, and good morning. Thank you for joining us today. Let me walk you through our fourth quarter and full year of 2025. Throughout the year, we maintained a disciplined management of the company, focused on strengthening our balance sheet and optimizing our capital structure, aiming at generating long-term sustainable value for our investors. In the 4Q, we maintained our commitment to delivering profitability. Throughout its history, FHipo has shown solid financial performance, consistently delivering distributions. As of the fourth quarter of 2025, we have distributed more than MXN 7,300 million to our investors on a cumulative basis since 2014, reflecting our long-standing focus on value creation and capital discipline. FHipo maintained a strong capitalization profile. As of the 4Q of 2025, FHipo reported a capitalization ratio of 60% and a debt-to-equity ratio of 0.7x on our balance sheet. In recent years, we have successfully executed a disciplined deleveraging strategy, focused on strengthening our balance sheet and better position the company to pursue attractive market opportunities when conditions get favorable. Our financial margin stood at 54% in the quarter. And on a cumulative basis for 2025, FHipo obtained a financial margin of 54.5%, highlighting the company's operating efficiency. On January 20, 2026, we completed the full early amortization of the RMBS CDVITOT 14U collateralized by INFONAVIT denominated in VSM or Veces Salario Minimo. The execution of the cleanup call was based on portfolio balances as of December 2025. And finally, as of the date of this report, the CDVITOT 13U, 14U and 15U issuances that have been fully amortized throughout the execution of the cleanup calls, significantly reducing the balance of the INFONAVIT mortgages denominated in VSM in our total portfolio. Moving on to Slide 5. We highlight FHipo's consistent track record of generating value to our investors through stable distributions. As I mentioned before, up to the 4Q of 2025, our annualized yield per CBFI stands at 10.9% based on an estimated quarterly distribution of MXN 0.35 per share or per CBFI, subject to the current distribution policy. We have also distributed over MXN 7,300 million to our investors since FHipo was created back in 2014. That is equivalent to MXN 19.68 per CBFI, demonstrating our investor-focused approach and our ability to translate disciplined financial performance into consistent returns for our shareholders. As we move into Slide 6, we take a closer look at FHipo's solid capitalization profile, supported by a disciplined financial strategy management. As of the fourth Q of last year, our debt-to-equity ratio considering both on and off-balance financings was 0.3x and considering on balance financing stood at 0.7x. This result was supported by a balance sheet optimization strategy, which reduced our leverage significantly since 2019 and enhanced our ability to capitalize on market opportunities under favorable conditions. On Slide 7, we continue focusing our strategy on assets with an attractive risk-adjusted profile. Our portfolio collateralization profile remains very strong with an average loan-to-value of 77% at origination and today, an estimated loan-to-value of 28.6% based on current market value. Moving on to Slide 8. As of the 4Q, our nonperforming loan ratio based on the accumulated balances of the total portfolio at origination stood at only 3%, reflecting the historical credit performance of the company. Finally, on Slide 9, FHipo affirms its commitment to sustainability and ESG best practices. Our objective is to generate long-term positive impact beyond financial returns. We have provided more than 100,000 loans, of which women borrowers account for 31% of our overall portfolio, while 46% of our workforce are women, underscoring our commitment to inclusion and gender equality. On governance, our Nomination, Audit and Practices committees are fully independent, and more than half of our technical committee members are independent as well, reinforcing strong oversight and transparency. On the environmental front, approximately 70% of INFONAVIT borrowers have utilized the green mortgage program benefit, supporting energy efficiency home improvements. And internally, we have introduced initiatives to reduce paper, plastic and water consumption. Together, these actions demonstrate FHipo's commitment to responsible and sustainable value creation. Now I will turn the call over to our CFO, Ignacio Gutierrez, who will walk you through our leverage strategy. Ignacio Gutiérrez Sainz: Thank you, Daniel, and good morning, everyone. I will walk you through our funding structure and leverage strategy. FHipo has further reinforced its balance sheet by executing a disciplined deleverage strategy over the past years. As of the fourth quarter of 2025, our total debt-to-equity ratio, including both on and off-balance financing stood at 1.3x. And on a stand-alone basis, our on-balance leverage ratio was 0.7x. This financial discipline strengthens our position and provides us with greater resilience in evolving market conditions. Our diversified funding structure allows us to maintain solid liquidity levels while preserving the flexibility to allocate capital efficiently and focus on long-term value creation. On Slide 12, we will go through the detailed breakdown of our consolidated funding structure as of the fourth quarter of 2025. Our funding sources are well diversified across securitizations, bank facilities and capital market instruments with competitive rates and spreads. As shown on the breakdown, over 90% of our outstanding financings have a legal maturity exceeding 20 years, providing long-term funding stability and mitigating refinancing risks. Given our current capital structure, FHipo maintains additional leverage capacity of approximately MXN 16.8 billion or 1.8x debt to equity in comparison with the target leverage limit of 2.5x. This position gives us flexibility to act prudently and selectively as opportunities arise. Now with this, I'll turn the call over to our COO, Jesus Gomez, who will walk you through the portfolio breakdown before we discuss the financials. José de Jesús Gómez Dorantes: Thank you, Ignacio. Good morning, everyone. Thank you for joining us today. Let's move on to Slide 14 to take a closer look at the breakdown of our mortgage portfolio as of the end of fourth quarter 2025. FHipo's consolidated portfolio comprised 43,849 loans as of December 31, 2025, with an outstanding balance of MXN 16.8 billion, an average loan-to-value at origination of 77% and an average payment-to-income ratio of 24.4%. At the end of the quarter, 92% of the portfolio is performing. Our portfolio remains diversified across several origination programs, including INFONAVIT Total, INFONAVIT Mas Credito, Fovissste and the digital mortgage platforms portfolio, which as of the end of the fourth quarter 2025 represents 20% of the total consolidated portfolio. In over 10 years, we have continuously adjusted our origination and asset acquisition strategy to improve the credit quality of the assets we acquire. Moving on to Slide 15. FHipo's portfolio remains geographically diversified across all 32 Mexican states. Nuevo Leon, Estado de Mexico and Jalisco continue to represent the largest concentrations together accounting for approximately 28.8% of the total portfolio balance. In terms of our partnerships and origination programs, here is the breakdown of our portfolio. INFONAVIT Mas Credito program accounts for 51.7% of the total portfolio equivalent to MXN 8.7 billion. The digital mortgage platforms portfolio accounts for 19.2%, equivalent to MXN 3.2 billion. The INFONAVIT Total pesos program represents 14.3% of the total portfolio, equivalent to MXN 2.4 billion. Fovissste's portfolio accounted for 12.1% of the portfolio equivalent to MXN 2.0 billion. And finally, the INFONAVIT Total VSM denominated loans reached only 2.7% of the portfolio for MXN 0.4 billion, significantly it reduces the balances of INFONAVIT mortgage denominators in VSMs after the cleanup call of the CDVITOT transactions that Daniel mentioned before. This distribution reflects our strategy to prioritize origination programs that offer strong risk-adjusted returns while maintaining a diversified portfolio aligned with market demand. FHipo is well positioned to participate in future growth opportunities while maintaining a strong focus on profitability. I will now return the call back to Ignacio Gutierrez, our CFO, to discuss FHipo's financial results for the fourth quarter of 2025. Ignacio Gutiérrez Sainz: Thank you, Jesus. On Slide 17, our consolidated nonperforming loan ratio stood at 8% at the end of the quarter. As of the end of the fourth quarter of 2025, we continue to maintain a solid reserve and allowance for loan losses with an expected loss coverage of 1.3x and an NPL coverage of 0.53x. If we move to Slide 19 for our financials for the quarter. The total net interest income for the fourth quarter of 2025 was MXN 321.6 million, reflecting an increase compared to the fourth quarter of 2024. The interest expense totaled MXN 148 million, representing a slight decrease compared to the MXN 153.9 million reported in the fourth quarter of 2024, primarily as a result of the decline in interest rates over the past 12 months. Our financial margin stood at MXN 173.5 million, representing 54% of the total interest income, an increase of 3 percentage points compared to the 50.9% in the fourth quarter of 2024. The allowance for loan losses recorded in the fourth quarter of 2025 was MXN 44.9 million, reflecting the underlying credit performance of the portfolio during the quarter and its expected loss. The valuation of receivable benefits from securitization transactions showed a net loss of MXN 8.2 million in fair value during this quarter. This result is mainly explained by the performance of the portfolio and collateral of such trust certificates during the quarter and a net effect derived from the total early amortization of the CDVITOT 14U trust certificates. The total expenses incurred during the fourth quarter of 2025, which include the portfolio servicing and operational services as well as other expenses amounted to MXN 108 million. As a result, the net profit for the quarter amounted to MXN 19.5 million. With this, the estimated distribution for the fourth quarter of 2025, subject to the current distribution policy, as Daniel mentioned, is of MXN 0.356 per CBFI, which considering the average price for CBFI as of the fourth quarter of 2025 and the days of lapse in the fourth quarter results in an annualized yield of 10.9%. With this, I'll now hand the call back to our CEO, Daniel Braatz, for some closing remarks before we move to the Q&A session. Daniel Michael Zamudio: Thank you, Ignacio. As we close 2025, FHipo's business model continues to demonstrate resilience and adaptability. During the year, we sustained a strong financial position and maintain a healthy capitalization profile. Our focus remains on driving profitability and strengthening our capital structure and managing risk responsibly. Through 2026, we will continue evaluating new opportunities aligned with our strategic objectives while enhancing the overall quality of our portfolio. We believe the initiatives undertaken so far have strengthened our position for the future, enabling us to capitalize on future market conditions. Our objective remains clear to deliver stable and sustainable returns to our holders while maintaining the disciplined approach that has defined FHipo since inception. At the same time, we will continue advancing our ESG initiatives and creating long-term value for all stakeholders, including the communities we serve. Thank you for your continued trust. I'll now hand the call back to the operator to open the Q&A. Operator: [Operator Instructions] Our first question comes from the line of Martin Lara. [Operator Instructions]. Martín Lara: This is Martin Lara from Miranda Global Research. I have 2 questions. Could you please share your expectations for this year in terms of loan portfolio, including potential acquisitions of other portfolios or other financial companies? That's the first one. And the second one is that your capitalization ratio is very high at 60%. How do you see this indicator going forward? Daniel Michael Zamudio: Thank you for your questions. In regards of the capitalization, as you know, we've been trying to stronghold our balance sheet in order to take advantage of future leverage opportunities that obviously will reduce the cap ratio that we are holding at the moment. We're working in a couple of financing facilities that will help us lever a little bit more our equity. And the use of proceeds for those financings goes towards your first question, which is we're going to be using part of those proceeds and liquidity that we are holding at the moment to tackle some opportunities in terms of acquisition of new originators and also portfolio on mortgages and real estate-backed loans. Martín Lara: Okay. And your -- I have a follow-up. Your financial margin was very strong. It expanded nearly 4 percentage points year-on-year. What can we expect in the future? Daniel Michael Zamudio: I would say that we need to expect the financial margin to keep at that level. It will depend a lot, as you know, on the interest rate curve that Mexico will be running. As of today, we have a small portion exposed to floating rates. But as we keep performing throughout the year and depending on what Banxico does, I think that could increase a little bit more. But to be in the safe side, I would say that you should target that between the 50% and 54% of financial margin is a target for the company in 2026. Martín Lara: Okay. But more towards 54% instead of 50%? Daniel Michael Zamudio: I would say that, yes, more towards the 53.3%. Operator: We would like to take this moment to thank you for joining FHipo's Fourth Quarter 2025 Results Conference Call. We have not received any further questions at this point. So that concludes our question-and-answer session. Thank you. I would now like to hand the call back over to Daniel Braatz for some closing remarks. Daniel Michael Zamudio: Thank you all for joining us today. Please don't hesitate to reach out to us if you have any more questions or concerns. We appreciate your interest in FHipo and look forward to speaking with you soon. Operator: That concludes today's call. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Compass, Inc. 2025 Q4 Earnings Call. [Operator Instructions] I would now like to turn our call over to Soham Bhonsle, Head of Investor Relations. Please go ahead. Soham Bhonsle: Thank you very much, operator, and good afternoon, everybody, and thank you for joining the Compass Fourth Quarter 2025 Earnings Call. Joining us today will be Robert Reffkin, our Founder and CEO; and Scott Wahlers, our Chief Financial Officer. In discussing our company's performance, we will refer to some non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter 2025 earnings release posted on our Investor Relations website. Any discussion regarding organic revenue, organic OpEx, organic transactions or organic GTV excludes activity from businesses we acquired since October 1, 2024. We will make forward-looking statements that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include our guidance for the first quarter of 2026, the recently closed Anywhere transaction and full year 2026 and beyond, including comments related to our expectations for operational achievements. Our actual results may differ materially from these statements. You can find more information about risks, uncertainties and other factors that could affect our results in the most recent annual report on Form 10-K filed with the SEC and available on our Investor Relations website. You should not place undue reliance on any forward-looking statements. All information in this presentation is as of today's date, February 26. We expressly disclaim any obligation to update this information. I will now turn the call over to Robert Reffkin. Robert? Robert Reffkin: Good afternoon, and thank you for joining us for our fourth quarter conference call. I am thrilled to speak with you today for the first time as CEO and Chairman of our newly combined company, which serves 340,000 real estate professionals and over 2,000 franchise broker owners across 120 countries and territories. On today's call, I will be discussing 5 topics. First, I will provide a quick recap of our record Q4 and 2025 results. Second, I'll discuss the historic Rocket Redfin partnership we just announced and how it significantly expands home seller choice and provides extraordinary value to our real estate professionals. Third, I'll touch on our 4 sustainable financial advantages. fourth, an update on our integration and cost synergy efforts. And I'll end by touching on AI and why I believe it will become a structural tailwind for our business. Starting with our Q4 results. In Q4, Compass delivered record fourth quarter revenue of $1.7 billion, delivered record fourth quarter adjusted EBITDA of $58 million. Both our revenue and adjusted EBITDA came in above the high end of our guide. We also delivered record fourth quarter adjusted EBITDA margin, delivered the best organic principal agent recruiting quarter for Q4 as we added 830 principal agents. The Compass platform hit a Q4 record of 20 average weekly sessions per agent. We grew our Q4 title and escrow revenue to record levels. We grew our mortgage JV earnings to record Q4 levels. And lastly, we grew our title and escrow attach in our legacy markets to all-time highs in Q4. 2025 was also a record year for Compass as we generated approximately $7 billion in revenue, surpassing our prior peak of $6.4 billion in 2021 when the housing market was approximately 50% above current levels of annualized home sales. We generated adjusted EBITDA of $293 million, which was the highest ever in our history, and we produced operating cash flow of $217 million, which is also an all-time high for the company. None of these results would have been possible without each and every member of the Compass team. I want to sincerely thank the entire team for their maniacal execution and unwavering hard work in what has been, by any objective measure, one of the toughest housing markets in a generation. Now let me touch on the unprecedented step we took today to ensure home seller choice through our partnership with Rocket Redfin. At Compass, we firmly believe that home sellers deserve the right to freely market their home when, where and how they want. We also believe that home sellers should also have the right to publicly market their listings without negative insights such as days on market and price drop history, amongst others. Currently, however, the Zillow ban forces home sellers to give them their listings within 24 hours of publicly marketing a property even if they don't want to be on Zillow and places negative insights such as days on market and price drop history on all listings. This is just wrong. Home sellers should have the freedom to publicly market their home wherever and however they want without the fear of being banned off a platform. The Rocket Redfin partnership we announced today stands up for home seller choice as it provides homeowners the flexibility in how they introduce their homes to the market and does not subject homeowners to any negative insights for listings off Zillow. There are 4 highly accretive pillars to this partnership. First, our agents will have the opportunity to receive 1.2 million high-intent leads from redfin.com and Rocket Mortgage over the course of our 3-year strategic alliance. The partnership is also structured in a way to provide us with an increase in lead flow in each of the 3 years with potential upside in year 3, depending on conversion rates. Second, our unique inventory will be on redfin.com, with all leads on these listings routed directly to our listing agents across all of our brands, including but not limited to, @properties, Better Homes and Gardens Real Estate, CENTURY 21, Christie's International Real Estate, Coldwell Banker, Compass, Corcoran, ERA and Sotheby's International Realty. This will supercharge the amount of unique inventory publicly marketed on redfin.com in our brokerage websites because more homeowners will choose to become sellers. For example, homeowners who are reluctant to put their homes for sale for fear of negative insights or due to the time of the year, before the fall market in the winter, over the summer, will now have access to 60 million monthly active users without the risk of days on market or price drop history. And their coming to listings will be prioritized on Redfin. This will bring more inventory to the market because it eliminates the artificial barrier that home sellers have to list their home, such as days on market price drop history. Keep in mind, only 4 million people buy homes a year. So 60 million consumers reflects 15x the amount of buyers that are buying a year. Third, with this partnership, we are reclaiming the digital yard sign for our agents and our brokerage brands as our agents' name and their brokerage affiliation will be prominently displayed on each unique listing. This benefit cannot be understated as it will significantly expand consumer awareness of our agents and our 9 brokerage brands. Fourth, we believe the partnership will make home buying more affordable by increasing the amount of inventory on the market that otherwise would not be there and by offering homebuyers 1 percentage point off their mortgage rate in year 1 or of the 6,000 in lender-paid credits through Rocket Mortgage. Now I would like to discuss the 4 sustainable financial advantages we are focused on going forward, including a higher-than-industry revenue per transaction, a leading cost to serve position in the industry, an expanding LTV per agent; and lastly, lower customer acquisition costs. Starting with our higher-than-industry revenue per transaction. We expect to achieve this by becoming the leader in delivering value-added services for real estate professionals through platform-driven attach as opposed to just the traditional channels used by other brokerages. This includes current services such as title and escrow, mortgage, home insurance, home warranty and moving services, but also potential future services we may consider such as solar, home security and other agent services such as property marketing, business spend, digital ads, property videos, 3D renderings, real estate, sign production, open house brochures, photography and more. With an incremental TAM of more than $150 billion from these value-added services, Compass' potential revenue per transaction could be multiples above the industry average, creating a sustainable financial advantage relative to our competitors. Our second sustainable financial advantage will be to have the lowest cost to serve position in the industry. Since 2021, we have already reduced our cost to serve per transaction at Compass by over 30%, driven by platform improvements, process optimization, offshoring and AI. However, with anywhere, we see significant opportunity to lower our cost to serve further as we, one, build a best-in-class centralized services operation that will be the most efficient in the industry; two, offshore more back-end operations; and three, leverage AI to automate workflows and expand self-service tools on the platform. As early proof of how AI can help lower our combined cost to serve in the 5 short months since we rolled out an enterprise-wide AI learning effort at Compass, the team has already identified potential annualized efficiencies in the vicinity of $20 million, 2% of our Compass OpEx, which should allow us to limit OpEx growth as the business grows. At Anywhere, approximately 2/3 of all documents in their brokerage business are already processed through AI-driven automation. Anywhere's AI-based document assignment engine already operates at 89% accuracy and we'll continue to learn from the largest transaction data set in the industry. Furthermore, Anywhere is also extending their capabilities through agentic AI, including automation of wire claims to accelerate resolution and help agents get paid faster, which lowers cost, but also improves the agent experience. By doing all of the above and ultimately establishing the lowest cost to serve position in the industry, we believe we will be able to drive better brokerage incremental margins than in the past, which should serve us well, particularly as industry volumes begin to normalize. Our third sustainable financial advantage will be our expanding LTV per agent. as we bring more than 340,000 of our real estate professionals onto one connected platform. By connecting our franchise broker owners and real estate professionals through one seamless platform, we will scale our best-in-class listing tools, coaching, innovative marketing programs and AI capabilities to help grow their business and help them make more money by better serving their clients. As we scale our offerings in a tech-forward manner, we believe we'll be able to drive better agent and franchise retention, higher agent and franchise productivity, higher attach on value-added services, improved agent outcomes and lower recruiting costs. Our fourth sustainable financial advantage will be our declining cost of customer acquisition as we execute on our strategy to become the #1 destination for buyers to find real estate professionals and homes for sale. As awareness around our unique inventory grows via the Rocket Redfin partnership, we believe more and more homebuyers will seek out our agents listings and our agents for their advice. This will lower our customer acquisition cost as our share of voice in the market increases and should provide our agents with incremental business opportunities. So bringing it all together, by combining our 4 sustainable financial advantages with what will continue to be a maniacal focus on OpEx and cost synergies, we believe we will build a more durable business model where adjusted EBITDA grows faster than revenue growth in the future. Now let me provide an update on our integration efforts and cost synergy targets. First, on integration. I want to start by saying how pleased I am by how well both our management teams are working together. Since close, we've made great progress by deploying best practices in integration, including establishing a transformation office that will be the single control tower to ensure we are achieving our targets, setting a clear road map to create a more efficient organization across each of our business units and quickly creating clarity around the organization spans and layers. Additionally, in the 6.5 weeks since closing the transaction, I've had the opportunity to spend time with countless employees, franchise broker owners, real estate professionals across all of anywhere 6 brands in many, many markets. Two themes have emerged from my conversations. First, there is broad-based excitement to be a part of the transformation our companies are going through. And second, the agents and broker owners are really excited to get access to the technology platform. This excitement is bearing itself out in the numbers as well as Anywhere's GCI retention rate in its top 2 quartile of agents, representing 91% of Anywhere's own broker GCI over the trailing 12-month period, hit the highest level ever recorded in the month of January. Now shifting over to our cost synergies. On our Q3 earnings call back in November, we stated a target of realizing $150 million in synergies in the first year and $300 million in net cost synergies over 3 years. I'm pleased to say that since close, just the 6.5 weeks since close, we have actioned approximately $175 million in cost synergies. Based on the pace at which the team is moving as well as their ability to collaborate and share data, I am making a CEO commitment to action $250 million of cost synergies in the first year. Additionally, as we spent more time working together as a collective team, we have increased confidence in our cost synergy opportunity. As such, I'm now making a CEO commitment to action $400 million in net cost synergies over 3 years. I look forward to updating you on our progress against our improved goals in the coming quarters. Now I want to end by talking about the 3 components of our business that not only protect us from the threats of AI, but strengthen our business in the context of AI. The first is our proprietary data. The second is trust. I want to be clear. Compass isn't in the business of brokering information. It's in the business of brokering trust. And we believe trust will become even more valuable in a world with AI. And third is the positive network effects driven by our 340,000 agents, which strengthens our platform. Starting with proprietary data. We all know that AI is less of a threat for companies with proprietary data. And we all know that the Zillow ban and approximately 40% of MLSs have restricted rules that force brokerages to make their proprietary data public. With the Rocket Redfin partnership and the efforts I expect Compass and Rocket to take, I'm confident that MLSs and Zillow will no longer be in a position to force brokerages to make their proprietary data public. We currently already have more than 20,000 MAKE ME SELL listings that are only available at Compass. And with the Rocket Redfin partnership, we believe we will have a large number of Coming Soon in Private Exclusive listings that will help grow our proprietary data. Our second pillar is trust. Compass is not a traditional SaaS company as we operate in the high trust advisory business. This distinction is significant. AI can replicate software features, but we don't believe it can replicate trusted human judgment in a highly emotional, high stakes, high-ticket transaction. Buying a home is not like any other purchase. It's one of the most significant and complicated transactions in people's lives. Buying a home is also much more than just searching for a property. A buyer seeks out a real estate professional because they know they will need the expertise and emotional support when negotiating and navigating the purchase of a home. They seek out a real estate professional, not just for information that is already available online, but for information on what's going to happen in the future, such as when the neighbor, a few doors over might be ready for the next move because their kids just graduated college. They seek out a professional to serve as the last line of defense during a walk-through at the closing. When the agent they are working with spots uneven floors or smells a wet basement and helps them negotiate a seller credit. I've been reading the same AI reports as everyone else. the reports that are addressing what could happen in a potential future for real estate. The quick summary is my AI agent will sell my house to your AI agent. They will do the best job and no one else is needed in the transaction process. In our 13 years with Compass, I've seen a lot of things. I remember in the beginning, the biggest pain points for people were fake rental listings. We started off in the rental space. You would see a listing, it was fake. You reach out to the agent, they will tell you they can show you the listing and then last minute, switch it up and say, listing is gone, but I have something else to show you. AI will do that on steroids. The writers in some of these reports assume that real estate is clean and fair and that everyone is playing nice. But in real life, you have thousands of fake AI agents generating fake listings to bay you. Hundreds of fake AI agents will give AI agents false lowball bids to try and get them to price drop. Fake AI agents will list fake listings to try and change comp prices to get higher prices. It's going to get wild. I think the value of Compass will skyrocket in that world. The only solution will be closed networks of trust. People think Compass' core is brokering information. It's not. It's brokering trust. And in the very near future, unless you have a great agent that is real, transacting with agents that are network deems trustworthy, you will not be able to transact safely. The MLS data will be corrupted. Open sites will be filled with noise. Private listings and private networks with real people will be the only trusted source. I just don't see a meaningful amount of buyers letting a bot negotiate with the seller's agent. If that were the case, then you would already be seeing people buying homes based off this estimate. You see people selling homes based off this estimate, and they're not doing that. Real estate is highly personal and the value of a home isn't solely determined based on the generic data and facts about the home. The value is driven by a buyer's and seller's personal connection to the home. In this world, Compass' value proposition will strengthen as we build a highly trusted environment for buyers, sellers and agents to own and manage their data with uncompromising privacy. And so for the same reasons that Internet did not replace agents that actually increased consumers' use of them over the past 20 years, we believe that the winners of the future will not be the companies that simply have AI, but those that use it to amplify trusted agents at scale like Compass. Our third and final pillar is positive network effects of our 340,000 real estate professionals that strengthens our platform. This network serves as a large continuous positive feedback loop for our platform. We believe as agentic AI becomes more common, the platforms with the most domain experts actively training and interacting with the system will win. Our agents are encoding real-world localized transactional logic into our platform every single day, creating a network effect that cannot be replicated by horizontal AI tools or legacy brokerages. At Compass, we are using AI to eliminate friction, allowing our agents to focus on winning and closing clients and by fully integrating it into the agent workflow to maximize productivity. By giving 340,000 real estate professionals countless hours back every week, allowing them to focus on winning listings, advising clients and closing deals, we are going to help them to close more transactions. When evaluating Compass through this lens, we believe we possess the exact pillars to thrive in the world of agentic AI. With that, I will now hand it over to Scott. Scott Wahlers: Thanks, Robert. Q4 was a landmark quarter for Compass, setting all-time Q4 records, both financially and operationally. Revenue reached $1.7 billion, a 23% increase year-over-year, beating the high end of our guidance. Even on an organic basis, excluding M&A, we grew 11.3%. For the 19th consecutive quarter, every quarter since our IPO, Compass outperformed the market, including during Q4 with organic transactions up 5.6% versus a 1% market increase. Quarterly principal agent retention was a solid 96.8%. During the quarter, we added 830 principal agents, which was a fourth quarter record despite not being able to recruit any of the Anywhere agents due to the pending merger during Q4. Note that because Anywhere does not have the same agent count methodology for principal agents as Compass does, we do not intend to provide principal agent count starting in Q1, but we will continue to provide total agent counts. Gross transaction value was $65.6 billion in the fourth quarter, an increase of 21.6% from a year ago, reflecting a 19.7% increase in total transactions, combined with an increase in average selling price of about 2%. The increase in our average selling price was closer to 5% on an organic basis. However, our acquisitions over the past year primarily operate in markets with lower average selling prices compared to our organic average selling price, which brings down the overall average. Our commissions and other related expense as a percentage of revenue was 81.5% for the quarter compared to Q4 of last year at 82.5% or an improvement of over 100 basis points year-over-year, primarily driven by the impact of our January 2025 acquisition of Christie's International Real Estate, which has more favorable margins. Excluding M&A, our commissions and other related expense as a percentage of revenue improved 13 basis points for the quarter versus a year ago. This is due to a positive impact from higher-margin new development and title revenue, partially offset by about 10 basis points attributable to the impact of geo mix on the brokerage business. Our total non-GAAP operating expenses were $259 million in Q4, an increase from $224 million of OpEx in the year ago period, which was largely driven by M&A, including the OpEx we assumed from the January 2025 acquisition of Christie's International Real Estate and a number of other brokerage and title companies we acquired this year. Excluding the impact of M&A, our non-GAAP OpEx was up only about 1%. I'd like to also point out that even on a full year basis, when excluding the additional OpEx assumed from M&A, our organic OpEx was only up 1% over 2024. We have demonstrated discipline to manage organic OpEx growth to within 3% to 4% annually. And this past year, we greatly exceeded that goal. Adjusted EBITDA was $58.3 million, a strong improvement of 249% from adjusted EBITDA of $16.7 million a year ago. Adjusted EBITDA exceeded the high end of our original guidance range by 19% and also represented a record level of adjusted EBITDA for any fourth quarter period. Adjusted EBITDA benefited from the higher revenue, better gross margins and a continued strong discipline on operating expenses. During the fourth quarter, we incurred $10.6 million of transaction expenses related to the announced merger with Anywhere, primarily legal fees and investment banking fees, which is shown in the Anywhere merger transaction and integration expense line on the P&L and is excluded from our non-GAAP operating expenses for purposes of calculating adjusted EBITDA. You'll see the expenses on this line jump in Q1 as we recognize the expenses in connection with the closing of the transaction and additional expenses throughout 2026 as we drive our integration efforts, which I'll touch on a little later. Stock-based compensation expense in the quarter was $57.5 million and in line with our guidance. As a reminder, during our Q1 results last year, we explained that our stock-based compensation levels would be elevated during the second, third and fourth quarters of 2025 due to a change in our methodology for granting employee equity and the accounting rules related to that change. These higher-priced awards will start to vest out at the end of Q1, and you'll begin to see a step down beginning in Q2 of 2026 on the base Compass business. This decline is expected to be partially offset with some levels of incremental expense coming through from the Anywhere employee base. We'll provide more details next quarter as we finalize this impact. But as you consider your models, you should expect that stock-based compensation on a consolidated basis will not exceed $50 million in any future quarter beginning in Q2 of this year. That said, as part of the change of control severance provisions for some of the former Anywhere executives, there will be an incremental onetime charge for stock-based compensation recorded in Q1. GAAP net loss was $42.6 million in Q4 compared to GAAP net loss of $40.5 million a year ago. However, excluding the $10.6 million in deal-related expenses from the Anywhere transaction, GAAP net loss would have been $32 million, an $8.5 million improvement compared to the year ago period. Our basic weighted average share count for the fourth quarter was 572 million, which was in line with our prior guidance. As for cash, we generated $42.2 million in free cash flow in the fourth quarter, which represented the eighth consecutive quarter of positive free cash flow generation. We ended the fourth quarter with $199 million of cash and cash equivalents on the balance sheet. On January 7, 2026, we completed the issuance of $1 billion in convertible notes at a highly attractive coupon of just 0.25 percentage point, which was used to pay off Anywhere's revolver of $500 million at the closing. Using the 0.25% coupon on the convertible debt to pay off Anywhere's revolver at higher interest rates provided for immediate annualized cash interest savings of $25 million. The convertible debt offering has a conversion price of $15.98 per share and was structured with a cap call derivative instrument to protect shareholders from dilution up to a conversion price of $23.68 per share. After considering the cost of the capped call and the related issuance costs, the net proceeds received on the fundraise were $880 million. We have moved aggressively on synergies. In just 7 weeks, we have already actioned $175 million of our cost synergy target. The heavy lifting of headcount and vendor consolidation is already underway. Some of the remaining synergies will involve deeper operational integration, which naturally takes longer to execute. However, the progress to date in such a short period of time following the close of the transaction certainly derisks our ability to attain our full cost synergy goals and provides early proof points on what we can deliver together as a combined company. It is important to distinguish between actions taken and the timing of the realization of these actions in the financial statements and where the benefit will be realized in the financial statements. On the timing point, some of these actions taken to date had an immediate effect such as day 1 personnel reductions. Other actions have terms ranging over the next 3, 6 or 9 months as the case of certain personnel reductions with associated retention periods or vendor contracts with varying end dates. And some new operating leases that we entered into to consolidate space or move to smaller square footage don't take effect until the fourth quarter of this year or early 2027. Additionally, because these actions were completed at various points throughout the first quarter, including this week, there will only be a modest benefit to Q1. To help with your models on the bookends, you could plan for $5 million of realization in Q1 of 2026 and $44 million of realization in Q4 of 2026 with some level of quarterly increases between those 2 data points. The $44 million to be realized in Q4 of 2026 represents 25% of the $175 million already actioned. In the aggregate, this would result in about $100 million realized in 2026. These cost synergies will be realized either as reduced operating expenses in the P&L or reduced capitalization to the balance sheet. In either case, they will benefit free cash flow. Historically, Anywhere has capitalized a large amount of technology labor to its balance sheet, approximately $80 million in 2025. And as part of our cost synergy work, a significant portion of the projects that have been subject to capitalization in the past will be cut as we shift the technology focus to the Compass platform. Therefore, of the roughly $100 million in synergies to be realized in 2026 that I just referenced, I'd assume slightly more than half will be reflected as reduced CapEx in 2026 and the remaining will be reflected as reduced OpEx in 2026. Since our cost synergies were just actioned in the last 6.5 weeks, these are still directional estimates. But next quarter, I'll be able to provide you a better distribution of how the synergies will be reflected in our financials. As a last point on this topic, note that there will be cost to achieve these action synergies during Q1 and in future quarters, which will include in the merger transaction and integration line in the P&L, which will be excluded from adjusted EBITDA but will impact cash flow. For modeling purposes as a placeholder, you could assume up to 50% of action synergies for an estimate of the costs to achieve. Turning to financial guidance for Q1, which now includes the impact of the Anywhere transaction. For the first quarter of 2026, we expect consolidated revenue, including the revenue from the Anywhere transaction in the range of $2.55 billion to $2.75 billion. While Q1 is the seasonally lightest quarter, we've observed softness in specific markets in January and particularly February due to the extreme winter weather and record snowfall across most of the country. Per NAR, January existing home sales in the U.S. of 3.9 million units were down 4.4% from last January, with Winter Storm Fern being a callout in their release as many closings were delayed. This is also supported by MBA's data point that mortgage purchase applications fell 14% in the final week of January and the first week of February as much of the country was snowed in. Furthermore, Q1 is our toughest year-over-year comparison in 2026 as we grew total revenue by 29% and organic revenue grew by 15% in Q1 of last year. To be clear, we believe these are short-term weather-driven timing issues. The structural health of the housing market remains sound. With mortgage rates at 3-year lows, stable financial markets and positive year-over-year inventory growth, we are optimistic heading into the spring selling season. For Q1 revenue guidance, keep in mind that while the revenue from the Anywhere transaction is included in Q1, the first 8 days of the quarter are excluded as we closed the transaction on January 9. We expect consolidated adjusted EBITDA to be in the range of $15 million to $35 million. Since Q1 is the first quarter that will include Anywhere's results, I'll provide some color on the contributions to the adjusted EBITDA line. However, we're quickly integrating this transaction. So going forward, we won't be providing guidance for actual results on a separate company basis. Breaking down the consolidated adjusted EBITDA guide for Q1, essentially all of the contribution is expected to come from Compass, whereas the contribution to the adjusted EBITDA guidance in Q1 from the Anywhere entities is negative. If you further unpack the Anywhere portion of the adjusted EBITDA guide, there are a few items that you should take into consideration. First, consistent with Anywhere's public comments on its Q3 2025 earnings, Anywhere saw an elevated level of expense related to its employees' long-term incentive plan, or LTIP. Anywhere's LTIP is comprised of cash settled RSUs, which require mark-to-market accounting through its P&L. The run-up in Anywhere's stock price, especially at the time of September 22 announcement of the transaction, drove higher operating expenses in its Q3 period. Anywhere's continued stock appreciation through the January 9, 2026, closing date will also drive higher OpEx from the LTIP in Q1 as these awards continue to vest in future periods. Second, Anywhere disclosed during its Q3 earnings release that it experienced a significant spike in health care benefit costs in Q3 and that higher level of expense continued through Q4 and is expected to be the new baseline in 2026. Third, as a result of the purchase accounting for the Anywhere transaction, we're required to reset the straight-line rent calculations of the Anywhere office leases for GAAP accounting purposes over the remaining lease periods following January 9, which has the effect of increasing the amount of GAAP rent expense we'll recognize post acquisition by about $4 million to $5 million per quarter going forward or $16 million to $20 million on the full year. While this doesn't change the cash commitments of the office leases, it's a normal purchase accounting adjustment that increases GAAP rent expense. When you add up the expenses for these 3 items, the LTIP, the health care costs and the GAAP rent item compared to the Q1 period of last year, it amounts to an incremental expense in the range of $15 million to $20 million in the first quarter guide for the Anywhere component or $17.5 million at the midpoint. So adjusting for these items, our adjusted EBITDA guidance for Q1 would have been $32.5 million to $47.5 million. We expect our weighted average share count for the first quarter to be between 720 million to 730 million shares. This includes the impact of the 167 million shares that we issued in January for the Anywhere transaction. For OpEx, while we are not providing a specific range for the full year at this time as we're completing the purchase accounting process, to provide some direction for your models, be sure to consider in your baseline the standard inflation assumption we use of 3% to 4% on both the historical Compass and Anywhere OpEx an incremental $20 million of annualized OpEx from the wraparound effect of midyear 2025 M&A and also the $16 million to $20 million increase that I referenced earlier in GAAP operating lease expenses as a result of the purchase accounting reset. Of course, these items will be offset by the net cost synergies that we realized in year. We'll provide additional updates on OpEx next quarter after we finalize our purchase accounting for the transaction. Finally, a few thoughts on cash balances and debt levels. As you think about cash levels, note that Compass ended the year with $199 million of cash. And as a frame of reference, Anywhere's cash as of year-end was $139 million. Additionally, January cash activity reflects $880 million of net proceeds from the convertible debt issuance, partially offset by $500 million used to repay Anywhere's revolver and approximately $175 million of day 1 transaction cash outflows. Note that transaction costs and the cash used for cost to achieve will run through the operating cash flow line. Additionally, payments for Anywhere's annual employee bonus and LTIP programs are scheduled for payout in the first quarter and will also come through the operating cash flow line. As a result, we will report materially negative free cash flow in Q1. We will return to free cash flow positive in future quarters, excluding the impact of any onetime items for the transaction and the cost to achieve our cost synergies. And finally, regarding debt levels. We now have long-term debt of $3.15 billion, which includes the $1 billion of newly issued convertible debt plus $2.15 billion of Anywhere's 4 tranches of notes that we assumed as part of the closing of the transaction. We don't expect to prepay any of the debt in advance of at least April of 2027 due to the nature of the call provisions on the 2 tranches of debt with the highest interest rates. For clarity, when I refer to the $3.15 billion of debt, I'm specifically excluding the securitization facilities for Anywhere's Cartus business and Compass' Concierge activity as these securitization facilities are more operational in nature. Also, as a reminder, in November 2025, we replaced our revolving credit facility with a new facility that originally had a capacity of $250 million. That capacity automatically increased to $0.5 billion at the time of the closing of the Anywhere transaction in January and remains fully undrawn at this time. I would now like to turn the call over to the operator to begin Q&A. Operator: [Operator Instructions] Your first question comes from the line of Dae Lee with JPMorgan. Your question comes from Jason Helfstein with Oppenheimer. Jason Helfstein: Thanks for all the disclosure. definitely taking some time to unpack this, but appreciate kind of all of it. So when we have talked to folks who've been kind of bearish on your exclusive strategy, the pushback has been well, if Zillow can get all of the other brokerages to work with them exclusively, doesn't that like tilt the scale. And clearly, you're getting -- it seems like Redfin to partner with you, that would kind of now move that point. So maybe elaborate on -- I guess, is there anything that you see now that could be an impediment to kind of the 3-phase marketing strategy working now you're partnering with Redfin. And then I guess, just how should we think about the economics for Redfin as part of this transaction? Is there anything you can share or not transaction but agreement? Robert Reffkin: Absolutely. So on your first question, on things that can get in the way of the exclusive strategy. Look, the exclusive strategy, as you know very well, is just homeowner choice. So if you're asking, are things getting in the way of homeowners' choice or can they permanently get in the way of homeowners' choice? I don't think so. And the -- choice versus control -- homeowners' choice versus platform control, homeowners' choice will win. Because it's the seller's home. It's not a platform's home. It's the seller's home. And so what we're doing is we're competing on giving as many options as possible to the seller. So they can market their home when, where and how they feel. Since the last launch, we launched undisclosed address. As you know, the portal ban bans the listing address on and won't put it on that portal's site if it markets outside of the portal for more than 24 hours. So our agents came to us, and they said, hey, why don't you let me undisclose address? Because if they don't know, if that portal doesn't know the address, they can't ban it. And so that's just one of many, many, many, things that are coming through the pipeline, where we will just continue to give sellers more choice. And no seller wants less choices. They want more choices. The feedback on this isn't just great for not have being banned by the dominant portal in the industry, it's also great because it allows sellers the privacy when they want to get public exposure but without the risk. And there are people that want public exposure, let's say, you're getting divorced you don't want your kids to know and you're moving and you want to publicly market home, but you don't want to dress there. So there's so many different reasons that this provides -- that more choices provide value. In terms of the economics, I tell you this way. I've already had through this call, maybe it looks like over 5 agents reach out to me asking if they can talk about coming to Compass because of the leads. We have 1.2 million Rocket Mortgage Redfin leads that will come to our agents as part of this, all the agents in our network of brands that makes it something that agents want to stay for, value for want to come for, your broker owners, your franchise affiliates and makes them see value and wants to common stay and continue their franchise agreements. In addition to those leads, it gives our -- we have -- this is an exclusive partnership. So our listing agents will be able to go to you, the seller and say, "Jason, you have a very special home." But you say you want $3 million for it. I think it's probably worth $2.7 billion. If you list with anyone else and you're wrong, you're going to have a price drop that's going to hurt the value of your home. You may have extended days on market. But we have a partnership with Redfin, where I can publicly market your listing to 60 million buyers. No days on market, no negative insights. This changes everything. This is historic. This will change the way people sell and buy homes because -- and it will give all of our agents and our network of brands, a huge advantage when they're pitching or in the living room with the seller trying to get the business. And so I think we'll be -- the number of listings will grow as a result, bringing new inventory to this company and to the market. Then you have the buyer increase going directly to the listing agents. For all of these, which is a huge value add to -- this is a huge value add for the agents. And again, lastly, the listings will be prioritized on Redfin. So this is something that shows the listing agents that we are fighting for them to have more choices. We are fighting for them and the sellers to have more options. And while others are banning and fining them for not giving up their content to them, we're advocating for them. And so this is a moment where we are fighting for agents to be able to not be banned and fined by dominant platforms and be able to market and meet their fiduciary duty to their sellers. In terms of financial, we're not sharing that at this time. We probably will in one of the upcoming quarters, but you can do your math and what you think the 1.2 million leads would equal. Operator: Your next question comes from the line of Dae Lee with JPMorgan. Dae Lee: Sorry, I dropped earlier getting disconnected. First one on that topic. So I agree that real estate is personal and emotional. But as we think about consumers getting more transparency and self-serve tools, like how do you think about helping your agents communicate their value proposition of that personal and emotional element. And do you feel like you can give them a differentiated AI-enabled value that can convince consumers to pay those rates and keep the per transaction economics resilient? And then secondly, maybe for Scott, for the combined entity, how should we think about the commission as a percent of revenue on a blended basis in 2026? And for -- on a normalized basis, what kind of free cash flow conversion should we expect? Robert Reffkin: First on AI and value, look I'd say a couple of things. Technology -- the Internet would have -- a lot of the things that we were seeing now would have happened, they have said for the last 20 years about the Internet. And over the last 20 years, people are using [indiscernible] more than they were 20 years ago. Just go look at a year after year after year. It's higher than it's ever been. Now why is that? I think it goes a little bit to the theme I was putting -- I was saying on the earlier on the call, which is the Internet led to a bunch of fake accounts, fake listings, fake postings and a lot of garbage. We think about fake news. News was a lot more credible before than today. And now today, for me, I go to Bloomberg, I can trust it. So trust in the era of more technology, more AI, you're just going to have less trust and more fake stuff in our industry with AI, it won't just be fake accounts, fake listing, fake take offers. We fake documentation, fake reviews, fake negotiations, fake identities, fake videos. And it's really going to be all over the place. And that's where agents come in. They shift -- they deal with all the noise and they make sure that what you see is real and what you see is accurate and that your time is well valued and for a transaction that is literally the most expensive transaction you're going to make, whether you buy or sell to pay for certainty, certainty has a price, right? And confidence has a price. Emotional confidence to know that you're not going to be taking advantage of because you have very advocate in front of you, but there's a price for that. And I think that price will -- I'm very confident that people continue to pay for the value of the real estate professional. I call it AI for AI, not -- well, artificial intelligence to empower agent intelligence. We have AI throughout our platform. And we're going to -- and these -- the current environment will let us build faster, build more, build cheaper and to integrate AI in more exciting ways in the future than we have in the past. So this is only going to, I think, help. Real estate isn't a transaction. It's a process. Technology can eliminate an event, a transaction, but not a process. You got to need to find the person and build a relationship, let's call a seller, you get to meet them in person. You have to explain why work with me, why work with my firm, what can I provide what tools I have or programs I have you're going to stage it, you're going to do deep cleaning, cosmetic repair, flooring, roofing, AI can't do that. You're going to schedule appointments, you're going to take photos. You are going to decide which photo is the best photo and yes, you're going to use AI to decide which photo is the best photo, but your judgment is going to be on top of it and judgment will be more valuable than before because of all the noise in the system. Scott Wahlers: Yes. Dae, I'll take your question on the gross margin. Obviously, we don't have a gross margin line on the P&L, but we talk about gross margin in a shorthand way to recognize the remaining difference after subtracting commissions from revenue. So on that basis, on a consolidated level, you can absolutely expect gross margin to go up in the future. as a result of the franchise business and the title business coming in from Anywhere that doesn't have any direct commission expense related to it. But even if you tease out just the brokerage business, margins will also go up as the margins for the anywhere owned brokerage or better than the gross margins on the Compass side. One way to estimate get an estimate of what that could look like is if you look at the pro forma financials that were included in the 8-K we filed when we announced the transaction. You'll see some estimates there. I'd also note that going forward, we will be providing segment disclosures on the combined business and breaking out the owned brokerage from the franchise business. And then separately, the integrated services businesses, which will include title and the Cartus Relocation facility. So you'll have a lot better information on that next quarter. It's a little bit too early for me to give you those exact numbers now as we're still bringing that information together. And then on the cash flow, look, 70% to 80% conversion from EBITDA to free cash flow is probably still a good rule of thumb. We've generally been a little bit on the high end of that range, and it might be more to the lower end of that range because the one thing you need to consider now going forward is interest expense, which will drive that shift. The one call out though is, as I said in the prepared remarks, there's a lot of expenses that will be going out this quarter in particular Q1 and for the full year, directly related to this transaction. And so we're going to be negative free cash flow for the first quarter. And that will -- so you have to kind of look at it on a normalized basis after backing out the $175 million I talked about for transaction expenses and the cost to achieve the synergies. But on a go-forward basis, I think that 70% to 80% adjusted for interest is probably a reasonable flow-through effect. Operator: Your next question comes from the line of Alec Brondolo with Wells Fargo. Alec Brondolo: I really appreciate the question. Maybe Robert, one for you. I think that there's 2 ways that you could have taken the projects with strategy. Obviously, you settled on the strategy of kind of syndicating the prime exclusive to Redfin not get in exchange for lead, I think another direction you could have taken the strategy would have been to syndicate the time it closes on the compass.com exclusively and try to build traffic into the O&O real estate portal and then develop leaf over time that way. Can you maybe just help us understand why you went with kind of this deal over the one that was proposed. Robert Reffkin: Yes. Thanks for asking. Look, we -- in Compass International Holdings, we have 9 incredible sites, all that would connect to our -- that we're building to connect into our listing platform that has everything from first contact to cash and close for our real estate professionals and their buyers and sellers, all the key buy-side flows, all the key work, key sell-side flows. And so yes, we're still building that and investing in that. And those sites, I expect to get more and more traffic over time. But during the life of this 3-year agreement, I think this is a great opportunity to partner with one of the best companies in our space. And I think the Rocket Redfin partner shows that another large participant in the industry agrees with our position on home seller choice as it relates to everything that's happening in the market, it will be nice to be -- to have a company of its size and scale, advocating for home seller choice alongside us. So we won't be the only one out there. There's other big brokerages, but it will be nice to have someone really with the resources of a Rocket behind us, advocating all the necessary and important ways. So I think that's -- that can't be overstated because the primary barrier to all this, this time next year, we should have 200,000 listings that are on our sites that are publicly on our sites that are where anyone can search it that are not on other sites and to bring the consumer to us. And so that's -- it's just that simple. And in 2018, 90% of our listings, before Clear Cooperation, 90% of them started off as publicly searchable listings on our site as Coming Soons and for on average, 11 days is bringing the consumer to our site to search as any normal company would, if you weren't being restricted by a nongovernmental entities like NAR. Within NAR came out with a rule the Clear Cooperation rule that said any public marketing of a listing after 24 hours, you must put an MLS. So we were no longer able to have the natural advantage of having these listings on our site. So now with Compass International Holdings these 9 incredible brands. We have over 700,000 listings, I believe, together. So it's 90% of that, that's over 0.5 million. Those listings should, without restrictions, if you just take what the world was like in 2018, if you eliminate the Clear Cooperation rule, which is only being enforced in 40% of markets now, 60% of them are letting -- are giving you the choice in the MLSs. And if you eliminate the Zillow ban, which bans anyone that advertise off of Zillow, again, imagine if Google bans everyone that advertised off Google, what would the world say. But if we eliminate those 2 things, then we will be able to have hundreds of thousands of listings on our sites, and that's the most important thing for having the independence of the consumer traffic and the demand of the consumer traffic that we can give to both our sellers and our agents. And so we try to do that alone. We're continuing to try and we'll advocate. But I don't see a scenario where the MLSs will continue to enforce these restrictive rules with Redfin, with Rocket on our side. Because it's -- one, for 2 reasons. One, because we now have more resources; two, because they're going to lose they're moral narrative. They're moral narrative. These listings are hidden. These are hidden listings for transparency, fair housing, double -- these companies double in deals and all that stuff. Go hold on, when we're giving our public Coming Soon listings to you, let's just take a market like CRMLS in L.A. or in Dallas NTREIS or in Seattle, Northwest MLS, let's just take all 3 of those markets. We're going to give our public listings to Rocket Redfin, publicly searchable with 60 million people. And in each of those markets, what's going to happen is that MLS is going to send our agents a fine for up to $5,000. $5,000. And I'm going to look at that piece favor and the agents can say, can you help me? And yes, we will help them. But what are you going to tell the public then is that -- are you telling me that you're fining the agent $5,000 for marketing the listing publicly search by 60 million people on Redfin sites that you're doing that to protect for housing. Are you doing that to protect transparency? Are you doing that to ensure that we're not doubling deals? Or are you doing this not to protect transparency, but protect your own business model, right? So that's -- it's going to expose that. And so I just -- again, that would plus the resources. I think the era of MLS is finding agents for marketing outside the MLS and forcing agents to give their sellers the marketing option of one single thing, the uncompetitive marketing option of one size fall market option of one single thing, the MLS versus the dozens of things that would have happened in the free market to help the seller market their home freely. I think that's over. And so then that really leaves the dominant portal. And I think we'll see in the weeks and months ahead how we address that. Operator: Your next question comes from the line of Ryan McKeveny with Zelman. Ryan McKeveny: Congrats on the results. So on the strategic alliance with Rocket Redfin, I guess first question actually is partially about Anywhere, but ties to the alliance. So what's the status of integration of Private Exclusives or Coming Soon from the Anywhere side of things, whether company-owned or franchised into kind of the existing Compass platform? Is that already integrated? If not, what's the time line for that? And then similarly, what should we think about the time line for either the Coming Soons that will show up on Redfin versus Private Exclusives showing up on Redfin? And will that initially be kind of Compass, what I'll call, Compass stand-alone? Or will that be across the Anywhere business as well? Robert Reffkin: So we're launching our technology to all the owned brokerages in the -- in our network of brands in July. And so that's when they will be able to share all of the inventory and access it in all the different ways that Compass has been able to do before. We're launching for the franchise broker owners in January. We have ways to accelerate. And I believe we will be able to give an option towards the end of next month for anyone to be able to create Coming Soons or Private Exclusives in the platform. And again, that will be ready at the next month. And then they will have the option to have it go on to Redfin. I would expect the vast majority, 95-plus percent of our Coming Soons and Private Exclusives to go on to Redfin. But that's -- it's up for the seller and the agent to do because we believe in choice, but there really is no reason not to get that incremental exposure. Ryan McKeveny: Got it. That makes sense. And I guess on the comments about embedding Rocket Mortgage into the Compass International Holdings platform, I guess, what does this mean for like guaranteed rate affinity OriginPoint side of the business? Any thoughts or anything we should know about on that side of things? Robert Reffkin: Yes. The way I think about it is guaranteed rate is -- they're our partner, our in-person partner. They're in our offices. While the way I think about it is that guaranteed -- then Rocket Mortgage is our digital partner. So guaranteed rate, they have incredible LOs, local partner in the offices and relationships at the sales meetings versus a digital partner on our site. But ultimately, what we're doing is we're expanding mortgage options for homebuyers with this partnership. Operator: Your next question comes from the line of Benjamin Black with Deutsche Bank. Jeffrey Seiner: This is Jeff on for Ben. Maybe just as a quick follow-up on the alliance and the option for home sellers after their Coming Soon goes on Redfin. Are you looking to do that nationally and across? Or are you going to be focusing on the 60% of like MLSs where they're already sort of okay with it? And -- or maybe just some color there on how -- if that will be more regional or what the options are for sellers? Robert Reffkin: Yes. Well, thank you for asking. I am incredibly excited in Northwest MLS with our dear friend, Justin Haag, the CEO, to publicly give listings to Redfin where Redfin is headquartered. And again, when we get a fine, when our individual agents gets a fine for doing what was in their client's best interest at their clients' request, we'll share that with Rocket. We'll say Rocket, we want to give these listings that would help the seller, help the agent, help you, Rocket, help redfin.com. And when those moments happen, I think we'll be able to respond accordingly. And again, I just -- I don't think that these -- I believe this is my personal view, I think this alliance is -- marks the end of the restrictions that MLSs have had on agents and sellers on how they market homes because when they're restricting the agent and home seller, they're going to be restricting Rocket. Operator: Your next question comes from the line of Michael Ng with Goldman Sachs. Michael Ng: First, Robert, I was wondering if you could talk a little bit about the listing agent referral program and how that would play out in success? Does that translate into market share gains, who ends up ultimately kind of footing the referral fee? Does that come out of the buy-side agents pocket? And does that show up in the commission rate? And then second, as a follow-up on the Compass Rocket partnership. That's great to see. Is the relationship exclusive? Or could other brokerages that want to pursue a Coming Soon or Private Exclusive strategy also strike a similar partnership with Rocket? Robert Reffkin: I'll start with the second question. The relationship is exclusive. On the first question, the new listing agent referral program we launched, this is -- it gives agents the choice to get to be the only person to get the buyer inquiry on their listing, which some agents want, but also gives the choice for them to have someone else get it if they don't -- if they either aren't getting it in enough time or if they're on vacation, the dream of the second version is something like this, you're a listing agent, you get it aside, if you don't pick up the phone because in a certain amount of time, how much time, 10 minutes, 5 minutes, 15 minutes, anywhere in that range, you can choose that it will go to either someone on your team, someone in the company, a preselected number of buyer as you like working with. And you can choose a different time and a different group of people, depending on if you're on vacation, if it's late at night, if it's after 5:00 on Fridays, where you're working with your family at State night, we're trying to give as much flexibility as possible for people to say, when they want their inquiry and when they don't and how they would frame them who they would give it to you. And to honor those listing agents who do give it to you others that would there be a 10% referral fee given back to them by those buyer agents. And then there's -- Compass has the traditional referral fee as well. Operator: Your next question comes from the line of Matt Bouley with Barclays. Elizabeth Langan: You have Elizabeth Langan on for Matt today. You gave helpful color on the cost synergy side, but I was wondering if you could touch specifically on the revenue synergy side, just generally how you're thinking about the potential for the combined company as a whole? And then if you had any details or comments around how you're thinking about the future of the title or the franchise business as well? Scott Wahlers: Yes. We're really kind of focused, as you can tell from our comments and our trajectory on the cost synergies. We're focusing most heavily right now on the cost synergies, less so on the revenue. I think that will come over time. But like one item that I'd call out on the revenue synergies that comes across on the title side is really the scale of having the 2 title entities together. So between what Compass does on title, what the Anywhere side does on title, we're in the $450 million to $500 million of title revenue here. It's quite large and upwards of about 40 different service areas throughout the country. And so there's areas where Compass Brokerage had brokerage operations before, but we didn't have any local title operations to attach title onto that brokerage transaction. Now with the different service areas we're picking up through the Anywhere transaction, we do. And vice versa, there's areas where anywhere our brokerage operations, Compass has title that can be used. So that will effectively provide some lift on title. But that's one example of some of the opportunities out there that at this point in time, we're really kind of focused heads down on the cost synergies, which is going to give us great lift to free cash flow generation and the ability for us to start to pay down that debt. Operator: And with that, I will now turn the call back over to Compass' Founder and CEO, Robert Reffkin, to close this out. Robert? Robert Reffkin: Thank you, everyone, for joining our call today. I just want to end by thanking all of our employees, all of our agents for all their incredible hard work. And together, we really did something special. We delivered the strongest fourth quarter in our history, the strongest year in our history, and I look forward to building upon our strong momentum in 2026 together with the Anywhere team. And with that, have a great rest of your day. Operator: That concludes our call today. You may now disconnect.
Maria Carrapato: Okay. Good afternoon. Welcome to our full year '25 conference call. Thank you for being with us again. We have the full Executive Committee with us, Corporate Executive Committee, and we'll kick off with Marco Patuano, CEO, a brief review of results, handing over to Raimon Trias, speakers for our financial overview, and then we're all available for Q&A. Marco Emilio Patuano: Thank you. Thank you, Maria. Good morning, everyone. It's a pleasure to be with you again as we open a new financial year and reflect on our results and our strategic progress. So in 2025, we delivered on all our promises, and we confirm how resilient our industrial model is. In a very volatile environment, we continue to execute our strategy with conviction and clarity and delivered results that demonstrate the quality of our assets and most importantly, the predictability of our revenues and organic growth model and reaffirmed the strength of the relationship with our plus. We successfully delivered on our 2025 guidance, and we reiterate our 2027 outlook. We have returned EUR 1 billion to shareholders through share buybacks, 1 year ahead of the plan, representing a total yield of 4.5%. We initiated dividend payments at the beginning of 2026 as committed at our Capital Market Day, and we continue on track to meet our leverage targets, reducing leverage from 6.39x in 2024 to 6.28x in 2025. We have reached an important turning point where year after year, we will generate increasing free cash flows, giving us greater flexibility to enhance our shareholder returns, fund industrial initiatives and reach our leverage targets. In 2025, we grew organically in all fronts with new points of presence accelerating throughout the year, showing continued demand for digital infrastructure. On a pro forma organic basis, our revenues increased by 5.8%, EBITDA by 7.1%, EBITDA after leases by 7.9% with a 1.6 percentage point increase in margin. Transformational industrial actions focused on boosting top line growth, optimizing cost and proactive lease management are unlocking the operating leverage of our business. Our recurring levered free cash flow grew by 11.5% and on a per share basis by 16.7%. And the free cash flow grew to EUR 350 million, confirming the positive momentum. On our capital allocation strategy, we completed the disposal of the French Data Center business, allowing us to increase our focus on core telecom infrastructure assets. At the same time, we have agreed to dispose our participation in the DIV II fund for circa EUR 170 million. DIV II for memory is a participation in a European infrastructure fund underwritten in 2021 in order for us to explore minority investment opportunities in digital assets. And we successfully issued in 2026, a bond for EUR 1.5 billion in 2 tranches to anticipate funding requirements, extending maturities and securing a pricing at 3.4%. From an organizational standpoint, we also recently announced the implementation of a more streamlined and agile leadership structure, which I will give you more color on shortly. Returning to our guidance for 2025, I would like to highlight our delivery across all the key metrics. And the fact that this guidance was set almost 5 years ago confirms the resilience and the predictability of our business. Consistent execution of our industrial plan is translating into operating results, which combined with normalizing capital intensity, underpins the trajectory of growing cash generation and sustained profitability. As I mentioned, we announced a new organizational leadership structure in February, marking important progress in the next chapter of our industrial transformation strategy. The new model is designed to bring sharper strategic focus, deepen customer relationship, enable faster decision-making and stronger functional alignment, all essential to support continued organic growth. We combined geographic cluster with a pan-European Vertical Solutions division, strengthening execution while ensuring consistency across markets. We are entering in a chapter defined by operational focus, team empowerment and agility, ready to capture the opportunities ahead. I would like to give you a flavor of why we created our new Vertical Solutions division. Several connectivity needs today exceeded the capacity of a traditional macro coverage and require solution very specialized by nature. Transportation, venues, city centers, public safety, defense, resilience, all of them are very different in terms of technical solution, but very similar across the geographies. We are deploying an operational model aimed to scale up every vertical connectivity solution, increase the commercial focus and ensure execution discipline and improve accountability. We are already leaders in Europe, leveraging on our centralized design capabilities and our country execution power, we want to further improve our performance. Now I hand over to Raimon to go over the highlights of our operating and financial performance. Raimon, please. Raimon Trias: Thank you, Marco. Good morning, everyone. I would like to start by reinforcing our very positive performance in terms of organic growth and cash conversion in the year '25. Robust revenue growth, combined with a continuous focus on operational excellence is driving higher profitability, a stronger operating leverage and expanding cash flow. Starting with organic revenues, we delivered a solid 5.8% year-on-year. EBITDA grew by 7.1%, supported by ongoing actions to increase operational efficiency. EBITDA after leases was 7.9% higher, reflecting our proactive lease management activity and recurring levered free cash flow rose 11.5%, supported by the disciplined implementation of our capital allocation strategy. Very important, the recurring levered free cash flow per share grows by 16.7%, underscoring the incremental value we create for shareholders. Moving to Slide 9. As usual, we show you the bridge between reported and organic pro forma revenue growth. Starting from EUR 3,941 million revenues in 2024, the perimeter adjustment for Ireland and Austria brings us to a pro forma revenue base of EUR 3,790 million. From there, the combination of escalators and CPI, colocations and build-to-suit deployments led to organic revenue growth like-for-like of 5.8%. This strong revenue performance, as you can see in the next slide, is led by healthy PoP growth in the fourth quarter '25 and as Marco said, throughout the year. Gross colocation and build-to-suit accelerated to 3,043 in the quarter, demonstrating sustained customer demand and a strong commercial traction across the portfolio. We recorded a strong colocation in France, 220; Italy, 887; and the U.K., 128. We continue BTS deployment across most countries and overall churn was contained at 307 units. Net new PoPs have shown consistent quarter-over-quarter growth throughout the year. Moving to Slide 11. The net PoP growth in 2025 has been 4.5%, fully absorbing a 1.2% churn influenced by the effects of 2 major consolidations in Spain and the U.K. In Spain, despite the Mas Orange network reconfiguration process underway, we recorded year-on-year growth in total PoPs. This reflects the importance of the support we provide our customers in their ongoing network deployments and how we benefit from the unlocked potential for MNOs to invest after-market consolidation. The U.K. also posted consistent quarterly growth, driven by continued 5G deployments, amendment programs and selective new site activity, illustrating the depth of demand and ongoing investment to catch up and improve network quality across the country. If we go to the next slide, the strength of our operational performance is again clear in this slide, which shows organic growth in Towers revenues of 5.5%, driven by contractual escalators, colocation and ongoing build-to-suit rollouts across our main markets. A reminder that these figures are adjusted for Ireland and Austria for comparability. Here, we have selected a few practical examples that show how our industrial strategy is being translated into real-world execution across different areas of the business. First, 5G densification in Italy. Fastweb, Vodafone and Cellnex Italy have extended their strategic agreement for an additional 12 years. This enables enhanced coverage and improved service quality through the deployment of 5G, supported by over 1,000 points of presence across the country. Second, network resilience and power autonomy. Telefonica and Cellnex Spain have signed the first agreement of its kind between a TowerCo and an operator to strengthen power assurance across more than 2,000 sites. This initiative improves network resilience and energy security following the recent blackouts in Spain. There is potential to develop more energy-related business across our portfolio, provide interesting upside to our core tower services. And third, the new markets through nonterrestrial networks. We provide land acquisition and construction capabilities to support low earth orbit satellite initiatives. Cellnex can provide essential gateways between LEO constellations and the terrestrial fiber backbone. Together, these examples illustrate how our operational strategy is being deployed on the ground and how it is opening new avenues for growth while reinforcing our role in next-generation connectivity. Let's move on to Slide 14. Fiber, connectivity and housing services delivered a strong 16% increase in revenues, supported by the continued rollout of the Nexloop project in France. Growth in DAS, Small Cells and RAN as a Service was driven by flagship deployments and the increasing relevance of neutral host solutions with projects delivered across venues and high-traffic locations such as [ Roig ] Arena in Valencia, La Cartuja stadium in Sevilla, PGE National Stadium in Poland, 5G rollouts in Madrid Metro in more than 40 parking facilities as well as multi-operator small cell deployments in Portugal and the renewal of long-term IoT agreements such as Securitas Direct. Our broadcasting business remained stable with a 1.9% growth year-on-year. And importantly, we secured the renewal of our long-term contracts with the leading broadcaster in Spain. On Slide 15, we can see that our industrial plan continues to scale and strengthened by the adoption of AI. The initiatives shown here aim to standardize processes, automate operations and reinforce asset management across the group. This collective effort is making the organization more agile, reducing operational complexity and improving our ability to respond quickly and consistently across countries. It is also visible externally. In 2025, customer engagement reached a new high with customer satisfaction index increasing to 8.3 out of a maximum of 10, the best result of the past decade. We are on a path of coordinated transformation that is elevating efficiency, effectiveness, quality and overall service experience. This industrial platform has helped so that our efficiency initiatives are translating in clear margin expansion, as you can see in the next slide. On a pro forma basis, we reduced cost per towers across all our key cost categories, 1.9% less in staff cost, 1.4% less in repair and maintenance, 4.9% reduction in SG&A per tower and 1.1% reduction in leases. Land management remains a key value driver for us. We deployed EUR 270 million across land acquisition CapEx and efficiency programs, generating around EUR 24 million in efficiencies, displaying how our disciplined capital allocation strategy helps offset volume and CPI-related inflationary pressures in lease cash-outs. These focused efforts have driven an increase in EBITDA margins of 300 basis points to 62.1%, up from 59.1% in 2023. The first part of the next slide shows the bridge from reported EBITDAaL and all the components that shape our free cash flow. In addition to our operating performance, this strong recurring levered free cash flow comes from an efficient capital and tax structure, combined with the continued decline in expansion and build-to-suit CapEx, free cash flow amounted to EUR 350 million. This free cash flow acceleration represents a turning point, as you can see in the next slide. Our operational improvements are clearly flowing down to cash. On a pro forma basis, recurring levered free cash flow grew by 11.5%, almost EUR 200 million. And on a per share basis, the increase was even stronger at 16.7%, also reflecting the share buyback program, which continues to enhance value per share. Looking at reported figures, free cash flow reached EUR 350 million, with underlying free cash flow, excluding or before the remedies, improving by EUR 307 million year-on-year. 2025 marked an important milestone for us with the entry into a new phase of consistent and rapidly accelerating free cash flow generation that supports our deleveraging strategy, as you can see in Slide 19. Net debt to EBITDA improved to 6.28x from 6.39x in 2024 and 6.85x in 2023, keeping us firmly on track towards our 5x to 6x target. I would like to note that the pace of deleveraging could have been faster. If we hadn't brought forward EUR 1 billion in shareholder remuneration, our leverage would have closed below the 6x. Our recent EUR 1.5 billion bond issuance that Marco mentioned before in January '26 successfully [ propounded ] most of our 2026 maturities with a strong appetite from investors on the back of a good market momentum and our strong rating outlook. We managed to extend maturities and secure an attractive 3.4% pricing. Now let me hand back to Marco so that he share our guidance '26 and '27. Marco Emilio Patuano: Thank you, Raimon. I would like to close our presentation with the message of confidence. The strength of our business and underlying sector drivers, the continued execution of our strategy and the power of our customer relationship give us the confidence to firmly reiterate our guidance for 2027 and share our outlook for 2026. Let me highlight that our old outlook has been adjusted to reflect 3 elements: the change of perimeter following the data center disposal, the discontinuation of our operation and maintenance business in Spain and the incremental financial costs associated with the share buyback. As you can see, we are very optimistic about our continued growth, profitability and cash generation. So in summary, 2025 was a great year for us, and we're very confident going into 2026 and 2027. Our business model is intact. Drivers of network investments are healthy and customer relationships are stronger day by day. Our organization is driven with renewed leadership focused on growth, efficiency and customer excellence. Our growth trajectory and increasing free cash flow underpin our commitment to enhanced shareholder remuneration and give us further capacity to outperform our CMD distribution targets. So thank you. Maria Carrapato: Okay. So before moving to the Q&A, I'd just like to highlight that in addition to the main slides in the body of the presentation, we've added a few new slides at the end, some fact slides that cover many of the topics that you often ask us. So we really hope you find them useful. And with that, we're now available to take your questions. Maria Carrapato: So the first question that we have on the line up is from Roshan Rohit -- Ranjit at Deutsche. Roshan Ranjit: I just got 3, hopefully, quite quick, please. Marco, you highlighted the Spanish revenue pick up, so kudos. I guess this is the benefit of the kind of the mergeco ready coming through now. Could you remind us how many ops and the trajectory of that ramp up through 2026, please? Secondly, on the EBITDA pick up, a strong acceleration on the organic growth. Is this now the benefit of the rank of [indiscernible] coming in and we should expect that momentum to continue through '26, or is there an element of timing effect in there, please? And lastly, thanks for the additional color on the backup slides. I'm quite interested in the RAN sharing slide, and you've given examples across Europe. Is it possible to get a sense of the kind of pricing premium across different markets that you attribute from RAN sharing?. Is it kind of a consistent uplift in the pricing? Or does it vary dependent upon market structure? Marco Emilio Patuano: Yes, very good. So on your first question on Spain, I take question 1 and 3, and I leave the EBITDA to lease to Raimon. So on your first question, so Spain had -- the first phase in Spain was the redesign of the network coming from Mas Orange. So you see that at the beginning of 2025, we had a material churn in the -- in our point of presence. We started in the second part of 2025 to activate the RAN sharing agreement we have with Digi, which was a part of the deployment strategy of Digi in Spain, and we started the so-called rural project in Spain with Mas Orange. Now for 2026, we start entering in the densification process project that we have with Mas Orange and we will continue to activate more PoPs with Digi. So 2025 was Mas Orange very much focused on reshaping the network and the activation of Digi filled the gap that was coming from some discontinuation in Mas Orange and 2026 on the contrary will be Mas Orange starting the densification project. Your second question on RAN. The question on RAN is pricing depends very much on -- not very much, to some extent on market conditions. You should imagine something between half of a colocation price and 1/3 of the colocation price, depending on the structure of the market. Normally, they have very, very, very limited activation costs on our side. So it's a pure margin for us. because there are basically no CapEx associated to this. Yes, there are some OpEx because our engineers have to make some little adjustments, but it's pure margin. Raimon Trias: The EBITDA perspective and Landco, as you will have seen this year, we have done up to EUR 270 million worth of initiatives, both on efficiency land acquisition across all the different countries that have allowed us to save approx EUR 24 million in terms of savings of EBITDAL. As you have seen on the guidance, this trend will continue going forward. The idea is that over the next years, since we created Celland, we have accelerated the amount that we are able to buy and we're buying more than prior years. It is true that we need to be careful not to compete with ourselves, and we need to keep certain level that normally we consider rate between EUR 250 million, EUR 300 million for the coming years to keep on achieving this level of savings going forward. Roshan Ranjit: That's great. So just on the last point, Raimon. So the kind of Q4 exit EBITDA growth would be something that we can expect through '26 then? Raimon Trias: I would say, if you take the savings that we have achieved this year, there is part of it, as you are saying, there has been a bit more of activity in the last quarter and a bit more of savings. So you have to consider that for doing the phasing for next year. But then next year, it will depend if we buy EUR 250 million, EUR 300 million, that the new savings of next year will kick in as well. Maria Carrapato: So moving on to the next question. It comes from Rohit at Citibank. Rohit Modi: I have 3, please, as well. Firstly, on the guidance for 2027, I understand the guidance was initially given it was a bit long dated and you have a broader range. Now given you are near to 2027, we have already in start of 2026, we still have, I understand 5% on range on the revenue level, but that goes down to 20% on free cash flow level and with a business like Cellnex where you have a higher visibility. I'm just trying to understand what are the swing factors on recurring level free cash flow and free cash flow for '27 that you expect that number can move from lower end to higher end. That's the first one. Second, again, there's a lot of noise we have seen particularly recently in Italy around renegotiation of contracts. I'm just trying to understand, Cellnex could be any kind of beneficiary if -- from -- if any, anything happens in Italy. And lastly, if you can just remind us around the derivative position that you have taken last year, the swaps just before the buybacks. I mean, is there a kind of termination date do you have on those swaps given you do mark-to-market and you have kind of cash outflow -- potential cash outflow if you move terminate that contract. Marco Emilio Patuano: Okay. So on 2027 guidance, yes, I remember there was a bit of skepticism in the recent past about our capacity to go to target. The more it was long term, the more the skepticism was higher. Today, I think that the level we reached in 2025 give good visibility of how the recurring level free cash flow and free cash flow are achievable. So what are the factors that made them achievable? Well, we defended and protected the revenue growth. The revenue growth despite a worse-than-expected originally expected CPI, we are maintaining a good level of growth. This is important. And as you saw, the idea of making a new organization is in order to keep revenue growth. We are performing well in terms of efficiencies, Raimon just explored. And even more, our discipline in capital allocation was demonstrated more and more. So the range for 2027 is what we confirmed at the Capital Market Day. And the more we get closer to this day, the more we see it feasible, both in terms of recurring levered free cash flow and even more importantly, in terms of full cash flow. So your second question was about contract renegotiation. Look, what I can tell you is that we already renegotiated several contracts. Renegotiated with Telefonica, we had no problems. We renegotiated with Vodafone, we had no problems. We renegotiated with KPN in the Netherlands, we had no problems. With Iliad in France, we had no problems. So our experience is that the renegotiation moment is a moment in which you sit with your client. The client will tell you what he likes and what he doesn't. But the core elements of our contracts have never been questioned. So the fact that it is a long term is a long term, the fact that it's an all or nothing, is an all or nothing, and it has never been questioned until today. On top of these, talking about Cellnex, what I can tell you is that the coming renegotiation are not tomorrow. So we have the next renegotiation we have one in Italy in 2030, and then we go to 2033, 2034, 2035, 2036, 2038, 2042, 2048. So in this moment, of course, we are looking with attention what happens in the industry, but our experience as of today has not been dramatic. And the last, I leave to Raimon. Raimon Trias: Yes. On the last topic, I'm not sure if I understood properly, but I'm going to try to answer what I understood. I think that you were asking why last year, most of the return -- all the return that we have done to shareholders have been through the share buybacks. There are various reasons. The first one, if you remember, in the Capital Markets Day, we committed to a dividend starting 2026. Why is that? You've seen the guidance that we have given. The free cash flow is between EUR 600 million and EUR 700 million. So it allows us to pay a dividend based on the cash generation from the business. Last year, we had cash available that it was coming partially from the cash generation of the business, the EUR 300 million that we have done EUR 350 million, but it was coming also from the divestments of Austria and Ireland. And on top of that, the share price was at a moment that was very attractive. That's why we also decided to use the proceeds for doing the share buyback. I hope it was clear enough. Rohit Modi: Sorry, it was regarding the swap, the swap contract that you entered last year, would you continue to have that contract? Raimon Trias: No, the equity swap, it is still in place. It matures in June '26, and it was bought at EUR 32, and we are today at EUR 31.5. Maria Carrapato: Okay. So moving on to the next question. It's coming from Arnaud Camus at Bestinver. Arnaud Camus: First, I assume the disclosure may be limited, but could you provide some indication of the size of the battery resilience agreement you have signed with Telefonica in Spain? Should we assume this is a replicable model to other countries of your footprint? And two, more broadly regarding the forthcoming Cybersecurity Act. I know it may still be early, but could you share any initial visibility on the potential CapEx envelope and implementation time as you are an infrastructure provider to telecom operators? And is it already considered within your 2027 guidance? Marco Emilio Patuano: So the battery agreement is still -- sorry, it's relatively sizable with Telefonica. We are discussing with them how to expand it more because what we agreed with them is to have modular development of this program based on the network design. Our technical teams are working strictly together. The target is to have several thousand sites covered. And it's a super interesting business model because what we do is like imagine not to be a pure infrastructure or a simplified infrastructure, but to be a service infrastructure provider. So we help to take care of the infrastructure from the bottom to the top. Having a program that allow us to buy batteries on a pan-European basis, we can have very good prices. And even more importantly, we have very long insurance terms for the life protection of those batteries. We agree on life protection up to 15, 20 years. Is it replicable? Yes, it's very replicable. We have several other customers that are interested in this business model exactly because of what I told you. We are negotiating very good prices on very good volumes. don't underestimate the fact that securing volumes in this moment in which there is -- starts to be a certain level of shortage on this type of elements is clear. About the Cybersecurity Act, the CSA, I was in Brussels last week talking about DNA and CSA, so the 2 regulations that are expected going forward. The answer is, yes, we are working very closely with the European community. There are still margins of nonclarity -- nonperfect clarity in what is going to be the final outcome. And to be honest, different member states have a different interpretation of the scope. Some are more strict, some are less strict. What we have in 2027, we are convinced that is full enough for what is going to be the requirement of the CSA. Then if you ask me if the CSA will be fully enforced in 2027, I'm not so optimistic. Maria Carrapato: Okay. So moving on to the next question. It comes from Fernando at Alantra. Fernando Abril-Martorell: Two quick questions from my side. First, on the expansion CapEx. I've seen it is down 6% year-on-year on a pro forma basis. So I don't know if you can elaborate a little bit on the main drivers behind this? And also, how should we think about its evolution for '26 and '27, the split between the different 3 CapEx items? And second, on PoPs growth. So you've accelerated throughout the year. Is it reasonable to assume a similar growth profile in '26? And can you give us an indication of what share of new PoPs will be linked to RAN sharing agreements? Marco Emilio Patuano: Okay. On expansion CapEx, so there are 2 elements. A few time ago, Raimon showed you that on DAS, Small Cells, RAN and other services, we grew almost 5%. The reality is that if you open this number between DAS and Small Cell RAN and other, you would have seen that DAS and Small Cell were growing about 8.1%, RAN about 10% and the other was growing much less. But the real focus for us today is DAS, Small Cells and RAN. So going forward, what we see -- the place we see having the CapEx is those 2 areas; DAS and Small Cells in this order, more DAS than Small Cells. So the Small Cell take-up is still low even though there are some interesting use case in some European countries that we are monitoring very closely of Small Cells covering city center very efficiently and with a very low urbanistic impact and the other is RAN. Our RAN project in Poland is using some CapEx. So this is about the expansion CapEx. Then of course, there is a part of expansion CapEx that is linked to colocation, but its tower expansion CapEx that you know every year, we have more or less the same. About PoP growth, Raimon? Raimon Trias: Yes. So during the year '26, you know that our growth in PoPs comes from 2 things, comes from colocations and it comes from build-to-suit. Build-to-suit will slow down a little bit in the year '26 basically because our programs of build-to-suit are reducing year-on-year as they come from the prior M&A deals. The normal colocation, we're expecting similar growth this year, not a big difference. And you were asking as well from our RAN sharing perspective. This year, the RAN sharing has mainly been in Spain with the entrance of Digi. And I would say that for next year, although you also have a bit in Italy, I would say that for next year, you have to consider that there will be similar RAN sharing coming from Spain and a bit in Italy as well. But I would just consider that from the colocation comes from Spain is what will be RAN sharing. Maria Carrapato: So moving on to the next question coming from Ondrej at UBS. Ondrej Cabejšek: I had to step away for a moment, apologies if I'm repeating the question. Please feel free to ignore. I have 2 questions, please. One is on the news that Iliad has decided to allocate part of the contract that you were mentioning at the previous quarter that you are kind of looking at the 4,000 sites in France. So Iliad has allocated at least half of this to TDF. I was wondering, Marco, if you can again kind of explain to us your thinking about the returns on this project, why this is the second project with Iliad specifically that you are kind of turning or walking away from presumably because of the kind of IR not meeting your standards. So that would be question number one, please. And second question related to France. We heard last week on the CMD that Christel, the CEO of Orange, was talking about again, again kind of investment remedies. And so I was wondering if this is something that is already somehow kind of taking shape in light of various positive, say, developments, for example, the European Council openly suggesting that M&A should be allowed and investment is needed, remedies are needed in that direction. So any kind of color on developing talks around that potential situation would be very helpful. Marco Emilio Patuano: Okay. I answer Nemrod and then today with us, there is also our Chief Strategy, who is French, by the way. So I will leave him to respond Ondrej. So on Nemrod, yes, we have been -- we participated to the tender and the tender itself is an evidence that there is more need of coverage and densification. So this is -- I commented a million times in the past and then there is a tender. So the good part of the story is that densification needs are there. We've been looking to the tender. We submitted an offer, but we submitted an offer that was in line with our capital allocation rules. So did make us not to reach the agreement with Iliad because it was out of our investment criteria and our capital allocation criteria. So we decided that if there was someone offering more, we would have stayed disciplined. So our goal is not to catch up with every investment there is in Europe. There are -- we are disciplined. We know where we create long-term value creation. And so that's it. We will focus on other projects. Vincent, would you like to answer the second question? Vincent Cuvillier: Yes, of course. So yes, we are obviously very -- extremely close to our different customers. We are not directly involved, as you perfectly know, within the discussion of the consortium. But we are also, as Marco mentioned, pretty convinced that any consolidation, if it happens, will come with investment remedies not only in new coverage, but also on the resiliency of the system. So we have shown our proactiveness with all our partner there to support these remedies. And as you perfectly know, in any case, what we will procure is to protect the NPV of our contract and giving some short-term flexibility in exchange of long-term growth that will come from these remedies without any doubt. And this is what we will protect -- this will result in the protection of the NPV of our contract. Marco Emilio Patuano: Okay. Thank you. So yes, I was with some members of the French institutional establishment and what they told me is that they consider infrastructure investment, a high priority for the country. So there's no doubt that there will be more investment coming. Maria Carrapato: Okay. So now moving on to the next question. We have Abhilash from BNP on the line. Abhilash Mohapatra: I just had one, please. I wanted to come back to the topic of the guidance ranges and specifically around the revenues. So about EUR 100 million delta for 2026 between low and high and EUR 200 million for 2027. Just wanted to understand specifically around revenues, what is the key factor there? Is it around inflation assumptions, presumably not given it's so close. So is it mainly around colocations? Or are there any other factors? So any color you could add there around the revenue would be very helpful. Marco Emilio Patuano: Yes. Do you want to Raimon? Raimon Trias: In terms of the guidance, the only thing that we have adjusted, you have it in the presentation is basically the change of perimeter that is coming because of the data center disposal. Also, we have adjusted the discontinuation of the operational maintenance activities that we have in Spain. If you recall, we decided to stop this something like 18 months ago, but it had an impact during 2 years still because it took some time to discontinue the operations. And the third thing that we have adjusted into the guidance is the impact of the increased share buyback that was not considered in our numbers in the Capital Markets Day. The rest of the guidance, '27 has not changed and remains as it was before. Abhilash Mohapatra: Apologies, if it was not clear from the way I framed the question. I was just -- maybe sort of more wondering around what is driving the variance between the low and high end of the revenue range. What are the key factors? Marco Emilio Patuano: Yes. I think that the width of the range depends very much on somehow the future of build-to-suit programs if we are going to allocate more build-to-suit programs or not. A [ Nemrod ] project enters, we have the full capacity in our cash flow to have such a project and it contributes to your growth. The Nemrod project doesn't enter, and we rely more on colocation and the existing commitments that we have. So having -- or maintaining a certain element is absolutely normal. And by the way, so it is also a decision of not to touch what we committed at the Capital Market Day. So if we start touching one point, then we have to make a full revision. So -- but if you ask me what can move us from the low end to the high end, I would tell you that what is going to come from colocation, RAN sharing, et cetera. More or less, we have a fairly clear picture. What are the commitments that are already taken. We know even the [ cent ] is possible that something more materialize in the coming months before -- between here and the end of 2027. Yes, and we will evaluate. We demonstrate we are disciplined. We're not going to make crazy stuff. If we do something, it's because it generates value, long-term value. So I think it's fine. Raimon Trias: If I can add to Marco, it's important that everyone understands the predictability of the business. This year, we have achieved the guidance '25 that was given 5 years ago. So the barrier that can happen within these numbers is very small in that perspective. Marco Emilio Patuano: Good. Abhilash Mohapatra: Thank you both for the color. So just to clarify, so you're saying that the high end of the guidance is more sort of predicated on additional build-to-suit projects over and above what we already have, if I understand that correctly for the revenue guidance... Raimon Trias: For going up to the higher part of the guidance, yes, there are other projects that should be won during the year to be able to get to the higher part of the guidance correctly. Maria Carrapato: Okay. So moving on. We can follow up afterwards if you still have any questions. Now moving on to the next question, comes from Fernando at Santander. Fernando Cordero: My two questions, in fact. The first one is related with a follow-up in the sense that you have been already asked about your confidence on the growth for 2026. I'm going a little bit beyond given that the build-to-suit activity is going to clearly decrease by 2027 and onwards. How confident are you of replacing the current [indiscernible] of growth coming from build-to-suit with colos. And the second question is on active equipment. You have already seen the project in Poland. I just would like to understand at which extent you would be also, let's say, open for additional projects, and particularly, I'm thinking in Spain, just as a way to complement your current portfolio and even to, let's say, to give more visibility in the long term to your current business in Spain? Marco Emilio Patuano: So the build-to-suit programs, as I said, 1 second ago, we are -- we have a program of committed that what has been already committed, has a sharp decline after 2026. 2027 will be materially lower than 2026. And -- so this is why we are working on analyzing future possibility, future opportunities that can appear in the market. On your question on active equipment and especially on Spain, I would say that it's not our sweet spot. So if you ask me if is this your sweet spot? My clear answer is no. We have the project in Poland. We are performing the project in Poland, I would say, fairly okay, okay in terms of how the project is going on, what are the returns, the relation with the client, et cetera. But what I can tell you is that contributing with a material benefit to the client we can do way more on the traditional perimeter than on the active component. Then every case is different. Today, a case in Spain is, I think, more a press rumor than a real case. So as of today, my answer is more no than yes. This is also something that is not so clear if it is a real case or a speculation. But I would say more no than yes. Fernando Cordero: My question on the PoP growth is because [indiscernible]. Maria Carrapato: We can't hear very well. Marco Emilio Patuano: Can you speak a bit louder, please, Fernando? Fernando Cordero: Can you hear me right now? Marco Emilio Patuano: Much better. Fernando Cordero: Okay. Perfect. Now my point is the following. There is a debate that at which extent your current PoP growth in Colors is subdued by the fact that you are deploying the build-to-suit programs. And in that sense, what should be, let's say, the your, let's say, your base case in terms of ops, it is the total growth that we are seeing today or just the colors when the build-to-suit product will be trading down. Marco Emilio Patuano: Well, the color that you see today is what we assume is going to be the rhythm of the colocation. And of course, if you see that the build-to-suit tend to reduce after 2027, we are going to push more on colocation. The point is we are looking to an important market share on new colocation. So what we are doing is maintain or eventually even increase our market share. And in order to do this, our technical team is working with proactive models in order to codesign with our clients better coverage. This is something that if you want, we can explore and explain better separately. Maria Carrapato: So moving on. Next question comes from James Ratzer at New Street. James Ratzer: I have 2 questions, please. So the first 1 is you're seeing some very encouraging growth in the kind of just organic colocation on your Towers. I'd be really interested just to hear more precisely where you're seeing that demand coming? Is this in kind of urban hot spots is this rural areas? Are these transport links. And you're speaking to the MNOs, where are you finding that particularly seeing this demand for organic colocation growth? And then secondly, kind of bigger picture, Marco. Where do you see Cellnex's portfolio of assets going, let's say, over the next 3 to 5 years. I mean if you announced here this morning another small disposal I mean, how do you see yourself at some point ever going back into acquisition mode and growing the portfolio of the business? I'd just love to here a bit more conceptually how you think about the kind of strategic portfolio over the next 5 years. Marco Emilio Patuano: Yes. Very clear, James. So on organic colocation, it's super interesting because when we go with my Chief Operating Officer and we start looking at the detailed figures, we look to our portfolio splitting between towers and rooftops and then urban, suburban, rural and deep rural. So the more you are tower in non-super dense area, the more you have opportunity for colocation, which is good common sense. If I'm in the center of Paris, adding a co-location on an existing rooftop is not difficult technically. It's difficult urbanistically. So you don't get the permit. So colocation are most of all suburban and suburban is the big roads and transportation corridors even inside the cities because these generate traffic congestion -- data traffic, not only car traffic congestion, but also data traffic congestion. And the rural, the rural is going to be a mix of colocation and RAN sharing. The more you go in deep rural, the more we suggest to our client to be efficient. We are making this, for example, in Switzerland. We are telling to our clients RAN share more because the industrial cost is for them, not for me, for them. The industrial cost make the investment having a better return. So the more you look at tower and the more you look at non-super dense urban area, the more you have opportunity for colocation. The more you have -- you are densifying dense urban areas, the more you have to think about more towers or eventually distributed small cell system or distributed antenna systems. I hope I made it clear, James. The second is how do we see the portfolio medium to long term? So point number one, everything that is noncore and you are easy to understand the participation, we were a limited partner in an investment fund. Hard for me to say that this is core. We had a commitment of further EUR 50 million to be invested in the future, and we could repatriate with a nice return, our old investment. So why not to rotate this asset? I think it was a relatively easy decision. We had a very good cooperation from the GP, the general partner cooperated with us very nicely. And so we made it. Now -- when you look at can Cellnex be on the buy side, I would say, for geographic expansion, I'm fairly categoric in saying no. I don't see Cellnex exit from markets and then reentering new markets because -- no, I don't see this that in terms of geography, I think we are pretty much okay. But if the MNO are claiming that there is too much fragmentation in the market, I would say the tower sector in some markets can say the same. In Spain, there are 4 tower players and 3 networks. In France, there are 5 tower operators. And if you count also smaller ones, you can eventually even consider it more fragmented. So those -- U.K. is the same. U.K. is pretty fragmented in terms of tower operators. Consolidation -- in-market consolidation in tower operator can make good synergies. The easy and evident one, I can manage more portfolio, more towers with less than proportional growth of people. This is, let me say, the trivial one, the easy one. The most interesting one is that when you put 2 portfolio together, you start realizing the real overlaps between portfolios and you can start decommissioning part of the portfolio, transfer to your clients part of the benefit. And this is what is -- what make it very, very, very interesting. So this kind of consolidation is not there today because there is nothing there today. But if your question is, how do I see it medium term, I think that this fragmentation, same as the MNO saying that it's unefficient, I can say that it's not particularly efficient even in the tower sector. Maria Carrapato: Okay. So now moving to... Raimon Trias: We have another 2 and then... Maria Carrapato: Yes. So now moving on to Graham at Jefferies. Graham Hunt: Yes. I'll just stick to one, if that's okay. Can I just ask a bit more on the reorganization that you announced that you took at the beginning of the year. Maybe if you could help us understand more about the characteristics of that business unit as to why it suits the cross-market leadership structure and what the challenges were that you're encountering before this that the new organization is looking to resolve. Marco Emilio Patuano: Thank you. Thank you, Graham. The reorganization was based on 2 main drivers. One is at corporate, we need to be more efficient. And to be more efficient, we need to be more focused and more slim, if you want, and then we have to decide what we do and what possibly it's not absolutely necessary. So this is why we made our organization at the headquarter level leaner. Leaner means faster and means also it makes easier to make decisions. So this is why we were reorganized the headquarter. When we were looking to the countries, we had some, let me say, some combination -- geographic combination that were a little bit hazardous. So we had a Portugal together with Poland, instead of being together with Spain, which is honestly not very geographically natural. So we've made some adjustments because it could make available some synergies that are not to imagine enormous synergies, but there can be some synergies. And the last and most interesting part was what we call Vertical Solutions. So Today, what happens is that if you take a large country like -- let's take 2 large countries, one is Italy and one is France. In Italy, the non TowerCo business accounts for a sort of EUR 40 million to EUR 50 million. In France, it accounts for less than EUR 5 million. Do you mean that the French market is 10x smaller than the Italian market? Or do you think that with the EUR 40 million to EUR 50 million, we covered all the opportunities we had on the Italian market? The answer is no and no. So -- but the problem was that sometime each and every country is very specialized and very focused on the day by day and sometimes some opportunities are simply not big enough, not priority enough, not to specialize -- we are not specialized enough to make it possible. So the idea was, okay, we are -- altogether, if I take all my countries, we are the #1 in Europe, but we don't play as the #1. We play 10x as a small operator, and we want to play one time as a big guy. But in order to do this, you have first to think big. If you think small, you remain small. So we need to think big. And in order to think big, I need to put all the volume together. And think central, act local is going to be the route. So I think that, yes, like every matrix organization, there are challenges, but it can work well. Do we have an example? Yes, Celland. It was a lot of small initiatives, each of them small. Now we have Celland and it's doing phenomenal. So let's try to capitalize on good experiences. Maria Carrapato: Okay. So now to end the call. I'll ask a question from Andrew at Goldman Sachs. Andrew Lee: I just wanted to -- just one question, just to dive in a bit more deeply into the Spanish densification reacceleration. You've obviously seen the equivalent PoPs in Spain tick up, I think, as was mentioned in an earlier question. Could you just give us a bit more insight? Because obviously, this is a key metric for us to be thinking about whether -- as to whether consolidation is a good or bad thing for telcos. And obviously, consensus thinks it's a bad thing and you think it's a good thing. So we're obviously all looking for evidence of densification acceleration. If that's happening now, what exactly does that look like? So what will be the equivalent PoP growth in Spain that you see in 2026 and 2027. I think -- sorry, the company average or Cellnex average is 3.7% equivalent PoP growth in the fourth quarter. What does it look like in Spain with that growth acceleration that we're seeing from densification? Marco Emilio Patuano: You are a little bit difficult because you talk about equivalent PoP and they talk about PoP. So the concept of equivalent PoP was a concept that has been used by Cellnex some time ago in order to facilitate the exercise of saying equivalent PoP time average price equal to revenues. The world doesn't work in equivalent PoP nor in average price. So average is a bit tricky exercise because I'm eating an entire chicken, you eat 0 and we had half a chicken each. So it's not true when we see if you're hungry at the end or not. So the growth in Spain or what happened in Spain is point number one, Mas Orange had to take 2 networks, one built at Orange standards and the other built at MASMOVIL standards, which were, believe me, very different and to create the Mas Orange network. So we had to avoid duplications. We had to make new colocations. We had to build -- or we have to build new sites, all at the new standard, which is the Mas Orange standard, which is the Orange standard. So top quality, top everything, carrier grade, top carrier grade. So this is what happened in Spain with Mas Orange, which is first part of the year, an accelerated decommission of PoPs, some of them anchor and some of them second. And then a progressive relocation of some of those antenna, most of them anchor, okay? On top of this, we are partner of Mas Orange in their rural deployment program, rural Spain program. And in the beginning of 2026, we are completing the delivery of this program. And this is the picture with Mas Orange. So going forward, what is going to happen? It's going to happen that they are working on improving -- further improving the quality of their network. We are making available more colocation and we are -- and we both committed that we will build for them some of the new installation that they need. Second, part of the decommissioned sites that Mas Orange made available have been taken by Telefonica. Why? Because it was a good location. There was a space on the antenna, which was made available by eliminating one previous antenna. Telefonica considered it interesting. So this happened in the second part of 2025 and will continue progressively in 2026. Our relation with Telefonica is particularly good, as you saw with the battery program. And so we are discussing with them if we can make available more sites with them. In their case, we are talking about more colocation than build-to-suit, but it's a very healthy relation. With Telefonica, we agreed on the activation of the RAN sharing program they have with Digi. It was -- it is a fairly big program. It started in the second part of 2025, I would say, in the last part of 2025, and it will continue in 2026. Why it took a little bit of time because we had not only to agree on a technical program, but also we had to amend our original contract in order to make available for them the RAN sharing on our network that originally speaking was not confirmed. So we made the agreement. So this is another demonstration that when people say that every time there is to discuss about agreements, it's a fight. No, it's a discussion. It's a discussion between 2 [ adults ]. And this is going to continue. In -- to be honest, our relation with Vodafone Zegona is not one of the largest relation -- business relations we have. So the fact that there is a little bit of noise around this is not affecting us particularly. Of course, if we can support Zegona and Vodafone in their network needs more than happy. As of today, it has been relatively small. But of course, if they need, we do. What we see more? We see more densification coming. This is something we absolutely see. We see more densification coming in Spain. And the big question mark is if Digi someday will deploy not only RAN sharing, but also some proprietary network. They did in other country. As of today, it's not in the plans, at least in the plans shared with us, but you never know. I hope I answered, Andrew. Andrew Lee: I guess the reason why you're using equivalent PoPs was just because it has a more direct correlation with actual revenue growth where these days so much. And it's really what we're trying to ask is like, is revenue growth going to accelerate? What's the revenue growth in Spain post consolidation, post the kind of the rebalancing of 2025? That's the real question. It sounds like you're not able you're not going to -- you can't answer that today, but I guess that's what we're really looking for. Marco Emilio Patuano: Well, what I can answer is that 2025 has been a little bit better than what we expected. So these -- so let's take the small positives. Maria Carrapato: Okay. Well, thank you, everyone. It's been a long call, very, very productive, I think. Thank you for your continued support. And as usual, the full team is available for following up if you have any additional questions. Thank you very much.