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Operator: Greetings, and welcome to the ARKO Corp. Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jordan Mann, Senior Vice President of Investor Relations. Thank you. You may begin. Jordan Mann: Thank you. Good afternoon, and welcome to ARKO's Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. On today's call are Arie Kotler, Chairman, President and Chief Executive Officer; and Galagher Jeff, Chief Financial Officer. Our earnings press release and annual report on Form 10-K for the year ended December 31, 2025, as filed with the SEC are available on ARKO's website at www.arkocorp.com. During our call today, unless otherwise stated, management will compare results to the same period in 2024. Before we begin, please note that all fourth quarter 2025 financial information is unaudited. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statements section at the end of our fourth quarter and full year 2025 earnings press release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Any forward-looking statements made during this call reflect our current views with respect to future events, and ARKO is under no obligation to update or revise forward-looking statements made on this call, whether as a result of new information, future events or otherwise, except as required by law. On this call, management will share operating results on both a GAAP and a non-GAAP basis. Descriptions of those non-GAAP financial measures that we use, such as adjusted EBITDA and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings press release or in our annual report on Form 10-K for the year ended December 31, 2025. Additionally, management will share profit measures for our individual business segments, along with fuel contribution, which is calculated as fuel revenue less fuel costs and exclude intercompany charges by our GPMP segment. And now I would like to turn the call over to Arie. Arie Kotler: Thank you, and good afternoon, everyone. 2025 was a pivotal year for ARKO. We continued to execute on our transformation plan, fortified our foundation and sharpened our focus. We continue to optimize our retail footprint. We improved our cost structure and we positioned the company for continued accretive growth across our 4 segments in 2026. Our strong fourth quarter results reflected that progress. Adjusted EBITDA grew 16% year-over-year to $66 million. Same-store merchandise sales trends improved and margin expanded 140 basis points to 34.4%. Retail sites operating expenses were down 16% compared to the prior year period, and retail fuel same-store gallon trends improved as we exited the year with higher CPG. Let me be clear, these improvements are not to be viewed as driven by the macro environment. The consumer is still cautious. They're still value focused. What you're seeing is execution across dealerization, remodels, NTI retail stores, food service and loyalty. We are running a better business, and the results reflect that. Earlier this month, we closed the IPO of our subsidiary, ARKO Petroleum Corp., or APC. We issued approximately 11.1 million Class A shares at a price to the public of $18 per share, and we own 35 million Class B shares, currently representing 75.9% of the economic interest in APC. This was a major milestone. This listing shine a spotlight on what has become a large, growing and highly profitable wholesale fuel distribution and fleet fuel business. We've consolidated our wholesale, Fleet Fueling and GPMP segments under the separately listed subsidiary. The result is greater transparency, clearer economics and what we believe is meaningfully unlocked value for shareholders. Until 2020, we were a pure-play retail operator. Over the years, through acquisition, we built a large wholesale and Fleet Fueling platform. These assets have been strong. However, they complicated understanding our overall story. Our creation of APC allows both the retail business and the wholesale and Fleet Fueling businesses to stand on their own. We issued $200 million of new equity in the IPO to quality investors. Those proceeds were applied to reduce debt. Our balance sheet is stronger, our flexibility is greater. We're positioned to execute. So what does post-transaction ARKO 2.0 look like? A core stronger retail business concentrated in markets where we believe we are positioned to win, a stand-alone publicly traded wholesale and Fleet Fueling business with an anticipated high conversion from adjusted EBITDA to discretionary cash flow. A conservative balance sheet, strong cash position, ample liquidity at a very attractive cost of capital and continued access to the capital markets, and a structure that offers investors greater visibility into each business and allows the market to value each business on its own merits. This is not just a structural change. It's a strategic inflection point. We now have 2 public companies, clear capital allocation and a better ability to focus on what we can control in retail while working to drive consistent returns across both ARKO and APC. Here is the opportunity in APC. APC is one of the largest fuel distributor in North America, over 2 billion gallons distributed in the last 12 months. And yet, we have roughly only 1% market share, 1% in a highly fragmented industry. The runway for growth is substantial. We see strategic accretive opportunities to expand this platform, and we believe APC will be a key growth engine for ARKO going forward. Now let's talk about dealerization. This remains one of the most important levers in our transformation plan. As of year-end, we had completed 409 conversions. We have approximately 120 additional sites committed either under letter of intent, under contract or already converted since year-end, and we expect to complete those plus additional conversion by the end of 2026. This realization strategy is delivering exactly what we said it would, reducing fixed costs, reducing maintenance CapEx, improving cash flow, and creating a more focused and regionally concentrated retail base. The Q4 results validate the strategy. The operating leverage is real. The cost improvements are showing up. We are now seeing tangible benefits from stores converted in the last 12 months as reflected by a more than $5 million benefit to operating income in the fourth quarter before G&A savings. Bottom line, dealerization has sharpened our focus, improved execution, and it's now flowing through to financial performance. Turning to loyalty. Our fas REWARDS platform and Fueling America's Future campaign continue to central to how we drive enrollment, engagement, trip frequency and basket size. In Q4, loyalty members outperformed across the board with enrolled members spend more than 48% higher than non-enrolled members. Loyalty customers also made 51% more trips to our stores than non-enrolled customers. Through 2025, since Fueling America went live, average daily enrollment is up 38%. This is consistent with what we said all along, loyalty is not just a promotional tool. It's a margin driver, a traffic driver and a retention engine. In 2026, we're working on accelerating enrollment and launching a new version of the app with enhanced personalization and vendor-supported benefits. Loyalty remains underpenetrated across our network. We see significant runway ahead. Now to remodels. We're very encouraged by the early results from our food-forward remodel program. In Ashland, Virginia, our first remodel reopened in June 2025. In the first 6 months, on an average daily basis, sales grew 14%, gallons grew 12%, average daily sales more than doubled in 4 different categories, and the stores outperformed its pre-remodel period across 20 different categories. In Mechanicsville, our newly remodeled store opened later in 2025 and through year-end, sales improved over 10%, gallons have grown over 20%. And post remodel, the store has grown in 15 categories and doubled in 2 categories. We're targeting double-digit returns on remodels and early performance is tracking at or above those targets. Additionally, we are in the planning stages for approximately 25 remodels, which will feature the fas craves food and beverage elements. We're also expanding food and beverage in non-remodel stores where space allows. Food penetration across our network of stores is growing. Every project is measured on ROI and food is the differentiator. Now to NTI retail stores, our new-to-industry stores. These are purpose-built newly designed stores, the blueprint for our future. We opened 2 NTI retail stores in 2025 and a Dunkin' store, one more NTI retail store earlier this quarter and another one earlier this week. One more NTI retail store and 3 Dunkin' stores are to be added later this year. We're targeting double-digit returns and the 2 we opened in 2025 are already ahead of plan. These are high visibility locations with simplified operations and food forward layouts. On capital allocation, our priorities for 2026 are clear. We plan to further scale high-return remodels, expand NTI retail stores selectively and invest in NTI cardlock location in our Fleet Fueling business. This NTI cardlock location typically generate attractive mid- to high-teens returns with minimal labor, while the cost to build is only $1 million to $2 million. We are targeting 20 NTI cardlock locations this year in our investment CapEx plans and have already identified and are working on 10 of these NTI cardlock locations. On the macro environment and Q1 2026 trends, the consumer is still value focused. People are making deliberate choices. Baskets are being won through relevance, promotions and convenience. We picked up market share in every nicotine category in 2025. OTP for the year was up 4% and energy drinks were up 8%. Trends improved through the back half of 2025. We built momentum in Q4, and that momentum has carried into 2026. In January and so far in February 2026, we saw mid-single-digit growth in same-store merchandise sales and positive same-store gallons growth before winter storms at the end of January and the beginning of February created some disruption. We're not going to overextrapolate from early data, but directionally, trends are improving versus where we were in early 2025. Bottom line, we believe that we have a lot of growth ahead of us with a strong balance sheet and ample liquidity to execute our strategy. Before ending the call off, I want to address an important leadership update. In December, we welcomed Galagher Jeff as our new CFO. Galagher brings deep retail experience and importantly, deep expertise in convenience and fuel sector. He held senior roles at Walmart and Dollar Tree, and Galagher was most recently CFO at Murphy USA. I also want to thank Jordan Mann for stepping in as interim CFO and supporting the transition. With Galagher now leading the finance team at ARKO, Jordan served as CFO of APC while continuing as ARKO's Senior VP of Corporate Strategy, Capital Markets and Investor Relations. We're excited about the leadership team we assembled and what Galagher brings to ARKO at this pivotal time. With that, I will turn it over to Galagher to walk through our financial results and outlook. C. Jeff: Thank you, Arie, and good afternoon, everyone. I am grateful to be here at ARKO and excited to work alongside Arie and this entire leadership team. In my short time here, it's become quickly evident to me what an immense opportunity we have to scale the ARKO platform and dramatically enhance the growth and financial performance of this company. First, I want to thank and recognize the team. I've been impressed by the dedication, the talent and the operational discipline in the field and at the support center. There's a strong foundation here that will take us forward. Second, I'm encouraged by what I'm seeing in the stores. We are improving our stores, and it is showing. Our trends improved as we exited 2025, and we continue to see momentum into early 2026, even with some weather disruption. Third, and this stands out to me. It's a level of analytics and rigor in decision-making, particularly around capital deployment and evaluating returns on every dollar we spend. That discipline is critical as we focus on the highest return levers in the business. Overall, I believe ARKO is entering an important phase. The work to simplify, reposition and strengthen the company through transformation is largely behind us. Now it's about translating that into consistent growth and improved financial performance. With that, let me walk through our fourth quarter and full year results and then discuss the outlook. Turning to our fourth quarter and full year 2025 results. Net income was $1.9 million for the quarter, reversing a net loss of $2.3 million for the prior year. Adjusted EBITDA was $55.7 million for the quarter compared to $56.8 million for the prior year, an increase of 16%, reflecting the results of our transformation efforts that we are improving merchandising margins, generating strong fuel performance, streamlining our business through dealerization and building significant expense discipline across the organization. For our Retail segment, we delivered merchandising margin of 34.4%, an increase of 140 basis points versus the prior year. Same-store merchandise sales were down 3% for the quarter and down 4.1% for fiscal year 2025. And same-store merchandising sales, excluding cigarettes, were down 1.8% for the quarter and 2.7% for the full year. As Arie mentioned, our merchandising sales trends strengthened over the course of Q4, and that momentum has carried us into early 2026. Retail fuel same-store gallons also improved in Q4 and were down 4.1% for the quarter and down 5.4% in fiscal year 2025 versus the prior year period. Retail fuel margin cents per gallon improved in Q4 to approximately $0.445, reflecting disciplined pricing in a relatively volatile environment. We remain focused on operating expenses. For the fourth quarter of 2025, site operating expenses decreased by $29.5 million or 15.7% compared to the prior year period, primarily due to $31.1 million of reduced expenses related to retail stores that were closed or converted to dealer locations. Same-store operating expenses were nearly flat, up 0.6% as tight labor management and cost discipline in stores mostly offset increases in rent and wage rates. Turning to our Wholesale segment. Wholesale fuel contribution increased 8% to $24 million in the quarter compared to $22.3 million in Q4 of 2024. Wholesale gallons also increased by 4% to 249 million gallons and fuel margin was approximately $0.097 per gallon for Q4. For the full year 2025, wholesale generated $94.5 million of contribution, a 5% increase from $90.4 million last year, with total gallons increasing 4% to $989 million and fuel margin cents per gallon of approximately $0.096. Moving to Fleet Fueling segment. Fleet Fueling fuel contribution was $15.9 million for the quarter compared to $16.3 million last year. Fleet fueling gallons totaled 34.9 million gallons compared to 36.1 million gallons and margin was $0.456 per gallon. For the full year, Fleet Fueling generated $65.7 million of fuel contribution on 142.8 million gallons with a margin of $0.46 per gallon. This compares to $64.3 million of fuel contribution on 149 million gallons last year. Fleet Fueling margins remain strong and continue to reflect the durable cash flow profile of this business. Adjusted EBITDA for the year was $248.7 million, flat to the $248.9 million in 2024. While top line performance remained pressured, structural improvements in margin and strong cost control helped offset volume headwinds. Net income was $22.7 million for 2025 as compared to $20.8 million for 2024. We are seeing results from the execution of our strategy and our performance in nearly every area strengthened as we finished the year. Merchandising margin was 33.7%, up 90 basis points year-over-year. Same-store retail operating expenses remained flat for 2025 versus 2024 with our productivity initiatives and lower credit card fees overcoming headwinds with wage increases, expanded food programs, higher maintenance costs and higher snow removal expenses. Merchandise same-store sales were down 4.1% for the year, and retail fuel same-store gallons were down 5.4% for fiscal year 2025, but both improved as we entered and exited Q4. Looking to the balance sheet. We finished 2025 with $305 million in cash, and our balance sheet remains strong. Following the successful IPO of ARKO Petroleum Corp., we received approximately $184 million in net proceeds, which we used to reduce debt and enhance liquidity. The transaction positions us with a stronger capital structure and greater financial flexibility to execute our strategy as we enter 2026. Regarding capital allocation, we remain disciplined and focused on high-return investments, including dealerization execution, retail remodel expansion, retail NTI development, technology and analytics, and cardlock growth in our fleet platform. We remain comfortable with our leverage ratio and have more than enough cash and liquidity to deliver our strategy and continue to build momentum with our capital initiatives mentioned above. Turning to 2026 guidance. We currently expect 2026 adjusted EBITDA to range between $245 million and $265 million, with an assumed range of average retail fuel margin from $0.415 to $0.435 per gallon. For sensitivity purposes, every $0.01 change in retail same-store CPG is estimated to result in $8 million to $9 million of adjusted EBITDA. We believe 2026 same-store retail sales will be relatively flat and will improve several hundred basis points versus our 2025 results. We are planning same-store margin between 35.5% and 36.5%, also an increase versus 2025. As stated in ARKO Petroleum Corp. prospectus, we expect our APC business to deliver approximately $156 million in adjusted EBITDA in 2026. As a reminder, APC includes the results from our wholesale, Fleet Fueling and GPMP segments, including a $0.06 fuel margin on fuel distributed by our GPMP segment to our retail stores. Our estimated gallons for the forecast period include an assumption that we will add an additional 50 million gallons in volume for the year ending December 31, 2026, as a result of our acquisitions from third parties of businesses or assets in our Wholesale segment, offsetting an estimated decline in gallons from comparable wholesale sites consistent with historical trends. Finally, we will continue to manage all of our controllable costs in both stores and in our office. ARKO will be a low-cost operator. To summarize, we are executing our transformation strategy, and it is working. So we fully expect to continue to show momentum and improve our performance in nearly every key metric in 2026. With that, I'll hand the call back to the operator to begin Q&A. Operator: [Operator Instructions] Our first question comes from the line of Bobby Griffin with Raymond James. Robert Griffin: Arie and team, I guess the first one for me is maybe on the merchandise sales for retail. Your guidance includes some notable improvement here further in '26. We're getting towards the later innings of the dealerization program. So can you maybe unpack some of the drivers of the further improvement? Is there more contribution coming from remodels? Just anything there to help us kind of get visibility into the confidence of that versus some of the trends we see here in 4Q? Arie Kotler: Good to have you with us over here. So I think that the first thing is, of course, execution and our marketing initiative. As I mentioned, we started with a Fueling America campaign back in the end of Q1 2025. And given that customers are looking for value, as we continue to move forward with this campaign, we saw an increase in loyalty transaction. We saw an increase in loyalty enrollment. And those draws, of course, customers to the core categories. That's the reason if you think about that, you saw a huge improvement. We actually gained market share in almost every nicotine item in the category. OTP was up 4%. Energy drink was up 8%. And if you think about it, those categories are high-margin categories. So we believe that all of the marketing initiatives that we had during the year, as we continue to basically to improve our initiative and improve those categories, I think that's what actually drove the margin increase in customer engagement within the stores. There's no question that food service help us as well. There is no question that every time when we remodel a store or build additional NTI that are actually progressing above our expectation, there is no question that those things drive directly to the bottom line. But it's not just one item. It's every little thing that we did this year. And as I said, most of it is really engagement through our loyalty program. And I think customers keep coming because of those -- basically those promotions that we are actually putting out there. We just upped our promotions from $2 per gallon to $2.50 per gallon, given the 250 years American birthday this year. So now customers can actually save up to $50 for every 20 gallons that they are being -- they're actually buying. So again, we believe those initiatives are the ones that drove basically sales or at least drove margins inside the store. And as you mentioned, I believe that given that the cost of fuel dropped during Q4 and was actually at the $2.50, I actually feel that because of that customers coming more often to the store. Robert Griffin: Okay. Very good. Maybe switching gears and talking about the remodels some. I don't want to extrapolate out early results from only a few stores, but it does seem like the trends are promising. Can you explain a little bit on what's the cost of capital for that remodel? And then it seems from the release, maybe there's an opportunity for kind of a partial redesign where you talk about taking some of the fas craves food, formatting change and taking a few of those and putting them into other stores, but maybe not a full remodel. So can you talk a little bit about the capital of that type of remodel and what ultimately the opportunity could be? Arie Kotler: Sure, sure. So as you can assume, the first couple of remodels that we did, it was a major remodel. It wasn't only the food, it was the entire store from the outside to the inside, curb appeal, adding some space to the stores. So those are the first remodels that we did. And the cost of a typical remodel like this is approximately $1 million, around $1 million -- between $900,000 to $1.1 million, but let's call it $1 million. There is no question that many of the other stores can go through a soft remodel, just adding the fas craves. And as a matter of fact, if those 25 locations that we are working on, we're really price engineering everything right now how to reduce costs. There is a big difference between working on a couple of stores versus working on 25 stores at the same time. But I believe at the end of the day, we can go to a soft remodel that will cost us around $0.5 million or so, something between, as I said, $400,000 to $700,000 is probably a good number to speak. Robert Griffin: Okay. That's helpful. And I guess, Arie or whoever on the team, when you kind of look at your retail base that you're going to own post the dealerization, I understand that you've given us some targets, but there's also some more. What size or what percentage of the stores post all this dealerization that you're going to own, do you think need a remodel of some sort? Arie Kotler: I don't have the percentage, Bobby. I think that most of the stores that we are actually keeping have less capital intense in terms of what they need. I think those remodels, it's really not about just a [ curb appeal ]. It's really how do we add food service like fas craves into those stores. And if it's not food service, what are the other categories that we can actually improve or actually we can add to the stores. So I think the business itself, the stores that we are keeping are -- many of them are stores that money was invested over the years. So I don't think it's really a question of capital. It's really a question of what do we want to drive from these stores. And as I said, foodservice is being one of the biggest initiatives over here. So we are concentrating on stores right now that may not need a remodel, but we're probably going to just invest money in foodservice. Any place that we will be able to add fas craves regardless of the remodel, we will add actually fas craves into those stores. And there are plenty of them. C. Jeff: Just to build on that a little bit, Bobby, to your question before, from the remodels, we're also trying to understand which elements of those remodels are working and driving results. So like Arie said, there's a lot of stores with some space, and we can take a low-cost approach to add the right assortment, add the right elements in those stores that don't require full remodel and so we get a lot of the benefits. So it's not a high capital expense. It's really trying to find the right elements that customers are responding to, mostly around the fas craves and the food and getting those into more stores. Robert Griffin: Understood. I'll jump back in the queue. Best of luck here on the first quarter and congrats on the announcement about your APC business. Operator: Our next question comes from the line of Daniel Guglielmo with Capital One Securities. Daniel Guglielmo: In your opening remarks, you mentioned a still cautious consumer. And then in the prior quarter call, you highlighted the Midwest and other select markets as under pressure with other regions being healthier. Are you still seeing that pressure in the Midwest? Or is it more kind of broad-based now? Any additional color would be helpful. Arie Kotler: I think the pressure in the Midwest continue to be probably the main pressure. I think I see some ease in the rest of the country. And that's going back, Daniel, by the way, to the point I made earlier, which is the minute the price of fuel broke $2.50 or went below the $2.50, we saw all of a sudden, customers coming more often to the store. We see an increase in basically in gallons. We see an increase in transaction, in baskets. So I really think that -- I'm not an economist, but I think that given the price of fuel dropped below $2.50, I think that, that is some of the spending with our customers. So I don't think anything changed from, I'll call it, from a region standpoint or from what I discussed earlier in the year. I just think that the initiatives and the promotions that we have out there are just screaming to the customers. And I think that the customers are coming in and taking advantage of those promotions. Daniel Guglielmo: Okay. I appreciate that, and that makes sense. And then on the initiatives and the promotions I saw, you all put out the $3, $4, $5, $6 value meal deals. Do those meals at those prices drive merchandise margin expansion on their own? Or is it more of a way to kind of get customers in the door to increase basket size, do other things? Arie Kotler: Yes. That's a good question, Daniel. So just to be clear, those promotions are being 100% supported by our vendors. So this is not promotions in order just to drive customers and actually lower margins. Our margins stay the same. Those promotions are being supported by our vendor partners. But there is no question that when you have those promotions that involve foodservice, those promotions not only bringing customers in, they're actually driving the rest of the categories, which is OTP, for example, candy, energy drinks. So I think those promotions just continue to gain momentum with the other categories. And like I said, those promotions bring customers, those customers turning to buy higher-margin core category items. And the more they come in and concentrate on the core categories, cigarettes becoming a much smaller piece of the business. So it's much more a small piece of the pie of what the customers are purchasing within our stores. But Daniel, I just want to be clear. This is all hard work by the team. The merchandising and marketing team thinking every day how we can actually be different than the competition across the street and how we can bring customers in. So that's a lot of work. I want to be just clear. That's a lot of work being put into this with loyalty, with food service. And that's what drove the results in Q4, as you can see. And that's, I believe, what drove basically sales in Q1 so far. Operator: Our next question comes from the line of Hale Holden with Barclays. Hale Holden: So I had 2 quick questions. The first one is on the APC side of the business. If you could sort of talk about what the M&A opportunity is there now that you have a separate currency and balance sheet to expand into fuel distribution? Arie Kotler: Sure, sure, sure. So I don't know how much -- I'm sure that some of you knows how big is the industry. We're talking right now about a wholesale business, a fleet business within an industry of over 195 billion gallons. And I mentioned it on the call, we only sell 2 billion gallons. It's a lot. We are one of the largest ones in the country, but it's only 1% of the industry. We believe with APC, with our -- basically with our capital that is available at a very low cost. We have over $635 million available for acquisition. Our leverage is very, very low. And I think we have the track record of doing acquisition. We did 26 acquisitions involved retail over the past 11 years. And I think in this fragmented industry, which is much more fragmented industry than the industry that we saw in retail, I believe that we're going to be able to gain a lot of momentum over here. In addition to that, we are one of the largest cardlock operator in the country, that's the fleet business. And this is an industry that is also fragmented. We have -- we're targeting 20 new cardlocks in 2026. We already identified 10 of them. To build the cardlock, it's not expensive. It's around $1 million to $2 million, and we're targeting mid- to high teens returns. So again, we believe that the opportunity is now when we have APC on its own, we believe that -- that's going to be a big, big opportunity for us to continue to do accretive acquisitions moving forward. Hale Holden: Great. And then just kind of a dumb accounting question, but you gave us the EBITDA guidance for the company and then the EBITDA guidance for APC that was in the S-1. Am I right in just implying that the retail business EBITDA is about $100 million for 2026? C. Jeff: Hale, this is Galagher. There is some elimination there for the intercompany sales. So you can't just 1 plus 1 equals 2. So part of the wholesale business sells into our retail stores, we do eliminate that as a transfer. So it's not exactly that simple. We do break down the segments in the release, so you can compare the segments and build the model. So we're also going to be a lot more transparent as you would expect with APC going forward. So shortly, we'll be providing separate information and releases for those. Hale Holden: I figured it was not as simple as it was in my head, so I appreciate that. C. Jeff: We're happy to help if you need help. Operator: We have reached the end of the question-and-answer session. And therefore, I'd like to hand it back over to -- the floor to Arie Kotler for closing remarks. Arie Kotler: Thank you, operator. Before we disconnect here, I want to speak directly to our employees. The great results we discussed today are a testament to your hard work and resilience. Your dedication and commitment drive our progress every day, and we are deeply grateful for everything you do to support our mission and serve our customers. Thank you for your efforts and for being the foundation of our continued success. To our shareholders, thank you for your trust and partnership. Your continued support enables us to pursue our strategic goals and deliver value across our businesses. We are committed to maintaining transparency and working diligently to meet your expectations as we move forward together. As we head into 2026, our financial position remains robust, and our commitment to expanding through value-enhancing acquisition is stronger than ever. We appreciate your time. Have a great evening, everybody. Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Have a great day.
Angelo Torres: Good afternoon. Thank you for joining us to review Robinsons Retail's unaudited results for full year 2025. I am Angela Torres, the company's Corporate Planning and Investor Relations Officer. The speakers for this call are Stanley Co, our President and CEO; Ms. Christine Tueres, out managing director of the Big Formats of the Food segment. Ms. Mariel Crisostomo, our Group GM for the drugstore segment; Ms. Carmina Quizon, our Group General Manager for Robinson's Department Store, Toys R Us, Sole Academy, and Spatio. Mr. Ted Sogono our Group General Manager for DIY, and Pats; Ms. Celina Chua, our General Manager for Daiso and Super50 and Ms. Mylene Kasiban, our CFO; our Chairman, Ms. Robina Gokongwei-Pe an adviser for corporate [indiscernible] executives are also in the call today. [indiscernible] is the agenda for this afternoon's call. We will provide an overview of our financial performance and share key updates across the organization. [Operator Instructions]. So with that, I turn over to our CEO, Mr. Stanley to discuss our financial highlights. Stanley Co: Good afternoon, everyone. Here are the highlights of RRHI's fourth quarter results. Net sales increased by 7% to PHP 61.1 billion. Blended same-store sales grew [indiscernible]. Gross profit and EBIT grew double digit [indiscernible] billion and PHP 3.8 billion respectively. Net earnings rose to PHP 2.9 billion up by 9.9%. Net income to parent increased by 5.3% to PHP 2.6 billion. Earnings per share grew 38.4% to PHP 2.39 per share due to the lower number of outstanding shares from the DFI retail buyback last May [indiscernible]. Here are the highlights of RRHI's full year 2025 results. Net sales up by 5.7% to PHP 210.4 billion blended same-store sales growth registered at 3.3%. Gross profit rose to PHP 51.7 billion and PHP 10.5 billion respectively. [indiscernible] earnings grew by 6% to PHP 6.7 billion and net income to parent decreased by 44.3% to PHP 5.7 billion due to the absence of the onetime gain from the BPI-RBank merger in 2025. Now a deeper look at our P&L. Fourth quarter and full year net sales were driven by strong same-store sales growth, new stores and onetime consolidation of Premiumbikes starting December 2025 under the specialty segment. EBIT increased double digits to PHP 3.8 billion fourth quarter and by 7.4% to PHP 10.5 billion for fourth year [indiscernible]. Net income to parent grew 5.3% in the fourth quarter to PHP 2.6 billion by full year decline to PHP 5.7 billion [indiscernible]. And fourth quarter earnings rose to 9.9% to PHP 2.5 billion in fourth quarter and 6% and PHP 6.7 billion [indiscernible] positive net sales growth in the fourth quarter and full year 2025 [indiscernible] large segment accounting for 79% of net sales and 82% of EBITDA in 2025. The discretionary formats, department stores, DIY and specialty stores contributed the remaining 21% of net sales and 18% EBITDA. In 2025, we opened 94 new stores, mostly under the Food and Drugstore banners and added 216 acquired stores from Premiumbikes bringing our total count 2,763. Our store count is comprised of 799 food segment stores, 1,173 Drugstores, 51 Department Stores, 234 DIY stores and 506 Specialty Stores and in addition we have 2,154 franchised stores of TGP. Passing over to Tin for the Food segment. Christine Tueres: Good afternoon. Food segment net sales grew 6.2% to PHP 35.6 billion in fourth quarter, supported by 2.9% same-store sales growth and contribution of [indiscernible]. Full year sales increased to 4.6% to PHP [indiscernible] billion. EBITDA rose 7.6% in fourth quarter to PHP 3.5 billion bringing full year EBITDA to PHP 11.2 billion up 6% outpacing revenue growth. This was driven by stronger vendor support and higher penetration private label and imported products. Now, I will turn over to Mariel for Drug Stores. Unknown Executive: Net sales for Drug stores grew double digits in Q4, reaching PHP 10.7 billion, while full year sales increased by 10.5% to PHP 39.6 billion. Q4 SSSG reached [ 8.9% ] on strong demand for cough and cold remedies bringing full year SSSG to 6.4%. Strong top line growth, higher penetration of house brands and price adjustments help lift EBITDA by 22.3% to PHP 1.1 billion in Q4 and 15% to PHP 3.5 billion for the full year [indiscernible]. Department store SSSG was minus [indiscernible] in the fourth quarter impacted by intense competition [indiscernible] stores affected by [indiscernible] PHP 5.9 billion supported by the opening of the new [indiscernible] store. For the full year SSSG was minus 1.5% while net sales grew by 1.5% to 16.9 billion. Gross profit grew by 1.1% to PHP 1.8 billion in Q4 and 2.4% to PHP 5.3 billion, outpacing top line growth [indiscernible] due to higher vendor support. However, EBITDA declined to PHP 487 million in the fourth quarter and PHP 1 billion for the full year due to negative SSSG. Unknown Executive: DIY recorded 5% sales growth in the fourth quarter, reaching PHP 3.4 billion, driven by the double growth in [indiscernible] strong demand for typhoon [indiscernible] full year, sales grew 1.8% to PHP 12 billion. Gross margin expanded by 19.1% to PHP 1.3 billion in the fourth quarter, supported by the introduction of new higher-margin items and closed the year at PHP 4 billion, up by 4.4%. EBITDA doubled to PHP 534 million in the fourth quarter. Full year EBITDA rose 9.7% to PHP 1.5 billion. Turning over to Mr. [indiscernible] . Unknown Executive: Specialty segment sales grew 20.1% to PHP 5.5 billion in the fourth quarter with the 1 month consolidation of Premiumbikes, bringing full year sales to PHP 16.1 billion, up by 9.9%. Excluding Premiumbikes, sales rose 6.4% with all formats posting growth. EBITDA expanded 13.8% in the fourth quarter, mainly driven by the higher dealer incentives from Premiumbikes. However, full year EBITDA declined to PHP 812 million, primarily due to clearance activities in appliances and mass merchandise. Unknown Executive: Moving on to the working capital, RRHI's cash conversion cycle rose to 18 days, driven by higher inventory days as 80 days and stocks of retail products increased to meet strong demand. On balance sheet, net debt rose to PHP 26.6 billion, largely driven due to the acquisition loan used for the DFI share buyback in May 2025. Despite this, the balance sheet remains sound with net debt to equity at 0.35x. ROA and ROE normalized to 3.3% and 7.1%, respectively, following the absence of a one-off gain from the [indiscernible] merger in 2024. Organic CapEx amounted to PHP 6 billion, up by 17%. Food accounted for 69%, followed by drug stores at 10%. I'll pass you on now to Stanley. Stanley Co: Now allow me to update you on some of our minority investments, namely, O!Save, GoTyme, and GrowSari and BPI. O!Save's net sales jumped 2.2x to PHP 524 million in 2025, supported by its rapid store expansion. O!Save ended 2025 with 797 stores from over 400 in 2024. GoTyme's customer base increased by 3 million to 8.3 million in 2025. The rise in customer count helped fuel the strong growth in the total transaction value. GrowSari's total platform value or the value of all its business lines increased by 13% to PHP 887 million due to the continuous growth in coverage. And meanwhile, BPI's net income improved by 7% to PHP 66.6 billion, supported by sustained loan growth and dividends per share grew by 10% to PHP 4.36 per share. Let me update you on some key corporate developments across the business. Last October 2025, the Institute of Corporate Directors awarded Robinsons Retail 2 Golden Arrow Awards during the ASEAN Corporate Governance Scorecard Golden Arrow Awards 2025, up from 1 Golden Arrow the previous year. This award [indiscernible] the company's ongoing efforts to strengthen its corporate governance practices and ensuring that our directions are guided by fairness, stewardship and long-term value for our stakeholders. Robinsons Retail was named to Time Magazine and Statista Best Companies in Asia Pacific 2026, a ranking of 500 companies based on employee satisfaction sustainability transparency and financial performance. RRHI is [indiscernible] companies included in the list. Effective January 1, 2026, we announced several key management changes in RRHI. Mariel Crisostomo has been appointed as the Group General Manager of the Drugstore business. Mark Tansiongkun has stepped down from his role of VP for Procurement and Administration and will now lead Premiumbikes following the retirement of Mr. Jo Pojol, the previous GM of Premiumbikes. Jo will continue to serve as an adviser until June 2026 [indiscernible] Ms. Angela Endrino, who is now the new VP for Procurement and Administration. Lastly, [indiscernible] has succeeded Mr. [indiscernible], who retired from his post as VP for [indiscernible] Human Resources. Gabby will continue to serve as adviser for HR until June 2026. For our full year 2026 guidance, we are targeting net store addition of 130 to 170, still mostly from our Food and Drugstore segments. Store expansion will be supported by organic CapEx of around PHP 5.7 billion. And we are also looking at a 2% to 4% same-store sales growth for the year and around 15 to 20 [indiscernible] expansion in gross margins. This ends our presentation for the full year 2025 results. We will now open the floor for Q&A. Angelo Torres: Now let me open the floor for Q&A. We have a question on the question-and-answer box. So this is from Karisa Magpayo. She's asking for the supermarket business. What was the food retail sales for fourth quarter and full year 2025, excluding Uncle John's. The food retail SSSG in the fourth quarter and full year of 2025, excluding Uncle John's and how much was it driven by transaction count and basket size? Maybe... Unknown Executive: Thank you for the questions. So Food segment, excluding Uncle John's, I'll start with [indiscernible] sales did about PHP 34 billion, that's up about 6% SSSG 3.2%, [ GP ] margin of about 23.2% and EBITDA margin of 9.7%. So that's full -- sorry, [indiscernible] 2025 is [indiscernible] for full year net sales of about PHP 119 million, up by 4.8%, SSSG of 3.6% [ GP ] margin of 22%, sorry 22.4% and EBITDA margin of 8.9%. Angelo Torres: We also have another question from Bernadine Bautista of JPMorgan. He's asking about Premiumbikes, what is the exact [indiscernible] sales, EBITDA and net [indiscernible] Premiumbikes for full year 2026. Unknown Executive: Sales of about PHP 500 million. We can only provide EBITDA, that's about PHP 60 million, but the company is positive at the net income level. For 2026, we're still expecting the company to provide -- to generate very good growth given the demand for motorcycles... Angelo Torres: Bernadine has a follow-up question. He's asking what is the breakdown of the target [indiscernible] stores opening the addition of... Unknown Executive: Okay. This is the breakdown is about [indiscernible] for the food business and then that would be supermarkets. Drugstores 70 to 80, DIY around 5, Specialty [indiscernible] that includes Premiumbikes of around 10. Angelo Torres: [Operator Instructions] [indiscernible] has a question. He's asking what's the percent contribution of private label to total sales for supermarket and drugstores in terms of full year 2024 and 2025. Unknown Executive: For supermarkets it's about 8% and for drugstores -- blended for drugstores is 10% so that includes TGP -- excluding TGP for about 4%, for Rose Pharmacy and Southstar Drug. Angelo Torres: We also have another question from [ Dale ]. What's the SSSG [indiscernible] fourth quarter? And how did it compare on previous quarters? Are we seeing any recovery in terms of SSSG? And if so, where is the recovery coming from? Unknown Executive: Thanks, [ Dale ]. 4Q SSSG [indiscernible] was actually at 3.1%. Sequentially, this is improving from the third quarter and second quarter with [indiscernible] demand basket size is also improving for the business. Angelo Torres: [ Dale ] has a follow-up question. He's asking what's the target for Uncle John's for 2026? Unknown Executive: We're looking to add maybe on a net basis, maybe 20 to 30... Angelo Torres: We have a question from [ Teresa ]. She's asking on supermarket. For the fourth quarter SSSG, how much was driven by transaction [indiscernible] basket size? Unknown Executive: Transaction by basket size for fourth quarter was about 6% [indiscernible] . Angelo Torres: [ Bernadine ] has a similar question for the food segment and [indiscernible]. So she is also asking how are SSSG [indiscernible] different for the different formats and she is asking about [indiscernible] different SSSG sales for different formats. Unknown Executive: For food basket size is 6% in fourth quarter and 5% for the full year. And then within the food formats, Robinsons Supermarket Marketplace and [indiscernible]. We also have Jonas on the line. Maybe, Jonas, you can comment on basket size and same-store sales for wholesale. Unknown Executive: Thanks for the question [ Bernadine ]. Our SSSG in the fourth quarter was around 16%, 15.9% and our basket size grew at around 11% in the same period. Angelo Torres: Next question is from Denise Joaquin. She was asking what's the interest expense for the borrowings related to the BPI share acquisition and the buyback of DFI shares for the fourth quarter and full year. And she's also asking the balances of the stores. Unknown Executive: For full year, it's around PHP 1.4 billion, which is spreading over [indiscernible] quarters. And the loan balance is around PHP 26 billion. Unknown Executive: Interest expense for BPI for full year is... Unknown Executive: Full year is PHP 1.4 billion both combined for BPI and the share buyback. So then balance around PHP 25.6 billion for... Angelo Torres: The next question we have is from [ John ]. He's asking what's the geographic breakdown for the food segment and store openings this year... Unknown Executive: Yes. In the last few quarters, we've been opening more stores outside Metro Manila. So that's about 75% to 80% or even higher for some partners outside Metro Manila. I think this will also be the [indiscernible]. Angelo Torres: So next question we have is from [indiscernible] asking for 2025 results outperformed expectations despite the narrative of weaker-than-expected demand to GDP figures. So what is the driver [indiscernible] during the quarter? Unknown Executive: It's really increase in basket sizes with inflation steady or stable, job market pretty healthy and remittances continuing to grow. This has been supportive of spending from middle class and [indiscernible] middle income to upper income households. So that's that. And then on the margin side, doing things that we can control, adding private label, adding -- or premiumizing the portfolio. So that's helping the business. But we are cognizant of the external risks... Angelo Torres: We have another question from [ Wasim ], what's the driver for the strong growth in drug stores? And should we expect the momentum to be sustained this year? Unknown Executive: It's price adjustments and higher penetration of [indiscernible]. Operator: We have another question from [indiscernible]. She's asking, we saw higher gross profit margin, but EBITDA was flattish for the Food segment in the fourth quarter. What's the cost items driving this? Unknown Executive: It's because we're adding stores for the food business. So that's putting some pressure on the OpEx side. But nonetheless, we still expect EBITDA margins to continue. So not the entire GPM expansion flows through EBITDA margin expansion, but we're still seeing EBITDA margins high. Angelo Torres: We have a follow-up from [indiscernible], she is asking what's the driving the strong SSSG for Drugstore and should we expect a high single-digit SSSG to be sustained for this? Mylene Kasiban: As mentioned earlier, driven the growth for drugstore is the price adjustment for 2025 and also the higher penetration of [indiscernible] we also anticipate that it will be still good for 2026. Angelo Torres: Thanks, Mylene. [indiscernible] asking is can management comment on the time line of its treasury shares retirement? Unknown Executive: Thank you, [ Ray ]. So just the background, we got shareholder approval to retire a portion of our treasury shares last September. We're still in the process of getting [ SBC ] approval for this one. So it's still ongoing. So the process is for the [ SBC ] to approve the amendment in our [indiscernible] of incorporation because we have to reflect lower authorized capital there. So that's still in the regulators -- still with the regulators up for approval. Angelo Torres: [indiscernible] is double checking what's the basket size growth in the fourth quarter for the Food segment at SSSG? Unknown Executive: It's around 7.5%. Angelo Torres: [indiscernible] have a follow-up on department stores. Gross profit margins appears to be flattish, but EBITDA margins were down in the fourth quarter. What are the drivers -- cost drivers of this? And any indications of how SSSG is faring so far... Mylene Kasiban: [indiscernible]. For SSSG, we're still trading below versus last year. Angelo Torres: [indiscernible] is asking how is SSSG so far this year? So I think this should be a blended basis. And what will drive the expansion in gross profit margin for... Unknown Executive: Yes, we're actually doing pretty good in Jan and Feb. We're within that guidance that we provided. In terms of margin expansion, still the same story for us. We're benefiting from scale. And then of course, we're adding -- we're also premiumizing. Angelo Torres: Has a similar question, but this pertains to the Food segment. How is it performing so far in... Unknown Executive: So just to repeat, Jan and Feb were within the 2% to 4% guidance in terms of SSSG momentum so far is good. Angelo Torres: Gear to DIY. [indiscernible] is asking, should we expect positive SSSG for the segment in full year 2026? And what are the drivers of the improvements in GP and EBITDA margin fourth quarter? Do you see further expansion for 2026? And if so, what will be the key driver? Unknown Executive: For SSSG for DIY segment, we think positive SSSG will be the same for the full year. In terms of drop in GP and EBITDA, it's because we've added a number of higher-margin new items. So we've improved the mix, plus there's less clearances sales across... Angelo Torres: Ther is a question from John on SSSG on the January and February, he is asking if this are similar to the fourth quarter number of 3.1% or even better? Unknown Executive: [indiscernible] Angelo Torres: [indiscernible] is asking any color we can share for our sales plan this year in terms of strategies for store openings? Unknown Executive: Yes, [ Jonas ]. Do you want to take this one. Unknown Executive: Sure, happy to. I mean this year is going to be a continued year of further expansion as well. We are planning to open between 300 and 500 stores across [indiscernible]. So, we continue to roll out at the same time, we also continue to consolidate this year across all aspects... Angelo Torres: Next question we have is from [indiscernible]. The question reads, could you say how much dividends you receive -- BPI for the full year? Unknown Executive: It's about PHP 1.4 billion store positive gain on BPI. Angelo Torres: Is asking what is the reason for the margin contraction in specialty segment for the fourth quarter... Unknown Executive: It's combination of some clearance sales and mass merchandise and appliances plus the 1 month contribution of Premiumbikes, it's actually a bit lower margin compared to the rest. But nonetheless, it's growing very fast in terms of top line. Angelo Torres: We have a question from [ Matthew ]. The question reads, does RRHI have a goal for private label penetration for both the food and drugstore sites. Unknown Executive: For food, we planned to -- intend to continue increasing the mix from private labels. So right now, we're about 8. We intend to bring this further up consistently every year. Same goes for the drugstore business. Angelo Torres: [ John Lam ] has a question is asking for the department store segment's average ticket size for the fourth quarter and how does it compare in the fourth quarter of 2024? Mylene Kasiban: It's about 1,100 and it's about 1.3% higher. Angelo Torres: [ Paolo Garcia's ] question reads what's the asset management's appetite for dividend this year? Are there any plans to increase your payout? Unknown Executive: [ Paolo ], the policy is 40% [indiscernible] for previous year and net income... Angelo Torres: Next question is from [indiscernible], Given the broader portfolio and capital allocation review at the [ JG Summit level ], are there any plans to do the same for RRHI? May we know what is the management view on capital allocation, dividends and improving return on equity? Unknown Executive: We're doing that regardless if the group is doing that or not. We're constantly watching over our portfolio, adding banners or brands that we think that makes sense to us. We're also continuing to grow the existing businesses. In terms of capital allocation, maybe around 30% to 35% of EBITDA -- for CapEx, 10 to 15 each for dividends, tax payments and the balance for principal repayments, working cap and [ M&As ]. Angelo Torres: We have another question from [ Paolo Garcia ]. He's asking what's the private label penetration for the Food segment in 2024? Unknown Executive: It's about 7.2%, [ Paolo ]. Angelo Torres: Has a question for the DIY segment. He's asking how we see the bottom for this segment. Unknown Executive: Yes, the view is we've seen the bottom for DIY and I think that it's going to be more positive from here on. Angelo Torres: Also has a question for the specialty segment. He's asking if the company is looking to add more brands in the portfolio? And any guidance that we could share in terms of gross profit margin with Premiumbikes embedded in specialty segment? Unknown Executive: For now, we're -- of course, we -- there's an opportunity we look at it. But for now, there's none. We're working on continuing to grow the business for Premiumbikes. In terms of GPM, as you know, the 2-wheelers gross margin would be lower than the rest of specialty. But what we're happy with this one is underlying demand is pretty good and should be able to continue to post good growth for our group. Angelo Torres: Next question is from [ Paolo Garcia ]. How many stores that will save [indiscernible] have in Visayas? And are there new store openings for both O!Save and UJ going to be focused [indiscernible]. Unknown Executive: For UJ, [indiscernible] is going to be a big focus for 2026 expansion. The target is about 10 stores. Unknown Executive: 10 stores UJ, Visayas. [indiscernible]. Unknown Executive: We have around 30 stores there at this stage. And while we will grow there this year as well, just given the number of stores that we opened in the year, still the vast majority of it will be open... Angelo Torres: At this point, there are no more questions coming in, and we can now close this earnings call. Unknown Executive: If there are no further questions, we will end the call. Thank you, everyone, for your time. We look forward to seeing you in the next earnings call. Thank you. Unknown Executive: Thanks.
Ben Jenkins: Good morning, everyone, and thank you for joining our half-yearly results webinar for the financial year 2026. Tim, we've got a bunch of people in the room now, ready to kick off. Timothy Levy: Awesome. Thanks, Ben. Thanks, everyone, for joining us. Look, in many ways, the half-yearly is a repeat of the information that's coming out in the quarterly results. But what I've done in this -- what we've done in this session is to provide some -- a deep dive into some of those really important strategic themes. Those things that we're doing in our business that are making sure that we are set up for success long term way into the future. So I'll talk a bit about sustainability in this presentation. The highlights of the half. I think this provides a good summary of them. We have got a business now that is growing comfortably above 25%. For the half, we grew 25% PCP, whilst doing so over the last couple of years, we've kept our fixed cost discipline strong with our CAGR of fixed costs at 4%. That's delivered $10.3 million of EBITDA, a 68% increase on the prior period, and $9.2 million of free cash flow, again, 51% increase on the prior period. There's some notable things going in our business, but one clear highlight is custodial. It has been growing at 15% per year in the first 3 or 4 years of its joining of our business, but it's really come into its own in the last couple of years, now growing comfortably at 34% for this financial year. It's profitable. It really is a strong part of our business. And all the other things we're doing around our K-12 business that are promoting into custodial are now proving successful. And again, we once again reiterate our guidance around ARR growth north of 20%, adjusted cash flow, free cash flow, and adjusted EBITDA margins of around 20%. I'm sure Ben will talk more about those in a moment. Before, I think where we're at a business is in a great spot. Honestly, I've never been more excited. Custodian business is on fire. We're profitable, cash flow breakeven or better. The next half of the financial year, obviously, everybody knows we will be generating significant cash flow. Crispin, who's on this call, he runs our K-12 business, and that has never been set up better than it is today, with clear innovation. I'll talk a bit about that in our product ranges. Our go-to-market motions are outstanding and only getting better. Reputation is getting better. Our pipeline is enormous and even bigger than what we reported in December. So I literally cannot wait for Chris our K-12 numbers in July with the annual results. So we have never felt more excited and more better set up than we are right now. And let me highlight some of the things that we're investing in that -- so we are seeking to be the most capable provider of safety technology globally, and here is a few indicators. We're looking after 30 million children, 9 million parents, 32,000 schools. And significantly, we've passed through 20% of U.S. students on our platform now. And that is a -- that's all organic. We entered that market in 2018, and now in 2026, we're at 20% of that market. And we're accelerating. If you look at our ARR growth, we're accelerating into that market, particularly in the big end of town, where we're becoming really the go-to for statewide procurement deals, and those big top 100 schools. Chris again is on this call if anyone's got any specific questions. And then, as we said at the top there, not only all of those kind of raw statistics, but we are literally intervening lit every couple of hours, which is really important. Talking more broadly about impact, I flagged this in a couple of last quarterly reports. We're now starting to see the indicators of the outcomes that we're generating for our school communities. So it's not just measures of how many people are using our technologies and it wouldn't be good if we're blocking kids accessing the appropriate content, but we're now looking through our data points to show that we're actually changing the lives of not only individuals but communities. I'll show you a couple of really important stats. This is, by the way, an analysis of 1.2 million students in the U.S. What this chart is showing is that in these intervals between launch and 6 months and 12 months after a school launches custodial. So U.S. school districts who start communicating to their parents, hey, you can now control your kids' school devices after school, and you can put custodial in your kids' personal mobiles. To be clear, we're only -- we're typically getting around 20% of these parents signing up to this product. Notwithstanding what it sounds like, in fact, it's pretty high take-up, but notwithstanding that, there's a modest portion of the community taking up these products. The reductions in toxicity, principally around bullying incidents in these schools is astonishing. Within 6 months of launch of these programs across 1.2 million kids, there is a halving of the incidence of terrace, extremist content and bullying. I mean think about that, just the launch of this product, even though a modest group of parents are taking it up, we're getting a halving of toxicity in these communities. This is the thing that's really opening up the eyes of school district leaders superintendents as to the power of the Qoria ecosystem approach. It's not just blocking content, it's engaging with kids, engaging with the teachers and admin of school and the parent community, and we're now seeing material changes in behavior inside these communities. This is becoming now the way we're talking about our products. We're not just flogging risk management, we're selling outcomes. And everyone is talking a lot about outcomes today, particularly around the use of AI tools, and we can now demonstrate a clear link between the products that we sell and well-being outcomes. But it gets even better. This is something that Crispin has been pushing for a long time is looking for evidence on the take-up of schools of our products, what's that doing in 2 dimensions. One is, are they becoming stickier? Are they liking? Are they getting value out of our products and staying with us longer, and that is a clear trend. I think you're seeing that in all our net revenue retention figures and our churn figures, which are industry-leading. But this is the other dimension, which is what are the behavioral implications of schools that are committing to our ecosystem. And what you see here is a clear correlation between the number of courier products that a school has signed up to and the amount of toxicity in that school community. So you can see it goes from 16 out of 0.16 toxic incidents for every 1,000 students per month -- sorry, per week more than drops by nearly 2/3 if you've got 5 courier products. So think about that as a powerful message that we can now sell to communities or talk to school communities. If you're engaging in our ecosystem, the more you engage in our ecosystem, the more benefits your community will see in terms of better behavior, better academic outcomes, better attendance, just better mental health outcomes. That's what we're now seeing through this platform approach. We've been talking about this for many, many years. And I think all of us in our hearts have known that a more engaged community will deliver more better outcomes for kids. And now I'm really glad to see that across 1.2 million kids, we're seeing very clear and dramatic evidence of that. So all of us in this company and all investors behind our company should be really proud of the difference that we're making. And if you want to know why I'm so confident about the sustainable advantage of our business, it's because us and only us can actually do this in our industry. But of course, it's not only about this kind of broad macro stats, and I don't want to get too my in this presentation, but it is ultimately about individual situations of children that are at risk of serious harm. And this is one example of the examples that we receive daily of our technology leading to direct interventions, which are saving kids' lives. Kids have a tomorrow because of the things that we all do. And this is one customer who's communicated to our team that they are, as they say, her bucket is continuously filled by the products that we offer. That is the reason why we do what we do, and I can't be more proud of the team. So there's a lot of things that we do for sustainable advantage. And obviously, I spoke about a few, this ecosystem approach. We layer content, professional services across our technology. We have a data analytics platform that means that we're more deeply being integrated in the decision-making of these school communities. There's a heap of things that we do to make sure that we have a sustainable business model, and we are penetrating deeply inside the school. I touch on a few things that we did last -- in the last year, so in 2025. There was a lot of work, in particular around content and in particular, around the use of AI technology. The video you see here at the top, this screen grab is from our AI content-based AI capability. We can filter real-time now what kids see in their browser. You see here them seeing it, but we actually can do it before the kids even see it. We can hide or blue inappropriate videos, in appropriate images. And recently, and it looks like it's been, I think, our most successful launch ever, real-time analysis of everything inside a page, even those hidden keywords inside pages, we see the lot which helps us protect kids from inappropriate content, but mainly the value of that technology is stopping kids using VPNs and proxy services using websites as ability to bypass the expensive filtering technology that schools use. So that's deeply embedded in our filtering platform, and that puts us bounds ahead of our industry. On the bottom of this slide, you see the new interface that's now starting to pop up across all of our platforms. And here, what you're seeing is the monitoring product, which is now you're starting to see signs of the deeper integration between our filtering and monitoring technology. So it's all starting to come together. On the right-hand side, what you see there is a commitment that we make that I still don't think any of our competitors are doing, which is leveling up our community to make to not only use our tools but how to use our tools in these situations that really matter oftentimes where kids' lives are at stake and making sure that those choices that they're making are appropriate, are ethical and legal given the jurisdiction that they're in. In custodial, look, these are just 4 areas of work. The custodial product has come on leaps and bounds in the last couple of years, so much so that the churn stats in that business in the mid-20% is clearly industry-leading. Churn in the consumer control space is typically in the order of 50%. That's part because parents start using printer controls when kids are 13, 14, which is too late. Our business model through schools helps to address that problem. And then custodial's outstanding product Barcelona, they're focused on making sure it's a feature-rich product, and you have a beautiful experience in your journey of opening up those features to deal with your life challenges. I can talk forever about custodial, but the innovation in that product is enormous. And this year, Victoria, I can say, this year, there's going to be a lot of work around the kids experience to make sure the kids are part of their journey as well. And on the right-hand side, just to highlight that I'm asked often where are you at with the unification of all the different technologies that we brought into the Qoria business over the years. And it's coming together pace. What you see here is, I can't tell you the name of it. It's the Qoria unified platform. It is rolling out in the U.K. currently. It's going to be start being used in Anga this half in the U.K. And by the end of the year, we're expecting all customers to have access to this product, and then rolling out to the U.S. beyond. So it is the unified interface on top of the unified cloud application and unified data sets that have been plumbed over the last couple of years. It's very, very exciting, and it offers the opportunity to create huge value, particularly in the U.K., because they will have access to all of our products. It offers us a much simpler code base to manage, and therefore, this ability -- 2 opportunities from that. One is the ability to be more agile. We can deliver more features more quickly. And two, there is an efficiency dividend that will clearly come to our business as we simplify our tech stack and stop the duplication. All right. The other objective of this business, obviously, profitable growth. We see an enormous opportunity to grow in a space that's almost infinite, the school safety and pure control world is enormous. There is no incumbent. There is -- it's a fractured market, and we see an infinite opportunity for us, but we are seeking to responsibly grow into that market profitably. And so what you see here is a few slides with is kind of how we think about and how we've been organized to accept that challenge. On ARR, I think everybody knows that our ARR has always been the strength of our business. We've always grown last -- in the last half, we've grown north of 25%, with custodial growing 34%. As I said, looking forward to Chris reporting the June half, this is the key selling period for our Northern Hemisphere K-12 business. And you see here in the chart on the bottom left, our weighted pipeline at December is extraordinary, never been so high, and it's, in fact, materially higher now as we approach the key selling period in the U.S. All of our markets are growing extremely well. U.S. is obviously our biggest market now growing north or nearly 30% in the established market. And I don't see any signs of that being up. Our brand name is building, our feature sets are building. The channels that we work with are getting more excited. So again, Crispin Swan is on the call, people would like to ask more questions about that. The top line growth is very strong, and we're guiding the market to continually 20% or better. Our unit economics has also been a key focus for our business. Our average revenue per license is consistently getting bigger, and that's despite a falling U.S. dollar against the Australian dollar, we're still climbing on an ARR per student. So our net dollar retention is improving. And our gross margins at 92% is extraordinary. And so our data and hosting costs, the hardware we deliver our services, the app store fees that we manage are all accommodated within 10 points of our revenue, which is extraordinary. And the chart on the left shows that it's not just one product. We're getting better and better at selling other products. And we talk about this often. Our Trojan horse in school districts is the CTO is that IT persona with a compliance obligation. I think we're very clearly starting to own that relationship, particularly in the U.S. And that's a relationship that's very dear to us, and we've worked very hard to build that relationship. But then we're leveraging that into instructional learning, into safeguarding, into data analytics, and ultimately into the executive in schools. And you're seeing that represented in the increase in contributions from these different products that are in our portfolio. And again, I can't be more proud of the team there in Barcelona. We gave them very strict parameters to operate in within the last few years as they kind of build out their feature set, and our business became profitable, which it now is. And so now we're unlocking a little bit of marketing dollars for them, and they're turning it into -- honestly, turning rivers of gold. Most importantly, as you see in this line here about mono payback, they're investing more. We've given them extra I think it's $4 million of marketing budget this year. And importantly, every dollar of cost of acquisition is being covered by the average order value. So it's almost a cash-free growth engine. It does affect our EBITDA with the way the accounting works. So we can't just give them cash. But it's not burning cash. It is, in fact, cash flow breakeven growth in a business that's already profitable. And the net ARR is growing significantly. If you look at the chart on the bottom left. The ARR is growing materially above trends. You can see the top chart on the left. The CAC payback period is an instance at month 0 and net subscriber growth, which has been relatively flat. That business has been growing in many parts through pricing optimization. Now it's a combination of pricing optimization and share subscriber growth. I should note, I think analysts will be interested to know this, we are going through a price optimization process right now, showing good signs. So I'm expecting growth in this half through contribution from both price optimization and subscriber growth as well. So again, really excited about that theme in [indiscernible]. Cost management. As we highlight there, we're growing at north of 25% revenue and ARR, and yet our fixed costs over the last couple of years are growing about 4%, and inflation across the place where we operate is in the order of 3% to 4%. So I think that's a pretty good story. And that's resulted in now 4 halves of EBITDA, and that's consistently growing. So I'll let Ben talk more about the financials in a moment. So while I've got you, obviously, the big topic for us is our agreed merger with Aura, which we announced in January. It's very exciting. I'll talk about the transaction in a moment, but just again to position for those people aren't clear, Aura is a consumer security player with a deep interest and some real innovation in family safety, with the Qoria for families offering. Obviously, Qoria is all about family safety and school and student safety. And the combination of these businesses creates a really onceinalifetime opportunity for people in our business, for investors. And I think it creates the business that the world needs. It's that place. It's that household name that the world needs to protect adults, protect families and protect schools. Our mission is to empower communities with lifetime digital protection for everything that matters most. Everyone is precious. And the opportunity for our businesses and our investors is enormous. And I'll kind of touch on these things again because it's worth highlighting. Aura, it gives them a deeper access into the family with the custodial product set and a deeper access into a really important community where you can leverage the trusted relationships of parents with schools to offer not only safety, but hopefully offer security offerings, and let's face it, the distinction between security and safety with the rampant development of AI technology is disappearing. The challenge that we're all facing is AI threats that come in all shapes and sizes. And so Aura brings together these opportunities and creates significant opportunities. And for Qoria, it's the access to the AI capability of Aura, which is a huge advantage for us. I'll talk more about that in the coming announcements. It gives us access to higher revenue streams through our relationships that we built through schools and into the home, and importantly, gives us a much -- opportunities for much greater lifetime value where if you think about the custodial business, it has what's called an age issue. When a kid becomes 16 or 17, our product becomes less relevant. But with the Aura product set, we have products that are relevant from the time you become an adult to the time you end up in an aged care home. That is an extraordinary opportunity for our investors that we get to leverage. And actually, we have scaled, growing, profitable, cash flow generating. We have huge distribution networks. We are in global markets. We can take our products and leverage existing channels and existing markets. There's a lot of very exciting low-hanging fruit and broader strategic opportunities. And then kind of going back to the original part of this presentation, there was an impact opportunity here. There is this opportunity to be that world's brand name that the world needs to have that person on your side, as we're all facing these immense challenges from the dynamics of AI and the rapidly changing world that we're living in. It creates this opportunity to have that partner for a whole life protection for you. And also for me, it gives me much more of an opportunity to have a seat at the table as these big decisions being made around policy and technology that has been thrust upon the communities. That's the background. Now in terms of the transaction, this is essentially the same slide that we released in January. The transaction is on track. It's all expected to complete sometime in the middle of June, where AXQ will be listed on the ASX, and Qoria shareholders will become shareholders in AXQ. Just to reiterate a few things. Aura will be acquiring 100% of the Qoria shares. It's subject to shareholder approval at a scheme meeting expected in June. It's subject to no material adverse change, and that's an incredibly high bar, a 15% reduction in annualized revenue between now and completion. That's very, very unlikely. -- regulatory and court approvals, which are functory and receipt of the placement from the Aura holders, which we've mentioned in here, binding commitments have been received for that $75 million at the equivalent of $0.72 for Qoria shares. The exchange ratio is 35% for -- so the ultimate result of this transaction is that Qoria shareholders will own about 35% pre-money and just under 34% of the combined group post the placement. As I said, the placement is committed. It's around about $109 million at that $0.72. It values the combined business at about $3 billion. That's based on a view of the valuation of a company that's in the order of $500 million, $350 million at the time of the merger, we expect $340 million to $350 million, growing north of 20% profitable cash-generating. That's where that price was negotiated. And then just to be clear again, the equity placement pricing is fixed in the securities pricing agreements. There is no mechanism for repricing. There is a reimbursement fee in the event that the deal falls over because of failure of either party. But as I said, I don't think either party -- both parties are very confident in this deal going through. And I think it's also worth highlighting that the Aura holders are committed to this deal. A big chunk of the Aura holders will be, in fact, escrowed through the passing of the financial -- first half financial report, which will be sometime in '27. So there's clear commitment from the Aura holders into this merged vehicle. That's a brief summary. Let me hand over to Ben and [indiscernible]. Ben Jenkins: Thanks, Tim. I won't spend too much time going through these slides, so we can jump into questions. But I guess the key highlight is the growth in revenue at 25%. So the lift in ARR delivering statutory revenue, notwithstanding a little bit of FX headwinds in the later period of the year, and we remain on track to our guidance around revenue growth. Free cash flow growth was also pleasing, up 50% or 51% year-on-year, and continues to be positive. As Tim mentioned earlier, the pipeline is strong, which we'll be able to talk to more at the end of March quarter, and that will, I guess, line of sight to investors through 30 June and will then give you line of sight into the next period of the year, which will be incredibly strong. So a lot of these numbers have been out in the market with the quarterly reporting. So, important to call out those things. EBITDA positive 8% [indiscernible] previously. I think that will probably continue in the next couple of months on a consistent currency basis, we're very comfortable with where our guidance is. I think, Tim, we can jump into questions in the interest of time. Unknown Analyst: A couple of questions, if you good nuggets to dive into. The first one on that comment around price optimization. Can you just maybe talk through the blended average price rise across your products in your key markets and mainly in the B2B side, the B2B side? Timothy Levy: Chris, do you want to talk through that? Crispin Swan: Yes, you should assume it will be around 5% typically through each renewal that we have on an annualized basis, where we're typically looking to exceed CPI. We do look at the products and the innovation that have been introduced over that time, and potentially may go a bit higher, a bit lower, but you can assume an average around that 5%. Unknown Analyst: And then commentary around the cost reduction there of $4 million. I guess the question here is that we obviously came out the other day with a huge cost reduction related to AI and AI optimization of its people costs. Does the $4 million relate to the acquisition? Or is this in the core business? Timothy Levy: Look, we're chipping away where we can to reduce costs. There a big chunk of that is in engineering where we're not replacing the churn, which always happens, unfortunately, in businesses like ours. Yes, I'd say 2/3 of that cost is through efficiencies that we're finding in the engineering part of the organization. Yes, we've got a really important -- I think investors need to understand it's an incredibly important and complex integration exercise that's happening right now. It has to be delivered because there's so much value that can come from that, not only bottom-line efficiencies and cost outs and so on. But it's order of magnitude, more value will come from the additional -- of the ability to sell more products, particularly in the U.K. and to provide better experiences to customers and more features more quickly. Really important time. So those sorts of order of magnitude engineering savings that WiseTech are running, I think they're in our future. But for this year, we've got to hit this unification work. It's really, really important. Unknown Analyst: And then around -- we're in the key U.K. selling period now this quarter. In the past, you've always talked about, I think you call it, whatever the words you use. Just talk us through the pipeline there. Are you comfortable with that business where it is today? And I know the integration is fully done, and you may miss the sales period, but just maybe talk through how that pipeline is maturing in this quarter because the pipeline was quite strong. Crispin Swan: Yes, I'll take that. So pipeline year-year basis is up sort of 15%, 20%. The U.K. actually is 116% of target year-to-date -- and yes, we're seeing a real positive trend towards the blended monitor and filtering proposition in the U.K. I think just a general positivity in the market overall. So even whilst the team wait with bated breath for, as Tim was saying, the Qoria Connect proposition, which essentially brings what dominates in the U.S. market into the U.K. with the first tranche of that release literally happening in the next sort of couple of months, everything in the U.K. is extremely promising, really exciting, actually, whereas in the last couple of years, we had challenges and with growth there for reasons we don't need to get into, we've come through that now. So yes, I'm really, really optimistic on the U.K. Unknown Analyst: And just one more. Just to go back to that price optimization. In the past, you always talked about 20-plus percent growth. Was that on volume -- is price additive to your growth rate? Or is it embedded inside 20%? Ben Jenkins: Yes. Look, we -- a better way to answer that question is we think there's upside in the 20%. So we've got a lot of levers to pull from additional products to price increases to new logos. So it's just one of the streams of work for us. Unknown Analyst: And for shareholders buying today, whatever share price it is today, $0.0-odd, they're really buying Aura. There's little information today around the Aura business. Maybe you can provide -- is there anything you can provide to provide shareholders of Qoria around the financial performance of Aura? And we've had strong growth in the past, around 35% in that business. Can you just talk through your understanding of that growth trajectory into calendar year '26? Timothy Levy: Yes. Well, so let me firstly say that Aura is being IPO-ed, but they're going through that compliance process, and a prospectus will be coming out sometime in April. So ASIC doesn't like asset requires to be quite careful in the promotion of Aura until the fulsome disclosures are available to the market. But what I can say is we came into this merger incredibly excited about not only the product set, but the growth profile of the business and the opportunities that will come to the businesses by bringing them together. That's self-evident in the reason for bringing these businesses together. So where we can, we're hoping to provide some more insights to educate the market prior to prospectus coming out. But once that prospectus comes out, the questions you're answering, I'm sure we'll have very, very confident positive responses. Crispin Swan: There's a question in the Q&A that you touched on when you were talking about the deal, but as just sort of reiterate. So Aura is owned by Warburg Pincus and Accel. What lockup is expected on existing Aura shareholders after the ASX listing? Timothy Levy: Yes. So we've asked the main 2 investors, which is Hari Ravichandran and WndrCo, which together own about 40% of Aura. We've asked them to have a voluntary escrow, so they'll be escrowed through to essentially the end of February next year. And that doesn't mean that they have an intention to sell in Mark. Please be clear on that. Both Sujay from WndrCo and Hari are absolutely in love with this business. They're committed to it. And so all the representations from all of those holders is they're in for the long haul. They're really passionate about building something that is world changing, and that's really the pedigree and history of these people. If you spend some time googling the people that are behind the individuals that are behind this investment, they are about making life-changing, world-changing investments. So we're really excited about that, and that's been backed up by the voluntary escrow and they've also -- those other investors also making commitments to what we describe as orderly sale provisions. So a commitment to take any intentions to sell shares to the Board for review. So we believe they're truly very committed. Unknown Analyst: So I just wanted to follow up on some of the timing around the sort of IPO and what disclosure can come out when. So are we -- are you saying now that we're not going to get any detailed information until April? Is that the next date? Or how should we think about -- can some of like any information come out before then? Or what's your plan on -- what does the time line look like over the coming months? Timothy Levy: Yes. Look, we're hoping -- we're working with the lawyers and effectively ASIC at the moment to work out the extent of the disclosure that we can provide in the lead up to the prospectus. We're kind of been scheduling to do something in March to bring people along for that journey with not only financial information, but product demos and so on, the publicly available sort of information, which I'm hopeful that we'll be able to disclose. So still aiming for that sort of time frame, love to run some events. And then as soon as that prospectus comes out, we'll be doing a significant company and giving an opportunity for the broader investment community to really get under the hood, both financially go-to-market and product and meet the team. And then I'm also hoping to work with people such as yourself and other groups to kind of hone in on specific areas of interest, and there might be particular channels or use of AI or security threats or whatever. So that we're planning a whole series of events in the lead up to the shareholder vote in June. Unknown Analyst: Can I ask one question on AI and in relation to Aura's solution set? They're using AI, you can see internally for their own efficiencies. But how are they set up for, I guess, preventing AI style attacks on cyber phishing or whatever else may come through? Have they got specific tools that they've already worked on? Are they -- is it a competitive advantage for them? Can you talk through how they are positioning to protect people in the new world? Timothy Levy: Yes. Look, I think this is one of the main reasons why we're keen on this merger. So thank you, and I didn't set this question up. So thanks a lot for the question. The anomaly detection platform that they've built looks for these, looks for strange things that's going on. And there might be something strange in your bank account or strange in your credit file. or strange activity on your child is undertaking at 2 a.m. in the morning. It allows an analysis of what's unusual based on an individual and a collective level. And that's powerful. And I am of the view that, that's beyond all of our competition. And it's something I'm really excited about bringing to the K-12 world, which doesn't really exist in the K-12 world. But beyond that, the thing that's really powerful about the way of thinking of Aura I think driven by Hari, he's a genius is this idea of, well, let's find an gentic response to those risks that have been identified. So don't just scour your experience in your digital life to look for these issues or risks, let's deal with them on your behalf. And it might be removing your data through data brokers or contacting your bank and getting your transaction removed from your bank or an entry removed from your credit file. It's an agentic response to the risks that are becoming apparent in our digital lives. That's really clever. And I think they're years ahead of anybody else in the world. And that was, in my view, that's my main driver as to why I want to bring these businesses together. Unknown Analyst: And how does that filter into their pitch and marketing and sort of their partners? Like is it -- like is that a big component? Or can you talk to anything that can prove that, that's actually resonating? Timothy Levy: Well, yes, I mean, look at their website. Look, it's all over their website. It's all across all of their marketing materials. In fact, they talk about their speed of the ability to identify risks, which is -- I forgot the stat, but please look at their website, but they actually quote specific stats about their performance in detecting threats beyond their competitors. So yes, that's core. It's core to the point. Ben Jenkins: We have a question in the Q&A on the capitalized development cost, how much development spend is capitalized versus expensed? And what would free cash flow look like if you treated some development as recurring maintenance? It's about 45% of our engineering spend that gets capitalized, but it all was included in free cash flow. So it doesn't matter if we change that mix. So free cash flow includes the capitalized salaries as well. So there's no impact there. I think there's no more hands raised. There is one other question in the Q&A, Tim, for you. Have you spoken to Qoria's largest shareholders on whether they intend to vote in favor of the deal? Timothy Levy: Yes. Look, we're engaged with all of our largest holders. They're all indicating positivity, let's say, to the deal, and we're hoping in the lead up to the vote that we can get clearer and more public indications of their support. But at this stage, it's all -- I feel very confident and I feel, in fact, really, really grateful for our top 3 or 4 institutional investors for the support they've given to this deal and what we're trying to achieve as a business. So yes, I'm feeling today really comfortable. Ben Jenkins: That's all the questions, Tim. So if you want to wrap up. Timothy Levy: Yes. Great. Look, thanks, everybody, for attending, for your interest for backing this story. As you see in this presentation, we're really set up. We've moved now from a start-up cash burning business into a business that's profitable cash generating, growing well. We really understand our markets. We're performing better, I think, than all of our competitors in these markets, never been set up for more success. And we're about to join forces with an innovator, a leader in the digital safety, digital security space. It's really exciting time. So looking forward to speaking to investors in March when we get to -- sorry, in April, we deliver the March quarter. And obviously, all eyes are going to be on Crispin and his big pipeline into that June quarter. So looking forward to seeing you there. Ben Jenkins: Thanks, everyone.
Operator: Thank you for standing by, and welcome to the Cleanaway 1H FY '26 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mark Schubert, Managing Director and CEO. Please go ahead. Mark Schubert: Good morning, and welcome to everyone listening in today. Thank you for joining Cleanaway's financial results briefing for the first half of the 2026 financial year. I'm Mark Schubert, and I'm joined by Paul Binfield, Cleanaway's CFO; and Richie Farrell, General Manager, Investor Relations and Sustainability. Following the presentation, as usual, we will open the call for questions. So moving to Slide 7. I want to begin today by addressing health and safety. This is foundational to who we are and what we do at Cleanaway. Regretfully, we reported 2 fatal incidents at sites that we own in the first half of FY '26. Each occurred in different operational contexts. And in the case of MRL, it happened when a commercial customer was struck by one of their colleagues' vehicles in a back up area. We remain committed to learning from these tragic incidents and ensuring we have strong controls in place at our sites so that everyone goes home unharmed each day. I am pleased to report that we are seeing significant improvements in our safety performance. When compared to the first half of FY '25, our serious injury frequency rate was 64% lower, at 0.36 and our total recordable injury frequency rate was 35% lower, at 3.5. And we know that our TRIFR is significantly below domestic comparable companies and international industry peers. A Board-commissioned independent safety review has been completed over the last 3 months. There were 4 key findings from the review. Firstly and importantly, no systemic safety issues or failures were identified. The HSE strategy is fit for purpose, reflects contemporary safety thinking, and is aligned to the organization's most significant risks, that our implementation is well advanced at an enterprise level, but there is an opportunity to strengthen consistency and feedback loops closer to the front line given the variable but improving translation at branch level. And finally, our overall approach is aligned with contemporary good practice in comparable high-risk asset-intensive industries. The report also found that fatality reporting across peers is inconsistent and in some case, lacks transparency. And therefore, direct comparisons with Cleanaway are unreliable and should not be used to draw conclusions about relative safety performance. The external review confirmed our approach remains sound and that we should stay the course. The areas to work on are consistent with our stage of progress in the 5-year strategy journey. We also commenced 2 key programs of work during the half that represent tangible evidence of systematic risk reduction across the enterprise. By the middle of this calendar year, we will have completed the rollout of a yellow gear pedestrian detection system that uses latest Generation AI cameras to alert operators to human presence. And by December 2026, we will have rolled out in-vehicle monitoring systems or IVMS across our roughly 3,500 collections heavy vehicles. The cost for all these initiatives are included in our FY '26 CapEx guidance with approximately $21 million of capital spent on risk reduction in the first half. On the environment, we're proud to report 0 major or significant incidents. Moving now to the first half FY '26 financial results highlights. On behalf of the approximately 10,000 Cleanaway team, I'm pleased to report robust financial results for the half. Through our Blueprint 2030 strategy, we are creating a stronger, more stable Cleanaway. We have transformed the business by installing the foundations, the right people, the right standards, the right systems, the right network, and the right operating model. And you can see those benefits coming through in the underlying performance. We have continued our track record of delivering on the fundamentals that matter with 13% net revenue growth driven by a combination of disciplined pricing and strategic acquisitions. The acquisitions completed in July last year brought further scale and industry-leading capability to our operations. Again, our continued focus on operational efficiency has translated into margin expansion. We did this through better rostering, better workforce planning, and more efficient fleet R&M. Contract Resources performance this half with revenues up 19% and exceeding their 4-year CAGR of 13.5% validates what we discussed after the acquisition. Group ROCE improved by 80 basis points, to 9.4%. This reflects our disciplined approach to capital allocation and the improvements we are making to operational efficiency. Importantly, this says we are growing profitably and efficiently. EPSA was 18.2% higher and reflects our ability to convert operational performance into improved shareholder value. The Board declared an interim dividend of $0.0335** per share, an increase of 19.6%. This reflects the Board's confidence in our trading outlook, sustainable cash generation ability, and its commitment to providing attractive returns to shareholders while maintaining balance sheet strength. The free cash flow movement was driven by catch-up tax and acquisition integration costs and our strategic indirect cost program that permanently lowers our cost base. We expect a significantly stronger second half cash flow. Looking further forward to FY '27, we won't have any of those items repeating, and so we will see further acceleration of free cash flow growth. Looking ahead to the second half EBIT, we have a clear pathway to support the earnings step up. Our corporate costs were higher than usual in the first half. This was largely attributable to a planned project to upgrade our human resources systems with costs to revert to their traditional run rate in the second half. The second half outlook for our Solids business is positive, and our Environmental and Technical Solutions division is also well positioned to deliver improved performance. We're expecting strong organic growth across most lines of the OTS business. We expect to deliver $3 million in synergies from the Contract Resources acquisition and expect an initial $15 million in-year capture of structural efficiencies from our strategic indirect cost review. As part of our strategy refresh, we completed a comprehensive strategic review of our cost base and restructured our indirect labor to enable the strategy. We have restructured our solid SBU down key business lines. We centralized key functions such as sales, pricing, customer service, and fleet, removed duplication and created a leaner, more efficient, and more aligned organization. This has resulted in a reduction of approximately 250 FTAs with most of these changes already implemented. This supports continuing margin expansion, reinforces our market leadership, and sets us up to deliver our improved customer value proposition. We've also identified further opportunities for nonlabor cost rationalization, spanning corporate overhead reduction, shared services optimization, and increased procurement efficiency. Once fully implemented from FY '27, we expect at least $35 million in annualized recurring benefit embedded in our operating model. Based on a robust first half performance and our confidence in the outlook, we're pleased to be able to upgrade our full year EBIT guidance range to $480 million to $500 million. With that overview, I'll now move on to the segment results. Solid Waste Services delivered a strong performance in the first half. We grew net revenue by 7.5%, to $1.25 billion, and EBIT is 11% higher, at $196.7 million. We also demonstrated the operating leverage in the business by expanding EBIT margins by 50 basis points, to 15.7%. In Collections, we grew our C&I net revenue through price increases, strong regional volume growth, and the Citywide acquisition. We also expanded margins by improving labor and fleet efficiency. We delivered similar improvements in our municipal collections business, where, in addition to improving labor and fleet efficiency, we have remained focused on rigorous contract management to support improving profitability. We secured the Cairns municipal collections contract. This is a 7.5-year agreement starting in December 2026 and will contribute over $100 million of revenue over the life of the contract. It is a strategically important win that demonstrates our ability to compete successfully in the municipal tender market when the economics are right. Our Post Collections business delivered net revenue and a EBIT growth across our core landfill portfolio, driven primarily by higher project volumes and prices. As planned, we closed New Chum landfill on the 30th of November, which incurred a loss of approximately $3 million for the period. Our transfer station network delivered improved profitability. We optimized our network, improved payloads, and reduced R&M costs. Finally, we delivered strong earnings from our Resource Recovery business through continued growth in CDS volumes and improved cost efficiencies. We also grew our organic volumes, primarily through successful tendering for commercial and municipal processing off the back of the FOGO mandate in New South Wales. This represents a long-term structural growth opportunity as more New South Wales councils implement FOGO. Old corrugated cardboard or OCCC (sic) [ OCC ] prices softened through the half. This created a slight headwind in the first half where customers receive rebates using a lagged price, noting we expect this to be a relative tailwind in the second half. As part of the strategy refresh, we have made the decision to retire the construction and demolition SBU and rationalize our service offering to align with our C&I customers' needs. We will continue receiving C&D residuals for our post-collections network. The decision is based on focusing on our efforts in parts of the market where we can achieve an adequate return and illustrates our commitment to disciplined capital allocation. Overall, Solid Waste Services is achieving strong results. The scale, diversity, and integration of our network provide a competitive advantage and a growing earnings and margin trajectory. We expect this momentum to continue through the second half. Moving now to our Oil and Technical Services and Health Services. In aggregate, net revenue fell 5.1%, to $342 million and EBIT fell 12.6%, to $36 million. EBIT margin contracted 90 basis points, to 10.5% with the underperformance driven by Health Services. In OTS, we delivered EBIT growth and margin expansion despite some revenue headwinds due to capacity constraints at Christie St. We continue to perform strongly in packaged waste, with a high focus on high-margin work where our portfolio of total waste solutions, network, and safety standards provide a competitive advantage. We realized the initial integration benefits from the former LTS and Hydro business units and simplified the network as well as saw increases in volumes through our equipment services business. As expected in Health Services, our revenue declined following the competitive tender for the HealthShare Victoria work, where we retained 85% of the work. The disruption to our Yatala health facility in Queensland continued in the first half following ex-Cyclone Alfred. This resulted in approximately $2.4 million higher logistics costs. Repairs have now been completed and normal operations have resumed. Importantly, we are seeing the turnaround in Health Services, leading to a significantly stronger second half outlook. We are expecting higher revenue from increasing secure product destruction services, and we're using data analytics to reduce revenue leakage. Turning now to Slide 12. The performance of the Industrial Services segment is reflective of the outperformance from Contract Resources. At the overall segment level, we delivered 74% net revenue growth, to $339 million and 164% EBIT growth, to $28.8 million. EBIT margins increased 290 basis points, to 8.5%. Contract Resources increased revenue by 19.5%, to $157.8 million during the first 5 months of ownership. This compares favorably to its 4-year revenue CAGR of 13.5%. Contract Resources increased EBIT to $17.5 million and EBIT margin to 11.1%. This illustrates the quality and resilience of this production critical and turnaround services business. EBITA is a better reflection of CR's operating profit, given it adds back the noncash amortization of quality customer contracts recognized at acquisition. EBITA for the half was $20.1 million and converts to an EBITA margin of 12.7%. This is comparable to the overall group EBIT margin of 12.2%. The integration of CRs and our Industrial Services segment is on track and delivering synergies ahead of plan with our new structure in place since the 1st of January under the leadership of the Contract Resources CEO. We're beginning to realize synergies, particularly in shared customers, workforce planning, and greater asset utilization. And we expect these to build during FY '26 through cross-selling and operational leverage. We now have the leading industrial services platform that positions us to execute on the growing pipeline of significant decommissioning, decontamination, and remediation opportunities. In Cleanaway Industrial Services, we are undertaking a review of metro activities to align our operating and delivery models with the Contract Resources platform, improving consistency, scalability, and long-term performance. We also executed disciplined contract management and delivered on several fleet initiatives to offset the revenue headwinds. We will focus our IS work on activities where, like in CRs, we can earn appropriate risk-adjusted returns with less variable outcomes and as a result, transition towards a structurally higher-margin portfolio. And with that, I'll hand it over to Paul. Paul Binfield: Thank you, Mark. Cleanaway has a sustained track record of earnings improvement, having now delivered 6 consecutive hours of underlying EPS growth. This reflects the quality and resilience of our business model and shows the strength of our established integrated network of infrastructure. Looking at the underlying metrics on the left-hand side of the slide, net revenue for the first half came in at almost $1.9 billion, up 13%. EBIT was $228 million, up 16.9%, with EBIT margin improving 40 basis points to 12.2%, reflecting improving asset utilization, cost efficiency, and demonstrating operational leverage. EBITA was 17.4% higher, at $239 million. This metric excludes the noncash acquired amortization charges and offers a clearer view of the business' underlying cash-generating capability. Net finance costs increased to $73.4 million, reflecting higher debt levels following the Contract Resources acquisition. And at 2.3x leverage is reducing and well within our target and financial covenants. NPATA was 18.5% higher, at $117.3 million, with EPSA up 18.2%, to $5.2. Free cash flow was $74.2 million, $20 million lower than the prior period. Return on capital employed, or ROCE, is a metric that we're transitioning to as it's more commonly used by our peers and adjust for the noncash amortization of acquired customer contracts. ROCE improved 80 basis points, to 9.4%, proving that we're deploying capital more efficiently, generating better returns for our asset base. Similarly, ROIC increased 60 basis points, to 6.3%. So moving now to underlying adjustments. As Mark said in his overview, we're creating a stronger, more stable Cleanaway. The first phase is transforming the business by installing the foundations, the right people, the right standards, the right network, the right systems, and the right operating model. If we think about the underlying adjustments through that lens, the cash costs fall into 4 categories, but all but the first one aligned to our Blueprint 2030 strategy. So the first category relates to costs associated with issues identified as we layered in the strong foundations. In this case, it's treating legacy waste and remediating a legacy enterprise agreement, both dating back to 2018. OTS, post Christie St, we sought to increase the capacity of the network for our customers, and we reviewed the waste inventory at all of our sites. Retesting of legacy waste at one of our sites found that due to the nature of the waste, treatment and disposal costs would be significantly higher than expected. The subsequent independent review for the network -- of the network has confirmed that all waste inventories are adequately provided for. Similarly, with respect to the enterprise agreement, as we strengthened our capabilities to address the backlog of expired EAs, we identified inconsistencies between the evolved scope of work at certain branches and how the expired EA had been drafted. Expense in this half includes review costs to date and a provision for potential further employee compensation that may arise following review of EAs with similar characteristics. We expect to incur low single-digit million EA review costs in each of the next couple of years as we complete this assessment. In both cases, the costs being incurred in this period, don't relate to revenue generated in this or recent reporting periods. And therefore, we've excluded them from our underlying result to provide a true reflection of our continuing performance. The second category of adjustments relates to one-off strategy refresh costs associated with executing the strategy, including driving towards a leaner organization. This will be completed in the second half with a similar cost to the first half. The third category relates to the one-off modernization of our IT systems, where costs cannot be capitalized due to the nature of the software solution. This is foundational to the way that we were going forward and underpins the strategy. We again expect a similar cost in the second half. The last category, the costs associated with building the right network of leading waste infrastructure assets. In the past, that's been acquisitions like Suez, Sydney assets and GRL. And today, it's Contract Resources and Citywide. This has created the leading waste infrastructure network in Australia. We expect approximately $5 million of further integration costs in the second half. The strategy refresh has refined where we want to play with our focus on attractive returns and capital discipline. And you can see this with the rationalization of our C&D service offering and reducing certain [ IS ] metro activities. The outcome of the assessment of the future profitability of the C&D business has resulted in a noncash impairment of the associated assets. We also took a noncash impairment charge against our investment in the Circular Plastics Australia joint venture, where policy is lagging the desire to promote recycled HDPE, resulting in a softer market price outlook. Looking forward, we believe that underlying adjustments will reduce as a result of the foundations that we've installed to build a stronger and more stable Cleanaway. So now moving to free cash flow, just focusing on the material items in the bridge. We generated $56 million or 14.6% more underlying EBITDA. The cash impact of underlying adjustments was $40.2 million or $20.8 million higher than the prior corresponding period. This reflects the cash component of the underlying adjustments detailed in the earlier slide. We expect the full year cash impact of underlying adjustments to be about $30 million higher than the prior year. Working capital movements were adverse at $12.2 million, largely attributable to an increase in receivables related to a growth in the business. The interest paid was $9.2 million higher. And again, this reflected the higher average debt balances from fully debt funding $470 million in acquisitions. Tax paid was $16.5 million higher, and this reflects our higher taxable earnings and a $58.7 million catch-up tax payment. This is the final catch-up tax payment. Maintenance CapEx was $22.7 million higher and is largely timing in nature with the full year expected to be broadly in line with prior year. So the net movements resulted in $74.2 million free cash flow for the half. We expect significantly stronger free cash flow in the second half and importantly, into FY '27 as tax payments normalize, underlying adjustments reduce, and our relative capital intensity continues to decline. So now moving to capital expenditure. Our total FY '26 outlook stays unchanged at approximately $415 million. This includes $15 million allocated to Contract Resources. HS&E CapEx was $8 million higher for the half, but the full year is expected to be lower than FY '25. Our investment in energy from waste continues to be modest as we pursue our originator model. However, recently, we did enter into a joint development agreement for the Parkes Special Activation Precinct in New South Wales. Our 35% minority interest has not resulted in any material upfront capital outlay or binding capital commitment, and any future investment will need to meet our investment hurdles. We decided to pursue the Parkes location when it became clear that there were complex planning issues that [indiscernible]. So having largely built out our infrastructure network of scarce processing assets, our capital intensity is on a declining trajectory. This year, our CapEx guidance as a percentage of net revenue will be the lowest for 5 years. Furthermore, you will see the nature of our CapEx change. There will be fewer larger projects that have been - that have characterized our spend over the last 5 to 10 years and an increasing proportion of our spend on fleet. Fleet CapEx is, by its nature, lower risk, but still delivers good returns to reduce running costs, improved utilization, and more dependable customer service. So finally, I'll turn to net finance costs and dividends on Slide 18. Underlying net finance costs increased $14.5 million, to $73.4 million, driven by the debt financing of Citywide and Contract Resources acquisitions, which was only possible due to the strength of our balance sheet. FY '26 full year outlook for net finance costs is around $155 million. Our previous guidance, approximately $150 million was based on the forward curve in August when we provided our initial guidance. February rate rise is clearly outside of our control. What is in our control is delivering to or above operational expectations, which we're demonstrating today with our upgraded EBIT guidance. Moving to dividends. The Board has declared a fully franked interim dividend of $0.0335 per share, up 19.6%. This increase reflects the business' strong underlying growth, our confidence in future delivery, and strategy execution, including our ability to deliver strong free cash flow growth. With that, I'll hand back to Mark. Mark Schubert: All right. Thanks, Paul. As we look beyond FY '26, I want to provide a preview of how we are positioned for sustained value creation through to 2030. We have now completed a comprehensive refresh of our strategy that ensures we maintain the positive momentum generated over the last few years. The review of our cost base has always been part of our strategy. We have restructured our indirect labor, accelerating the realization of embedded operational efficiency created during the first phase of the Blueprint 2030 strategy. We've also identified further nonlabor cost reduction initiatives. At the heart of our refresh strategy is driving top line growth by delivering an improved, hard-to-replicate customer value proposition that combines 2 critical elements. Firstly, value for money. This means competitive pricing backed by reliable service, operational excellence, and scale and network advantages that our customers can't get elsewhere. And secondly, seamless customer experience. In today's digital world, this means customers expect easy and seamless experiences, transparency, responsiveness, and frictionless service. We're investing in systems and processes to deliver this. Our CustomerConnect investment positions us as Australia's most digitally enabled waste operator, creating barriers to entry that smaller competitors cannot replicate. Unlike fragmented regional players, Cleanaway's technology-enabled solutions will provide seamless customer experience across our unrivaled network. Our technology platform will increasingly leverage data analytics-led insights to understand customer behavior and optimize pricing by segment and route, allowing us to deliver personalized solutions to capture premium pricing where differentiated service is provided. We have the largest heavy vehicle fleet and the most extensive network of interconnected collections depots, transfer stations, processing facilities and landfills across Australia. Our scale creates operating leverage and strategic advantage that's hard to replicate. We will leverage our scale and lock it in, in 3 ways: Firstly, we'll use our digitally enabled sales and customer service teams to drive higher internalization and utilization of our integrated network. We capture a higher marginal contribution from every incremental ton of waste we handle through our existing network and through our powerful operating leverage. Secondly, we will extend our scale as an advantage by consistently executing best practices across our new national verticals in solid waste by flexibly reallocating resources based on demand patterns by cross-selling total waste services across our portfolio of customers and by ensuring we get value for money pricing. Third, we'll hardwire our branch-led operating model end-to-end, which ensures stability, creates transparency, drives local ownership and enables fast decision-making. Finally, our refresh strategy will deliver strong free cash flow growth from top line growth, margin expansion, and strong capital discipline. We are planning a dedicated strategy investor briefing on the 21st of April with further details to follow soon. Now let me provide you with an update on our FY '26 guidance and trading outlook. We are pleased to upgrade FY '26 EBIT guidance to between $480 million and $500 million. This is based on the robust first half performance and our confidence in the outlook for the rest of the year. I will walk you through the key drivers of second half performance that give me the confidence in providing that guidance today. We will continue to exercise price discipline in our Solids segment and expect positive organic growth. We're seeing supportive market conditions for project work in Post Collections in the second half. We also typically have a second half skew with higher CDS volumes across all states during the late summer months and the timing of our carbon benefit realization. Our Environmental and Technical Solutions division is well positioned to deliver improved performance. We are expecting strong organic growth across most lines of the OTS segment. We expect continued OTS integration benefits and a strong recovery in Health Services. And we will also begin to realize some of the synergies resulting from the Contract Resources acquisition. As I discussed earlier, we're expecting to capture approximately $15 million in-year savings from the organization restructuring completed over the last couple of months. Importantly, these savings are expected to deliver an annual continuing benefit of at least $35 million in FY '27. This all supports a stronger second half, which is reflected in our guidance. We have clear line of sight to these drivers, positive operational momentum, and confidence in our ability to deliver within this range, noting the midpoint of the range represents approximately 19% year-on-year EBIT growth. What's exciting is the trajectory continues beyond FY '26 with our refresh strategy unlocking many organic growth levers. Critically, our capital intensity is on a declining trajectory. The $415 million CapEx guidance will represent the lowest capital spend to revenue ratio in the last 5 years. This sets up accelerating free cash flow growth and improving returns beyond FY '27, which brings me to my final slide for today. As you can see, we now have a track record spanning multiple years of doing what we said we would do. Calling out a few highlights. We have grown the top line by 52.5% or $646 million over this 4.5-year period. We have demonstrated the powerful operating leverage we have in the business, growing underlying EBIT by 75.4% or $98 million across the same period. We are focused on both the returns from capital we spend and improving the base business, and this translates to the steadily improving return metrics you see here. What you cannot see on this graph is that we have done all of this by pulling sustainable handles. That is handles that will continue to be available and grow into the future. We are delivering resilient and dependable returns underpinned by our network of infrastructure assets with an enviable growth trajectory. Our expanding margins, improving returns, and strengthening free cash flow create compelling value. We are building a stronger, more stable, more capable, and more profitable Cleanaway. The exciting part is that with the refreshed strategy, we have line of sight and a laser focus to continuing this performance in the years ahead, and I'm really looking forward to discussing that with you soon. Before we hand over to questions, I do want to sincerely thank our employees for all their hard work. These strong results would not be possible without them. And with that, we will now take questions. Operator: [Operator Instructions] The first question today comes from Lee Power from JPMorgan. Lee Power: Just Mark, can you talk a little bit around the -- just the volume backdrop? I get there's a lot of moving parts which is better for Citywide. I think you're still calling out low metro volumes for C&I. I'm just trying to reconcile that volume piece with the pricing backdrop given that the commentary of the 2H around positive organic volume and price outlook. Mark Schubert: Yes. No worries, Lee. Thanks for the question. So I mean the first thing I'd say is sort of on metro C&I, we would say volume is flat, price is up. I think you should think about that as us also exiting some low-value C&I, which creates capacity for high-margin customers. I think, yes, the Citywide obviously coming through on a PCP basis is a positive. I think then on sort of other sort of volume areas, so landfill volumes -- just remember, landfill volumes is not just C&I. There's muni, there's civils, there's C&I, there's restricted waste, all those different things. What we're seeing particularly strongly in the landfill volumes is civil jobs coming through. So we've got a strong runway of civil jobs. The example to bring that to life would be, say, the M8 tunnel works in Sydney that we're seeing coming through. And then finally, just on price. While I've got the -- sort of the question on volume, I will also talk on price. I think price has been positive and importantly, well above inflation. Lee Power: Yes, that's really useful. And then maybe just when we think about into the second half, like if I just annualize your implied 2H guide at midpoint, you get $524 million EBIT. Is there any sort of color you can give us around the seasonality? I mean you've obviously called out a 2H skew in the Solids business. So help us think about updated thinking on the ramping profile of acquisitions through that period. I guess what I'm trying to get at is, what's an exit -- a sensible exit run rate? And how much of that's your initiatives versus just a normal skew in the business? Mark Schubert: Yes, sure. I mean let me try and bridge you the second half, which I think will answer your question. So like -- as you said, if you take the half 2 number implied by the midpoint of the guidance, that's how you get that number 260-odd that you just talked through. I think the drivers -- importantly, the drivers we've got good line of sight to. If I split them in 3 ways, if I talk about Solids firstly. So what we're seeing on Solids is strong Solids volumes coming through and price. We just talked through some of the drivers of that just a moment before. We are definitely seeing that Solid second half skew, and we talked about that previously, but just to go through it again, that's the CDS scheme is driven by volume in the late summer months. That's when the volume comes through, and that's obviously in that -- in the second half of the year. Carbon benefits also always come through in the second half. So that's kind of the Solids picture. If we go to ETS, we can see a good outlook of projects -- OTS projects in the outlook. We can see the Health business recovering. And just remember, that's -- we won't have the same issues that we had in the first half, which were related to the roof at the Yatala facility and having truck waste down to the South Coast. So that business will recover. We've got the OTS integration benefits coming through. So remember, that's the merger of Hydro and the LTS business, and we're talking about those benefits coming through. You get the first round of CR synergies, that's around sort of $3 million. And then the third bucket in the second half is you'll get the benefits of the indirect cost review. And remember, that's the $15 million in the second half that helps us step up those earnings. And just to kind of like recap and remember, so that $15 million is the number that then becomes more than $35 million as we go into FY '27. So $15 million in the second half, more than $35 million in FY '27. The difference is $20 million. Lee Power: And then maybe just one more, if I can. Just Paul, like you're obviously confident around the cash piece into the second half. I think in your comments, and correct me if I'm wrong, before, you said the full year cash impact of some of those adjustments will be $30 million higher than the prior year. Obviously, the first half is a pretty big part of that. So can you just remind me what that means on a second half basis in addition to the catch-up of the cash tax piece finishing? Paul Binfield: Sure. So Lee, if we look at prior year, the impact -- cash impact underlying adjustments is roughly about $50 million. So I'm calling out a $30 million step up on that. So roughly $80 million for the full year. We've taken $40 million in the first half. In terms of the tax catch-up, again, $58 million that we paid in December, that is the last catch-up tax payment. So we had back to normal installment payments into the second half. And you should think of a figure sort of in that region of about $48 million to $52 million, $53 million in terms of installments into H2. So if you look then beyond that into '27, again, hopefully fewer underlying adjustments, you're seeing no more catch-up tax payments. You're seeing a reduction in capital intensity in the business going forward and increased earnings and much of that increased earnings obviously coming through from higher margin type activity. So again, you don't have that nasty pinch in terms of the need to deploy additional capital to drive those earnings. So again, it gives us some confidence that the H2 will be better, but '27 will build on that further. Operator: The next question comes from Peter Steyn from Macquarie. Peter Steyn: Congrats on the upgrade. Just Paul, keen to just understand the underlying adjustments a little bit better and particularly the tax-free impact in the EBA issues. If you could just -- I mean, you've made the point that they were back in 2018 time lines. How far did they extend time line wise? Why is it that they've only become an issue now? Just keen to understand that and then your conviction at it being the -- you're drawing the line underneath those issues. Mark Schubert: I might have a go at that, Peter, if that's all right. By the way, I got my motorways wrong in the previous question. It should be the M12, not the M8. I am a bit confused on the motorways. All right. So just in terms of legacy waste. So let me start by saying today, we are fully aware of our waste inventories. We only accept waste where we understand the disposal pathway. We have clean waste acceptance matrices that drive that, and we make appropriate provisions at the time of acceptance. Let's go through the history. So the provision -- the original provision was made at the acquisition in 2018, but the adequacy wasn't checked because of manual systems. Since 2022, what we've been doing is installing the foundations into the company, and we talked about safe, stable, profitable Cleanaway, and like Paul said, right people, right standards, right systems. Post Christie St, as we sought to maintain the capacity of the network for customers, we did a review of waste inventory at one of our sites and found that the cost of treating and disposing that waste was significantly more expensive. We then had that validated by third parties. We also conducted further cross-Cleanaway auditing to ensure there was nothing else like this. We also confirmed that there's nothing for the CR's acquisition, and there's nothing from Citywide. And as Paul said, the costs are not related to the revenue received over the last 8 years, and that led to the decision to exclude it from the underlying -- to give you the best view of the ongoing performance of the business. If I run through the same summary for the enterprise agreements. So just remember, this has been flagged as a contingent liability for a couple of years now. Again, this is about we've been installing the foundations into Cleanaway, again, right people, right capability, those sorts of things. In the case of sort of industrial relations and enterprise agreements, we've been increasing the capacity and the capability of the function. We did that to initially clear the backlog of expired EAs, so we could get into the approach that we're in now, which is the proactive approach to negotiation. As we renegotiated this time, we identified a 2018 enterprise agreement where the work on the ground was different to that anticipated by the expired enterprise agreement. That led to a review of the enterprise agreement, and during the first half, the remediation of that enterprise agreement. We're now proactively looking at EAs with similar attributes. The underlying adjustment covers the 2018 EA, the remediation of the cost and a provision for other similar EAs. So I think that -- hopefully, that sort of like summarizes both those answers, Pete, for you. Peter Steyn: Yes. That's useful. And then just if you could give us a little bit of a sense of what you're seeing around ops excellence more generally, the margin improvement at solid waste was pretty handy in the half. If you could just shed a little bit more light on how the momentum in that program is going. Mark Schubert: It's going strongly. And I think what you should find is it will really -- it will accelerate. So we're pretty happy with the Solids performance and outlook. So in terms of the ops excellence, I mean, you saw us really focus on the branch operating model, labor and fleet efficiency. I think I say accelerate, Pete, because what we're seeing is we've got the branch-led operating model in now. But then what the switch now to the national verticals means that we've co-located all the like branches. So all the landfills are together, all the transfer stations are together, all the resource recovery facilities together. And so the value drivers are all the same. And the risks are all the same as well. And so it just means we're going to have experts running those plants, led by experts in those plants, and we will get much further operational excellence coming through. So I think the initial strong foundation has set the branch-led operating model, enabled us to do the restructure in a stable way, and now we get to really accelerate through the ops excellence. Operator: The next question comes from Jakob Cakarnis from Jarden Australia. Jakob Cakarnis: I just wanted to focus on the free cash flow, if we could, please. I appreciate the commentary about a stronger second half. It looks like you might best the first half somewhere between $40 million to $50 million based on the bridge items that you've got us. But it does look as though, at least from what I can see initial impressions, you'll be below the PCP. Can you just kind of calibrate those 2 things for me if that's the right way of thinking about it? Paul Binfield: Yes. I'm not going to give specific guidance in terms of free cash flow for the half. I guess the important thing I'm seeing here, Jakob, the key trends in terms of an improving outlook. So I think we've been pretty clear in terms of expectations about a further $40 million in the second half of underlying adjustment spend. We've been through the CapEx lines in terms of giving you an indication as to how we see that spend dropping out. Working capital, typically really well controlled in this business. We haven't seen any real deviation in terms of cash collections or credit risk. I don't have concerns on that front. I think importantly, too, you should look at the impact of the strong second half EBITDA performance as well, and that clearly has a beneficial impact in terms of the 2H cash flow. And as I said, if you look at '27, you have the additional benefits of lower cash outflow in terms of underlying adjustments and decreasing capital intensity as well. Jakob Cakarnis: And then just one for Mark. I mean, Contract Resources for a lot of people was a little bit of a surprise. It's good to see that it's doing a little bit stronger maybe than the business case and towards the margins that you thought it could do when you acquired it. Do you want to add just a little bit more color for how we think about that into '27 as well, just the scope of work that's coming down the pipe and I guess the integration more importantly with the existing business, please? Mark Schubert: Yes, sure. So I think maybe just in terms of the second half, I mean, what I'd say is we have a really strong first 5 months from the Contract Resources team. I think you should understand that, that includes sort of the peak Australian turnaround season, and that's just because really where winter falls. That's when the work gets done in those plants because it's the most comfortable time to do it. And so I think in terms of the sort of second -- or full year performance for Contract Resources, don't go and take 17.5 divided by 5 and multiply it by 11. That's not right. I think what you should estimate it to be -- for Contract Resource and Cleanaway, you should think -- sorry, Contract Resources and Citywide, you should think the number is about $35 million, excluding the $3 million of synergies. Again, that's a really strong outcome. If you think about where we were in August last year when we were talking about sort of circa $30 million. You're seeing the growth come through in all parts of CRs. They are continuing to gain customers and grow the share of wallet within their customer set, both here and the Middle East. So it's really positive performance, and it's pretty much exactly what we thought it would be as it's come across. Jakob Cakarnis: And then just into '27, sorry, Mark, like, is this -- Mark Schubert: Yes. Jakob Cakarnis: -- a more sustainable earnings base, do you think, like a representation of go forward? Mark Schubert: Well, I think we -- I mean, our expectation is CRs will continue to grow. I think there's real opportunities in -- we'll be more thinking about CRs plus IS going forward as opposed to CRs by itself. We've already -- we already see people dressed in red, driving blue trucks and all of that sort of thing. So that's well in hand. It's going to be really difficult to separate the 2 because the work is just being done by the most logical group and the assets are all starting to be shared. I think longer term, you should definitely think about that growing DD&R sort of vector, that is alive and well. The example there is Contract Resources today, we've got 3 groups on 3 different platforms in Bass Strait doing work for Exxon. So that is -- that's real DD&R. The nice part is Contract Resources doesn't even call it DD&R, they just call it work. And I think we should think that, that will continue to grow steadily into the future. Operator: The next question comes from Owen Birrell from RBC. Owen Birrell: Just a quick one on the financing cost. I think previously, it was 150, that's jumped up to 155. Just off that the leverage at 2.3x, is there a deleveraging time line? Or you guys are still pretty comfortable with where you sit in the headroom? And any refinancing risks looking into '27, '28? Paul Binfield: Yes. Thanks, Owen. In terms of delevering, again, expectation that we will continue to steadily delever. So if you look at -- if we take our long-term view into '27 and '28, we expect to see that to continue through that timeframe. And again, obviously, that's supported by the comments you've heard today about the lower capital intensity going forward. In terms of refinancing risk, we've done the heavy lifting on that front. So you'd have seen that we issued USPP notes for $500 million for tranches of 8, 10, 12, 15 years. So we pushed a really significant amount of debt out with some great tenure. So to be honest, I don't have any concerns about refinancing risk at all. And I'm very comfortable, frankly, with the leverage as well. Owen Birrell: Great. And just one other one. The MRL Southern expansion CapEx, is that just very much a one-off? Or could we expect more of that to come? Paul Binfield: No, that simply is now construction. So the bit of MRL that we moved into now, we call it the Southern expansion, and that is simply construction, one of the major sellers there. And that simply is ongoing. It tends to be a bit lumpy as you'd expect, but it is simply ongoing. Owen Birrell: Great. And just on associates, I noticed that was up $6 million. Is that a sustainable piece or [ bit of a question then ]? Paul Binfield: Yes. The primary driver there has been, we've seen the improved profitability of the CPA PET facilities, which has been good. Obviously, the continued weakness is in the HDPE facility. But the main driver was the Eastern Creek joint venture we have with Macquarie in terms of the org energy from waste property. So we had a block of land there. Clearly, we have no need for that land going forward, and we sold it at quite a significant profit, I think about an $8 million profit, and that would come through the JV result. That JV has been closed down now. Operator: The next question comes from Cameron McDonald from E&P. Cameron McDonald: Just 2 questions from me. Mark, just when you're talking about the visibility in the building blocks going into the second half and then into '27, can we -- can I just throw some numbers -- some items at you to get some granularity if we can. So the defense contract, please, like where -- what was sort of the benefit for that in the first half? And what's the expectation for the second, the Eastern Creek organics investment, and then the ramp-up in that, and then the Western Sydney MRF please, and then Tasmanian CDS? Mark Schubert: Yes. So I mean I think we're not necessarily commenting specifically on the profitability of sort of individual contracts. I'll talk around them. I mean, I think the defense contract is well established now. We obviously had the large -- Cameron McDonald: Talisman Sabre? Mark Schubert: -- Talisman Sabre exercise, but I think there's lots more opportunities to expand our offering with the defense contract. And obviously, we're working actively through that. Eco, which is the old GRL for sort of long-time listeners, that's the -- that's going well. You're definitely seeing us win muni contracts and the organic stream. So that's the tailwind that I talked about where there's 2 things going on. The government has mandated the shift to FOGO. That comes through muni where all councils need to have a FOGO offering by 2030. And we call it the COFO mandate, which is a commercial food organic, that basically is July of this year that large customers need to offer their -- will need to provide a food organics solution. That's all what that means, that's all good for us because we've got the infrastructure to process that. So we'll continue filling up Eco with those sorts of contracts and volumes. Western Sydney MRF is going really well. Again, the expectation was we would slowly build contracts into that. As you guys all know, that's a really well-located plant there and can intercept volume that would otherwise find its way coming further closer to town. So we've been successful there, winning a couple of council contracts. And Tas CDS is still in the ramp-up phase. Just remember that CDS schemes take about 18 months to ramp. Volumes there have been ahead of what we would have expected. And obviously, that program started up really strongly. There's a lot of pent-up, I think, storage of containers that surged through. And then we've seen the summer surge as well. So it's just really pleasing to see. Cameron McDonald: Okay. And then just is there any update on potential license and/or height extension in New South Wales on your landfills, please? Mark Schubert: Yes. So I mean, I guess the news there is we continue to work through the, we call it the extension -- extension or expansion -- I got to remember -- it's extension, Lucas Heights extension, which is the extension of the landfill to the area where the -- sort of the gun club was previously. That is a really active project. There's lots of work going on around the environmental approvals of that. And that's obviously a key project for Sydney and for New South Wales in terms of landfill air space. But I would say that is on track at the moment. I think in terms of other landfills, obviously, there's -- we're looking at the Eastern Creek -- sorry, the Kemps Creek, I guess that's the expansion. And of course, there's some work underway at Erskine Park in terms of hydros. So there's lots of sort of extension activities, all which I would classify as on track and in hand. Cameron McDonald: And so what would be the expectation around timing at this stage on getting approvals or some sort of decision? I mean, it's difficult with -- dealing with government, but best guess. Mark Schubert: Yes. I think what I would say there is we have significant airspace in Sydney until the early 2030s timeframe. What this project is trying to do is extend that forward for a long period of time and bridge into obviously, energy from waste, which then even extends it further. I think it's not something where we need approvals in some sort of rush, and we're just working through the long lead time type stuff and stepping that forward. So again, it's on track. The idea with these is to do a cost-driven project as opposed to a schedule-driven one, and we're on the cost-driven track at the moment. Operator: The next question comes from Robert Koh from Morgan Stanley. Robert Koh: First question is on HDPE, which I think you said that the small impairment on Circular Plastics was due to policy not being where you wanted. Could I maybe just ask what was the policy that you would have liked and what do we end up with? Mark Schubert: Yes. So I mean this is -- so just to recap for people. So in Circular Plastics, there's joint ventures, there's 3 plants. The easy way to remember it is the ones that start with A, which is Altona and Albury, they are the PET ones. They're performing well. And as Paul said before, that's because the plant is performing well and then the offtake is strong. And the offtake goes to, in Albury's case, to Asahi and to Altona's case, to Coke. And the joint venture there is the 4-way joint venture between Asahi, Coke, Pact and us. The challenge that we've had is at the Laverton plant, which is the HDPE or PP plant. If you remember what is that, that's milk bottles, ice cream containers, shampoo bottles, that sort of thing. This is a joint venture between Cleanaway and Pact. The good news is the plant itself is performing really well. The issue is that the federal government hasn't introduced a minimum domestic recycled content in milk bottles. And what that means is that dairies are unwilling to pay the extra price associated with recycled material. That would be like less than $0.01 per milk bottle. And instead, they're importing virgin material to make those milk bottles. I think at a headline level, this is the right plant at the wrong time. And so hence, with that sort of policy setting, we've taken the decision to write down the investment. Robert Koh: Just moving over to DD&R. Just -- and congrats on very encouraging early results there. Can you talk to any of the regulatory developments that are coming up in that space that might help or hinder you? You've got a Victorian parliamentary inquiry. Are we anticipating that NOPSEMA issues any more directions or anything like that? Mark Schubert: I think we're not really relying on sort of regulatory drivers. I mean what you see when you look at CR, is CR's top 8 customers are the #1 oil and gas companies in the country. They're at such a maturity level with those customers that they're virtually embedded into their operations, and they become the natural go-to to help out with that work, and help plan it, and then execute it. And that's what we see happening. Like I said before, Rob, like surprisingly, the CR's team doesn't even talk about DD&R, they just talk about as work as the natural work that follows on from being the incumbent. And so I think I know there's things like, we'll have to pull out the subsea pipelines and stuff like that. We don't really worry about that because there's enough work to do even if that's excluded, and we'll still be involved in the work of cleaning those pipelines before they get abandoned in any case, regardless of whether they come out of the ocean or not. Robert Koh: Okay. That sounds good. Final question for me. I'm just trying to think about this more than $35 million annualized cost saving that you're talking to. Is that incremental to the previously guided CustomerConnect benefit, which from memory was about $5 million in FY '27? Or is CustomerConnect part of this $35 million plus? Mark Schubert: No, it's incremental. Rob, good question. Yes. The way you should think about that, just to go back over the number so everybody listening can follow on. So we're saying it's $15 million in the second half of this year. That converts to more than $35 million in FY '27. It's mainly labor. It's around 250 FTAs. It represents about 10% of our indirect labor force, and it's mostly done. What we've said, when you say it to be greater than $35 million, you should think that what that means is there's further nonlabor opportunities that we've talked about, and we've listed them out in the voice over. But that seems like procurement efficiencies, further overheads rationalization. And when we talk about procurement, we're talking about both upstream and downstream procurement, where we've got a laser focus on some opportunities there. Operator: The next question comes from Nathan Lead from Morgans. Nathan Lead: Just interested in your comments there about the capital intensity and the declining trajectory. Can you put a bit more around that because obviously, you're quite a capital-intensive business. So if you can get the CapEx flat to declining, it's particularly strong value driver. So just how are you defining capital intensity? And where do you think that could end up? Mark Schubert: Well, I guess we're defining it as CapEx divided by net revenue. That's how we're defining it. So hopefully, that's right. I think you should think about the fact that over the last period of time, in the whole history of Cleanaway, Cleanaway has been evolving this fantastic network. Over the last 3 or 4, 5 years, we've been trying to complete that network. And we actually -- when we looked at the strategy work, the next phase of the strategy, we look back and we go, you know what, the network looks pretty good. It's basically complete. The only sort of outlier there is, obviously, we will upgrade Dynon Road in 2028, and you guys all know the numbers there. So therefore, the investment shifts towards smaller investments rather than the larger investments that we've been doing in the past. And the easy example there is fleet replacement, which has a very certain return. And obviously, we're really excited about modernizing the fleet. So when we look at CapEx as a percentage of net revenue, we see that number dropping. We see it has dropped and it will continue to drop as we look forward. So that's kind of what we mean. Hopefully, that's the color you were looking for. Nathan Lead: Yes. That's great. And second question is just in terms of the landfill remediation spend that goes through that cash flows. Can you give us a bit of an idea about what that looks like over the next 3 to 5 years? Paul Binfield: I'm not going to go out 3 to 5 years here, Nathan. But certainly, I think we've given you some indication that you should expect a slightly higher spend in the second half. And into '27 -- you should expect to see it step up a little bit in '27 and '28 as well. So importantly, you would have seen us obviously close the New Chum landfill and there's obviously a requirement to get on with the capping process there that will drive some of that remediation spend. And we've got some remediation activities, so capping activity at MRL and that as well. So again, you should expect to see the remediation spend a little higher in the second half and '27 and '28 a little bit higher than '26 as well. Operator: The next question comes from Nicole Penny from Rimor Equity Research. Nicole Penny: Referring to Slide 10 and the Solid Waste business splits, could you provide some guidance on which of the business lines see the greatest opportunity over the 3 to 5 years' timeframe, please? Mark Schubert: I'm just going to look at Slide 10. Okay. Interesting question. So I think my reaction to that initially would be, well then I would absolutely look at one of these sort of national verticals and think that any particular one has something special. Each has significant growth and improvement opportunities within it. So if you go back to what we're saying sort of -- I alluded to in the sort of strategy refresh sort of take there, there's a significant opportunity on margin expansion and efficiency that we have been setting up for in the first half of the strategy that now with the digitization layer coming in now will then be further enabled by just improving the way we work and also improving how we optimize the hard assets. I think if I look at -- we'll reduce -- the volume will obviously drive the equation. And one of the things there that you saw us talk about through the customer value proposition discussion also was we're not -- our plan is not to really add to the network. Our aim is to really drive the network like it's never been driven before in a really positive way and get increased internalization, increased utilization and those sorts of things. There's definitely tailwinds as well. There's tailwinds through the FOGO transition that we talked about before. There's tailwinds through the data analytics work into eventually AI and stuff like that. And that will drive volume and price through this network. Operator: The next question comes from Amit Kanwatia from Jefferies. Amit Kanwatia: Well done on the guidance increase. Congrats. Just a couple of quick questions. Similar to Kemps, if I unpack the second half EBIT a bit more, at the midpoint, it's -- sorry, $262 million at the midpoint in second half that's implied. And then if I think about the contribution from acquisitions, I mean, you've got LMS coming in. You've got the cost savings as well coming in. I'm just more interested in kind of understanding the growth in the base business into second half versus first half? Mark Schubert: Yes. So I mean we're not going to quite break it in that detail. I think what you should be thinking about is the business -- the base business is performing strongly. You can see that in the guidance upgrade that you just mentioned. You should be thinking that CRs and Citywide will deliver that number around sort of 35. And obviously, the base business progressed. That's obviously after some of those first half headwinds that we talked about probably around the AGM time, things like New Chum and stuff like that. So really, the underlying business is looking robust. And then I think it's back to kind of that bridge where you break it into Solids EPS and sort of indirect cost review benefits. It's -- in Solids, it's the price volume coming through. It's the Solid -- it's the second half skew driven by particularly CDS and carbon. In -- so ETS, it's the project outlooks; in OTS, it's health recovering, it's the OTS integration benefits and the CR synergies. And then at the group level, it's the indirect cost review, which is the sort of the $15 million. I think if you want to get to the one, which is like, what do you need to believe to get to the top of the range? Well, you just need to believe lots of small things. There's no one big thing that drives it to the top of the range. And that's a great thing about Cleanaway. Cleanaway is just a sum of lots of smaller moving parts. And so therefore, it's quite resilient. Amit Kanwatia: Sure. Yes, I think fair to say that second half growth will be more than first half. I mean if I can just move on to the capital allocation and then I mean, given the context of capital intensity, but maybe if you can speak to how are you thinking about capital allocation given your comments today over the next few years? Mark Schubert: Well, I think on capital allocation, you're seeing a few things. You saw us talk about the fact that we are -- what we're doing on construction demolition. So we're allocating -- we're strategically allocating capital to parts of the business that we think we can get the right returns for the risk that sits within them. In the case of C&D, we don't see that because the resource recovery activities moved to the demolition side. And so we will participate in that at the landfills and equip the tickets there. So that's absolutely fine. I think in terms of the capital allocation, you're seeing us be very thoughtful about muni where we've allocated capital to the Cairns contract. We see Cairns as a great location, regional location, where we can create a strong position there. And that's very consistent with the sort of the muni strategy. You can see us in Industrial Services reducing our capital allocation towards high-margin but low ad hoc metro work and instead shifting to contracted work using the sort of the CRs operating model. And then at a more macro level, you can see us saying, listen, the network looks pretty good now in terms of completeness. So therefore, you should expect us, therefore, to require less overall capital as a result, and our strong focus will be to fleet renewal and then just really driving our volume through our network using the advantage that we've built over the last 80 years. Amit Kanwatia: I mean it looks like the free cash flow seems to be improving, earnings strong. I mean, obviously, leverage is there. Is there a case for payout ratio to go up in the next couple of years given what you've said today? Do you think? Mark Schubert: You want to talk about payout ratio, Paul? Paul Binfield: Yes, payout ratio. It's not something we've given too much thought to at this stage, Amit. We think the ratio of 60% to 75% is -- it feels pretty sensible. We're obviously at the top end of that range. Obviously, we have significant franking credits, and therefore, that sort of encourages to be paying out perhaps more than less. But at this stage, we are focused on making sure that we get that balance right between capital and dividend and maintain that deleveraging profile as well. Amit Kanwatia: And just a final one. Maybe just the strategy around waste-to-energy in New South Wales and maybe if you can touch in the Victorian market as well. Mark Schubert: Yes. So I mean in New South Wales, I guess, sort of the statements that we sort of shared around that, which we haven't talked about in these calls, but it's not -- it's been sort of announced by others. So we've signed the JDA for the Parkes energy-from-waste with Tribe and Tadweer. That is just -- that's the capital-light originator model playing out. We end up with a 35% interest and the waste supply for the C&I tranche. So that's the low-cost access for customers that we've been driving for. We prefer the Parkes location now over Willawong, and that's just due to planning uncertainty and the Parkes has sort of more support from locationally from the government and from various stakeholders. So that's the sort of progress there. There's a long way to go with these sorts of projects. So there's nothing really much in the near term there in terms of investments. I think in terms of Melbourne; Melbourne, again, is just in long-term sort of progressing capital-light approvals. And so that's the status there. So I guess the main update was the one that Paul walked through on Parkes. Operator: At this time, we're showing no further questions. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Caroline Thirifay: Good morning, everyone. Thank you for joining us today, both in person and virtually for the management presentation of our full year results 2025. I'm here with Marc Oursin, CEO; Thomas Oversberg, CFO; and Isabel Neumann, Chief Investment Officer and Chief Operating Officer. Before we begin, we want to remind you that all statements other than statements of historical fact included in this management presentation are forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected by the statements. These risks and other factors could adversely affect our business and future results that are described in our earnings release and in our publicly reported information. With that, I will hand over to Marc. Marc Oursin: Thank you, Caroline. Hello, good morning to all of you. Thank you for being here. So let's start with this page, Page #2. So you can see that we have, at the end of '25, close to 350 properties in Europe and reaching almost 1.8 million square meter of footage. Regarding the performance of the year, we have delivered another very strong one. Our revenues grew by almost 11%. We increased our NOI same-store margin by 40 bps with an EBITDA growth following the one from the revenue at 10.4%, and ending with an earnings per share growth of 1.7% versus last year despite the additional cost of debt and dilution from our scrip dividend. Meanwhile, we stay with a very solid balance sheet. We have a BBB+ rating, a leverage of 23% or 6.2x net debt over EBITDA and having an EPRA net tangible asset per share of EUR 53.3. So let's go to Page 4 for more details. So you can see on the right side of the page how the revenue growth full year of 10.8% has been achieved. We got the benefit of additional available square meters of 5% versus '24 coming from our development, renting them up by 8.8% versus '24, and combined with an increase of our in-place rent of 1.9%. When you combine all of that, you get the 10.8%. And as explained earlier, our cost management due to the efficiency of our platform allowed us to grow the EBITDA by 10.4%, therefore, in line with our revenue speed. And this performance is clearly putting us on an earnings per share growth trajectory, medium term. If you go to the next page, Page 5. So I think it is interesting to notice how the company has been able to grow physically, meaning in terms of footage and translating this square meter growth into revenue growth. So you can see on the left that we grew by almost 7% CAGR for the past 5 years in terms of number of stores, but also square meter-wise. At the same time, our revenue grew close to 11% CAGR and demonstrating that our strategy of growth delivers unique revenue increase. If we go to Page 6, and this slide is focusing on the NOI growth '25 versus '24 for the total company. It is also showing the importance of the margin generation from our so-called non-same stores, representing all the properties not yet matured and coming from organic development or M&A transactions. You can see that almost 2/3 of the incremental NOI value is delivered by our development engine, confirming our capacity to deliver profitable growth. So now let's go to Page 7. So on this page -- I think this page is really important to understand what we have achieved and how we will continue to use 2 major strengths that we have. I mean the scalability of our platform, allowing us to increase our same-store NOI margin and, at the same time, our development engine bringing profitable growth. And you can see that we got the benefit of both with a significant increase of our total NOI margin value since '21, with having the non-same-store taking the major share of this growth, 2/3 in '25, as you have seen on the previous slide, while having the same stores normalizing their NOI delivery. And Isabel, by the way, will come back later with details regarding our future pipeline. On this, I turn to Thomas. Thomas Oversberg: Thank you, Marc, and good morning, everyone. Let me now turn to the same-store performance for 2025 on Slide 8. Across our 251 same stores, we delivered a solid full year revenue growth of 3.2% at constant exchange rates, supported mainly by the continued in-place rent growth of 3.5%. Occupancy remained resilient at 89% despite the modest addition of rentable square meters during the year. Overall, demand remained steady across our markets. But as we highlighted, in several regions, market dynamics intensified during Q4, particularly in the U.K., the Netherlands, France and Germany, requiring selective pricing adjustments to protect occupancy while preserving our long-term growth. This Q4 NOI margin impact flowed through to EBITDA, as you will see later. That said, throughout the year, we were able to rely on our structural strength, disciplined pricing, the scalability of our platform and cost efficiencies delivered through clusterizations, helping us mitigating inflationary pressure, for example, of payroll and real estate taxes. As a result, full year same-store NOI grew by 3.8% and our same-store NOI margin expanded by 40 basis points, reaching 68.1% for the year. Moving to same-store NOI performance on Slide 9, where we break down the main components of our NOI growth for 2025. We delivered EUR 254.2 million of same-store NOI in 2025, up from EUR 244.8 million last year. As noted, key contributors were higher in-place rent, which added EUR 8.1 million and a EUR 1.4 million benefit from margin improvements. Rental square meters were broadly stable year-on-year, having only a marginal NOI impact. With same-store representing approximately 86% of our total NOI, this demonstrates our ability to sustain high profitability, allowing for predictable earnings growth. Slide 10 illustrates the normalization pattern, which we anticipated and communicated throughout 2025. After several years of exceptional post-COVID growth, 2025 showed the expected return to more typical revenue dynamics across our same stores. Revenue growth remained positive at 3.2%. And as mentioned, Q4 was clearly more challenging, in particular, against our very strong comps from 2024. The key message here is that the overall slowdown in revenue growth was expected. But importantly, the long-term fundamentals of our markets remain intact: urbanization, mobility and still significant undersupply. We remain convinced that our omnichannel and pricing capabilities position us well to manage through different market conditions as we have demonstrated in the past, most recently in Sweden. Turning to adjusted EPRA earnings per share on Slide 11. For 2025, adjusted EPRA earnings per share landed at EUR 1.74, fully in line with our expectations and market consensus. This performance was underpinned by a strong underlying EBITDA growth of 10.4%, reflecting the impact of our expanded portfolio and economies of scale. As noted, the performance in Q4 eventually did not allow us to expand our EBITDA margin as the Q4 slowdown flowed through to EBITDA, resulting in a decrease in EBITDA margin by 30 basis points. While interest and taxes grew in absolute amounts, we increased slightly less than what we initially estimated, resulting in a 1.7% adjusted EPRA earnings per share growth. I now hand over to Isabel, who will walk us through capital allocation and returns. Isabel Neumann: Thank you, Thomas, and let me add my good morning to all of you as well. In 2025, we have delivered exactly as guidance. We have opened about 90,000 new square meters of properties at an 8% to 9% yield for an investment of about EUR 210 million. By delivering this 90,000, yet again, we really show that we can consistently deliver this target that our development engine is working very well indeed. What I'm particularly pleased about is that we have delivered these 90,000 square meters through all the regions, across the regions and also using the different ways of growing we have. So through new developments, redevelopments and M&A. So it shows again the scalability of our platform, we can grow in all 3 ways across 7 countries. And you can really see how in 2025, this comes together quite nicely. This brings me to the next slide. We have a strong pipeline for '26 and '27 with 160,000 square meters already secured at a yield of 8% to 9%. Let me remind you that we buy our properties subject to building permit, and we don't land bank. For '26, we have 23 properties in the -- 23 projects in the pipeline for a total of 102 (sic) [ 102,000 ] square meters. And for '27, we already have 12 projects in the pipeline for a total of 56,000 square meter. We've also decided to increase the hurdle rate going forward from the current 8% to 9% to 9% to 10%, but we will come back to this later in the presentation. On the following slide, we show our strong track record in delivering the returns we set out. On the left graph, you can see how our organic projects have performed per vintage year. And on the right, you can see how our acquisition projects have performed. This is the second year we're showing these numbers. So the bars in red show the returns at the end of '25 and the bars in gray show the returns last year at the end of '24. Up to 2023, we had a hurdle rate of 7% to 8%. And since then, we have increased it to 8% to 9%. So now let's look at our track record. On the organic projects, we delivered very strong performance indeed. All vintages before 2021 already delivered a minimum hurdle rate and the younger vintages, as you can see, they continue to progress well. For the acquisitions, we generally delivered the hurdle rate with the exception of 2021, 2023 and 2024. And there are specific reasons for each of them, and let me go into that. In '21, we did the acquisition of the A&A portfolio. The A&A portfolio consisted of 4 stores in London, out of which 3 in the Kings Cross area. We have 2 topics that has impacted us on this acquisition. The first one is that we've seen a large increase of competition in the Kings Cross area in the years following our acquisition. In 2023, Big Yellow opened a very large store in the summer of '23. And in fall of '23, Access also opened a store exactly in the same area. Secondly, because of the very central location, we also -- it took us also a little bit longer to get the permits to do the work that we set out to do. So that has, I would say, caused a slight delay, but we remain confident that we will reach the hurdle rates as we have set out. Then for 2023, this is the year where we did the Top Box acquisition in Germany. But Top Box, I think, was very much like an organic project. We are 5 stores and -- 5 open stores and 2 pipeline stores, but the open stores effectively were at a very low occupancy, and we, of course, also had to build out 2 stores. So if you look at the occupancy at the time of acquisition versus the fully built-out square meters at the end, at maturity, we were only at an occupancy of 42%. So this is an organic project. This is not an M&A-type project. And therefore, if you look at the returns of 1.6% that compares in '23, that compares fairly nicely with the 1.8% on the organic side. So you can see this is just more a fact that it's an organic-type project. Then for 2024, this is the year we did Lok'nStore. We also did Pickens and Prime, and Pickens and Prime are very mature, fairly mature properties. But of course, Lok'nStore as well is a portfolio that's not mature yet. The occupancy for the existing store was about 70% at the time of acquisition, but we had quite an aggressive redevelopment program, and we also had a high number of pipeline stores. This year, effectively, we have delivered already 18,000 of the pipeline stores. And next year, we will deliver 26,000 of the pipeline stores. But if you take into account the redevelopment and the pipeline, at acquisition, we were about 50% occupancy. So you can see for 2004 Lok'nStore, it's a bit of a combination between mature and organic. This brings me to the Lok'nStore acquisition. And let me give you an update on where we stand. First of all, on the real estate side, I'm pleased to say we have fully completed the rebranding of all the Lok'nStore stores. We have installed access control, brought it up to our standard to reduce the energy consumption. So they are now, for all intents and purposes, fully Shurgard stores. Further on the real estate side, as I mentioned before, this year, we have added 18,000 square meters to the portfolio through a combination of redevelopments, remixes and the opening of 2 properties. And next year -- sorry, in this year, we will open the remainder of the stores from the L&S pipeline for a total of 26,000 square meters. So by the end of this year, the full FBO, as we had set out will be delivered. Now let me shift to the operational side. First and foremost, our occupancy is on track. We started the acquisition at 67% occupancy. And by December '25, we were at 80%, and we continue to expect to reach our target of 90% by the end of this year. Now we have said in the past that we will deliver a CAGR of about 2% of in-place rent, and you can really start to see how this is coming together, a, by an increase of the move-in rate; and two, by a decrease of the move-out rate. On the move-in rate, as we have a higher occupancy, we need less promotions and therefore, logically, the move-in rate goes up. On the move-out rate, you can really see the impact of our commercial policy of the Shurgard standardization. And therefore, you see normalization of the move-out ratio in line basically with our London portfolio. So the 2 of them together will make that our in-place rent is moving up. The last point I would like to mention is on the synergies. We have realized synergies at the high end of the range. At the time of the acquisition, we had guided towards between EUR 4 million and EUR 5 million, and you can see that we are delivering at EUR 5 million. This is through a combination of factors. First and foremost, as we put the Shurgard operating model in place, we've been able to lower the FTEs per store. All the assets have been folded under the U.K. REIT, and we have a reduction in G&A, Primarily, we have closed the former Lok'nStore headquarters. So in summary, we are delivering according to plan on the Lok'nStore acquisition. I will now hand it back over to Thomas to talk about the balance sheet. Thomas Oversberg: Thank you, Isabel. Let's now move on to our balance sheet and financing structure. Shurgard, as you know, is the only European self-storage operator with a BBB+ investment-grade rating. Our capital structure continues to be a source of competitive advantage, supporting our long-term low-cost funding. At the end of the year, our LTV stood at 23.2%, broadly stable year-on-year and comfortably below our 25% long-term target. Net debt to underlying EBITDA remained at 6.2x, fully within the boundaries of our rating. Our average cost of debt is 3.33% with a 7.2-year weighted average maturity. Liquidity remains strong with EUR 56 million cash on hand and a fully undrawn EUR 500 million revolving credit facility, giving us flexibility to fund our development pipeline. As you know, 100% of our mainly freehold portfolio is unencumbered. And this, with our commitment to our BBB+ rating, is a cornerstone of our decision-making process. On Slide 21, we outline the strategic decisions we are implementing to accelerate medium-term adjusted earnings per share growth. We have increased our investment hurdle rate by 100 basis points, as mentioned by Isabel. This means that all projects from -- approved from 2026 onwards will have to earn an NOI yield on cost at maturity of 9% to 10%. This reflects our focus on disciplined value-generating organic growth. It has no impact on the growth already embedded in our pipeline for 2026 and 2027. Further, we are discontinuing the scrip dividend options, moving to a cash-only dividend of EUR 1.17 per share. We remain fully committed to our BBB+ rating, as I mentioned. Therefore, we continue to target a long-term LTV target of 25% and below, refine our medium-term net debt-to-EBITDA target to 5x to 6x. And finally, we reiterate our commitment to continue applying a disciplined M&A framework, requiring acquisitions to be EPS-accretive in the first full year, ensuring value generating also on this front. These decisions collectively reinforce our ability to deliver sustained compounding earnings growth. Looking ahead and incorporating the current pricing and occupancy conditions and expectations, on Slide 22, we are guiding for 2026 to be a year of continuing growth. We expect all store revenue growth of 6% to 8%, driven primarily by the continued ramp-up of our properties opened or acquired in 2023 to 2025. Underlying EBITDA is expected to be in the range of EUR 278 million to EUR 289 million, reflecting our confidence in delivering operational efficiencies that offset ongoing cost pressures as the ones mentioned on the slide. As a consequence of the strategic decisions explained on the previous slide, we anticipate net interest expenses to be between EUR 57.5 million and EUR 59.5 million. Overall, resulting adjusted EPRA earnings growth will be between 1% and 6%, and is expected to translate into adjusted EPRA earnings per share between EUR 1.70 and EUR 1.81. We plan to add 100,000 to 125,000 square meters to our portfolio in 2026 with CapEx in the range of EUR 250 million to EUR 315 million. Our year-end leverage is expected to remain within the rating framework at 6.5 to 6.8 net debt to EBITDA. We expect to update the outlook throughout the year, where necessary, to ensure consistent and transparent communication. Finally, let me close with our medium-term guidance for 2027 through 2030 on Slide 23. We expect all store revenue, underlying EBITDA and adjusted EPRA earnings to reach a growth at 6% to 8% CAGR, reflecting the long-term compounding nature of our business. Our pipeline, approximately 90,000 square meter per year, will require around EUR 200 million of annual investment and continues to offer an attractive yield at maturity. We anticipate continuing to distribute EUR 1.17 dividend per share paid in cash and remain firmly committed to our BBB+ rating with landing in our target net debt-to-EBITDA range of 5x to 6x by 2030. Our model remains simple: disciplined capital allocation, a scalable platform, strong cost control and a structured demand that continues to support long-term value creation. With that, I hand back to Marc for his concluding comments. Marc Oursin: Thank you, Thomas. So in summary, Shurgard has a proven and resilient business model. If I show it, it's better. So yes, indeed, we have a proven and resilient business model, combined with a high-growth profile and, I would say, a development engine based on a real scalable platform. And that's why you've seen all these improvement in the same-store margin along the years. At the same time, as explained by Thomas, our balance sheet is solid with its BBB+ investment grade. And therefore, we have an attractive earnings growth perspective. So on that, I thank you for your attention, and I hand over to you, Caroline. Thank you. Caroline Thirifay: Thank you, Isabel, Marc and Thomas. As you can see, the next rendezvous will be the Q1 results on May 13, same day as the AGM. We are now available to take your questions. We will take first the question of the audience, followed by the question from the webcast. [Operator Instructions] We have the first question. Jonathan William Coubrough: Jonny Coubrough from Deutsche Bank. Could I ask firstly, please, on the medium-term guidance range? What is informing that current range and what's implied there for same-store growth rates? And also, whether the new guidance range reflects the new hurdle rate for yield on cost of new developments? And then secondly, on that new hurdle rate, how does that impact the opportunity set for potential new investments? Marc Oursin: Okay. So I will take the first part and you take the second part, Isabel. So regarding the -- and maybe we can share the slide of the medium term. So the medium term actually is taking into account the fact that on the same-store, we have said that many times, the normalized same-store growth should be, I would say, between 2% and 3%. That's what we have usually for this model. And then, of course, we took into account also, that's why you have a range this year. And we think it's -- we are not the only one, by the way, giving ranges. We've seen that in the U.S., and we think it's a good thing to do with the -- with you guys. So we have taken an assumption, which is on the low side, if it's not going into exactly what we are looking for. And if all the planets are globally aligned, you have the high side on the right. So that's what we are disclosing this. And the midpoint of this medium-term guidance is more or less the trajectory that we're looking for. That's for the -- I would say, the explanation to this. And regarding the hurdle rate, Isabel? Isabel Neumann: So on the hurdle rate -- so indeed, we've increased the hurdle rate to reflect our cost of capital, that is clear. With regards to the opportunities going forward, well, first and foremost, I would say 2026 and 2027 is largely already driven by the pipeline that has already been created. So there's, as such, not necessarily an immediate [Audio Gap]. We have, in the past, increased the hurdle rate from 7% to 8% to 8% to 9%, and we have still managed to find projects. However, we will only do them if they are -- they generate the returns. It means we will have to work together as a team. Our construction team will look at opportunities to lower our cost of construction, look at opportunities to lower our broker costs and so forth. So it will be a collective effort. And I would say there is a possibility that, in the first year, we will do slightly less project than we have done before, but we remain confident that we can continue to grow in an attractive way. Andres Toome: Andres Toome from Green Street. So a few questions. Firstly, on that same guidance for the medium term, and it seems it's come down in terms of what you're looking for in terms of underlying EBITDA growth, which was more in the double digits before. So maybe you can help to understand what's driving that because you -- I think you sort of alluded to the fact that your same-store guidance, implicit one, has not really changed. So is it just that the delivery on development pipeline, lease-up is under your expectations? Marc Oursin: Do you want to take this one, Thomas? Thomas Oversberg: I think we shouldn't take that conclusion from that. I think we have a very solid understanding of where we expect the markets to be. We have taken the current condition into account. And based on that, we do think that delivering in that range on a CAGR perspective is more or less in line with what we said before. I mean -- so from that perspective, we don't expect really a fundamental change in the dynamics. It's more a refinement where we see we're going to land. Andres Toome: Okay. And then I guess, looking back also on the slide with your 2024 acquisitions and the delivery there on the yield on cost so far, it looks to be lower compared to what you had, I think, when you announced Lok's acquisition in terms of just the day 1 unlevered yield on that. So I guess there are other sort of bits in that 2024 vintage as well. But just on the headline there, it looks maybe Lok'nStore is actually underdelivering on your expectations. Or is that the wrong read and there's something else included? Marc Oursin: Yes. I think it's the wrong read. If I remember, we said when we did Lok'nStore that we will deliver 8% yield on cost, '29, 2030. And that the, as explained, actually, by Isabel, when we took over, the portfolio was not at all matured because if you look at it, occupancy was 2/3, 67% of the current square meters. But with all the new ones that are coming in, especially this year, plus the expansion that we have done in the past year, the 67% is actually 40 -- less than that, 35% of the ending point of the square meters in '29, '30. So that's one. Secondly, in terms of return or let's call it, entry yield, the first year, we were saying that we were roughly below half of what we're targeting, so between 3% and 4%, which is the case shown on that slide, more or less. Andres Toome: Right. I guess from the prospectus or the sales, sort of, memorandum, I think the EV EBITDA multiple was sort of 27% on in-place income, which would be sort of at high 30% range, but... Marc Oursin: Okay. Knowing that in this, you have also other deals, you have the Pickens one, you have the Prime one plus another one we did the same year. Andres Toome: Okay. And then final question is just on your thinking around your cost of capital and how you think about net external growth because you keep on sort of plowing ahead, but your shares are trading at a pretty hefty discount. So do you have any thoughts around just because of that discount to actually sell some assets and capture any sort of private market arbitrage there might be? Marc Oursin: Well, we have said, especially in the case of Lok'nStore when we met with all of you because we had a question about the geography of Lok'nStore. And we said, we want to stick to London, the surroundings of London Southeast and therefore, Greater Manchester. So obviously, we said that we do a review of these properties. So we said, let's give us some time. It will take probably 1 to 2 years to see how the stores where Isabel has invested the money to put them up to speed are delivering. And also, are there better opportunities with this capital potentially? And you're right. So we are working on this. Valerie Jacob Guezi: I'm Valerie Jacob from Bernstein. I just have a follow-up question. If I look at your 2026 CapEx, I think you previously guided for EUR 320 million and now the number is a bit lower. And so I just wanted to understand the reason for that. And also, as a follow-up, what are you seeing in terms of your acquisition pipeline? And do you think you'll be able to offset that? Isabel Neumann: Sure. So indeed, we usually generate about 20,000 square meters in M&A. So the 102,000 that you're seeing here is organic pipeline. So M&A would kind of come on top of that. But of course, with M&A, it's always -- some years, there's lots and other years, there's less. So we never quite know where we're going to be ending up in terms of M&A in a given year. But so indeed, we have a good basis with 102,000 of organic pipeline and any M&A would effectively come on top of that. So we are expecting to kind of end up in this range that we have guided towards. Thomas Oversberg: Yes. Probably there, we always consistently have been saying we are expecting 90,000 overall, a certain amount of CapEx. And as we are not in full control of M&A, the mix might change between where we go, but the target of the square meters and the amount we are investing remains the same. Caroline Thirifay: Do we have any other questions from the audience? If not, we will take questions from the webcast. Unknown Attendee: We have our first raised hand from Vincent Koppmair. Vincent Koppmair: Congrats on the results. My first question is a little bit more information on the Q4 weakness you've seen in certain markets. Could you give a little bit more color on those, please? Marc Oursin: Okay. So thank you, Vincent. So we have seen -- as we also have said during the course of the year that the way we're looking at '25, and there's a slide actually showing this deceleration, we're anticipating the deceleration. If you remember, actually, Q1 was better in terms of results than anticipation. Q2, Q3 were in line and Q4 is not as we were expecting, to be frank. And we have seen this deceleration stronger in 4 markets: the U.K., the Netherlands, France and Germany. And I will come back to this. Meanwhile, at least 2 markets that are the Nordics, so Sweden and Denmark, did pretty well and very happy with that, of course. And back to the U.K., Netherlands and France and Germany, so the reasons are probably different. If you take Germany, for example, we have opened quite a number of stores, but especially one of our competitor called MyPlace did in Berlin, for example, in that city. And the situation in Berlin is much more -- we think, a kind of what we experienced in Stockholm some years ago. So suddenly an oversupply that the market has to digest. And therefore, in order to keep our occupancy where we want, it's what we did with Sweden, and you saw that the payoff is very good today. We are, I would say, putting more discounts. We don't see any lack of demand at all in all the 4 markets that I've mentioned to you for this deceleration. It's much more the fact that we have to do more discount to convert that demand into contracts. And why do we have to do more demand? Let's take Berlin, it's more supply and they want to fill up their properties, which is logical. And in other markets, I would say, like the U.K., for example, especially London, we have seen some competitors becoming more aggressive on their pricing, probably for different reasons. If you look at Access, for example, if you look at Safestore and the surroundings of London outside the M25, smaller players also became more aggressive. That's what we have seen. Will it last? We don't know. But what we can say is that when you start to look at the first 2 months of the year, Q1 in '26, we start to see a certain normalization on that. And the Netherlands, it's a bit the combination of both in the sense that if you go to Randstad, especially in Amsterdam area, there is openings and there is some cannibalization regarding certain properties and also some competitors being more aggressive. That's what we are experiencing. That's the answer, Vincent. Vincent Koppmair: Yes. I had one follow-up question on your 2026 guidance. I appreciate that you now give a range, so quite nice to have some more information. But should we understand, as you've mentioned that, of course, the high end of the range is the blue sky scenario, but would you, compared to the high range and the low range, aim for the middle? Or is your base case scenario a little bit closer to the higher end of the range? Marc Oursin: No, that's a good question. Thank you very much. So obviously, here, Vincent, the -- what we are looking at is to be within this range, obviously, first. Secondly, across the year that will come every quarter, and I think this is what our peers in the U.S. are doing and other companies not in real estate, you just adjust the -- where you're going to end within this range. So obviously, because year-to-date, quarter-over-quarter, you have actuals versus simply last year. So you know where you will end. So for us, we want to be in this range. And you can say that the midpoint of this range is probably where we would like to be. Unknown Attendee: Our next raised hand is from [ Stephane Afonso ]. Unknown Analyst: I'll ask them one by one. So first, regarding your 10% yield on cost, how many years does it take to reach this stabilized yield? And could you break that down between occupancy and ramp-up rents, please? Marc Oursin: Okay. So the 10% is related to maturity. So usually, this is taking more or less between 5 to 7 years, depending on the size of the property and the investment. But if you want to be on the safe side, take 7. That's one. Secondly, how do we get there between the volume effect, so occupancy first and then the rates? So occupancy to get to 90% will be between 2 to 3 years. And then the rates will start to kick in and especially the ECRI, so the increase that you do to your existing customers. And this would bring you the remaining years to this -- after 7 years to this level of targeted 10% return. Unknown Analyst: Okay. And has this time line changed, meaning does it take longer or not, no? Marc Oursin: No, no, no. Unknown Analyst: And regarding the 2% to 3% same-store annual growth that you expect, on what basis are you deriving this figure? And within the information that is publicly available, how can analysts challenge this figure? Marc Oursin: It depends on the talent of the analyst, obviously, and the knowledge of the analyst. And I think if you're the analyst, what you will do is you will look at the past first. We know that the past is not the future, but it gives you at least a good understanding how Shurgard has been able to go through the past 10 years, for example. So GFC, COVID, interest rates, high inflation. And you will see that if you are between 2% and 3%, it's, we think, reasonable. So if you want to take, [ Stephane ], something more conservative, you stick to 2%. If you are more aggressive, you go for 3%. But I think that if you are in this range, you are close to the truth as a run rate long term. Unknown Analyst: But just to understand, do you base it on inflation, for example, could be a threshold or -- just trying to... Marc Oursin: That's an interesting one because, usually, you're right, many analysts or people who are, let's say, looking at the company and this class of assets are looking at CPI. But we have demonstrated -- we have a couple of graphics in -- I think it's what we call the company presentation where we show that we have always overbeaten the CPI actually. I'm talking same-store revenue growth year-on-year. So I would say that usually, we are above CPI. And why? Because it's a need business. And that makes the whole thing very different, meaning that because you need space, and as soon as you got in, you need that space and the exit barrier to leave that space, people are sticky. So again, think about what it is, it's like having your attic or your basement in a remote location and think how you behave versus your attic and your basement when you want to leave it is because you are forced to do so. So that's why we have been able, I think, to beat the CPI for quite a long time. Unknown Analyst: And last question. If the right opportunity came up, would you be open to another... Marc Oursin: We didn't hear you at the beginning. Will you repeat, please? Unknown Analyst: Yes. Just asking one question about M&A. If the right opportunity came up, would you be open to another sizable acquisition in the short term? Or is the focus firmly on completing the Lok'nStore ramp-up? Isabel Neumann: Of course, we are very much focused on delivering the returns for Lok'nStore or any M&A that we have done. But clearly, as we have -- Thomas has also said, we are very cautious in the M&A that we do. It needs to deliver the returns that we have set out, and it needs to be accretive from the first year. So yes, of course, we will look at everything. But of course, the hurdle rate to move forward is very high. Thomas Oversberg: And let me clarify on that point also for the people in the room. We are really committed to 2 things, and that's our BBB+ rating, which defines and what we can do on the debt side and to our accretiveness in the first year. Those 2 points are not negotiable. So therefore, you will not see us coming out and saying, oh, there was this strategic opportunity and we throw everything overboard. Unknown Attendee: Our next raised hand is from Aakanksha Anand of Citi. Aakanksha Anand: I have 3 of them, and I'll go through them one by one. The first one, we're obviously speaking about increased competition and a higher level of discounts. Could you just give some color around what kind of incremental discounts are we talking about compared to previous years? That's the first one. Marc Oursin: Okay. Thank you for the question. So first, we do not disclose the intensity of discounts per market. What we can tell you is that, for example, if I would take Berlin as a reference, yes, we are increasing the discounts there. If you take usually the normalized level of discounts, we are close to 15% of the revenue. So it might go to 20%, for example, a certain period of time or less, depending -- actually, the pricing we do is per unit type in a given property. So it's very focused in terms of investing these discounts. And therefore, globally, you see this level. But it's hiding actually, very different situation per location and per type of size. Thomas Oversberg: And if I can add to that, the important part is, and Marc alluded to that, is self-storage is a need business. So what I need to make sure is that I get the people who have the need. And that means I want to give them as little hurdle to make the conversion as possible. So the prices and next to the location of convenience are the 2 really driving factors. As I don't know, who of you will stay longer than 1, 2 months, but we know that more than 60% stay with us very long, the only reasonable thing I can do is make sure I get all of you. And that's what we are trying to do. So we are always saying we want to get as many people as possible because it's a need business. It's a sticky business. So that allows us, while we are coming in at a lower price, to again increase thereafter on our ECRI. And that's really important to understand. When we are saying we're giving more discounts, this is not something which we are not expecting that is executing on our pricing strategy, which, as said, we want to have 90% occupancy because we know it's a sticky business, and we want to get as many of the customers as possible. Marc Oursin: And back to what you were saying, Thomas, with Sweden, it's exactly this is what happened. If you remember 3, 4 years ago, we had really a hard fight with one of our competitors in Stockholm mainly. And the payback today is that we were right to stick to this occupancy. Yes, it was painful in terms of revenue growth, same-store, because Sweden, the worst moment was minus 1% quarter-on-quarter, but never more than that. It's not like going to minus 5% or minus 10% -- minus 1%. And in the end, later on, you get the payback because the customer base is there, and you can apply the ECRI on it. What is your second question? Aakanksha Anand: The second one is just on the same-store revenue growth over the medium term. So which would be the top 4 geographies where you expect to see the highest, if you could rate them for us, please? Marc Oursin: Okay. So that's a -- I would say that if you look at medium term, so '27, 2030, which is the range that -- the time horizon that we have given, I would say that probably the Nordics will be on the top for -- that's one. At the bottom, I would say, probably Germany and maybe the U.K. And in the middle, I would say, Netherlands, France, Belgium. If I have to give you a ranking, I would see these 3 groups, the 3 tiers. Thomas Oversberg: If I can add some color to that, the reason why this is not an easy answer because how our pricing mechanism works is we are sort of like agnostic of where a customer is sitting because we know the customer behavior is the same in all of our markets. So what you can see is that our pricing algorithm, both on the initial pricing and on the increase to existing customers is really agnostic to that. So whenever we see dynamics which impact our occupancy, we will see that the pricing algorithms are acting on both fronts. So what Marc was therefore referring is to what you should see probably the lowest growth is where we see most of our new store own opening because we are competing with ourselves, obviously. That means we can -- we need to make investments to ramp that store up. Again, not a buck, it's a feature of our model and where we see unexpected short-term price competition by competitors. So that, I think, is the way of looking at it. But overall, because we are applying exactly the same everywhere, our model is not saying, oh, you're a U.K. customer, you're only getting X percent. That's not how we're looking at it. Aakanksha Anand: All right. And the third question, just on the investment hurdle. So the raised investment hurdle, I understand that applies to both acquisitions and the development pipeline. I think the question here is, does this mean -- I mean, are you able to find as many opportunities with that raised investment hurdle from the visibility that you have on the bolt-on acquisitions market at the moment? And if not, I guess it just basically means that the future external growth potential is going to be driven -- I mean, the share of future growth potential from the bolt-on acquisitions is going to be much lower. Marc Oursin: Do you want to take this, Isabel? Or do you want me to answer? Isabel Neumann: Well, I can start and you can add. I think the question was already kind of raised here in the room. But indeed, as we said, the pipeline for '26, '27 is kind of set, right? So there is no immediate change here for the next couple of years as, of course, we have a certain delay between the moment we do a deal and then we execute it. And our objective in terms of being accretive in day 1, this is not new. So to a certain extent, we're not necessarily changing the way we're doing it since we have done this year. M&A is always a situation whereby it's driven by effectively what is also available in the market, what is happening. And so part of it, of course, is where we want to act, but also it's what is the availability of opportunities. And that's the part we have not necessarily a control over. Marc Oursin: So to complete the answer from Isabel, I would say that you're right, the risk on the M&A is higher than on the development, organic, because as Isabel said previously, organic development, finding a piece of land, okay, dealing the land and then after that, being able to act on the cost of development are much higher in terms of capacity internally to work on than trying to negotiate a deal -- a price with a seller in order to reach your hurdle rate of 9% to 10%. So you get the deal, you don't get the deal because you are priced in at the level of the seller. That's it. So that's clear to me that probably you're right, if we are not able to satisfy the, let's say, will of the sellers, knowing that we want to be at 9% to 10% return on this M&A transaction, yes, it will diminish. But it's not a big deal to me. It's -- I prefer to be not on a bad deal than with several on a good deal -- sorry, on a bad deal. So here, organically, potentially, it might take over what we are missing on the M&A. And as said by Isabel also, in the past, we have already increased the hurdle rate. We were at 7%, 8% till '23. And as of '24, we went from 7%, 8% to 8% to 9%. So the -- let's say, the concern was the same. Would you be able to still do M&A? Would you be able to buy lands and to deliver organic at the same -- at this new hurdle rate? And the answer is yes. So I would say the coming quarters will give us a good sense of our capacity to continue to organically develop at this new level of requirement. And regarding the M&A, let's see. Isabel Neumann: And maybe one final point here is that it really shows the value of looking at our growth across M&A and organic. And there's been years whereby we've had much more organic and less M&A, and there's been years where we've had more M&A and less organic. Over the years, it all kind of levels out a little bit. But it's -- we are really depending on the opportunities, adjusting effectively how we combine the growth. Marc Oursin: Caroline? Caroline Thirifay: [indiscernible] conscious about the time. Marc Oursin: Thank you. See you in Miami. Unknown Attendee: Our next raised hand is from Ana Escalante from Morgan Stanley. Ana Taborga: My first question is also on the level of discounts. Just wanted to understand if these discounts are more focused on attracting new customers or are more focused on existing customers, meaning keeping existing customers in your properties to sustain that occupancy? And to the extent that you can comment, are you seeing those discounts being sustained into the first quarter of this year? Thomas Oversberg: Yes. So the discounts which we are talking about is indeed to attract new customers. As I said, what we are trying to achieve is that we get as many customers in and then increase their prices as long as they're staying with us. We don't see any changes in dynamics there. We are becoming, again, more sophisticated on increasing our existing customers. We're also having now machine learning tools on that running so that we are really having a risk-based approach there. But the main amount is always talking about the initial pricing, which a prospect gets to convert them into a customer. At the moment, I think we are seeing no major changes in there to what we saw in Q4. But again, that is not something which we are -- which we should have expected to see, because the dynamics -- market dynamics are not changing from one day to the other. If competitors are more competitive on pricing -- initial pricing, it's because they're obviously trying to fill up. And then it's more a question of what is the end goal. Are we dealing with a customer -- with a competitor who is happy to be at a certain occupancy and then manage the rates at that point in time? Or are we dealing with a competitor who is following our pricing strategy? We barely ever meet the ones in the second class. So at one point in time, this will naturally level out. As we also were saying, we are part of this pricing pressure ourselves because we're adding new spaces close to our existing store to enable us to plug the holes in our network and get from that the scalability effects. So again, we are obviously causing that to a certain extent as well. Ana Taborga: Okay. Very clear. Maybe also related to this, thinking medium term, do you think that there is a risk that artificial intelligence makes this sector or the price search by prospective customers a bit more transparent? Because I know that you are very clear with your first month, EUR 1 or GBP 1, but there are other competitors that are not that transparent, do you think there is a risk that AI increases the transparency here and therefore, customers become a little bit more opportunistic, not only for new customers but also existing ones trying to -- looking for cheaper alternatives and the search process being facilitated by AI advances? Marc Oursin: Okay. So Ana, here, I think, again, back to what Thomas just said and confirmed, the global revenue growth of the company is actually combining 2 engines. One engine, which is to attract new customers. That's one thing. It's where the discounts prices are public. They're on the website. The price you see is the price you pay and you have discounts after that. Discounts could be $1, EUR 1 the first month, can be additional discounts. That's one thing. And secondly, you have everything related to the ECRI, which is increasing your existing customer. And here, it's purely discretionary, it's private. So I will start with this, where AI -- actually, from a customer -- an existing customer perspective, I would say that the risk there to me are very limited because as we have said, people are sticky. You don't wake up in the morning and check every morning like a stock price if the price that you are paying for your unit can be cheaper with AI because you forget it. And that's the whole behavior of the customer. So that's very important because it's protecting actually our business, and that's key. I don't think AI will change that, to be very frank. I might be wrong. But today, with what I understood from this business after being 15 years in it, and by the way, being a customer of Shurgard before even working for Shurgard, I doubt. But where you are potentially right is on the first aspect is how, for new customers, people who are searching for a unit, how they can be, let's say, for themselves more efficient, more agile to pick up a location, a price which is closer to their home, and they can choose that. You would have told me, for example, in 2012 that in '25, 12 years later, more or less, or 13 years later, 95% of the search we have are gone through Internet and in Europe, because Google is almost a monopoly, the search engine used is Google for 95% of those, and that the people are doing that today for close to 80% with their mobile phone, when in 2012, it was 5%. I would have told you, well, I doubt. And I was wrong. So what will happen and that we have started to see is that people are using ChatGPT to search. And today, out of all the search that we have on the web within 1 year, it went from 0.1% to 0.6%. So 6x, still 0.6%. So it's a long way. And ChatGPT up to now is more than 80% of all this search in terms of tool used. So you remember, in the past, if you take the analogy with the web, you could say there was Google, there was [ Bling ] or Bing, there was -- I don't know what. And in the end, Google took over. So here, for the time being, what we see is this. So it's very early day. It will go probably quite fast. It might take also another 5 or 10 years to become more significant. There will be, I suppose, a fight between the search -- let's say, the different tools as we had with the search engine. And -- but in the end, I would say, already with the way we are pricing our products, I think that by being the cheapest in the area where we are, in the 15 minutes, that's what we are looking for, is probably the best protection. Thomas Oversberg: Yes. So probably to add just 2 sentence before Caroline stops me. So self-storage is a hyperlocal product, which means that the searches will be hyperlocal. And we are having the right network to be hyperlocal. So what is happening in the future -- in the foreseeable future is that customers are more informed making their decision. We have already pricing transparency on our website. So there's -- we are not hiding anything. So it's more difficult for the people who don't have pricing transparency. And overall, customers will have a much better understanding. It's like what does it mean? How does the contract work? How does a rating increase work? Because those are the information which you typically quest, and those are the question which AI will be able to help you. Caroline Thirifay: Do you have any additional question, Ana? Ana Taborga: Yes. Super quick, a final one. It is on your dividend, capital allocation. So you're guiding to 6% to 8% EPS CAGR in the next 4 years, but stable dividend. I understand that you want to retain cash to continue funding your expansion, right? But just wondering how do you balance that more immediate shareholder remuneration versus the long-term value creation through your growth initiatives? Thomas Oversberg: So I think that's an important point to look at. When we looked at the decisions which we took this year, we looked exactly at that conundrum of what is my cost of equity, what is my cost of debt and what are investors expecting as a return. And that led then, for example, into the fact that we're saying, okay, we need to increase our hurdle rates because the investors require a higher return there. So -- and that then, as I was saying, is we need to balance off with the earnings per share growth, which people are expecting going forward, which is obviously impacting, on the one hand, on the dilutive effect of more shares, which we have now eliminated. And on the other hand, which is then compensating is the additional interest expenses, which will reduce earnings as well. So long term, we are continuing to say, well, an investor should expect a total shareholder return, which is made of the dividend yield and the earnings growth of 10%, and we remain committed to that. Once we are seeing that there's really an imbalance where this is no longer happening, we always said and we haven't changed our opinion on that, but we are also going to change our dividend payout. But at the moment, we feel that to -- in order to deliver this growth and our strategy, we are comfortable with the dividend at the level where it is at the moment. Caroline Thirifay: So we are conscious of the time, then we will take the last question, and it's Roy Külter from ODDO - ABN AMRO. Roy Külter: It's just one from my side. I know it's a more operational real estate sector that you're operating in, but I do want to focus a little bit on property values. So we've seen the NAV per share has grown strongly, but valuation yields have remained flat. So it's basically operational performance. But we've also seen in the market some large transactions being pulled during 2025. So how comfortable are you today with your book values? And maybe secondly on that, can you give some comments on the investment market? Marc Oursin: Thomas? Thomas Oversberg: Yes. So the main increase, if you look at the value increase in our portfolio, which is around EUR 500 million, I can split that into 3 buckets. The first one is -- and they're not equal size, but for the sake of debate, let's assume they are almost. The first one is stores which we opened last year and the year before, which are ramping up. And therefore, this means that the valuation expert can reduce the discount and the risk because they are seeing that we're performing against our target. And therefore, this increases the value of our portfolio. The other part is where, indeed, we are talking about stores which we have added this year, which are under construction. So again, that results in value increases there. And the third part is, and this is not -- by far not the biggest, is the operational performance where we are delivering better performance than before. If you look now -- and on what we were saying, well, this part here, I'm talking about is mainly same stores. Same stores, as you saw in our slides, is actually performing still quite well. We're having a revenue growth there. So the NOI is growing. So everything is fine there. So we are not concerned about the operational performance that this would immediately impact our valuations. To speculate on why transaction in the M&A markets are not taking place is beyond my skill set, to be perfectly honest. And therefore, we are obviously aware of what is happening in the market. We are watching it with great interest and excitement. But in the end of the day, there's always 2, it's a buyer and a seller. And if those 2 cannot agree with each other, then the transaction's not happening. And that sounds very, very basic, but you see on the one hand, let's go to Australia where we have 2 transaction, potential transaction, which might have happened at the same time. The one was not going through because people thought the valuation was too high. And the other went through despite the fact that it's the same principle. So I think it's more a deal-specific one, but I'm surely having more experts on my left side here to deal with that. Marc Oursin: We can speak for a long time about that, but let's take it aside when we'll be with you, Roy. But I don't want to paraphrase what Thomas said in the end, it's like selling your house. I want EUR 1 million. I'm ready to pay EUR [ 700,000 ], it doesn't work. That's it. If someone is going to pay EUR 1 million for the house and taking a risk, it's a risk appetite story from the buyer. That's it. And we have precise -- and repeated what -- how we approach the risk. We have said we want the first full year to be accretive per share in terms of returns for an acquisition. So that's it. That's where we stand. Let's see how '26 will go with all these deals that have been put into the fridge. Are they coming to the microwave oven or not? Let's have a look. But thank you for the question. Caroline Thirifay: Thank you all for joining us today, and we look forward to reconnecting in this venue soon. Thank you.
Operator: Welcome to Perpetual's Half Year 2026 Market Briefing. [Operator Instructions]. Press the documents icon to see today's files. Select the document to open it. You can still listen to the meeting while you read. The audio queue is now open. I'll now hand over to Suzanne Evans, Chief Financial Officer. Suzanne Evans: Fantastic. Thanks, Michelle. Good morning, everyone, and good afternoon or evening to those who are joining us from other parts of the world. Welcome to Perpetual's half year briefing for 2026. Before we begin today, I would like to acknowledge the traditional owners and custodians of the land on which we present from for today. Here in Sydney, that is the Gadigal people of the Eora Nation. We recognize their continuing connection to land, waters and community. We pay our respects to Australia's first peoples and to their elders, past and present. We would also like to extend our respect and welcome to any Aboriginal or Torres Strait Islander people who are listening to this briefing. We acknowledge the traditional custodians of the various lands on which all of you work today. Presenting our results today will be our Chief Executive Officer and Managing Director, Bernard Reilly; and myself, the Chief Financial Officer, Suzanne Evans. There will be an opportunity, as you've heard, to ask questions at the end of the presentation. Can we please ask that we start with just 2 questions per person to ensure that we have time for everybody who would like to participate today. Before I hand over to Bern, we'd just like to also draw your attention to the disclaimer that's contained on Page 2 of the presentation. Bern, over to you. Bernard Reilly: Thank you, Suzanne. Good morning, everyone, and thanks for joining us today for Perpetual's First half '26 results briefing. Reflecting on the overall group performance this half, we delivered a solid result, achieving both revenue growth and underlying profit growth as well as making good progress on our strategic objectives. As you'll see from the table below, our headline results showed total operating revenue of $697.9 million for the first half, up 2% underlying profit after tax of $112.7 million, up 12%. We reported a statutory profit after tax of $53.9 million. The Board has determined to pay an interim dividend of $0.59 per share unfranked, and diluted EPS on NPAT was $0.971 per share, 9% higher than the first half of 2025. We maintained disciplined cost management, resulting in an improvement in our expense guidance for the full-year. We continue to make strong progress on our simplification program. To-date, we have now delivered $60 million in annualized savings, and we remain on track to achieve the targeted $70 million to $80 million by FY '27. In Asset Management, earnings growth was supported by improved market conditions and cost management, partially offset by currency and net outflows, primarily in global, international and U.S. equity strategies. Importantly, over the period, our Australian boutique performed well and Barrow Hanley's contribution improved. Corporate Trust continued to perform consistently, delivering strong growth across all 3 business segments and reinforcing its importance as a diversified earnings engine for the group. The business benefited from strong securitization markets and client growth throughout the half. Wealth Management showed resilience during the half by maintaining focus on delivering for clients as the sale progress -- has continued to progress. While we've made good progress with Bain Capital and are progressing documentation, there is no certainty that a binding agreement with Bain will be reached or that a transaction will proceed. Turning to the next slide. I want to now spend some time framing our asset management business in the broader industry environment. Quality asset managers come into their own during down markets and periods of heightened volatility. We continue to expect more flows between active managers. As you can see on the chart on the bottom right-hand side of the slide, flows between core active funds still dwarf flows from active to passive funds. The line between public and private markets is blurring with private capital increasingly accessed through mainstream vehicles across wealth, retirement and insurance. McKinsey also know the convergence of traditional alternative assets. For Perpetual, this underscores a clear path to growth. High conviction, differentiated active capabilities and increasingly ETF wrapped strategies aligned to new distribution channels. With that context, let me now turn to performance and flows across our boutiques. Our multi-boutique model provides earnings diversification across capabilities, client segments and importantly, regions. As you can see in some of the points on this slide, we saw pockets of strong performance across a variety of our capabilities in the first half, with 54% of strategies delivering outperformance over the important 3-year time frame, reinforcing our relevance in an environment where active flows increasingly reward demonstrated performance. During the half, we saw $22 billion of gross inflows and $32 billion of gross outflows, resulting in a net $10 billion of outflows. While collectively, we saw outflows in U.S. global and international equity capabilities, emerging markets and Australian equity strategies saw areas of investor inflows. This was supported by a strong half for fixed income capabilities, highlighting the benefits of a diversified asset management platform. Net outflows in the half were offset by stronger equity markets and foreign exchange movements, supporting earnings growth and increased AUM over the half. We remain focused on active client retention and delivering strong investment performance, which together underpin improvements in our flow profile over time. Turning to the next slide for some more detail on our Australian asset management business. The integration of our Australian distribution capabilities has materially strengthened our local platform. We now have a large and diversified footprint across both the intermediary and retail channel, which I'll refer to as wholesale and the institutional channel with $71 billion of AUM across Australia. If we look more closely at the wholesale channel, we managed $32 billion of AUM. Of the over 15,000 ASIC registered financial advisors, nearly 11,000 have holdings in Perpetual Group products. We also have key sales and distribution team members working closely with asset consultants and subchannels, including high net worth researchers and brokers. Wholesale delivered $1.5 billion in net inflows for the half. In our institutional channel, we managed $25 billion of AUM across superannuation funds, government clients, insurers, endowments and foundations. We did see outflows for the institutional channel in the half. However, we saw an improvement on the second half of 2025, and we've secured several wins in the first half. These flows include a $250 million contribution from a super client into Australian equities, $110 million contribution from a large institutional client in J O Hambro's emerging markets capability and $100 million new multi-asset mandate from a large superannuation client. Important to note, we also manage $14 billion of AUM in the cash channel. Importantly, our Australian distribution is now a unified platform with strong expertise in distributing across asset classes and boutique brands through a single coordinated team. Our team of 46 includes sales, marketing and client services and is one of the largest local distribution teams in the industry. We're also seeing the benefits of strong product development, including the launch of contemporary investment solutions, and I'll touch on them in more detail on the next slide. A key priority for asset management is ensuring our product range is aligned to evolving distribution channels and strategies where we see sustained client appetite, particularly in fixed income. During the half, we launched the Perpetual Diversified Income Active ETF, which performed well relative to other ETF launches in the period and held over $215 million in AUM as at the 31st of December. We also successfully raised $268 million for the Perpetual Credit Income Trust with assets now in excess of $800 million. In working with our client base globally, we were able to successfully launch Barrow Hanley's U.S. Mid-Cap Value Fund into the U.K. market in June with the fund reaching over AUD 165 million in assets in or $110 million by the end of December 2025. This represents a significant achievement, especially given Broadridge's global market intelligence data, which indicates that fewer than 1% of newly launched funds surpassed the $100 million of assets in AUM. Looking ahead, we have an active pipeline of strategies under development and where appropriate, we will support them through seed investments to target attractive growth areas. Suzanne will talk further about our seed capital program shortly. We expect the continued convergence between traditional and alternative capabilities to remain a feature of the industry globally, driving a forecasted $6 trillion to $10 trillion of capital reallocation over the next 5 years. To that end, our discussions with Partners Group have advanced and an early-stage product design is now being introduced to the market to assess interest. We're also looking at the launching of a direct bond SMA in Australia to expand our suite of fixed income solutions for advisers and platforms. Turning to ETFs. The U.S. active ETF market represents a significant opportunity. While active ETFs remain a relatively small portion of overall AUM, they are becoming an increasingly important channel, capturing a high share of industry flows and revenues. We will continue to build on our established ETF platform here in Australia, and we're going to apply some of these learnings to the U.S. market. We've decided to enter the U.S. ETF market in a risk-managed basis by a third-party provider of multi-series trust structures. This structure is lower in cost and offers quicker speed to market, helping us to bring scale before we need to invest more heavily. If we now turn to the work we're doing with J O Hambro. I've spoken previously about restoring J O Hambro to its heritage strength, and it remains a key priority for us. We've made progress on revitalizing the business, and this will continue through the second half and beyond. In September last year, we announced the appointment of Bill Street as CEO. Building off the work we've already started with J O Hambro, Bill has quickly commenced implementing a clear strategic direction, beginning with the simplification of J O Hambro's operating model to create J O Hambro International an aligned platform that better positions the business for growth. The future success of J O Hambro is an important component of our global offering, and we look forward to updating you on its progress over time. Turning now to Corporate Trust. On the next slide, please. Thanks. The business experienced another strong half and continues to deliver steady growth across all 3 of its business segments. The Australian securitization market remains robust, supporting continued growth in debt market services. Importantly, we continue to see growth across the non-bank lenders, contributing to a more favorable mix of mandates for us. Managed Fund Services growth was driven by custody and our Singapore business, benefiting from both new and existing client growth. Digital and Markets also delivered a 5% uplift in assets under administration compared to the second half of 2025, reflecting continued investment and expansion of our client offerings. Highlighting its strength in the market more broadly for the 10th straight year, Corporate Trust was awarded the KangaNews Australian Trustee of the Year. Looking forward, the business remains focused on executing its 5-year growth strategy, including investing in its core business and digital markets. Corporate Trust has proven time and again to be a highly resilient and growing business. UPBT has grown steadily at a CAGR of 11% from around $22.4 million in first half of '19 to approximately $49 million in the first half of 2026. The cost-to-income ratio has remained broadly stable in the mid-50s range, underscoring our disciplined investment in the business as revenue has continued to grow. This slide also illustrates what is driving that growth across each of our business segments. Notably, Corporate Trust's service-led operating model is aligned both to the credit-linked and equity market growth, which provides a stable, diversified earnings base that is less exposed to equity market volatility. That diversification is particularly relevant in the context of asset management's market sensitivity, reinforcing Corporate Trust's role as a consistent and resilient earnings business within the group. Moving now to Wealth Management. In the half, the business remained focused on delivering for its clients while the sale process continued. Underlying profit before tax was lower, reflecting expense growth. However, wealth management was resilient. Funds under advice grew by 6% over the half, supported by institutional flows and strong equity markets. It was also pleasing to see the strength of this business recognized externally. Five of our advisers were recognized in the Barron's Top 150 financial adviser list, reinforcing our position as a trusted provider of high-quality client-focused financial advice. We were again recognized as a finalist in 2 categories of the 2025 IMAP Managed Account Awards, marking our third straight year of distinction. Wealth Management is at the core of Perpetual's 139-year history and has all the hallmarks of a successful business. Strong funds under advice, 12.5 years of consecutive net inflows as well as being one of Australia's largest managers of philanthropic funds with a very strong client advocacy measure, as you can see here. In relation to the sale process more specifically, I'd like to reiterate that while we have made good progress with Bain and are progressing documentation, there is no certainty that a binding agreement will be reached or that a transaction will proceed. In parallel, we are establishing a clear stand-alone operating perimeter for the business to support a potential sale and ensure continuity with minimal disruption for our clients and for our teams. Our Wealth Management business is a high-quality profitable business with growing funds under advice, and the Board and I are focused on ensuring that any transaction that Perpetual may ultimately enter into is in the best interest of our shareholders. Turning to the next slide. Our simplification program remains on track to deliver our overall target of $70 million to $80 million in annualized savings by June 2027. Importantly, the benefits are now flowing through into reported earnings alongside a simpler, more streamlined operating model. The chart on the right-hand side of the page highlights our planned program of work, which, as you can see, is well advanced. As at 31, December, we have delivered $60 million in annualized savings, of that $26.9 million of actual savings was reflected in the first half '26 results. The majority of savings to-date have come through workforce-related efficiencies, supported by ongoing rightsizing across the global business and the removal of duplication as we simplify structures and reinforce organizational or reduce organizational complexity. We incurred $4.4 million of additional cost savings in additional costs to achieve these savings during the half, and they are recorded as significant items. Looking ahead, the areas of focus for the second half of FY '26 remain finance systems transformation, back-office simplification and the ongoing rightsizing of functions across the group. Total costs to achieve the program are expected to remain at approximately $55 million. In summary, we are pleased with the progress we've made so far, acknowledging we still have more work to do. I'll now hand over to Suzanne to walk through the financials in more detail. Suzanne Evans: Fantastic. Thanks, Bern. It's great to be able to present a little bit more detail around Perpetual's half year results for the period ended 31, December 2025. We'll start by moving just to the next slide, Slide 15, that has a summary of our results. Operating revenue of $697.9 million was 2% higher than the 6 months ended 31, December 2024 or the prior corresponding period, driven by continued AUM and further growth across the group. As noted in our recent second quarter update, revenue included performance fees of $10 million, mainly generated by our Perpetual and J O Hambro boutiques. Total expenses of $547.8 million were within our guidance of 2% to 3% growth for the financial year 2026. I'll step through some of the drivers of our expense growth and also the basis for our improved expense guidance range shortly. Underlying profit after tax was $112.7 million, 12% higher than the prior corresponding period, supported by improved contributions from asset management, continued momentum in Corporate Trust and reduced funding costs following the refinancing of our debt facilities in the last financial year. The effective tax rate on UPBT was lower at 24.9% compared with the prior corresponding period. Now this was a combination across the halves due to a write-off of a deferred tax asset in the prior corresponding period and in the current half and unrelated prior period adjustments lowering the effective tax rate. If I look forward in the medium-term, we would expect the effective tax rate to normalize around the 27% to 28% range. Significant items for the half year were predominantly non-cash in nature, and I'll cover those in more detail later. Earnings per share on UPAT was 9% higher. Finally, on the summary slide, the Board has declared an interim dividend of $0.59 per share, unfranked and to be paid on the 7th of April 2026. Now if I move to the next slide. On here, we've just got a high-level visual snapshot of performance across our divisions. I'll step through each division in slightly more detail, beginning with Asset Management. Asset Management underlying profit before tax increased 4% to $106.9 million, demonstrating top line growth, but also how our cost discipline is beginning to translate into an improved cost-to-income ratio when compared to the prior corresponding period. Higher average AUM drove higher management fees. However, performance fees were slightly lower than the prior corresponding period. Total expenses declined 2%, reflecting some of the early benefits from the simplification program that Vern has outlined. These were partly offset by foreign currency movements and continued investment in upgrades to our fund technology platforms. Now moving on to Corporate Trust. Corporate Trust experienced steady UPBT growth in the half, up $5 million on the prior corresponding period across all 3 of its business lines. Increased volumes in Debt Market Services, along with new client flows, further supported underlying FUA growth in the securitization portfolio. The result was 10% growth on the prior corresponding period revenue. Managed Fund Services revenue increase was driven by growth in custody services and continued momentum in our Singapore operations, both from new and existing clients. Digital Market Services experienced particularly strong growth with revenue up 20%. Some of that reflected an elevated level of implementation fees for Perpetual's intelligence SaaS offerings as well as continued growth in markets and the fixed income platform management solution. Operating expenses were higher, supporting growth and increased client volumes as well as continued investment to enhance digital capabilities across the business lines. Moving now to Wealth Management. Wealth Management's UPBT decreased by $5.5 million. Given the backdrop of the ongoing sale process, the business remained resilient. Revenue was broadly flat at $118.8 million. Market-related revenue increased modestly, supported by stronger equity markets, while non-market revenue declined slightly, mainly due to lower fiduciary and risk advisory income. Total expenses were up 6% with increases across staff, technology and premises costs. Funds under advice were up 6% on the first half to $21.9 billion with positive market movements and net inflows from new institutional clients. Moving now to the final division, our Group Support Services. Underlying loss before tax decreased by $3.3 million, with higher revenue over the half compared to the prior corresponding period. Revenue was supported by higher income from seed investments, interest received on cash balances and some foreign currency revaluations. Compared to the prior corresponding period, interest expense declined, reflecting the benefit of the refinanced debt facilities in May last year that I referenced earlier. Moving now to the next slide with a reconciliation between underlying profit after tax to net profit after tax. Significant items for the half were $58.8 million and were predominantly non-cash in nature. During the period, we undertook a review of significant items and began developing a clearer policy around classification, which resulted in some age projects being closed or where appropriate, moved back above the line. If I step through our results from UPAT to NPAT, the main drivers were costs relating to the Pendal transaction, the proposed sale of the Wealth Management business and our simplification program. I will call out on Pendal, these are the final costs associated with the transaction, and we're expecting no more to occur by the end of financial year 2026. The simplification program and any associated costs with Wealth Management are expected to continue into the financial year 2027. The remaining significant items are non-cash in nature and include revaluation adjustments. Reflecting the impact of these significant items, we reported a net profit after tax of $53.9 million. Now if I move to a bit more detail around our expenses. Controllable cost growth was 1%, largely attributable to expenses in Corporate Trust and Wealth Management as well as variable remuneration linked to improved contributions from Barrow Hanley and also our Australian boutiques. Now this was partially offset by simplification program benefits, which also helped to mitigate inflation-related cost pressures. Cost growth was also impacted by foreign exchange movements, albeit not as negatively as the prior 6 months. Looking ahead, we've improved our FY '26 expense guidance, and it's now reduced to between 1% to 2%, down 100 to 200 basis points on the prior guidance provided. It is important to note, however, included in this guidance is that expenses will continue to fluctuate depending on FX movements and interest rates. We've provided our currency assumptions in the footnotes to this slide. Moving now to cash flow. Free cash flow of $33.8 million for the half included $82.9 million in net cash receipts in the course of operations. There was a net increase in free cash flows in the half compared to the prior corresponding period. Borrowings did increase by $10 million over the period, but that was predominantly due to timing differences in drawings on our working capital facility relative to the upstreaming of dividends across our global operations. After paying dividends totaling $60.3 million and adjusting for timing on seed repayments and foreign currency movements, total cash at 31, December 2025 was $325.6 million. Moving now to the balance sheet. The balance sheet at 31, December 2025 remains robust and is supported by operating activities across our diverse sources of earnings. The majority of our cash is held for working capital, but also for regulatory capital purposes and predominantly in the United Kingdom. For greater clarity, we have also disaggregated the other financial assets in the balance sheet into 3 segments: seed capital, IIP balances and a loan receivable. By way of background, the IIP units is where Perpetual is hedging employee incentive obligations. Of course, there is an offsetting item in the liability side of the balance sheet. Importantly, we have $150 million of surplus liquid funds available, of which the majority relates to undrawn lines of credit. Now moving on to one of these categories, seed capital. Our seed capital is deployed to support organic growth and product development. Capital is deployed selectively, recycled actively and governed through a formal committee oversight process. The average holding period is approximately 3 years. We've included some case studies here to illustrate how seed capital can be used, whether it's to build early scale, launch strategies, develop track record and then recycle capital once external demand is established or the sometimes difficult and more challenging part to exit where scale is not achieved or commercialization does not occur. Now finally, turning to dividends. The Board has declared an interim dividend of $0.59 per share for the half, which will be unfranked and paid on the 7th of April 2026. The interim dividend represents a UPAT payout ratio of 60% for the half, which is lower than the prior corresponding period where the payout ratio was set at 70%. Dividends are expected to remain unfranked in the second half of this financial year. We will, of course, continue to assess the appropriate payout levels within our stated range, taking into a number of factors into account, including our ability to frank. I'll now pass back to Bern for some comments on the outlook. Bernard Reilly: Thanks, Suzanne. Before we move to questions, I want to spend some time talking about the progress that we've made on our strategy over the half. Thanks. Next slide. Great. Our strategy is aligned to 3 pillars, as you can see here on the page, simplifying our business, delivering operational excellence and investing for growth. We've made progress within each of these pillars over the half. Firstly, with Simplify, as I've already spoken to today, our simplification program has streamlined the group's operating model and delivered an additional $16 million in annualized savings for the half. Progress has also been made on our finance and transformation projects. Delivering on operational excellence. Our 3 businesses are now established as focused, largely decentralized business lines with greater accountability for delivery and financial outcomes, supported by continued group oversight and governance. Additionally, we have delivered on our cost commitments, resulting in an improved expense guidance for 2026. Finally, as we discussed earlier today in investing for growth, we have supported the launch of new product innovation in asset management with an example being the Perpetual Diversified Income Active ETF. Our Corporate Trust business also completed the acquisition of IAM's term deposit broking business, increasing scale in markets, broking and fixed income areas. Corporate Trust will continue to look for additional capabilities that will help drive business growth. We have also progressed AI transformation initiatives, embedding AI into core workflows to enhance decision-making, productivity and scalability across the business. These 3 pillars will remain the platform for execution for our business activity for the remainder of 2026. Now looking ahead, we have a clear and focused set of priorities. We'll continue to deliver on our cost reduction commitments. We'll retain our leadership position in Corporate Trust by investing in capability to drive further growth for that business. We'll continue to target investment in new products and capabilities across our asset management business, and we'll work to remove complexity to create a leaner, more efficient structure for the group. Thank you for listening this morning. Suzanne and I are now happy to take questions that you may have. I'll hand back over to Michelle, our operator, to manage these questions. Thanks, Michelle. Operator: [Operator Instructions]. Our first question comes from Elizabeth Miliatis from Macquarie. Elizabeth Miliatis: The first one is just on the sale of the Wealth division. If you could give a little more color on why things are taking a little longer than perhaps we'd expected. There's also been press reports that the brand is potentially up for sale as part of that transaction. Yes, just a little more color would be much appreciated. Bernard Reilly: Sure, Liz. I'll start and maybe Suzanne can add in. The process for the sale of the wealth has taken longer than I think the market would have liked. I think to put it into context, I think it's important. Firstly, this is a business that we've owned -- Perpetual's owned for 139 years, and it is intertwined in particular with the other businesses that we have, in particular, Corporate Trust. If you think about the prior transaction that we had contemplated, we were selling 2 businesses together to one buyer. Now we are selling one business to -- potential progressing selling one business to one buyer. We need to untangle that business from the broader organization to be able to do that. There's an element here of negotiating a sale while also untangling the business to be able to do that. It's actually quite a complex process to be able to do. I think the one point that I'd like to reiterate that I have said in my formal remarks, was that the Board and I are very focused on delivering the best outcome for our shareholders. So we're very focused on that, and so understanding the complexity that's in front of us, we're driving to get to an outcome of clarity for the market, but also for our team and our clients as quickly as we can. I was focused on the first bit. Really, we don't comment on media speculation, but when we thought about the sale process, brand was an important part of the consideration for us. I'll probably leave it at that. Elizabeth Miliatis: Then just the upgrade to the guidance for OpEx, so now 1% to 2% from 2% to 3%. It seems like most of that change is currency. Can I just confirm that? Then also secondly, I mean, just the rates in there look pretty conservative. Obviously, we'll see how things progress over the next 4 months or so, but potential upside risk to that number as well just because of currency? Suzanne Evans: Yes. Liz, you're spot on. In fact, that was probably one of the big swing factors in the full-year last year. Fair to say that probably has made me quite conservative as the CFO. Yes, I mean, FX is a big swing factor for us, and we've tried to capture that when we've provided the guidance. What I would say, though, is we're already 2 months into the second half, and there's a lot of things there which are still controllable costs. I think that's given us the confidence to tighten the range. Obviously, the combination of us staying quite vigilant on the expense base and also some of the benefits coming through from the simplification program, I'd like to think that we can comfortably deliver within the guidance we've given. Operator: Our next question comes from Nigel Pittaway from Citi. Nigel Pittaway: Just first question on -- just on J O Hambro. It seems as if your aims there to restore it to its heritage strength is still being somewhat hampered by the net outflows from the international and global select strategies. I was just wondering, do you feel you're any closer to be able to extend those outflows? Or is that something that we can expect unfortunately to go on for some time? Bernard Reilly: Nigel, yes, with J O Hambro, the select strategies have still -- you're right, still experienced outflows. You're 100% correct there. What we are seeing is a real focus on client retention, in particular with a lot of the wholesale clients in the U.S. The team are very focused on that. I think what drives investment outflows or inflows is performance, right? Performance there has still remained soft, and that makes that challenge a little bit harder. What I would say on the other side of that, our other global strategies and our emerging market strategies in J O Hambro have actually been receiving inflows as well. They do -- you do see some of the offset there as well. It remains a focus... Nigel Pittaway: Then just, I mean, following up, those 2 strategies, the outflows from there seem to be the main explanation as to why the revenue margin in asset management ex-performance fees dipped quite a bit in the second half last year. There seems to have been some partial recovery in that this half despite those outflows continuing. Is there anything going -- else going on within that revenue margin for asset management? I say stripping out performance fees that made it improve this half? Bernard Reilly: You're right. The margin compression that we saw in the prior half was related to the outflows in Select. You're also seeing at the margin, you're seeing the asset mix is changing. We touched on some of the strategies that we launched in the most recent half, and we've seen those fixed income strategies, which are a lower basis point average relative to equities where we've seen the inflow. You do see some of it is in that. It's not in all in outflow. We've also seen a pickup in some of the Barrow strategies as well. Suzanne Evans: Yes. I think as Nigel just called out, the way we report it includes performance fees. Operator: The next question is from Andrei Stadnik from Morgan Stanley. Andrei Stadnik: Can I ask my first question around distribution efforts in U.S. and U.K.? Are you pleased with the progress there as you are in Australia? Or what's the update on U.S. and U.K. European distribution? Bernard Reilly: Sure, Andre. We highlighted the Australian distribution in this half because we've actually spoken about the global in the prior half or the half before. I can't remember now. I thought it was an opportunity given a lot of the work in the Australian -- bringing the Australian teams together was really finalized. I wanted to highlight that and the fact I think they've done a great job in delivery on coming together as a unified team and delivering positive flows for the business. I suppose that's the first point, I suppose to explain why we put it in there for you to give you some context. I also think the size of that team and our footprint is something that we don't always talk about, and I think it's actually a great asset for the business. Reflecting that, I think, is important. It is far -- that team is far more advanced than our international distribution footprint would be a fair assessment to make. The work that we're doing with the team is continuing to drive that. Am I happy where it's at? I'm probably never going to be happy enough with where it's at from a distribution perspective. I might say the Australian team, some of them are listening have done a good job. There's still more that they can do. I suppose we're focused on continuing to drive what we can on both on -- I think the market segment piece is important. If I think about the U.S. and the U.K., I think a great example of some of the work that we've done was launching the Barrow Hanley strategy in the U.K., which was effectively a strategy we have in the U.S. that there was a real appetite for that opportunity in the U.K. The multi-boutique model allowed us to actually offer that in a different market that the Barrow team never would have been able to access had we not had they not been part of the group. I think a good fact point around the business strategy and structure that we have. An example of that. I think there's more we need to do in the intermediary space, wholesale space in the U.S. It is a little bit hampered, to be honest, by some of the outflows we're seeing in the select strategy, but that's an area of focus that I can assure you the team are clearly focused on that. The other part to, I think, think about in the U.S., given you raised the U.S. is how that market is changing. Active ETFs are clearly -- while it's a small start, right, but active ETFs garnering an outsized share of flow. We've talked about it in the past, us having a footprint in the active ETF space in the U.S. is going to be important for the future. As I mentioned in my remarks, we've made some steps there to go down the path of actually using a third-party provider. The reason we're doing that is a couple of fold. I think from a risk of execution perspective, we're taking some of the risk off the table by using someone who is using a multi-series fund. We're effectively using their scale to help us launch. It's quicker to market for us. We don't have to spend all the time building and getting approvals. We can get to market more quickly. Then we can assess the success of that and the progress of that before we look to invest more heavily. I hope that answers. Andrei Stadnik: I can ask the second question. Just on the seed capital, $183 million of seed capital. Can you talk a little bit about how that's shaped evolved over time, where you would like to see that number? How many strategies might be behind that $183 million of seed capital? Suzanne Evans: Yes to take that one. Thanks, Andre. Bernard Reilly: Suzanne is the Chair of the Committee, so she can take that. Suzanne Evans: Look, the thing is to deal with one of your questions, it is very diversified. We've got a lot of strategies that only required a relatively small amount of seed either to build the initial portfolio construction to build a track record. We've got quite a few bets in there. There'd be more than 20 capabilities that we've got ceded today. Also included in that number is investments in our CLO business via Barrow Hanley. Now those are obviously longer-term structures, so not liquid. Those ones have more duration to them. I think the important thing there is we're quite focused on, I think the size that we have deployed at the moment is appropriate. Obviously, the discipline that we're very focused on is how do we recycle. It's quite easy putting money into funds. It's sometimes a lot harder at recycling or as I sort of called out, if something isn't working, and that may just be that the market demand wasn't where you expected it to be. You have the discipline around closure and bringing that capital back. I wouldn't see us looking to materially increase the pool that we have today. I think with what we've got and with some of the recycling we're starting to think about, we'll be able to continue to support some of the innovation and product development that has spoken about. Operator: The next question is from Lafitani Sotiriou from MST. Lafitani Sotiriou: Can I start off with the wealth management business and sale process? $14 million spent in the last half is quite a lot of money for a business you may not sell in addition to the $5 million odd you spent the half before. Can you talk us through exactly what that money is being spent on? Have you got a better idea on potential stranded group costs and further separation costs if you are successful? Bernard Reilly: Sure, Laf. If you look at the $14 million pretax number, that is spent in -- there's obviously legal and other costs in there, but I think the larger part of that is around actually the separation of the business, which, to be honest, as part of our simplification strategy, we would do anyway. There's a part there where we are creating -- bringing the team into a separate perimeter and systems and other sorts of things that we are -- the technology that we're implementing that's in that number. You're right, $14 million is not an insignificant number, and it's one that we are keeping a very close eye on in addition to the $5 million you mentioned from the prior half. Suzanne Evans: I think it's a good point, Laf, because I think it's -- some of that is obviously cost that we may otherwise have incurred, but maybe in a slightly more accelerated time frame with some of the work we're doing around putting more autonomy into each of our business lines. The stranded cost, obviously, is something I'm very focused on. I would say we've already had a mind to that through the simplification program. Wherever we end up with the sale process, I'm pretty confident that those will be relatively immaterial. Now that does require us to do some more work just as we've done across the rest of the organization, but that's not something that probably touches my mind that much. The other part that around what will it cost if we are successful with the sale. I think we're going to have to progress a little bit further with that process to be able to articulate that in a way that I wouldn't be giving you a misleading number. I guess it's fair to say we have had a reasonable amount of spend already. That's some cost, which we can leverage if there is a sale that proceeds. Lafitani Sotiriou: Can I clarify? I understand that there are costs that you can move around, but one of the criticisms has been you had the strategic review and simplification cost program previously, that was over $130 million. Now you've got a new simplification program, which is $60 million. This is even separate to that, right? This wealth management $20 million spend is another one-off program that is being kept off and separated from the underlying cost. There seems to be a lack of consistency. On the one hand, you've got one-off costs for your tax you've reduced your tax cost in the underlying number this period, but it's from one-off capital gains losses that you would typically strip out, but you've then stripped out a lot of costs from your wealth business, which you still have, and you've also stripped out still $6 million from your Pendal business. I'm just not sure how we should reconcile and think about one-off costs going forward? Suzanne Evans: Yes. Thanks, Laf. Just one point of clarity and sorry if I wasn't clear before. Some of the impact that we've had in the prior period around the deferred tax asset wasn't actually a capital gain loss. We had a deferred tax asset that was sitting there, which was a timing part. We took a view around our Singapore business, and that was reversed. It's just slightly different and sorry if I didn't clarify it. I think we've definitely heard from the market views around significant items, and I made a commitment at the last half that we would start to look at that. I can't change some of the history, but I think I have been very focused on working with both the executive team and the Board around how we do have more discipline as to what gets classified as a significant item. I think there will be items from time-to-time and the potential sale of the wealth business is one of them, which I think if we don't break that out and provide some clarity around it, it is going to be very hard for people to think about the ongoing expense base. I will say we've heard you. We've heard what the market has given us this feedback, and we're starting that process. I think by the time we come back at 30, June, I think we can be much clearer as to what you should expect on a go forward in terms of the classifications for significant items. Lafitani Sotiriou: Just to be clear, so the wealth management business, some of that is actually BAU that's in that perimeter that's been separated. The teams -- that's people headcount that are part of the wealth business that are being excluded from the underlying number. That tax piece, that Singaporean thing still, whether it's a CGT thing or not, that's one-off in nature. Suzanne Evans: Yes, you're correct on the one-off. That's right. It's not people in the wealth business. We do have a team at the moment that are assisting us with the separation process. That separate team makes up some of that cost. I wouldn't categorize this as BAU spend. It is something that we're doing over and above. Obviously, if this was a BAU process, we would take a lot longer around some of these separation activities. The fact is, as Bern said, we're trying to separate 2 businesses that have operated together quite closely for close to 140 years. There's a lot of unwinding to do. Some of that's quite technical in nature around the co-sharing of licenses and operations that have existed for a long time. Lafitani Sotiriou: Just finally, so can you just clarify why the one-off tax gain is included in underlying the one-off BT Pendal-related expenses still being excluded from underlying? Suzanne Evans: The Pendal one, I think -- and forgive me if I haven't got a little of the history, but I understand at the time the Pendal transaction occurred, it was indicated that it would take approximately 3 years for those costs. In that program, as I'm aware, all of the integration work is completed, but there is still a bit of a tail around some of the incentive arrangements that is still coming through in that number. That won't be there from FY '27, which is what I called out. As with the tax, I guess what we're trying to do is mirror both above and below the line. In terms of the one-offs, those were highlighted previously in significant items. I guess it's an open call as to whether you think they're material enough to call out. Given the movement that also pushed us below what we would expect our effective tax rate to be on a medium-term basis, which, as I said, is around the 27% to 28%, we wanted to call it out. Operator: There are no further questions. I'll now hand back to Bernard Reilly. Bernard Reilly: Thank you, Michelle, and thank you, everyone, for joining us on the call today for our update on our first half '26 results. Thank you.
Operator: Welcome to the IonQ Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Hanley Donofrio, Director of Investor Relations. Please go ahead. Hanley Donofrio: Good afternoon, everyone, and welcome to IonQ's Fourth Quarter and Full Year 2025 Earnings Call. My name is Hanley Donofrio, and I'm the Investor Relations Director here at IonQ. I'm pleased to be joined on today's call by Niccolo de Masi, IonQ's Chairman and Chief Executive Officer; and Inder Singh, IonQ's Chief Financial Officer and Chief Operating Officer. By now, everyone should have access to the company's fourth quarter and full year 2025 earnings release issued this afternoon, which is available on the SEC's website and on the Investor Relations section of our website at investors.ionq.com. Please note that on today's call, management will refer to non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. You are directed to our earnings release for a reconciliation of adjusted EBITDA and adjusted EPS to the closest comparable GAAP measures. During the call, we will discuss our business outlook and make forward-looking statements, including those regarding our guidance for 2026. These comments are based on our predictions and expectations as of today and are not guarantees of future performance. Actual events or results could differ materially due to a number of risks and uncertainties. Therefore, you should not put undue reliance on those statements. We refer you to our recent SEC filings, including our annual report on Form 10-K for the year ended December 31, 2025, for a more detailed discussion of those risks and uncertainties. We undertake no obligation to revise any statements to reflect changes that occur after this call, except as required by law. Now I will turn it over to Niccolo de Masi, Chairman and CEO of IonQ. Niccolo de Masi: Thank you all for joining us on today's historic call. 2025 was a highly successful and transformational year for IonQ, both strategically and financially. Strategically, we expanded our business from leadership in quantum computing to become the world's leading quantum platform solution and merchant supplier. We are the first company in history capable of delivering integrated quantum solutions across computing, networking, sensing and security in all major allied geographies. IonQ is the world's only full stack quantum platform company operating in all domains. This strategic expansion is powered by an unmatched intellectual engine as we continue to attract the world's best and brightest quantum leaders as well as the leading quantum IP portfolio. IonQ benefits from approximately 300 PhDs and 800 talented colleagues with advanced degrees, many of whom are household names in their fields. Financially, we delivered a record year, not only for IonQ, but a historic one for the entire quantum industry. In the third quarter of 2025, we delivered nearly as much revenue as we did in all of 2024. In the fourth quarter of 2025, we surpassed this by growing more than 50% quarter-over-quarter. After becoming the first public quantum company to achieve 8 figures of revenue in 2024, we grew to deliver substantially more revenue in the fourth quarter of 2025 than in the entire calendar year of 2024. Strong organic growth powered our full year 2025 revenue to be over 3x that of 2024. Commensurately strong investor interest allowed us to fortify our balance sheet with the 2 largest capital raises from a single investor in Quantum history. Quantum is indeed now, and IonQ is confidently leading this revolution by every measure. As most listeners know, late last month, we announced the largest acquisition agreement in Quantum history and the first public-to-public planned Quantum transaction ever. SkyWater is the leading quantum foundry in the world, commercially supporting not only IonQ, but also more than a dozen other Quantum and DoW programs. By leveraging SkyWater's unique expertise in pioneering quantum semiconductor scaling within secure trusted environments, we will be positioned to accelerate manufacturability of IonQ's entire Quantum platform roadmap. However, our mission extends beyond IonQ to power the broader U.S. quantum industry and all our global allies. We aim to ensure our nation's entire quantum ecosystem moves forward with speed and security. In our joint IonQ SkyWater webinar last month, we laid out the fact that IonQ is already a leading merchant supplier to the broader quantum industry. Our precision atomic clocks power a number of quantum computing businesses and government contractors, and we already sell our quantum networking solutions and sensors broadly. Our modality-agnostic networking components are, in fact, designed to integrate diverse quantum devices, ensuring seamless connectivity across the quantum industry. Once SkyWater is part of the IonQ family, we will become the largest quantum merchant supplier in the world, with Thomas Sonderman continuing to lead SkyWater. Our focus is accelerating our nation's quantum industry, and we will continue investing to ensure the United States prevails in this geopolitical race. SkyWater has already created the compartmentalization, the protocols and the IP protections that will allow customers to continue to operate within our foundry model. We are a kindred spirit with everyone supporting our nation and our allies in this quantum space race of our era. Our combined company will have the capacity and capital to grow not only U.S. quantum R&D initiatives across quantum computing, quantum networking, quantum sensing and quantum security, but also to ensure the U.S. quantum manufacturing scaling. SkyWater helps us build an IonQ platform that customers, especially government and other mission-driven buyers, can trust and plan around irrespective of geopolitics. Together, we intend to ensure the entire U.S. quantum industry will deliver, scale and do so onshore with trusted processes for the good of the nation. Returning to 2025. It has been a year of tremendous accomplishments across our product families, both technically and commercially. In quantum computing, IonQ demonstrated the highest performance quantum gates in any system platform and by a wide margin. 99.99% 2-qubit gate fidelity means we can concentrate on system architecture and scaling in order to make smaller and cheaper systems even as they become more powerful. While other quantum computing companies are still working on perfecting their underlying qubits and gate operations, ours are based on physics that was settled 25 years ago. Our fidelity advantage translates into a powerful and enduring error correction advantage. I want to highlight today that our quantum computers deliver the best time to solution on the market for commercially relevant applications. Time to solution is how fast a customer running an algorithm gets to accurate answers that actually solve their problem. For example, when we look at a common quantum algorithm used for signal processing, search and factoring, IonQ is up to 1,000x faster than the leading superconducting system on reaching the solution. We also see a massive speed advantage in signal processing and optimization tasks with up to a 10,000x faster solution on IonQ systems compared to superconducting. We aren't just doing theoretical work. We are solving real-world problems at a speed that creates commercial utility. This is how IonQ is delivering in today's competitive landscape, and we're just getting started. Our near-term roadmap builds to 1,600 fault-tolerant module qubits a year before our competitors even get to 200. We believe we will continue to outpace competitors on commercial utility to an accelerating extent as we unlock our application roadmap announced last fall. Best of all, we deliver these advantages at a far more accessible cost for both commercial and government customers. At our Analyst Day in September, we shared third-party validated estimates of IonQ's full scale system cost, which is 2 orders of magnitude below superconducting competitors. As students of history, we all know that the best economics occasionally beat the best technology, but best economics and best technology is what makes markets and builds an irresistible ecosystem. This is what IonQ is poised and focused on delivering. In Q4 2026, we are targeting to demonstrate an operational 256-qubit system, which will be our sixth-generation machine in the market. With our world-leading 2-qubit gate fidelity, we expect to unlock substantial value for our customers and explore world-changing applications this year. Last year, we worked closely with dozens of customers around the world who use our quantum computers to run complex applications. A prime example is our continuing work with Ansys and Synopsys as we pursue a mutual goal of commercializing quantum in the engineering space. To paraphrase the CEO of Synopsys on my Quantum panel at the World Economic Forum in Davos last month, the key driver of innovation is complexity. Customers do not adopt new technology because they're curious, but because they need to solve a problem in a more affordable way. We help customers around the world do just that, running applications from pharmaceuticals and automotive to chemistry and AI with the fastest, most energy-efficient and cost-effective approach. In quantum networking, among numerous deployments, we partnered with the U.S. Air Force Research Lab to achieve the first qubit to photon frequency conversion in a field deployable system. This ensures real-world quantum networks on existing standard fiber optic commercial infrastructure. We also won the contracts to deliver multiple international quantum networks, including the world's first citywide dedicated quantum network in Geneva, Switzerland, Slovakia's first national quantum communication network and one of Europe's largest operational QKD networks to date in Romania. In quantum sensing, our atomic clocks and inertial sensors are the highest performing fielded devices for their form factors. Our quantum sensors already operate in domains from under the ocean to up in the air. This technology leadership is translating directly into high-value defense partnerships, including U.S. Navy contracts for miniature ultra-stable atomic clocks and U.S. Army contracts to provide resilient timing systems for GPS-denied environments. Our clocks are the highest performing in the marketplace, and they are shrinking in size. Most recently, in partnership with DARPA, we successfully reduced our clock size by 6x while maintaining similar performance, a breakthrough that paves the way for integration into satellite payloads. Together, IonQ's market-leading quantum sensing technologies complement our quantum computing and quantum networking infrastructure to position IonQ as the partner of choice for the mission-critical needs of defense, aerospace and sovereign nation customers. We bolstered our IonQ federal team with the appointment of Katie Arrington as our CIO until recently, the acting CIO of the Department of War and adding General John Raymond to our Board, the first Chief of Space Operations for the United States Space Force. Rick Muller joined last year also having until then been the Director of IARPA. Dean Da Costa joined to run communications and government relations, having previously held the same role at Lockheed Martin. The collective expertise of these leaders uniquely positions IonQ to navigate the complexities of the federal landscape and win large-scale mission-critical federal contracts. Geographically, we deepened momentum in South Korea through our QKD National Security accreditation and KISTI system sale win, where IonQ is now anchoring the country's largest quantum classical compute platform. We also expanded our agreement with QuantumBasel in Switzerland to over $60 million, spanning 4 years and 4 generations of IonQ systems. In the EU, we struck a partnership with leading autonomous vehicle company, Einride of Sweden, and incorporated IonQ Italy under the leadership of Dr. Marco Pistoia, the former Head of Quantum at JPMorgan. In Canada and Sweden, we struck a partnership with CCRM to accelerate the development of advanced therapeutics, reinforcing the transformative impact of Quantum in the pharmaceutical sector and building on the proven results of our work with AstraZeneca last year. Scott Millard joined us to lead our global commercial efforts, having previously led the AI team at Dell. Chad Sakac joined us to run field engineering and presales following his distinguished career doing the same at EMC and Dell. Under their leadership, our expanded commercial team is positioned to accelerate our global go-to-market strategy, delivering our full stack quantum solutions to meet the evolving needs of our global enterprise customers. Moving now on to 2026. As our team knows, we have 3 key objectives; first, to drive superior financial performance by leveraging our scale and our complete platform to further accelerate our commercial execution. Our strategic evolution into the world's only full stack quantum platform company positions us with continued momentum to achieve $235 million in revenue in 2026 at our current guidance midpoint. Second, to answer the key strategic questions that unlock exponential value in our product families and across our global quantum platform. DARPA QBI Phase C and the next-generation GPS that is orders of magnitude more accurate are examples of our ambitions here. Third, to hone our internal operating system for efficiency, speed and talent density as we scale. We continue to make smart, disciplined organic investments to move technical progress earlier in all our product families. We will also continue to consider value-enhancing acquisitions to further deepen our product and service offerings and accelerate our long-term path to profitability. You will hear us talk more about both time to solution and cost to solution, areas where IonQ has and will always excel. And we will unlock utility for Fortune 500 companies, U.S. and allied governments alike. Our North Star is to positively impact all aspects of applied science by pioneering and globally commercializing the world's quantum solutions. 2026, I believe, begins the era of truly showing IonQ's quantum platform in action in all its forms and domains, quantum applications, quantum computers, quantum networks, quantum security and quantum sensors. IonQ is one platform, one team, primed and poised to win. As we advance our strategy and deliver on our objectives, we are confident we will drive significant value creation for shareholders. As I conclude, allow me to thank my colleagues for their tremendous efforts in 2025 and the entire U.S. quantum industry for their trust. We are here to speed up all of our nation's quantum initiatives and players using our merchant supplier capabilities. IonQ is here to support all initiatives at the White House, DoW, DOC, DOE, and Capitol Hill advance to ensure our country and its allies benefit from U.S. quantum leadership in the 21st century. We look forward to 2026 and beyond with confidence as IonQ's technical roadmap is delivered across all product families and our operating momentum continues to build. I am delighted now to hand you over to Inder Singh, IonQ's CFO and COO. Inder Singh: Thank you very much, Niccolo. It really has been an amazing year for IonQ. I'm extremely pleased that 2025 has been such a transformative and record-setting year for us from virtually every lens that I can see from record-setting financial results to exceptionally strong commercial sales globally to unmatched technology breakthroughs like the four 9 fidelity you mentioned. It was the year in which we transformed the company from a single product quantum computing company in 2024 to a full stack quantum platform company, able to deliver not just quantum computing, but as you said, quantum networking, quantum security, quantum sensing, interconnects, laser-based communications, the world's most precise PNT and on and on. In short, from one amazing product to the world's most comprehensive quantum product portfolio. In the process, we also became the Quantum industry's merchant supplier. Yes, as Niccolo noted, we provide components to our pre-group companies in the quantum space. And as you heard from Niccolo, we're not stopping there. We've announced our intent to acquire SkyWater Technologies, already recognized as the most secure fab in the United States. With SkyWater, once it receives regulatory approval, we would have both surety of supply and security in our solutions. With more than $3 billion of cash among our financial firepower, we intend to bring that surety and security in the most advanced and secure products to our customers around the world. Let me highlight our financial results, which help really punctuate what you and I just talked about. IonQ ended 2025 with an exceptional fourth quarter following a record-setting third quarter. Fourth quarter revenues were $61.9 million, even exceeding our own expectations and growing 429% year-over-year. This brought our full year 2025 revenues to $130 million, comprising 202% year-on-year growth. These historically high results mean that IonQ has outperformed our revenue guidance once again, exceeding the midpoint by 55% for the fourth quarter and 20% for the full year. Our full year revenues now exceed the Street expectations for 2025 revenues while the other pure-play quantum players combined. Let me take a moment to talk about some key drivers of what the performance we saw this quarter and this year. First, we saw tremendous demand from customers for our latest fifth-generation 100-qubit tempo system. In fourth quarter, we welcomed KISTI of South Korea as a new customer of our fifth-generation system. This sale highlights IonQ's distinct value and the ability for us to win even against competitors that may be larger than us or more entrenched or bigger marketing dollars. The value and the strength of our products clearly shine through. Customers are choosing to partner with IonQ because of our industry-leading tech road map today and the tech road map we have announced for the next 5 years as well. We also welcomed another new customer, CCRM, one of the world's leading advanced therapeutics accelerators, which plans to use IonQ's Tempo cloud-based solution to do bioprocess optimization, disease modeling and the design and manufacturing of advanced therapies for many health conditions. Yet another commercial success story is with QuantumBasel, which demonstrates our land-and-expand strategy, but also that we treat our customers as partners in a journey, combining theirs with ours. QuantumBasel, who already owns our prior fourth-generation Forte quantum computer, agreed in the fourth quarter to purchase our fifth-generation tempo computer and also obtained access to our future sixth-generation computer, which is still in development, and this is a 256-qubit semiconductor-based computing device we expect to deliver in 2027. This multiyear relationship now -- is now expected to span 7 years from the years we've been with them in the past and the 4 years that Niccolo mentioned with this new arrangement we have with them. It also demonstrates how one compute device can lead to the adoption of an entire road map. QuantumBasel is a testament to how customer relationships turn into enduring partnerships. Beyond computing, we are seeing similar demand and adoption for our networking and post-quantum cybersecurity solutions. As you also heard from Niccolo, we saw quantum networking adoption in Geneva, in Slovakia. And in Romania, IonQ is deploying one of the largest and most complex operationally post-quantum cybersecurity networks in Europe. These national partnerships represent significantly larger networks than in the past and are indicative of the growing adoption of our quantum networking and our quantum security solutions. Turning now to the mix of revenues we saw. For the full year 2025, over 60% of revenue came from commercial customers, marking strong sales in the commercial sector and reflecting the customers, some of whom I named before. And anecdotally, our international sales comprised more than 30% of revenue for the first time, reflecting how our Quantum platform solutions are now resonating worldwide. Because of the breadth of quantum products we are now delivering, our customers' list includes Singtel, SK Broadband, Solace, CERN, IIT, it's a very long list. Importantly, this broadening customer base presents us with a golden opportunity to cross-sell more things to more customers. As we move ahead, we continue focusing on new customer opportunities around the world, including in places like Australia, Italy, Greece, India, Japan, Vietnam, Argentina and many others. Our new CRO and the sales team are taking a very methodical approach to identifying the most compelling opportunities and taking a disciplined pursuit and capture approach. Importantly, our 2025 results included nearly 80% year-on-year organic growth, and I expect this to be even healthier in 2026. We are very pleased to see solid organic growth, of course, even as we have broadened our product portfolio with our Quantum platform. With my second successive quarter now in this role, we are continuing our focus on building strong backlog plus developing a very targeted view of our pipeline in order to make sure that we continuously strengthen our visibility for our financial planning and also that we match demand and supply. As a demonstration of this focus, in our 2025 10-K being filed today, we disclosed that our remaining performance obligations, or RPO, which provides one metric to gauge visibility over several quarters, stood at $370 million at the end of 2025 compared to just $77 million at the end of 2024, which is almost a fivefold increase. Turning now to EBITDA. We reported an adjusted EBITDA of negative $67.4 million for the quarter and negative $186.8 million for the year. I wanted to note that even this adjusted EBITDA is better than the full year adjusted EBITDA guidance that we had provided at the time of our third quarter earnings call. The adjusted EBITDA reflects the fact that we are making investments. We are investing in our business and our key investment area, as you'd expect, continues to be R&D. R&D comprised $96.1 million in Q4. And for the year, it was $305.7 million. That's 123% annual increase. We will continue to invest in R&D as this helps maintain the technological advantage that we deliver for our customers and also creates new IP to extend the value for our customers in the future. We are doubling down on investments in our computing platform, which is already leading the market by multiple years by both investing in our fifth-generation tempo deployments, which are in progress this year, which are already beginning really the build-out of our sixth-generation 256-qubit computing platform, as Niccolo mentioned. And then we have our sights on our seventh-generation system beyond that. Unlike other market players, we are also investing in building our own quantum application, in many cases, in partnership with our customers and also on our own. We are focusing on applications with the highest potential impact with the intent to build once and sell many times. Just a few examples of high-impact applications we might build include quantum high-frequency trading, energy grid optimization, life sciences acceleration and even the design of semiconductor chips in a more effective way. There are many others. To sum it up, our investments in R&D are not just lab experiments. We are bringing Quantum to life and delivering to our customers today. Turning to net income. For the fourth quarter, we reported a positive $753.7 million of GAAP net income, which was mainly due to an approximately $950 million mark-to-market valuation of warrants as required by accounting conventions. Needless to say, the mark-to-market impact warrants are noncash items and valuations are more related to our stock price at any given point and do not represent the operating fundamentals of our business. For the full year 2025, we reported a negative $510 million GAAP net income, which included warrants valuation impact of $66.7 million. Cash, cash equivalents and investments as of December 31, 2025, were $3.3 billion. The strength of our balance sheet provides us with what we consider unprecedented financial firepower to continue to invest in R&D to build out even more new products to invest in go-to-market resources and yes, to also acquire for critical new capabilities or to accelerate our road maps. IonQ is uniquely positioned with the resources, talent and differentiation so we can focus on cementing our market leadership and delivering the world's most advanced quantum technologies in every sector. As for operational excellence, which is so critical for establishing the foundation of future success. This will be one of the top priorities for Niccolo and the leadership team in 2026. And as you said, and as we reported last quarter, we've already turned our focus to this very important area to prepare for the future. Deploying organizational clarity and accountability is one essential ingredient. Manufacturing under a clear leadership, customer deployment under a single leader, sales under a single leader, supply chain under a single leader and applications development ownership. All of these things comprise the building blocks of what you need to be able to ensure that there's accountability and planning. Last quarter, we mentioned we have established a dedicated M&A integrations team. And I'm very pleased to report that since then, we have successfully integrated key functions like HR and finance and are making strong progress on IT consolidation under our new CIO. In short, we have moved to rapidly integrate our acquisitions, increase our execution velocity and deliver on key priorities. I'm pleased to report that our IT cybersecurity teams are now unified under the leadership of our new CIO that Niccolo mentioned, Katie Arrington, who recently joined the team from the Department of War and our CISO, who also brings years of experience with many agencies and also other companies, including through other agencies and reports to Katie. Our goal is to create our products in as highly secure posture as possible. Last quarter, we also spoke about IonQ's unique ability to now leverage the established semiconductor manufacturing process for our next-generation compute. In January of 2026, as Niccolo noted, we announced our intent to acquire SkyWater in order to strengthen our supply chain all the way through to manufacturing. On the close of that transaction, which, of course, must go through a regulatory process, we would acquire SkyWater's trusted fab U.S.-based Tier 1 foundry, enabling us to ensure we would have the availability, security and quality to scale our chip-based road map, bringing us both CMOS as well as advanced packaging capability. This acquisition also builds on our already existing merchant supplier business model in which we currently serve other quantum players today. As the pacesetter of the quantum industry, we do see it as a key responsibility to also help ensure in the overall development of our ecosystem. Let me turn now to fiscal year 2026 guidance. On the shoulders of the amazing 2025 numbers that we saw, we feel we have built a strong foundation for yet another year of strength in 2026. With that in mind, we are pleased to offer the following financial guidance for full year 2026 as well as for the first quarter. For 2026, we are projecting revenues of between $225 million to $245 million for full year and $48 million to $51 million for the first quarter. Our projected revenue growth is anchored by a continued expansion of our customer base, both in terms of number of customers, number of offerings that we bring to the market. And as I mentioned earlier, our guidance today is based on visibility stemming from a healthy backlog and an attractive pipeline that we will work methodically to convert. We are projecting adjusted EBITDA to be between negative $310 million and negative $330 million for the full year 2026. And as I discussed today, this range represents our continued investment in critical R&D to help drive the next generation of Quantum solutions across our portfolio. It goes without saying that since we announced SkyWater transaction has not closed, our guidance metrics do not reflect SkyWater. We continue to operate as separate publicly traded companies until such time as approvals are in hand. As Niccolo mentioned at the beginning of his comments, IonQ has rapidly established itself with the world's most unique set of products and capabilities, and we are for sure not stopping there. Compared to any other quantum pure-play one might look at, our product suite is unmatched. Our talent density is exceptional. Our business is global. We are actively selling into commercial deployments, not just labs. And critically for the future of Quantum, we possess a merchant supplier business model that enables the entire Quantum ecosystem to develop and succeed over time as we progress. And yes, while we do now and then take a moment to celebrate our progress like today, and I must say it does feel good. Tomorrow, the entire IonQ team will get up and continue to dash towards delivering the world's most advanced, innovative and complete quantum solutions for our customers. With that, operator, can you please open the call for Q&A? Operator: [Operator Instructions] The first question comes from John McPeake with Rosenblatt Securities. John McPeake: Guys, can you hear me? Inder Singh: We can, yes. John McPeake: Okay. Great. I think the last time I was on mute, and I don't want to repeat that. So congratulations on the numbers and guide. I just have a question about the SHIELD release that came out a couple of days ago. Now that you guys have a pretty broad portfolio of quantum assets, you talked in the release about the $151 billion opportunity. How should we think about what you might be able to address relative to that number? Inder Singh: We'd love to get all of it. No, I'm kidding, John, of course. We are very pleased to be included among the players that might participate in that. We intend to ensure that we deliver based on what we've built, John. And you know that one of the things that we're trying to make sure we are very clear on, maybe do a better job of is explain how we're actually a solution company. We're a platform company. And I think in some cases, we're still being compared against a single product company. And when you look at opportunities like SHIELD or frankly, any other opportunity that we may be looking at, and we are looking at others, too, you need a solution. You need to integrate things together. It's not enough to have a quantum computer that may work one day. It's not enough to have a quantum computer that even works today. You need to be able to link things together. You need networking. You need to be able to bring the quantum security up to industrial scale. You need to ensure that you're able to provide secure communications. You need to be able to make sure that you're able to deliver today, not promise something in 2029. So we're happy to be included in that, John. I mean, I thank you for your question. Yes, we'd love to have our unfair share of it. But I think that we will deliver on the things that we promised, and we think we can do things in a more effective and more complete way than many of the other players that I think we are looked at again. That said, we do these things with humility. We ensure that we have the engineering. We ensure that we have the software. We ensure that we have all the interconnections that are required. It's a solution sale, right, when you look at something like that, John. Niccolo, do you want to add anything to that? Niccolo de Masi: No, absolutely. Look, I mean, credit to the team for an outstanding year. We did a lot, obviously, in 2025. And as I said, we're just getting started. So we expect to continue momentum here, and it's not just momentum in each product family, but it's, of course, as Inder really points out between the product families, where we really are inventing the future in multiple dimensions, right? And I think that's what's appreciated to a grand extent by our nation's SHIELD initiative amongst many other appreciators at the moment. Operator: The next question comes from Kevin Garrigan with Jefferies. Kevin Garrigan: Team, congrats on the great results in reaching over $100 million in revenue. On SkyWater, can you just update us on the status of the regulatory approval process? And over the last 30 days since you made the announcement, have there been any unexpected developments, either positive or negative that could impact the timing? Inder Singh: We're still looking at it in the same way that we talked about it last time, and I appreciate your question, and thanks for your comments. It's a regulatory process. It's well defined. It's not that we try to predict how it may go or not go. We think that the model that brings together a merchant player and quantum platform, which is us and a merchant provider of manufacturing services through SkyWater is in the interest of the nation, the industry and all the players in it. And as I said, and as Niccolo said, we're already a merchant supplier. We supply products, components to others that you may call our competitors. We don't see them that way. We think that all players need to succeed, and that's what creates an ecosystem and an industry. This industry needs the same. So we are the pacesetter, yes. We will remain the pacesetter, yes. There's a responsibility that comes with that, and we will live up to that. Kevin Garrigan: Yes. Got it. Got it. Okay. That makes sense. And just a quick follow-up, continuing on the acquisition front. You guys had acquired Seed Integrations (sic) [ Seed Innovations ] at the end of January. Can you just talk about how this company fits strategically within your portfolio and what gaps it fills? Niccolo de Masi: Sure. So Seed is a software classified mission control business, that really is quite unique. Because almost all their work is classified, I'm not going to go into huge details for you. But you can assume that it is stitching together not just component solutions that we have at IonQ, but it's also helping 3 letter litter agencies and portions of our DOW do the same even before IonQ came along. So it is a unique opportunity for Quantum, not just in the hardware sense, but also in the application sense to be part of what we're doing in programs like SHIELD for the prior question as well as the rest of the broader quantum platform of sensing, security, networking, which we have put together in every theater of operation from under the ocean to on top of the ocean to on land, in the air and up in the heavens. There's a lot going on for the battle for the future, and IonQ very much is well positioned to have, hopefully, our fair share and maybe even a bit more. Inder Singh: And just to add, I mean, the DevSecOps capability and software development that Seed brings to us is actually relevant for all of IonQ. And so we intend to take part in ensuring that Steve is succeeding in everything they're signing up for directly externally, but also, frankly, leveraging their unique capability to help us accelerate in DevSecOps across the company as well. Operator: The next question comes from Craig Ellis with B. Riley Securities. Craig Ellis: Congratulations on the really strong results and the big RPO number, $370 million is quite substantial. I wanted to follow up on the guidance for calendar 6 revenue at the midpoint, $235 million. Can you help give us some color on some of the things that are driving revenues to that level, whether it be the international versus domestic mix of business or whether it be particular programs within your compute networking or sensing capability? And then just a sense, Inder, given the first quarter's guide on the linearity through the year, it would seem to be that there is implied growth, but any color would be helpful there. Inder Singh: Sure. Yes. Thanks for the question. Look, I think not to provide a lot of color underneath the guidance itself, but you can expect that we will continue to globalize the company. So that's also in there. I mentioned a number of countries that was not by accident. I mean we are looking at some amazing opportunities. Frankly, demand is exceeding supply, if I'm allowed to say. And we're trying to ramp up our resources to make sure that we can deliver the fifth-generation machine to as many customers as wanted. We're already starting to see demand for our next-generation machine, the 256 and beyond that. So what gives us confidence, first of all, just in general on the compute platform is the road map that we put out there is resonating. The fact that we are taking our customers on the journey with us is working. The fact that we are forward deploying engineers and application developers with those customers embed this with them. So we feel very comfortable that organic growth of our compute platform will be very strong in 2026, as I mentioned earlier. I wouldn't be surprised if it exceeds 100% growth year-on-year, but that's the direction of travel. The other parts of our portfolio are also performing. The need for and the sense of urgency, frankly, to deploy post-quantum security is taking on a different level of importance that didn't exist a year ago. In fact, we are agnostic as to the type of application that our customers want, whether it's PPC, QKD, but of acronyms, alphabet soup, I won't go through all of that. You know that. We do not have religion around it. We deliver everything. We know that 2 to 3 years from now, you will need all of it. Classical cybersecurity probably at some point, it doesn't work. So I think those that recognize that in some largest banks, largest governments, the countries I named, the cities we named, I think this is just the beginning. So underlying our assumption of guidance for the year also is that we will see healthy demand, which is what we're seeing for security solutions, networking solutions. And then sensing, I think, is at the very beginning of something very exciting. Niccolo talked about GPS interference and how you get around things like that. That is on the minds of virtually every country at this point, as you probably heard, right? And so to have the world's most precise PNT solution, most precise atomic clock, the ability to deploy that in different modalities under the water, in the sky, et cetera, that's the opportunity that we have ahead of us, which, of course, we have to execute on that, but the demand is there. And we intend to make sure that we deliver on elements of that for sure in '26, but that is a multiyear journey. So that's like years of potential opportunity for us. And then lastly, I think I mentioned to you that commercial is becoming bigger. Like 3 years ago and 4 years ago, when Niccolo and I joined the Board of this company, it was mainly labs, right? Of course, it would be labs, research institutions, et cetera. That's where they would first see this quantum work. Now the quantum works, you are starting to see, at least from our machines, people say, we want this one, we want the next one and the one after that. And so I think as long as we are also investing in applications, which is really key. Think about the iPhone with no apps, it wouldn't be as exciting. But the iPhone with the apps is what we're trying to do in the quantum space. That's the thing that I think resonates well. And I think that once you have that ecosystem going and you build some of the applications yourself and you build -- others will, of course, build apps perhaps on top. But we'll focus on the most important things. And again, we do have this sort of industry-neutral merchant philosophy. Our machines, our systems can plug into NVIDIA system, Microsoft's Cloud, the Google Cloud, et cetera. We want to make sure that we become ubiquitous and then we also drive the highest value things ourselves. So there's a bunch of things around confidence from customers now telling us, okay, I'm ready. The one that you haven't built yet, I think I might want that one, too. We're not putting that in our guidance, obviously, you know that. But to have backlog that have line of sight, that's kind of what we're looking at. Craig Ellis: Yes. Sorry to jump in on you, Inder, but there was mention in the transcript of a 256-qubit system by year-end. What should we keep in mind with the notable engineering milestones from here to bring that to market? Inder Singh: Yes. Look, I think you realize that, of course, and you know this, the 256 system and beyond, that entire road map for the next 5 years that we've talked about, is a semiconductor-based road map. It's the ability to use mature node manufacturing that exists today to build out and scale from 256 to 10,000 and beyond. So we are in the process already. And we said this when we announced the SkyWater transaction, we're already looking at them to be a supplier to us even prior to the acquisition announcement and other foundries also. These existing foundries enable us to, with some confidence, drive the development of the 256 into the 10,000 and beyond. As for the 256 itself, I'm happy to report that we've done the tape-outs of A, B and C. And as you know, from semiconductors, those are the most important ones in the beginning. And then the feature-rich, feature driver fourth D tape-out as it's called, is in progress. So not to give you an exact time line that you'll then say you told me it's going to be March 31 or April 1 or whatever. We are very comfortable with the way the development of the 256 is going. It's following the road map that other semiconductor development follows. And then beyond that, it's into tiling, it's into scaling. And we also have the engineering team already beginning to think about the 10,000, not just the 256. Does that help? Craig Ellis: That's very helpful. Operator: The next question comes from V. K. Rakesh with Mizuho. Vijay Rakesh: Pretty impressive guide and growth for the year. Just a couple of questions. Just wondering, as you look at the fiscal '26 number here, any way to think about -- and the forward quarter, I guess, any way to think about the hardware, software split? Inder Singh: I mean we will provide, obviously, when we report the usual breakouts that we do, which is kind of along the lines of what you described. I think of it less as hardware software. I think -- remember what I said, like the hardware without the software doesn't do much and vice versa. So solution thinking is really what's important. We're trying to think of our business as the only company, frankly, that can deliver entire solution. The compute, the ability to connect one compute device to another, the ability to connect one city to another, the ability to connect ground to space and back to ground again, the ability to provide security across those links, the ability to use Skyloom's OCT terminals to provide secure, high-speed transport for data and secure transport and on and on and on. I remember Cisco, and you'll remember Cisco as well. And I think of other companies that have done this in the past that have not asked for permission. So when Niccolo became CEO exactly 1 year ago, by the way, I think his anniversaries tomorrow, in one short year, we've gone from being a one product company to a platform company. We now have to execute and with responsibility, deliver for our customers what they are now wanting from us. And they're saying, "We will buy your road map, we will buy your solutions. You're bringing the secure solutions together." So it's a unique opportunity for us to actually just go and execute, and that's why this is the year of execution and yes, also continuing to innovate. So watch the space, more announcements, more things, we're not stopping. Vijay Rakesh: Yes. Very impressive. And just one other question. And obviously, you're growing your team pretty nicely here. Any thoughts on when this national quantum initiative, the NQI funding starts to open up? I know you have some pretty solid engagements with the Golden Dome SHIELD, et cetera. But any thoughts on when that national NQI funding starts to open up for the space? Inder Singh: Yes. I mean, thanks for the question. Look, I think that 3 years ago, probably that would have been top of mind for us. Like when does the funding unlock. But with more than $3 billion of cash available to us today and the ability to raise more if we need in the future, the ability to invest ourselves organically, to be candid, I think other companies might be looking for funding to unlock. We're looking for the ability to drive customer value today without the need for like additional funding. I'll let Niccolo add to my comments here, but it's an opportunity, obviously, for the whole industry to benefit if more and more countries focus on quantum in general. I'm starting to see, and Niccolo is the tip of the spear on this for us, but like virtually every government in any country in the world is now including quantum, very close to whenever they say AI, maybe not as many times as they say AI, but almost. So quantum is rising in relevance because it is becoming more real. We are making it more real. And we're making sure that we are -- we have the capital we need. We have the financial firepower that we need to keep investing for the foreseeable future and beyond. And we're fortunate to have investors that are saying to us, there are partners in that journey. Our job is to execute on that opportunity. And so yes, I mean, I think that funding things were important. I think for now, it's more about taking the engineering, building once, selling many times. So we're now getting into the very sort of commercial deployment of everything, quantum, less worried about what funding comes when... Niccolo de Masi: Yes. I mean, look, we, of course, value our government customers. We value them from all of our allies, and we're growing our IonQ federal team to capture that. But I think Inder said well in his prepared remarks as well as our press release today, 60% of our customers are commercial. That's the primary reason why we're not waiting with bated breath on government unlocks, if you will. That having been said, I do want to point out that we have a very bullish administration in the U.S. vis-a-vis growth in the budget of the Department of War. And within that, there's a considerable allocation to building the future of all things quantum sensing, networking and computing in every war fighting domain. And so IonQ uniquely operates in all of the war fighting domains, and we're uniquely able to sell those complete solutions that we believe the nation and all friendly nations absolutely must need. So watch this space, but we are growing headcount aggressively because we are growing the business aggressively along all of these vectors. Operator: The next question comes from Quinn Bolton with Needham. Shadi Mitwalli: This is Shadi Mitwalli on for Quinn. Congrats on the strong results. In the prepared remarks, you guys talked about making smaller and cheaper quantum systems. I believe the acquisition of SkyWater is going to help accelerate that. But just curious to hear the puts and takes of how much it cost to make a system today and how you expect that cost trajectory to evolve over the next few years. Niccolo de Masi: All right. So I mean, look, what we said at our Analyst Day on September 12 is that our full fault-tolerant machine and machines with hundreds of thousands to millions of physical qubits and thousands to tens of thousands of logical qubits and someday hundreds of thousands of logical qubits, we'll have a 2025 BOM cost, bill of materials cost under $30 million. Obviously, there's inflation each year. And the reality is when we said under $30 million, it was materially under $30 million to enable us to ensure that gross margin will be compelling as the years roll by. And of course, our ability to drive ecosystem expansion will be the most powerful, we believe in the quantum world, whether that's in the U.S. or our allies. We are -- look, we are cheering for everyone with the SkyWater acquisition, right? So it's really important to note that we already supply our clocks and sensors and QKD switches to a wide breadth of customers. With SkyWater, we are not only going to be supporting their existing customers, but we're going to be investing in SkyWater, which means that with our improved capital base on a combined basis, those customers will see tremendous benefits. And we expect additional customers in the fullness of time to want to be on that acceleration platform. The ability for us to maintain costs as we grow our computer power is almost unparalleled. And the reason for that is the electronic qubit controls that we have of our ion traps on a semiconductor basis and platform. So as we add more qubits, we're not really changing the cost of goods sold much. A little bit, the chips get a little bit bigger and machines get marginally larger, but it's single-digit percent kind of thing, not even double-digit percent, I think, in most instances. And that means with manufacturing volumes, as I said in my prepared remarks, we actually expect the size and the cost from a bill of materials perspective to actually go down over time even as the machine goes from 256 qubits to 100,000 and 1 million and 2 million qubits by 2030. That is obviously a cost curve that everyone is familiar with in the semiconductor industry. And we believe it's vital because it's what enables our ecosystem to prevail in the commercial market. At the same time, it's prevailing, of course, with our nation and allied nations federal customers. In the history of technology, as I said, sometimes you get cases where just economics alone prevail. But in our case, we have the most powerful machines soonest, and we have them at the lowest, most accessible unit economics. And so when you're doing something in a number of cases that were -- they're 5 years ahead technically and you might be 10 or even 100x cheaper, you can see why we are bullish on our ability to be the mass market platform of choice in the fullness of time. Operator: The next question comes from David Williams with Benchmark. David Williams: Let me also add my congratulations on the really solid results here. So I guess maybe firstly, thinking about your capacity and Inder, you talked earlier about the demand outstripping your ability to supply. If you kind of think about what your capacity is today, maybe on the Tempo solution, what would that look like if you could ship everything that you could build in maybe '26 from a unit perspective? Inder Singh: Yes. I mean, look, we are raising our ability to meet the demand to make sure that we satisfy what the customers are looking for, of course, and we will do that. And it's not always about manufacturing, of course, David, as you know, it's also about having the deployment engineers, the people that go on site, prepare the location, deploy a machine, turn it on, show the customer, et cetera, and then stay with the customer, frankly. So we're investing in all of those. And over the last 6 months, we've invested in, I would say, all of that. As far as like when you go from Tempo in 2026 to the 256 in 2027, the chip road map allows us to then begin leveraging that semiconductor base, which is, frankly, available, fully depreciated, low cost, not so capital intensive. So to the cost question earlier also, you can benefit over time from bringing costs down by leveraging that. So we don't have to necessarily build our own factory. But the Tempo in prior generations, we manufacture them in our factory in Seattle. So we think we have enough capacity right now to be able to meet demand. I did say that demand is exceeding supply, yes, it's true. We might have to be somewhat selective. That's a good problem to have. And so if that continues, we absolutely will surge our ability to deploy, build and ensure that we service the Tempo. But importantly, the question to be asking is, once you have the chip-based system out there, now we have with -- well, SkyWater closing, of course, or even the commercial relationship we already have with SkyWater, the ability to leverage their highly secure in U.S. trusted fab, the ability to make computing solutions that we can sell to national security customers. We can sell to the most discriminating bank in the world. We can sell to any customer that says, "Yes, I know the power quantum." It is both amazingly powerful in a good way, and it could do some really dangerous things, too. Much of the AI can. So we're making sure that we deploy it in a way where it has the level of surety of supply to us so that no geopolitics enters into the ability for us to get components and then have a product that our customers can trust. So I think that it's less about capacity in terms of manufacturing this time next year. But for this year, absolutely. We began investing in the third quarter. We talked about in the third quarter call. And we've hired deployment engineers, and we feel pretty good actually right now. Niccolo de Masi: Yes. And I'll just add, obviously, that all of those secure trusted fab capabilities and manufacturing scale, we are providing to the entire U.S. industry and all of our allies. So we look forward to working with everyone because I think it's time to put the pedal to metal for the industry. David Williams: Great color. Just one last quick one for me. Just as you kind of think about that fab and the capabilities there today and then looking out beyond '27, maybe, are there major step function potential investments that need to be made in order to hit that road map? Or are things -- do you feel like they have the appropriate maybe abilities today that the investment isn't as big a heavy lift as it might otherwise be? Inder Singh: Well, look, I think that I won't speak for SkyWater, they're independent company, obviously, right? So from our lens, when we look at the capacity that they have in Texas, in Florida and in Minnesota, it's more than what we need actually right now. So I don't see that other than sort of like maybe some tooling and things like that, I don't see where we need to necessarily build the fab capacity as much as ensure that it has the type of, I'll call it, sort of quantum-ready ability to be in a clean room environment, right? So they have clean rooms everywhere. The quantum is like one level higher than that clean room, that's the investment. So it's not like move out on many, many dollars. It's more like ensuring that we provide them what they need, of course. But they have the engineering talent. They have the people that are experienced. They have the ability to do advanced packaging, which is really important. It's not just fab, it's packaging. So we are looking forward to the deal closing, and we're looking forward to leveraging them, of course. And in the meanwhile, we have a commercial relationship, and we hope that we're able to continue providing for the needs of '26 and beyond. Niccolo de Masi: Yes. So I think just to add on to that, there is plenty of capacity at SkyWater today for the whole U.S. quantum industry. As the U.S. and allied quantum grows, we are confident we will meet that demand at SkyWater. The tooling absolutely is bespoke per program and per customer, but it's typically actually part of the commercial relationship. Speaking from experience, that's usually part of the total conversation you'll have on a multiyear basis. And so that won't come out of IonQ's balance sheet, so much as be part of each customer's commercial agreement. I think the last thing I'll add is probably the biggest investment we're making in the next few years in SkyWater is we're obviously assuming some debt, which we're going to be paying off on transaction close. And I think that will be the largest chunk of it, believe it or not. The rest of it, I think, will be growing with the operations in a fairly modest way. Inder Singh: And their CapEx to revenue, as you probably saw, is like low single digits. They're not very capital intensive, neither we. So I don't think that model changes much, candidly. It might be a surge here or there, but I don't think it's a big shift. Operator: And due to time constraints, the last question will be Troy Jensen with Cantor. Troy Jensen: Congrats on the great results. Maybe just a quick one for Niccolo. I get the partnership for applications and software. But what's your thoughts on IonQ controlling the controller specifically? And can you touch on your investment in horizon? Niccolo de Masi: So look, we like to think about our ecosystem in the following way. We are the -- an open interoperable stack, but we're students of history, and we want to make sure that we capture value from the hardware to the compiler to the application layer. It's been well known since our IPO that we've been public on the Google, Amazon, Microsoft clouds. And we want to interoperate with everyone because I think it's in the nation's interest and, of course, IonQ shareholder interest to have everyone learn on the IonQ systems and sensing and networking hardware and of course, flourish and build on top of that, right? So we like to work with software partners. We like to work with the so-called hyperscaler partners. We work, of course, with everyone from NVIDIA through to Ansys that does computational engineering is a leader of that in classical and the same in the pharmaceutical space. And so we see this all really as an end, right? We want as much more ease as possible to be interoperable with everyone. And to that extent, we will partner consistently both across our stack and up and down our stack. But we're not handing the keys over to someone else, nor are we trying to be a vertical play where you have to use all of our stuff or none of it works with your stuff, which we think is a limiting approach to life. And there are companies that attempt that. But I think history shows that you want to be open with the right posture and be clear on what you need to maintain control of to make sure that not just your ecosystem works well, but also that it works well and that you continue to be able to accrete long-term value at a pace that grows faster than your cost, of course. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Niccolo de Masi, Chairman and CEO, for closing remarks. Niccolo de Masi: Thank you. In closing 2025, I am confident the year will be remembered as the year IonQ moved beyond the laboratory and into the bedrock of global infrastructure. We didn't just meet our goals, we redefined the ceiling for the entire industry, becoming the first public quantum company to cross the $100 million revenue threshold while tripling our revenue scale year-on-year. And we did this while demonstrating unprecedented technical excellence, demonstrating 99.99% 2 cubic gate fidelity and becoming the first company in history that can proudly say that all of our key technical milestones have been achieved on the path to full fault-tolerant quantum computers. We are no longer just building quantum computers, however, we are supplying the high-precision atomic clocks, secure quantum networks and advanced quantum cybersecurity, hardware and software that will serve as the nervous system for the next era of computing, modeling and sovereign security. And by acquiring SkyWater, we will effectively onshore the future of quantum manufacturing, transforming IonQ into the quantum industry's merchant supplier for the U.S. and our allies in this important geopolitical race. We enter 2026 with a fortified balance sheet and an unmatched intellectual engine of approximately 1,500 professionals, having continued growing strongly even beyond our reported end of year total. Our focus remains clear: to lead the geopolitical space race of quantum for our generation by delivering a unified all-domain quantum platform and to help customers solve the world's most complex problems. The era of quantum utility is not on the horizon, it is here, and IonQ is the one team, one platform primed and poised to win. Thank you for your continued trust in our journey, and we'll see you next time. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning and thank you for standing by. Welcome to the Worley Half Year 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chief Executive Officer, Chris Ashton. Robert Ashton: Good morning, everybody, and welcome to the call today, and thanks for joining the half year results presentation for Worley for 2026 financial year. The results are defined by a solid revenue growth and resilient earnings outcome, once again showing our adaptability in the face of dynamic markets. As I start my seventh year as CEO, these results continue a pattern of consistent growth. Despite market disruptions, Worley continues to deliver. Our performance reflects deliberate decisions about portfolio, capability, where we compete and the agility with which we can adjust. And we have a dedicated team around the world who work to deliver the outcomes that our customers trust. Let me now give you an overview of our business performance for the period before our CFO, Justine Travers, takes you through the financial results in more detail. I'm pleased to share an early look into how we're positioning for the next phase of growth as we go through this presentation today with the strategy focused on increasing our total addressable markets and generating value for shareholders. Today, we reconfirm the outlook we provided to the market at our full year results in August last year. We continue to expect a year of moderated growth, but calendar '26 has started with renewed momentum. Some big wins recently include being provisionally named as EPCM partner on Glenfarne's Alaska LNG pipeline and appointed marine and port infrastructure technical adviser for the WA Westport program in Western Australia. We're already delivering Phase 1 of Venture Global CP2 LNG project in the U.S. and are continuing our partnership to deliver Phase 2. These wins on some of the largest projects in the world demonstrate the confidence customers have in our capability to execute major complex projects, and we continue to scale across a growing pipeline of these opportunities. Given this momentum, we're encouraged by the visible signs of growth for Worley beyond this financial year. Turning to Slide 2. I remind you to review the disclaimer shown here. I'd also like to take the time to acknowledge the Gadigal people of the Eora Nation, the traditional custodians of the land from which I'm calling today, and I pay my respects to the elders past, present and as well to the emerging leaders. Turning to Slide 3. Let me now turn to our business performance for the first half of the financial year. And so let's turn to Slide 4. As I said, revenue has grown even while navigating challenging market conditions and earnings have been resilient. The last 6 months, we've seen solid revenue growth of 5.4% over the prior corresponding period. A number of major projects in execution phase contributed to steady earnings and bookings are up 63% on the prior period. Venture Global CP2 Phase 1 was a major contributor, but I want to highlight some of the other significant wins across the sectors and regions, like the EPC for ConocoPhillips Scandinavia for their Norwegian Continental Shelf project, the FEED for OQ Refineries and Petroleum Industries decarbonization project for the Sohar refinery in Oman, and construction for ExxonMobil's major reconfiguration project of its integrated complex in Baytown, Texas. Momentum through increased wins in the first few months of this calendar year reinforce our confidence we can deliver a stronger second half. We've taken deliberate actions to enhance earnings quality. Our cost out and business restructuring initiatives are well advanced, and we're targeting more than $100 million of annualized savings from 2027 onwards, resetting our cost base and positioning the business for our next phase of growth. We acknowledge there's been $82 million of transformation and business restructuring costs this half, and Justine will talk to this later. And finally, our balance sheet remains strong. Disciplined working capital management drove strong first half cash performance, giving us the capacity to keep investing in growth. Turning to Slide 5. Our highest priority remains the safety of our people. Our safety performance has been maintained with a total recordable frequency rate of 0.10. At Rio Tinto's Rincon project in Argentina, for instance, we recently marked more than 1 million work hours with 0 safety accidents incidents. Visiting last year, I witnessed the discipline, care and pride the team brings to their work, and it's milestones like this that reflect the safety leadership on the ground and the commitment to looking out for one another each and every day. Positive ESG progress continues too. We've maintained leading external ESG ratings, and we've strengthened our approach to preventing modern slavery. And we remain on track with our own Scope 1 and Scope 2 emissions reduction targets. We're also well prepared for the new Australian sustainability reporting requirements. Bookings are up 63% compared to the prior 6-month period. And in the first half, bookings totaled $9.8 billion, including Venture Global CP2 Phase 1, which achieved FID last July. Sole source wins also increased, reinforcing customer confidence in Worley's capability and delivery. And as I've mentioned, a number of significant project awards already this calendar year build on this momentum. Energy and resource have both grown with the Americas continue to deliver wins for our portfolio and the mix of bookings reflect increased construction, fabrication and procurement activity as these projects move into the execution phase. The quality of these bookings remains high. As noted, large complex projects where Worley is supporting customers across the full project life cycle underpin backlog quality and forward earnings visibility. Turning to Slide 7. I'll now turn to leading indicators. Backlog remained resilient at $6.7 billion (sic) [ $16.7 billion ], providing good visibility of revenue into the second half of FY '26 and into '27. Backlog is slightly lower than the reported period for June '25, and this reflects the delivery timing rather than a drop-off in demand. $6.3 billion has been added to backlog through scope increases and project wins during this period. And while work on the Baytown Blue project has paused, we've retained in the project backlog and continue to work closely with ExxonMobil on that. Project wins already in the first few weeks of calendar year '26 will add more than $3.5 billion to backlog. Our factored sales pipeline remains robust, and we continue to convert opportunities into backlog as we secure contract wins, and the pipeline keeps replenishing. Around 46% of these opportunities are expected to be awarded in the next 12 months, reflecting the extended project delivery time frame for major projects. As we target more of these projects, we're focused on opportunities in the early-stage consulting phase with potential for pull-through and consulting opportunities increased by 24% in our pipeline over the past 6 months. Turning to Slide 8. The slide shows the diversification and competitive strength underpinning our business model and earnings resilience. Our broad exposure across sectors, geographies and services reduces reliance on any single market or customer decision and revenue is well balanced across energy, chemicals and resource. It's geographically diversified with meaningful scale across the Americas, EMEA and APAC. Our services mix across professional services, construction and fabrication and procurement shows our increasing relevance to customers across the full project life cycle. And we're attracting a greater share of project capital with expanded capabilities. We also continue to differentiate through our use of digital and AI. Enterprise efficiency is a non-negotiable. Technology is transforming project delivery. Our digital and AI initiatives will reshape how we deliver projects and strengthen our competitive advantage. For customers, intelligent solutions will bring their assets into operation sooner and accelerate returns on capital. I'd now like to give an update on each of our sectors and turning to Slide 9. Aggregated revenue from energy work increased 8.8% over the prior corresponding half, and growth was driven by major projects moving into the execution phase, lifting construction, fabrication and procurement activity, particularly in the Americas. Integrated gas continues to be a growth driver. Demand for gas is supporting ongoing LNG import and export terminal developments and integrated gas work represented 25% of Worley's total revenue during the period. The variety of LNG projects we're working on around the world is notable in places like Germany, Indonesia and Australia as well as the U.S. While the outlook remains softer overall in oil, activity is increasingly concentrated in higher-margin offshore projects and selected onshore developments, particularly shale. And power is an important growth market. Structural change is driving energy demand and investment across gas-fired power generation, renewables and nuclear. Turning to Slide 10. The global chemicals market remains important to us. Near-term conditions are challenging, reflecting regional [Technical Difficulty]. Aggregated revenue declined 9% over the period with project cancellations in Western Europe and lower professional services activity across APAC and EMEA. This was partially offset by ongoing major project execution in the Americas, where construction and fabrication activity continues. Looking at specific subsectors, refined fuels remains promising, and it continues to attract investment in product slate optimization, decarbonization and asset life extension. Petrochemicals remain a major contributor to our chemicals revenue, although Western European plant closures related to global overcapacity have had an impact. Low carbon fuels present more selective opportunities where projects are commercially viable. Turning to Slide 11. Finally, resource have delivered growth for Worley in the first half and aggregated revenue has increased 12.3% over the prior corresponding period. Resources now represents 29% of our business. Population growth, urbanization and the energy transition are demand fundamentals, which will continue long term. Fertilizers remains our largest subsector. Here, demand is supported by population growth and food security. Demand for copper is driven by the need for energy transition materials and an increasing demand from data centers, cloud and AI infrastructure. In battery materials, there's been a resurgence in activity and sentiment with a focus on front-end work and commercialization of technology. And we're confident resources will make an important contribution to second half growth, and we expect this to continue beyond the next year. I'm now going to hand over to Justine for further details on the financial results. Justine? Justine Travers: Thanks, Chris, and good morning, everyone. Turning to Slide 13. Our half-year performance and execution of strategic priorities such as cost management and earnings quality, coupled with strong capital management positions us well to deliver moderate growth this year. I want to reemphasize 3 points in relation to the results we are delivering today. First, we continue to deliver aggregated revenue growth and solid earnings, supported by our global operations and strategic focus on major project delivery. Second, targeted actions to reset the cost base are underway and aim to strengthen earnings quality and resilience. And finally, we remain in a strong financial position to support growth and return capital to shareholders. Aggregated revenue for the half was $6.3 billion, up 5.4% on the prior corresponding period. We continue to see an increase in construction and fabrication revenue as we execute on major projects as well as an increase in procurement revenue. Supported by the contribution from our global operations and our major projects, underlying EBITA was steady at $377 million. Underlying NPATA was $207 million. A lower statutory NPATA at $152 million reflects the inclusion of transformation and business restructuring costs. While business as usual costs are included in underlying EBITA, these transformation and business structuring costs were beyond the scope of the normal course of business. Normalized cash conversion was 95.5%, a fantastic achievement. This continues to be an important focus for our business. Our balance sheet strength and strong cash position provide capacity to invest in growth and return capital to shareholders through our ongoing buyback and payment of dividends. Leverage at the end of the half was 1.5x, comfortably within our target range, reinforcing the strength of our financial position. Turning to Slide 14. Our aggregated revenue growth has supported steady earnings despite the challenging market backdrop. As I've highlighted, a driver of revenue growth this half was major project activity with increased volumes flowing through construction, fabrication and procurement, particularly across the Americas. This work is delivered under a lower risk contracting model and has supported a stable earnings outcome, reflecting both project delivery stage and disciplined delivery across the portfolio. As a reminder, we don't do competitively bid lump sum turnkey projects. On the right-hand side, the EBITA and margin walk highlights our continued focus on rate improvement. Margins reflect the combined impact of volume, mix and pricing with rate improvement partially offsetting mix impacts in the period. Importantly, this demonstrates an ongoing focus on margin discipline. While near-term earnings reflect project phasing, the underlying drivers of margin improvement continue to build through backlog, the cost-out program and disciplined execution. Turning to Slide 15. As communicated at the full year results in August, we're transforming the way we work by removing complexity, improving efficiency and driving consistency. This work is well underway. We acted proactively to reposition the business in response to softer conditions in chemicals and some project cancellations in Western Europe to strengthen margins and ensure ongoing business resilience. We've accelerated actions aligned with our strategic priorities, specifically resetting the cost base, scaling GID and expanding margins. During half one, we incurred $82 million of costs associated with these actions, much of this being severance and related costs, predominantly in Western Europe, where we have seen high restructuring costs due to local labor protections. We expect further costs in the second half as the program continues. However, we do anticipate these costs being lower than those already incurred in half one. The actions we've taken include repositioning capability to areas of higher demand and rightsizing where demand has softened. These restructuring actions together with our efforts to transform the way we work are setting the foundation for stronger earnings and margin quality. Our business will be supported by a leaner, more scalable operating model, supported by global integrated delivery, GID. In delivering this transformation, we are progressing at pace. With a disciplined cost-out program, we're targeting over $100 million annualized savings from FY '27 onwards. Our cost management efforts are focused on and include repositioning capability to areas of higher demand, increasing enterprise service center utilization, rationalizing our third-party contracts and adjusting our office network to reduce costs while supporting global delivery. We're also deploying digital solutions to simplify processes and improve productivity. Embedding AI across our business will be an ongoing part of our broader strategy to leverage technology and new ways of working to create sustainable value. I have been working closely with the business on this program, and it is clear to me that steps that we are taking strengthen our cost discipline and will enhance our earnings quality. We will ensure we retain the capability and capacity required to support growth and deliver for our customers with greater cost discipline, commercial agility and technology focus. Turning to Slide 17. Finally, I'd like to take you through our capital management position. Operating cash flow is strong. Normalized cash conversion of 95.5% is above our target range and continues to reflect strong underlying cash generation and a disciplined approach to working capital management. Day sales outstanding of 46.2 days remains well controlled and comfortably within our target. We have been consistently delivering returns to our investors through dividends and our buyback program. The Worley Board has determined to pay an interim dividend of $0.25 per share, which is unfranked. We continue to execute our share buyback program of up to $500 million, reflecting the confidence we have in our business. As at 31st of December, 2025, we had purchased over 24 million shares for a total consideration of $324 million. We will continue to execute on this program. During the half, we continued to invest in the business in a measured way while prudently managing debt and maintaining flexibility to invest in growth with capital directed towards initiatives aligned with our strategic priorities. Our balance sheet remains strong with leverage at 1.5x, comfortably within our target. We continue to use free cash flow to manage liquidity and support growth. We remain committed to maintaining a diversified funding base and proactively manage our debt maturity profile. We are looking at a variety of options for the group's euro medium-term note debt as it matures at the end of the year. I am getting to know our debt investors and we are confident and well placed to manage this upcoming maturity in June. Our weighted average cost of debt remains stable and our effective tax rate continues to track within our expected range. Overall, our disciplined approach to capital management remains a key differentiator and supports long-term value creation. I'd like to make a final comment on foreign exchange rates. The Australian dollar has moved over the past few weeks and we note the possibility of FX being a headwind in the second half if it remains at these levels. In summary, our solid half year performance and execution of strategic priorities, including cost management and earnings quality, coupled with consistent and strong cash conversion and balance sheet strength positions us well to scale for growth. I'll now hand back to Chris to take you through strategy and outlook. Robert Ashton: Thanks, Justine. Just moving straight on to Slide 19. But before I share the outlook for '26, I want to step through some of the fundamentals underpinning growth, and then I'll turn to our growth strategy. Worley is a diversified, resilient business with a robust foundation and demonstrated agility to adapt to market changes. And this foundation and agility gives us the confidence as we move into our next phase of growth. Our end markets are supported by strong structural tailwinds. Energy security, affordability, electrification, energy transition and decarbonization, along with the rapid progress of AI and digitalization are long-term demand drivers. And Worley's growth should be viewed independently of cyclical factors. Our growth has been secured across commodity cycles, not dependent on oil prices and continues to outpace customer capital expenditure. Turning to Slide 20. Our strategy has 3 pillars supported by disciplined capital management and operational excellence. One, we're strengthening leadership in our core markets; two, we're expanding into growth markets and along the value chain, including expanding EPC and EPCM capability; and three, we're innovating to differentiate delivery with technology. This strategy supports sustainable growth and resilient earnings. Moving to Slide 21. We remain committed to our purpose of delivering a more sustainable world, and Worley's next phase builds on our strengthen, expand and innovate strategy to secure both within and beyond our core markets. We've built a leading position across energy, chemicals and resources with sustainability solutions embedded now in the business. And now we'll grow our total addressable market by extending our project delivery capabilities to capture a greater share of spend across the customer asset life cycle. This positions us for more EPC and EPCM scopes with continued growth in consulting and value-added services from concept to completion. These capabilities mean we can target high-growth adjacent markets beyond ECR. We'll selectively expand into adjacent complex critical infrastructure where our skills are transferable. And the next phase of growth is supported by disciplined capital allocation, margin focus, which will ensure accretive and resilient growth. Turning to Slide 22. We're expanding our total addressable market by accessing a greater share of our customers' capital expenditure. The graphic on the left represents a typical customer capital program for an asset. As projects progress into execution, customer spend scales significantly. And by extending our EPC and EPCM delivery capability enabled by technology, we're positioning Worley to capture a larger share of this overall capital investment. And you can see the results of this focus as we turn to Slide 23. The major projects shown here in LNG, cement decarbonization and iron ore demonstrate our execution capability at scale and reward our deliberate shift to more EPC and EPCM scopes. And while major projects are reinforcing our confidence in this strategy, extending our ability to support customers across the asset life cycle is not just about project size. It's an evolution as we expand the services we offer all customers globally, deepening and broadening the capability of our workforce. EPC and EPCM have always been part of Worley. Consulting and other services along the value chain enabled by digital and AI differentiate how we deliver. And now we're leaning into scaling this full project delivery with intent, and we're excited by the early success shown in major projects. Turning to Slide 24. Backed by the capabilities I've described, our growth strategy seeks to strengthen our leadership in existing markets by growing market share and expanding into high-growth adjacencies. LNG and energy transition materials are areas where Worley has an established presence and a strong track record in execution, and we can further grow market share with more major projects. We're also expanding into new growth opportunities in complex critical infrastructure markets such as data center infrastructure, power, ports and marine terminals, and industrial water. These are capital-intensive markets where we have an existing or an emerging presence and can leverage transferable engineering services, EPC, EPCM and digital delivery capability. Importantly, these markets offer a clear pathway to scale. Together, these existing and new market opportunities reflect a balanced but deliberate approach, and they build on what we do well today while selectively expanding into adjacent areas of growth. And more detail of this will be shared at our Investor Day in May. Turning to Slide 25. Before I present the group outlook, I'd like to give a brief update on key focus areas. Our first is full project delivery, a key enabler for our growth strategy. And as I've outlined today, we're winning and delivering more of this work within a disciplined risk appetite. As Justine said, we will not do lump sum turnkey EPC. We'll seek to balance the portfolio with high value early-stage consulting, study, FEED and scale as we pull through to more execution phase construction and procurement work. Alongside this, we're resetting the cost base to build a more efficient technology-enabled business, targeting $100 million plus exit run rate annualized savings. We continue to focus on margin growth by targeting higher quality work and delivery excellence, scaling global integrated delivery and deploying digital, embedding AI across the business to drive capability efficiency and differentiation. And together, these deliberate efforts set us up for the next phase of our growth. Turning to Slide 26. Geopolitical uncertainty and shifting market dynamics are a reality of today's market. Nevertheless, we've continued to deliver growth in revenue and steady earnings in the first half. This speaks to our business model resilience, portfolio diversification and disciplined execution strategy. We reconfirm our moderate growth outlook for the current financial year on a constant currency basis. We're targeting higher growth in aggregated revenue than FY '25 and growth in underlying EBITA and expect the underlying EBITA margin, excluding procurement, to be within the range of 9% to 9.5%. We continue to benefit from favorable long-term macro tailwinds, and these support demand in our existing end markets with high-growth adjacent markets also identified to support Worley's growth beyond FY '26. A diversified business model, increased cost focus, commercial and financial discipline and a strong balance sheet positions us well for both the short and the long term. That concludes the formal presentation today. Justine and I are now happy to take any questions from those on the call. Operator: [Operator Instructions] And our first question comes from the line of Scott Ryall of Rimor Equity Research. Scott Ryall: Chris, thanks for the presentation and some of the color. I just wanted to follow up on your comments on Slide 24 and the energy and power slide that you were talking about before. And I'm just wondering, you've moved into new markets historically and you've had to invest money a couple of years ago. You did that across a range of different industries. Are there investments you need to make in terms of expanding into some of these new areas? How long do you think it will take? And can you just remind us on -- you mentioned nuclear in the presentation. What's Worley's nuclear capability or experience, please? Robert Ashton: Well, let's start with the nuclear first. So Worley is the engineer of record for 15% of the U.S.'s nuclear commercial power generation capacity. We're currently doing a nuclear project for -- in Egypt, the El Dabaa project, that's over 2 gigawatt nuclear facility where we own as engineer. We're currently doing nuclear work for Canada OPG. So we have a long track record of doing nuclear. So it's expanding into that. In terms of investing, we invested -- when we did the transition or the push into sustainability, we committed $100 million of investment over 3 years to support that transition. And look, and where we have -- we've got effectively there's 3 growth pathways: organic, strategic partnering and M&A. And where we need to develop -- invest in ourselves then, we're actually going to -- we're absolutely going to make sure that we commit to building the incremental capability. The reality is when it comes to power, just even look at the thermal power, we're currently doing the U.S.'s largest thermal -- in construction, the largest thermal power generation facility, over 2 gigawatts, that happens to be in the CP 2. So we've got a long history in power out of our Reading office in Pennsylvania. So power, nuclear, long history. Industrial water, we do a lot of industrial water. It's integrated part of the offering to our customers, but we see that is going to be an increasingly important part of our future. And so it's about putting focus on it. And our data center infrastructure, if you look at this really through the lens of data factories, these are becoming increasingly complex in terms of needing independent power generation and also cooling. So you look at the water and the power needs for some of these multi-gigawatt data factories, that's in the sweet spot. So we've got capability in these areas. It's about expanding them. And certainly, should it require organic investment for organic growth, we'll do that. And more will come in Investor Day. Operator: Our next question comes from the line of John Purtell of Macquarie. John Purtell: Look, just in terms of what you're seeing from customers, Chris, obviously tariffs impacted decision-making through calendar '25. What are you seeing on the ground? And maybe if you could just provide some commentary on the different segments there for you as far as Energy Resources and Chemicals. Robert Ashton: Yes. Look, I would say in the latter part of '25 calendar year and now coming into '26, we're seeing a different tone of voice coming from our customers. Clearly not across every sector, every geography, but certainly on the resources side. We're seeing a lot of interest in the major project delivery capability. But our customers in the Middle East, North Africa, definitely a sense of, I guess, stability. Last year was a lot of uncertainty around the tariffs and the customers working through that. And we did say we thought by the end of the calendar year '25, things would have settled down. I would say that's occurred. Look, the single area of softness continues to be the conventional chemical side in Western Europe and just generally as a result of overcapacity. But on the energy side, integrated gas, power, oil, that that continues -- certainly seeing a renewed interest and a renewed, I would say, buoyancy in that. On the resource side, whether it's on iron ore, copper, lithium, on the [Technical Difficulty] materials, we're seeing a return in interest or a continued buoyancy there. So I think generally, John, the tone has shifted with our customer base, from last year where everybody was thrust into a period of uncertainty as a result of what was happening in the U.S. But that seems to have [Technical Difficulty] been normalized with the decisions that our customers are making. Operator: The next question comes from the line of Nathan Reilly of UBS. Nathan Reilly: Just a few questions in relation to the restructuring activity. The number came in probably a little bit higher than what I was expecting. Was there a decision made to maybe accelerate/even increase the level of restructuring activity when you sort of previously flagged that back at the AGM? And can I just get a little bit of an update [indiscernible], I guess, the nature of some of that restructuring activity in the first half, but also what you're expecting to undertake in the second half? Justine Travers: Sure. Yes. And Nathan, you're right. The amount of work that we've done around restructuring is greater than we had anticipated. And I would say the cost of both the cost and scale is higher than what we would have initially thought we would have incurred for the first half. It is really driven by predominantly severance and associated costs that we've seen in Western Europe as we've looked to restructure that workforce and move into areas of higher demand. And so what we've seen is the scale and duration that it's taken to actually move on that restructuring was longer than anticipated. We've also taken the opportunity, though, as we looked at this, it was a real catalyst to take deliberate decisions around accelerating that shift of moving from higher cost location to areas where we would see higher demand. You'd note within a number of our priorities, we talk about scaling GID. This has really been an opportunity to say how do we accelerate in doing that and actually driving a lower cost base through the business. In terms of what we would expect for the second half of this year, we do expect continued restructuring costs in the second half. We're doing work looking across our enterprise services as part of that restructuring. We do, however, expect those costs to be lower than what we've incurred in the first half. And what we want to do is not continue to have a multiyear program of restructuring. We're really saying what can we do in FY '26 to reset the cost base and reposition ourselves strongly as we go into FY '27. Operator: Our next question comes from the line of Gordon Ramsay from RBC Capital Markets. Gordon Ramsay: Chris, just wanted to ask you about where you stand in terms of project cancellations or scope reductions. I know there were none in the second half of FY '25. Is there anything you can comment on in the first half for FY '26? Robert Ashton: I mean the only one as we talked about before was the Shell Red Green project in Europe, but that was announced at the time. So we've not seen a continuation or any sort of trend around cancellations other than the ones that we've talked about previously. And I think that's just -- that reflects a shifting confidence in the market. But yes, we've not -- there's no trend of continued cancellations. Gordon Ramsay: Just on deferrals, are you seeing companies, especially in what I call the green energy or renewable transition area, it looks like a lot of companies are kind of slowing down investment there. Are you seeing that in your work at all? Robert Ashton: I think it depends on which region you're talking about. Certainly, in the U.S., the extreme green has slowed down, but not in Europe. You saw just this week, we announced a hydrogen backbone pipeline project in Europe. So it just depends by region. But certainly, in the U.S., the more extreme green has seen a slowdown in that. And that's reflected in our future factored sales pipeline. We've actually reflected the slowing down of that. But again, no material trend around cancellations. Now there's always deferrals. And I would say the deferrals are no more or less material than they are historically at this point, yes. Certainly, in '25, as what was happening in the U.S. with the U.S. changing its position, you saw a ripple effect, but I would say that's really dropped off now. And I think we're probably in a much more -- well, we are in a much more stable environment. Operator: And our next question comes from the line of Megan Kirby-Lewis of Barrenjoey. Megan Kirby-Lewis: My question is just on the margins and by activity. So it just looks like professional services and construction dipped slightly year-on-year, but procurement has held steady. So I guess just keen for you to talk through the dynamics for each of those areas and how we should be thinking about them going forward? Justine Travers: Yes. Thanks, Megan. We don't see a structural issue with margins. And we don't see a decline in the quality of work that we're being engaged to do. I think what we are seeing is, as you said, procurement margins have hold relatively steady. Construction and fabrication, we see that more as a phasing around the execution stage of the projects that we're undertaking at this point in time. And with the portfolio of major projects, we expect to see that really normalize over a period. In terms of professional services, again it's largely driven by how we would see in terms of the stage of the projects that we're undertaking. But we're not seeing anything structural within that margin profile that gives us a cause for concern. And I think on top of that, the actions that we're doing around cost management, the efficiency within the organization, removing some of that legacy complexity that we've had is really all in service of ensuring that we maintain that margin resilience as we go through and over the next 12 to 18 months. Megan Kirby-Lewis: And I guess just as a follow-up on that, like more focused on the construction piece, but you are continually talking about moving more into EPCM and EPC. I guess just how like that will start to flow through to margin. Is there anything sort of to think about in terms of risk sharing between customer and contract -- customer and Worley and how that might impact the margins there? Robert Ashton: Well, as we grow the EPC business, the mix of what we do across, the phasing of those, the phasing of engineering against another major being in the procurement phase or in the construction phase. So it's the mix that will -- the mix of the phase of projects that will drive the margin rather than EPC alone. I think you've got to look at it as always a portfolio of projects, which, yes, we'll do more engineering procurement and construction. But it's just driven by mix, Megan. I mean, yes, I mean, I'm not sure what more. Justine Travers: No. And I'd say, Megan, we're holding our outlook position on the margin, excluding procurement, between 9% and 9.5%. So looking at that from a mix perspective, we think that's able to be maintained. I know you've covered Worley for a long time, and you will have seen over the course of the last few years that we've really gone from strength to strength in terms of our margin profile across the portfolio. So something absolutely that we're mindful of in terms of that composition of volume, mix and rate. And so we need to be doing the things that we can proactively manage around quality of what we bring into our pipeline and then through to backlog, and we need to be resilient around the work we're doing on cost discipline and margin expansion. So yes. Operator: Our next question comes from the line of Cameron Needham of Bank of America. Cameron Needham: Just one quick question for me, just on Baytown. Could you talk me through the logic of leaving that in your backlog, please? And then just more generally, could you talk through the process that you guys go through internally in terms of deciding if a project meets requirements to actually stay in the backlog versus what comes out as a cancellation? Robert Ashton: Yes. Baytown Blue has not been canceled. So it remains in the backlog. If you look at Exxon's announcement, it's been paused. And until it's been canceled, it will remain in backlog. So we have a very rigorous process of what goes in or comes out of backlog, and we consistently apply that. But Baytown Blue, if you read ExxonMobil's announcement, has been paused, not canceled. Operator: And our next question comes from the line of Tom Wallington of Citi. Tom Wallington: A quick question on customer mix and growth adjacencies. So just noting 28% of the backlog is associated with traditional work, including oil and gas. And I appreciate you've highlighted these complex critical infrastructure scalable opportunities in your priority markets. Can I just get a bit of color as to how these early customer engagements have been and how we should think about the mix of Worley customers evolving over time? Robert Ashton: I would say that the early engagement has been very, very positive. And the customer mix, I think it's an important point because we often, in conversations, have the conversation pivots around capital expenditure of customer base is shrinking or dropping off or may not be as big as the previous year. And I'm speaking generally. And it may be for the majors. But if you look at the number of customers that we're working with that are outside of that analysis, it's significant. You look at Glenfarne, Venture Global as 2 examples. These are not necessarily companies that attract when the overall market or the overall capital spend is being considered. So look, early phase conversations are fantastic and certainly a lot of interest in what we're offering, whether it's in the full project delivery side or on the power ports or marines or industrial water or even on the data factory infrastructure side. So good early engagement, very positive early engagement, I would say. And in terms of opportunity to grow, I think that there's significant opportunity to grow outside of the addressable market that are traditionally sort of assessed and associated with Worley. So we do a lot of work for customers that are -- that is outside of the majors, outside of the Rios, outside of the BHPs, outside of the ExxonMobils or Chevrons, outside of the BASFs. And we see increased opportunity for growth in that space. Tom Wallington: That's very helpful. And potentially a second question, if I can, a follow-up to Nathan's question around the restructuring costs. Noting that the scale and the scope of these costs has likely exceeded initial expectations. Just curious, going into the result, we thought that these costs would be taken above the line, noting that they are taken below the line now given they have exceeded those initial expectations. Can you give us, I guess, any color as to why the change of thinking as to how this would be treated for from an accounting purpose and potentially what this might have implied if all of these costs were taken above the line? Robert Ashton: I don't think the -- in terms of -- well, I'm going to let Justine answer the technical side. But look, there's a lot of things that go into the decision-making around this and clearly, and I have communicated, we've communicated that the cost will be taken above the line. What changed was as we got into the -- toward the end of the year, as we got into the detail of the restructuring costs, we saw an opportunity to restructure parts of the business more deeply than we initially assessed with an objective of relocating that work when the markets -- when the opportunities and the projects present themselves, repositioning and relocating it to India. So rather than keep people on the bench and do a moderate restructure, we took a strategic decision to do a deeper restructure with the intent of moving the work to a higher profit location such as India or Bogota at our GID center there. So it was a strategic decision. Now in terms of the accounting side, I think I'm going to hand over to Justine. Justine Travers: Thanks, Chris. And Tom, clearly, the costs that we've seen in the first half of the year around this transformation and restructuring are outside the normal course of business. And putting them below the line for us really and hopefully for the market provides a much clearer and more transparent view of our underlying operating performance. It also makes it much easier to look at the comparability of our results across periods. And it is a very typical treatment of costs of this nature for Worley historically, but also if we looked at our customers and/or other peers that are undertaking similar programs of work to have treated them in this way. So we believe that is very comparable to what the industry would do, what we have done historically. And it is important that it does provide a more transparent view around our underlying operating performance of the business. Operator: Our next question comes from the line of Rohan Sundram of MST Financial. Rohan Sundram: Just one for me. Following on from John's questions around the tone of customer discussions. Take on board, there's a renewed buoyancy in the market. But Chris, just can you hear your thoughts on how that's translating into higher sole sourcing on the back of all of that? Robert Ashton: Well, it is. I mean what it is, is the customers that we have strong deep relationships with and have historically looked at sole sourcing is their capital -- is their confidence around investment returns, then it's leading to an increased level of sole-source work. And sole-source work is now up to 48% of what we do. And so we actually look at this very closely. And so you look at the percentage of sole-source work, it's increased compared to the prior corresponding period. And I think that's a great sign that the customer confidence is returning and the confidence they have in Worley in terms of supporting them. Operator: Our next question comes from the line of Ramoun Bazar of Jefferies. Ramoun Lazar: Just a couple from me for Justine. Just in terms of the treatment of the restructuring costs now below the line, how should we think about the seasonality in the business in the second half? Is that going to look more like what it did last year now? Justine Travers: Yes. Ramoun, we do expect the phasing to be broadly similar with what we've seen in FY '25. We know and traditionally have seen a strengthening in the second half. And so you can assume that that would be a similar profile to what we've had if you're looking at the underlying result, just consider that phasing broadly similar. Ramoun Lazar: Yes. Got it. And within that, are you assuming any benefits from the restructuring coming through in the second half out of that $100 million annualized number? Justine Travers: The $100 million, really we see as an exit run rate, and we see the real benefit of that coming through into FY '27. We will see a little bit into the second half as we start to see the translation of that cost come through that resetting of the cost base. But the $100 million is really a reset for FY '27 and should be considered in that way. Operator: I'm showing no further questions at this time. I would now like to turn the call back over to Chris Ashton, CEO, for any closing remarks. Robert Ashton: I just want to thank everyone for joining today. And I know over the next 4 days, 5 days, we've got a number of meetings with yourselves and others on the call or on the -- dialing in on the Internet. So look, we look forward to having the conversations, answering further questions after you've had an opportunity to digest what we presented today. Look, I do think that it is a strong first half result. And look, I look forward to -- Justine and I look forward to talking to you and hopefully being able to answer the questions that you've got. So we'll be connecting with you over the next few days and today as well. So thanks, everyone, for your time and look forward to meeting. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Hello, everyone, and welcome to Zoom's Q4 FY 2026 Earnings release webinar. I will now hand things over to Charles Eveslage, Head of Investor Relations. Charles, over to you. Charles Eveslage: Thank you, Catherine. Hello, everyone, and welcome to Zoom's earnings video webinar for the fourth quarter and full fiscal year 2026. I'm joined today by Zoom's Founder and CEO, Eric Yuan; and Zoom's CFO, Michelle Chang. Our earnings release was issued today after the market closed and may be downloaded from the Investor Relations page at investors.zoom.com. Also on this page, you'll be able to find a copy of today's prepared remarks and a slide deck with financial highlights that, along with our earnings release, include a reconciliation of GAAP to non-GAAP financial results. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the first quarter and full fiscal year 2027, our expectations regarding financial and business trends, impacts from a macroeconomic environment, our market position, stock repurchase program, opportunities, go-to-market initiatives, growth strategy and business aspirations and product initiatives, including future product and feature releases and the expected benefits of such initiatives. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Zoom assumes no obligation to update any forward-looking statements we may make on today's webinar. And with that, let me turn the discussion over to Eric, who's giving his prepared remarks by Zoom custom avatar. Eric Yuan: Thank you, Charles. FY '26 was a pivotal year for Zoom and for our industry. We grew Q4 revenue 5.3% and full year FY '26 revenue, 4.4% and an acceleration of 130 basis points over FY '25. These results reflect the increasing value of our platform with innovations like AI Companion 3.0 as our platform expands and evolves into an AI-powered system of action for modern work. The inflection in growth reflects a structural shift in the market. Organizations are moving beyond systems of record and engagement towards AI-driven systems of action that help customers and employees get real work done. Zoom is uniquely positioned to lead this transition. We bridge work both inside and outside the organization across collaboration, customer experience and employee experience using AI to take conversations all the way to completion. And this directly connects to the 3 priorities we outlined last quarter to bring this system of action to life. First, elevate the workplace with AI; second, drive growth of new AI products; and third, scale AI-first customer experience. Let me start by speaking about scaling AI first customer experience. Zoom's advantage in customer experience comes from embedding it within our broader system of action, not treating it as a stand-alone solution as many competitors do. our CX platform is differentiated because it is built on the same platform that powers collaboration inside the organization and extend seamlessly to customer engagement and other external workflows. By unifying internal and external workflows, we eliminate traditional silos and enable customer journeys to move continuously from conversation to completion. Within customer experience itself, Zoom delivers a cohesive set of intelligent capabilities that empower both human and virtual agents and turn live interactions into coordinated action across teams and systems to drive outcomes. Our AI innovation across AI-assisted human agents and virtual agents is translating into improved service outcomes and cost savings for our customers and incremental revenue for Zoom. You see this in ZCX ARR continuing to grow in high double digits, and in fact, accelerating in Q4 driven by AI monetization. More concretely, you see it in the story, our deal composition tells about why customers choose us. Every 1 of our top 10 deals this quarter included paid AI and 7 represented competitive displacements of leading CCaaS vendors. Let me bring this to life with some Q4 customer wins. We welcomed Aeroflow Health, a medical device company who chose Zoom Contact Center in a major Q4 deal spanning ZCC Elite and ZVA Voice plus Chat to replace a leading CCaaS vendor due to our bold AI vision for CX and ability to execute. We also saw many expansions. MLB and OPENLANE both began a Zoom Contact Center customers and in Q4, bought a combination of ZCC Elite and ZVA Voice to deliver reimagine AI-first human plus virtual agent customer service. In other cases, customers are adopting the full Zoom CX suite alongside Zoom Phone and Workplace to transform service operations end-to-end. For example, in Q4, a major insurance provider decided to replace an expensive contact center stitched to an AI point solution with our unified Zoom Phone, Contact Center and ZVA Voice to automate call triage, reduce agent workload, and increase overall efficiency. We also partnered with Surrey & Sussex Healthcare NHS Trust, who administers regional NHS services to modernize their manual fragmented inbound call operations through a single secure digital platform powered by Zoom Phone, Zoom Contact Center, and ZVA Voice plus Chat to enable AI-powered self-service improve wait times, reduce missed appointments and enhance overall patient outcomes and call operations efficiency. These wins also demonstrate the momentum behind Zoom virtual agent and the customer response to our voice AI within the CX suite. Only a few quarters in market ZVA Voice has already been included in 4 of our top 10 CX deals. We are also starting to see ZVA Voice bringing new customers and act as a beachhead for potential expansion into large organizations. In Q4, we signed a nearly 7-figure ARR deal with a leading U.S. retailer leveraging ZVA to handle inbound calls across more than 1,100 locations. ZVA 3.0 announced yesterday builds upon this growing momentum. It operates across voice and chat, taking action across systems, executing complex multistep workflows, learning continuously from how human agents resolve issues and seamlessly bringing people into the conversation with full context when needed. That's how we are helping enterprises close the loop on customer issues at scale. And it's a powerful example of how our CX platform can drive measurable efficiency, better experiences and real business value for our customers. Our second priority is to grow AI revenue streams beyond customer experience and to extend the system of action to new AI products across vertical and horizontal workflows. Zoom Revenue Accelerator, our revenue orchestration platform that uses the power of Zoom AI to drive prospecting, coaching, CRM automation and more is a great example of this vertical value. ZRA had a strong quarter. The number of customers purchasing it grew 50% year-over-year, and its largest Q4 transaction spanned HR services, real estate, technology and automotive sectors. Another great example of vertical workflows is BrightHire, which we were very excited to close in Q4 and bring similar conversational AI value to recruiting and hiring. BrightHire is early in its growth path. Together, we have a tremendous opportunity to combine BrightHire's domain-specific AI capabilities with Zoom's product breadth and distribution advantages to transform how organizations recruit, hire and retain talent. We are also making progress with Custom AI Companion, which brings horizontal value to workflows across Zoom Workplace and beyond. We're proud to welcome the following new customers showing the breadth of what this product can unlock. Harmonic, a leader in virtualized broadband and video streaming solutions added Custom AI Companion wall-to-wall to their Workplace deployment to integrate across multiple third-party tools and support knowledge retention, sales enablement and employee onboarding. Custom AI Companion also made headway in sectors like education, where AI literacy is of paramount importance for both students and administrators. In Q4, Grand Valley State University adopted it wall-to-wall alongside Zoom Workplace for education, supporting their efforts to streamline help desk and other student-facing processes by connecting administrators and community members more seamlessly with internal knowledge bases and workflows. At the same time, they added ZVA to their existing Zoom Contact Center to provide students with more responsive omnichannel support. Last, the foundation of our system of action sits within Zoom Workplace, spanning the full meetings and work life cycle where context is created and work moves forward. By evolving collaboration into an engine of action while preserving the flexibility of an open ecosystem, Zoom Workplace remains simple, reliable and deeply preferred by solopreneurs and Fortune 10 companies alike. Q4 marked a big step forward with the launch of AI Companion 3.0, advancing our system of action by turning meetings from one-off events into engines of ongoing work. As innovation accelerates adoption continues to grow and broaden. In Q4, AI Companion monthly active users more than tripled year-over-year. MAUs engaging AI through the side panel more than doubled quarter-over-quarter. And within Zoom Phone, MAUs using AI features increased 35% sequentially. This momentum reflects not only scale, but expanding depth of engagement across workflows. We also revitalized our core Zoom Workplace client simplifying the user experience with refreshed interfaces and streamlined navigation to make action even more intuitive. Our product mastery continues to translate into competitive wins and meaningful displacements across meetings, phone, chat and beyond. Zoom Phone had some great competitive wins and Phone ARR continues to grow in the mid-teens. Let me highlight some customer wins to bring this to life. In Q4, we landed a Fortune 10 customer on Zoom Phone in a large and competitive deal for 140,000 seats replacing Cisco calling. We also secured 2 major U.S. financial institutions on Zoom Workplace and Phone displacing Teams and Cisco calling. Additionally, we significantly expanded our footprint with a leading global bank, adding nearly 50,000 Zoom Phone seats in Q4 and bringing their total deployment to an incredible 150,000 seats. These financial sector wins highlight our ability to meet the complex, highly regulated needs of the industry. Our customer-centric approach to innovation, particularly around AI and security, enables institutions to ensure compliance, mitigate regulatory risk and modernize operations. The momentum is similar in healthcare, where we witnessed a growing number of Workplace and Phone wins that also added customer experience. They are choosing Zoom not only for sector-specific capabilities, but for the differentiation offered by our cohesive AI-first system of action, spanning patient engagement, care coordination and back-office collaboration. In the age of AI, Zoom becomes more essential. We are building the system of action that turns conversations into coordinated execution across work inside the organization and with the world outside including customer engagement, sales, recruiting and more. By connecting collaboration to action, Zoom drives measurable outcomes, and we're still early in what this system can unlock. Now let me turn it over to Michelle to take us through the financials. Michelle? Michelle Chang: Thank you, Eric, and hello, everyone. I'm excited to be with you today to share Zoom's Q4 and full FY '26 financial performance. In Q4, total revenue grew 5.3% year-over-year to $1.25 billion or 4.8% in constant currency. This result was $12 million above the high end of our guidance. Our Enterprise business continues to be strong with revenue growing 7.1% year-over-year, representing 61% of our total revenue, up 1 point year-over-year. And our Online business continues to show signs of stabilizing. In Q4, average monthly churn was 2.9% as compared to 2.8% in Q4 of FY '25. In our Enterprise business, we saw a 9% year-over-year growth in the number of customers contributing more than $100,000 in trailing 12-month revenue. These customers now make up 33% of our total revenue, up 2 points year-over-year. Our trailing 12-month net dollar expansion rate for enterprise customers in Q4 continues to hold steady at 98%. Pivoting to our growth internationally. Our Americas revenue grew 6% year-over-year. EMEA grew 5%, and APAC grew 3%. Moving to our non-GAAP results, which, as a reminder, exclude stock-based compensation expense and associated payroll taxes, net litigation settlements, acquisition-related expenses, impairments of assets, charitable donations of common stock, tax benefits from discrete activities net gains on strategic investments and all associated tax effects. Non-GAAP gross margin in Q4 was 79.8%, up 1 point from Q4 of last year, primarily due to continued cost optimization efforts, while we remain focused on investing in AI. Non-GAAP income from operations grew 4.6% year-over-year to $490 million, exceeding the high end of our guidance by $8 million. Non-GAAP operating margin for Q4 was 39.3% as compared to 39.5% in the prior year period. The slight margin decline was due to changes in our bonus structure and investments in AI. Non-GAAP diluted net income per share in Q4 increased by $0.03 year-over-year to $1.44 on approximately 303 million non-GAAP diluted weighted average shares outstanding. This result included a headwind of approximately $0.11 and from higher-than-expected taxes due in part to tax true-ups discrete to the quarter. Turning to the balance sheet. Deferred revenue at the end of Q4 grew 5% year-over-year to $1.42 billion, above the high end of our previously provided range. For Q1, we expect deferred revenue to be up 1% to 2% year-over-year, which takes into account the recent trend of larger and longer duration competitive takeouts in Phone and Contact Center that often include credits to defray transition costs. Looking at both our billed and unbilled contracts, our RPO increased over 10% year-over-year to approximately $4.2 billion. We expect to recognize 57% of the total RPO as revenue over the next 12 months, down 2 points year-over-year. In Q4, we had operating cash flow of $355 million as compared to $425 million in the prior year period. Free cash flow was $338 million, as compared to $416 million in the prior year period. Our Q4 operating cash flow and free cash flow margins were 28.4% and 27.1%, respectively. We ended the quarter with $7.8 billion in cash, cash equivalents and marketable securities, excluding restricted cash. Under the current $3.7 billion share buyback plan in Q4, we repurchased 3.8 million shares for approximately $324 million. That brought our total repurchase under the plan to 36.3 million shares for $2.7 billion at the end of Q4. Looking into FY '27 and beyond, we intend to leverage buybacks to, at a minimum, offset dilution on a yearly basis, reflecting management's confidence and long-term commitment to shareholder value creation. Pivoting from Q4, I'd like to highlight some of the major financial milestones for the full FY '26. Total revenue for FY '26 grew 4.4%, and our Enterprise revenue grew 6.5%, both accelerating 130 basis points year-over-year. Along with the top line progress, we also improved margins. We reached a non-GAAP gross margin of 79.7%, up 80 basis points from the prior year, and a non-GAAP operating margin of 40.4%, up 100 basis points from the prior year. Free cash flow grew 6.4% to $1.9 billion. And finally, we continue to be strong stewards of shareholder capital. We reduced stock-based compensation expense by 18% in FY '26. That, combined with the continued execution of our buyback allowed us to reduce our diluted weighted average shares outstanding by 2.5%. Turning to guidance. In Q1, we expect revenue to be in the range of $1.22 billion to $1.225 billion. This represents 4.1% year-over-year growth at the midpoint. We expect non-GAAP operating income to be in the range of $487 million to $492 million, representing an operating margin of 40% at the midpoint. Our outlook for non-GAAP earnings per share is $1.40 to $1.42 based on approximately 304 million shares outstanding. For FY '27, we expect revenue to cross the $5 billion milestone and land in the range of $5.065 billion to $5.075 billion, which at the midpoint represents 4.1% year-over-year growth. We expect our non-GAAP operating income to be in the range of $2.05 billion to $2.06 billion, representing an operating margin of 40.5% at the midpoint. This margin guidance includes a temporal tailwind of 180 basis points related to an accounting amortization change, offset by 70 basis points of pressure from the second era of our shift from SBC to cash bonus compensation. In addition, our outlook for non-GAAP earnings per share in FY '27 is $5.77 to $5.81 based on approximately 308 million shares outstanding. Included in this guidance is an interest income headwind of approximately $50 million in FY '27 due to lower yields in the declining rate environment. As a reminder, future share repurchases are not reflected in the share count and our EPS guidance. For FY '27, we expect free cash flow to be in the range of $1.7 billion to $1.74 billion. which includes approximately $75 million of incremental CapEx related to the post-pandemic refreshment cycle of assets across our U.S. data centers as well as similar interest income headwinds previously mentioned. As we end FY '26 and we move into FY '27, we're thrilled with our progress, and we're excited about our differentiated vision as an AI-first system of action. This success gives us confidence in our ability to grow durably beyond $5 billion in revenue across progress in meetings, continued growth in Phone, scaling our AI-first customer experience and in introducing new AI revenue streams. We're excited to do all of this and still maintain our focus on profitability, cash flow generation and shareholder returns. Thank you to our customers, investors and of course, the entire Zoom team for your trust and your support. With that, Catherine, please queue up the first question. Operator: [Operator Instructions] Our first question will come from Arjun Bhatia with William Blair. Arjun Bhatia: Eric, maybe one for you, we'll start. I'm just curious how you think about AI monetization progress in fiscal 2027? You called out a couple of examples of customers adopting Custom AI Companion and going wall-to-wall. How do you think that and your broader portfolio of sort of AI products evolves in terms of adoption and contribution to revenue next year? Eric Yuan: Yes, it's a great question. So we're very optimistic about our AI technology monetization in FY '27, driven by, first of all, and customized AI companion (sic) [ Custom AI Companion ] more and more the customers, they see the value and if we like and of course AI companion are built for free, but Custom AI Companion is different, we can monetize. That's one. And I expect, right, to drive the AI monetization. At the same time, we have very solid AI Companion 3.0 foundation and the team working so hard to innovate. We leverage that technology to empower other use cases like ZVA, Zoom Contact Center, Zoom Phone and ZRA almost every -- those -- the product lines for customer experience or sales experience even for webinar, right, we can leverage AI to empower those -- the vertical use cases. Also, we can monetize it. Again, take the CX, for example, right? Look at top 10 CX deals we closed in Q4, 4 of them already attached with Zoom Voice Agent, right? Zoom Voice Agent is built upon our AI technology. We see more and more opportunity like that. I cannot be more excited than before because of AI and because of our monetization strategy for AI. Operator: Our next question comes from Allan Verkhovski from BTIG. Allan M. Verkhovski: Can you hear me? Eric Yuan: Yes. Allan M. Verkhovski: Awesome. Congrats on the strong quarter here. Great to see the acceleration and Zoom customer experience. Michelle, I wanted to ask you, and I'll stick to a question here, but on the Q1 deferred revenue growth guidance of 1.5% at the midpoint, can you just quantify the impact from the larger competitive takeouts? And for the fiscal '27 revenue guidance, can you just give us some color like what you're assuming for Enterprise and Online revenue growth? Michelle Chang: Sure. No problem. Let me touch on the deferred revenue one, because I think this is one that's really important for investors to understand and maybe not read into it as you traditionally might. First of all, it's important to note this is a billing dynamic and not sort of a rev rec thing. What we saw was a recent trend that's actually great for Zoom's business. Wins in large and longer competitive platforms where we're providing a grace period to our customers to help them with that transition. This is good for Zoom. This is intentional. And I think maybe just one other piece for investors. You can see that, the fruits of that so much in Eric's script and you can see it in the long-term RPO that's up 15% relative to 3% in Q3. So a couple of thoughts on deferred revenue. In terms of the guide, at 4.1%. One other thing that I want to make sure we call out to investors is included in that guide is a 40 basis headwind of pressure from a single large competitor white labeling that churned at the end of FY '26. Setting that aside to your broader question, we expect Online to have slight growth sort of in the range of what they had this year. And really, it's going to be an enterprise that's the headline for the growth. And it's going to be the source of things that we talked about in this earnings and that, frankly, we've been talking about with investors which is progress in AI monetization, progress in product diversification and building out new routes to market, upmarket and with our channel. Allan M. Verkhovski: Awesome. Congrats on the strong quarter, guys. Operator: Our next question will come from Peter Levine from Evercore. Peter Levine: Eric, one for you. I think in a world where AI models or provider -- AI model providers are essentially they're controlling the intelligence layer and theoretically could build AI-native collaboration suites on top of their capabilities. So I guess, question like what's -- like in terms of technology or what structural barriers, I think, prevent them from disintermediating Zoom? Like what's the moat that you feel like will defend your market, data, the infrastructure, it's the enterprise relationships, brand equity. But like -- or is it something deeper? I guess is like how do you think about that risk? And then how would you debunk the concerns that like AI could ultimately replace you guys? Eric Yuan: Wonderful question. I think -- if you think about the mission-critical communication like Zoom, reliability is extremely important, right? It's got to work every time. You cannot say today's meeting may not work, tomorrow might work, no one is going to use that, right? And security also extremely important, right? You need all kind of security features also need to built-in plus ease of use. That's the reason why the customer choose to use Zoom. Back to the AI. I think I'm an engineer, right? I also now starting writing code as well with the AI coding tools, I think it's extremely hard to replicate what we built over the past many years because, first of all, a lot of code still C++ code, and you have to open out the video, audio, a lot of things, right? Today, you look at AI coding tools, it is so hard to build a very scalable and the leveraged, the native OS build all kind of code. It's not as straightforward. You can build it very easy system, using high-end tools. But it's more like toys, nobody going to use that because this is a collaboration. It's not a system of record or database or store information, even UI don't work. You know how to use that, right? It's fine. But when it comes to mission critical video collaboration tools like Zoom, it's really hard to leverage the AI coding tool to replicate what we achieved. I have very high confidence. And by the way, no matter what we do, we still need tools like Zoom, right, human to human connection, interaction is still very important. Peter Levine: Michelle, a follow-up on net retention, 98%. Can you maybe just help us bridge the gap, all the new products that you're having. You're seeing upsell Contact Center, Voice. When does that reflection -- when can we see that in the model? Michelle Chang: Yes. So great question on NDE. Look, we've said that it will rebound in the long term, we've not put guidance. And when it rebounds, it's going to be off of so many of the drivers that we're talking about here, progress in churn, phone in mid-teens, contact center in high double digits and obviously, the onset of AI monetization. Look, we're going to run the business sort of to revenue growth and you have our '27 guidance there. But a couple of notes maybe for investors about headwinds relative to NDE. First of all, I just want to go back to that white label churn that we talked about of competitive white label churn that will obviously put some pressure. And then the other thing that I'd call out for investors is actually good pressure, which is with Workvivo and Contact Center, we're seeing them bring in new customers to Zoom. And look, in the fullness of time, that will replicate through our net dollar expansion. But obviously, it will take a little bit more time. So just 2 more mechanical things to take into consideration. Operator: Our next question comes from Siti Panigrahi from Mizuho.. Charles Tevebaugh: Chad on here for Siti. I think the Americas revenue growth trend has been pretty clear and quite strong throughout this fiscal year. I was wondering if you could dive a little bit into the trends you're seeing internationally and sort of any key initiatives there for the up -- the current year to reaccelerate growth there? Michelle Chang: Eric, do you want to take that one? Or do you want me to? Eric Yuan: Yes, go ahead please. Michelle Chang: Yes. I mean, look, I would point to -- we're pleased. I think we give the constant currency growth rates, but they're up and growing across our international business. Maybe the thing that I would call out is, I think as we move into areas like Contact Center, and Phone as well as Workvivo, that's giving us, together with investments in channel, an opportunity really to break into international markets. So it is something that we're investing in. We've also done maybe more local investments like U.K. data center. But it's something that we're focused on and with our broader product expansion, AI monetization, as well as channel investments is something we think will grow in the future. Operator: Next up, we have a question from Alex Zukin with Wolfe Research. Aleksandr Zukin: I'll maybe make mine pretty quick. There's been a lot of questions around, I think, just your ownership structure of some of the larger foundation model companies. I know we haven't talked about it or asked about it, but given it's such a wide-ranging topic, maybe I'll let you address it to the extent that you want to specifically maybe on the Anthropic stake. And then Michelle, for you just any comments about how clearly the growth on Phone, Contact Center was really, really strong this year. As you look at the guide implicit, I know you don't give product level guidance, but as we think about the sustainability of mid-teens growth in Phone, the sustainability of whatever very high rates of growth are in Zoom Contact Center. How should we think about those particularly since you don't want us to pull any kind of forward looking dimension from the deferred? Michelle Chang: Perfect. So let me hit Anthropic first and then we will round Alex, with the product question. Look, in our results, you will see a total strategic investment. Zoom has a Zoom Ventures Fund that we use to strategically invest in tech that we feel like is important to Zoom. And you'll see the total balance of that $1.6 billion. And in Q4, you'll see a gain of $532 million pretax. This is due mainly, of course, to the change in the valuation of Anthropic after their last round. Look, we have a minority stake, but Anthropic is a critical partner. Zoom has long standing, talked about our federated approach to AI and Anthropic is key to our road map and a great partner in our federated approach. On the sort of durability, if I get your question right, Alex, on Phone. I really look at just we've seen continue -- I'm going to hit Phone and then I'll wrap with Contact Center. Phone, we've been seeing very durable mid-teens growth. Look, we haven't updated our penetration stats in Zoom. But in Zoomtopia, I think in '24, we said it was 19% of our meeting space. I think that just both speaks to progress and opportunity going forward. And then look, on the phone side, I just look at all the examples that Eric talked about, leading insurance, Cisco win and F10, Cisco win, major fast food chain, RingCentral win and really feel like a major U.S. bank of Microsoft, Cisco win. So we feel great about the share gains on phone. On contact center, what I would point to there is just multiple quarters, now 4 quarters at high double digit and actually Q4 accelerating off that. But really, and I think, Alex, you've been a great noter of this is to look at the makeup of contact center as reflective of where we will go. For many quarters, we've been talking about the majority of the top 10 deals being large displacements. We've been talking for quarters about the value really coming in AI, now 10, up 10. And to Eric's point, 4 of 10 in voice, which has been a new entrant for Zoom in the summer. We did a 2.0 refresh. And even yesterday, we announced 3.0. And really, maybe if I could wrap with one stat, which is how often times these things come together. And I think it's a great example of what Eric introduced in the system of action of both inside the organization and outside just what a powerful element that is. And 6 of our 10 largest contact center deals, as an example, pulled through Phone as well. Eric Yuan: So just quickly, Alex, it's such a great question to add on to what Michelle said. We talk about the top 10 Zoom Phone deals, Zoom Contact Center deals are doing very well. This is more like a lot of enterprise. I think this year, you look at SMB, also a huge opportunity. The reason why because of AI. Our AI is very affordable, federated AI approved, right? You look at the last December, I look at a human [ HRE ] test. Zoom ranked #1 for a while, right? So because those investments, because of the price and also the latency of the technology, I think we have a huge opportunity for all of those SMB customers as well because of AI. Michelle Chang: And especially true, just to mark Eric's comment because it's such a good one that is especially true in ZVA. So great to see the new product value, which will really open up new opportunities down the market. Operator: Up next, we have a question from Josh Baer with Morgan Stanley. Josh Baer: And congrats on a strong quarter. You obviously have the horizontal tools that every single knowledge worker in the world can use, but you're also building this portfolio of very departmental solutions, marketing, sales, HR, contact center. So a strategy question for you, Eric. How do you balance addressing additional departments and roles with new products versus going deep into these areas, rolling out more solutions in these departments that you're already in and balancing all of that with the horizontal play? Eric Yuan: Josh, wonderful questions. Speaking of vertical solution, a lot of my AI avatar, right? I use that for 3 quarters already. As you can see, the quality is getting better and better, right? This is kind of one of the vertical use case for marketing team. Having said that, I think given the AI evolution, AI coding tools, I think we have a foundational technology. Now we can do both. On horizontal front, right, we keep innovating and more features and services, right, and delivery happiness to our customers. You see the AI Companion 3.0 announced in the last December. And also in terms of innovation, a lot of things we're going to announce -- new innovations announced at Enterprise Connect, that's on the horizontal front. Look at each vertical use case, either departmental use case or vertical market use cases, I think because of AI, I think we can monetize. That's why we also want to double down on those use cases. Customer support, my example, ZRA, webinar, BrightHire, almost every vertical use. I think we can leverage AI to quickly penetrate into those markets we never thought about before. That's why we are very excited because of AI. Operator: We have a question from Tyler Radke with Citi. Tyler Radke: I wanted to ask you about the custom AI Companion. You noted some good wins, I think, in higher education and some other verticals in the quarter. But how are you thinking about that in terms of a driver for FY '27. And is this something where you're seeing list price sort of be realized in the field? Or is there still sort of heavy discounting? Just give us an understanding of sort of how that rolls out from a go-to-market perspective. Eric Yuan: Yes. So you look at customer AI Companion. Again, AI Companion is part of our offering. It's for free, it's become more and more powerful. But the way for us to monetize AI Companion is to go through the customer AI Companion, in particular for medium and large enterprise customers because with the third-party applications, connectors and also we build in a workflow and no-code workflow to build agent. And that's kind of our vision, right from a composition to completion. If you do not have a very flexible workflow builder, so how do you build an agent, how can you complete a task, right? So because it used to be zoom, just the collaboration. Now with the Zoom customer AI Companion with workflow connecting with all the third-party applications, more skills, more agent and then we can achieve from a composition to completion. And also not only workflow, but also customer companion also can give you the enterprise knowledge retrieval functionality, right? You can connect so many third-party applications, right? I do not need to log into different systems, within Zoom AI Companion interface, I can search for any information and help you write and document to achieve the task. Essentially AI Companion -- Custom AI Companion is a customized workflow builder and also the information search capabilities to connect with all kind of third-party enterprise applications is extremely powerful, and we can monetize for those -- to targeted enterprise customers. Tyler, go ahead. I think Tyler maybe have follow-up. Tyler Radke: Can you hear me? Eric Yuan: Yes, yes. Tyler Radke: Sorry, just any way to -- is that going to be a contributor to FY '27? Or is it still kind of early days in terms of that monetization of the premium AI Custom Companion? Eric Yuan: It already contributed, right, to our growth. So I've already closed the big customer AI Companion deals in the quarter in Q3 and Q4 with more innovation, for sure, it's going to help us more in FY '27. Operator: Up next, we have a question from Seth Gilbert with UBS. Seth Gilbert: Maybe just one, if I hold the online growth, online year-over-year growth at about 1.2% for fiscal '27 that would imply that the enterprise decelerates by about 1 point from the 4Q exit rate of 7%. So maybe a question for you, Michelle. Can you talk about some of the puts and takes here that could cause enterprise to outperform? Michelle Chang: Yes. Is your question on Q4? Or is it more on guidance going forward? Seth Gilbert: It's more on guiding going forward. So yes, sorry. Michelle Chang: Yes. Look, let me talk about online, and then I'll finish with enterprise. I think online, so pleased to see it return to growth. It was the first time we've had growth since fiscal '22. And look, that growth comes off of adding value in our portfolio of -- in a workplace portfolio as well as AI. And that's why we're able to realize on a price increase as well as keep record low churn. Our guide assumes an additional price increase on the annual SKU. So in line with monthly, it's really just intended to do the same thing as the prior but bring them into value. But look, Seth, to your more Meta question, Enterprise is going to be the durable driver for growth going forward. And I'll just continue to hit home the components. It's making progress, meeting churn. It's keeping Phone in that sort of mid-teens growth range. It's continuing with that better together story to pull along Contact Center and realize the AI value. That is by far where we are seeing the most immediate pulls of the incremental AI monetization in both agent-assisted AI as well as the ZVA that Eric and I talked about. And then look, there's so much coming on from an AI monetization perspective, both in product, Workvivo Phone. But additionally, beyond that in new SKUs, we've now opened up a note taker SKU to our free base as well as making continually products like ZRA even better. So we look out to the forward and we're excited about the progress that we made this year, 130 bps kind of up year-over-year, and we're equally excited, if not more, on the '27 go forward. Operator: Up next, we have a question from Tom Blakey with Cantor Fitzgerald. Thomas Blakey: Eric, or Michelle, I'd like to hear about maybe some quantifying of these credits that you called out, that was interesting. And even if it's -- you can't call it out numerically, just how they're trending. I think the numerical help would kind of understand, help us as a group understand what kind of headwinds we're talking about that as I know, Eric, you're managing this business for a multiyear basis here as they come -- you guys are innovating and taking share when they come off, like what that would look like? And I have a follow-up, if I may. Michelle Chang: Yes, I can take that. So look, it's in line with what I said earlier, which is -- again, I just want to continue to emphasize investors, don't read into this as normal. These are great competitive wins where we're providing a grace period, so that in exchange for a larger and longer-term competitive platform win. Think of this as helpful in sizing, Tom, is really the primary driver between the decel in Q4 relative to the guide in Q1. And if helpful on the other side, maybe what I'd point to is connecting you to that uptick in long-term RPO as [indiscernible] sizing. Thomas Blakey: Yes, that would be helpful. And then, Eric, just combining you and Michelle's comments here, Michelle is guiding us to grow online kind of relatively flat, but you seem awfully excited about the SMB's opportunity to maybe equally do as well. I know it's early days in terms of maybe tackling the successes that you've had on the enterprise side with CX and Phone, but is it safe to assume that, that's maybe not implied or imputed in that one kind of 1% guide for fiscal '27 online? Eric Yuan: Yes. So when I mentioned SMB customer is more like a high end. Thomas Blakey: Higher end? Eric Yuan: Yes. For the online buyers like SMB customers, right? It used to be -- let's say, they look at multiple solution now because of power for AI. And also, I think we have a huge opportunity to serve those SMB customers because we have a very rich product portfolio, great AI capabilities, yes. It's not about individual online buyers, yes. Thomas Blakey: Michelle, could you comment on BrightHire, anything on the top or bottom line impact into fiscal '27? And that's it for me. Michelle Chang: Yes. So it closed mid-Q4. So I think of the impact to Q4 is sort of de minimis. The guide reflects obviously BrightHire. And I would just say that it's a perfect example, I think, of what Eric laid out in the earlier question with regards to vertical and horizontal value. So this is a business where we share common customers, so there's sort of mutual benefits. And this is a product where we have similarities with really taking AI value to rethink the hiring kind of approach, more insights, efficiencies as well as then you have Workvivo on the other side of sort of thinking about the life cycle of kind of human talent. So it's something that they use Zoom and all of their interviews. And so we look at it and there's natural synergies and they're relatively small. This is a small acquisition. You can see the size of it, sub-100 [ to the total ]. Operator: Our next question comes from Samad Samana with Jefferies. Samad Samana: So I wanted to ask about pricing. You guys have continued to create a lot of value. You've obviously -- part of it is to drive better retention, which we've seen over the years. Some of it is to be expressed in kind of monetary terms. How are you thinking about that balance for fiscal '27, Michelle? And what are you assuming in the guidance, if anything, from a price increase perspective? And to the extent -- I'm sorry for the 11-part question. I'm learning from some of my peers. But if you have, can you give us a sense of like timing around that assumption as well? Michelle Chang: All right. Let me hit explicitly the online, and then I'll move and talk about our enterprise because I think the dynamics look a little bit different. So our online guide includes a price increase of 6% to go in effective mid-March to our annual SKU. So think of this as -- this is really the flip side of what we did last year. And I really encourage investors not to think about it as a price increase. Price increase is just one mechanism for realizing incremental value to customer. So price increase ongoing, if you will, is not something that Zoom is going to use. It's going to come with incremental value. In this case, it came with much more value across chat calendar meetings, whiteboard, et cetera, et cetera, in our workplace as well as AI value. So that's really what's behind that. So that's sort of how to think about the online side. And on the enterprise side as well, one, important to note that those prices then impacted the enterprise. But look, there, we're going to focus much more on total contract value, things like discounting and contact -- contract, sorry, duration. And those would be baked into our guide given. Operator: Our next question comes from Ryan MacWilliams with Wells Fargo. Christopher Brazeau: This is Chris on for Ryan. Eric, you've mentioned in the past a doubling down on the product side. And so we were curious if in the last few months, you've seen any product velocity improvements from agentic coding tools like you're mentioning. And if you're thinking about product investments any different this year compared to last year? Eric Yuan: Yes. So a while back, right, so we all adopt AI coding tools, it's getting more and more powerful. And especially for the new product development, right, or new service, right, certainly accelerated our pace of innovation. But at the same time, we also have a lot of the existing services, right, and a lot of code written by our engineers, right? I do think that the AI coding tools is powerful enough, right, to maintain all those millions of the length of the code yet, right? So having said that, you look at not only for engineers, but also the UI designers, product managers, almost everywhere, right, we can have AI coding tools to improve our productivity. Essentially, we drive the innovation, the speed. And you look at the product area we invest. Like ZVA, for sure, is really a great example. And we're kind of building a lot of new features. And it's probably in terms of speed, and better than any time in our company history, right? That's the reason why over the past few months, the customer feedback, wow, you had this feature, the other feature, a much better position. This is a great example because the AI coding tools, and also because of the way we embrace the AI. So again, not only for engineers, but entire the product development, the life cycle. Operator: Next question comes from Jackson Ader with KeyBanc. Jackson Ader: Great. The question I have is on is around the channel. And I think you guys have made a bunch of improvements and enhancements to the channel partner program, the last few quarters and last year. And so really, I'm curious, number one, any kind of continued enhancements that you definitely know are going to be implemented here that should help for growth in 2027? And then also, it seems like -- I understand there are some kind of headwinds, tailwinds to the margin for fiscal '27. And I'm just curious, is that due to the mix of the type of investments you're making, meaning channel versus direct? Or is it just the overall amount of investments that you're making? Michelle Chang: Yes. Let me go ahead and take that, and then Eric, you can pepper in as you see fit. Look, channel, if you think about sort of those durable elements of revenue growth is going to be essential to things like a Phone business and the Contact Center. And it's just how customers procure in that space. And also, it just speaks to beyond just the software, the consulting deployment, just how customers interact with partners. And look, we're very -- this is something we've been very intentional about, and I think you could see it in our revenue growth inflection. Look, in terms of quick couple of stats and things of why we feel great about our investments. You can see it in our large contact center wins, 9 of 10 in channel. Our channel base continues to grow. And frankly, the proportion of new customers coming from channel to me is especially exciting. The kinds of things that we're investing in to your question, look, it's around incentives. We made starting last year a lot of system capabilities and portals so that we really help enable especially to all of the product value that Eric mentioned, in things like ZVA coming out at incrementally past levels, we want to make sure that our ecosystem is ready there with us, and so we'll invest in that. And then maybe the last channel investment that I would mention is, we're bridging that into things like systems providers, which we think is going to be really important going forward. On your -- on the operating margin guide, let me make some comments because I want to make sure that people really understand the bigger picture here. So we guided to 40.5% at the midpoint. We want to, obviously, beyond the mechanics of reminding that we've used as a consistent forecast methodology. We really want to make sure the investors understand the 2 dynamics, which are not channel were up 180 basis points due to the amortization change that we referenced in the script. And then that's offset in part by the comp changes. We're in our second year of shifting from stock-based compensation to cash. So those are really the headlines to think about in terms of the op margin versus anything channel. Operator: Our next question comes from William Power with Baird. William Power: Eric, really encouraging to see continued progress on Zoom Phone and obviously the broader ARR growth trends. But I'm particularly interested in the Cisco displacements. I think historically, there's just been a lot of inertia with some of these legacy phone systems, especially the large enterprises have. So I'm just kind of curious, is this just a function of working through the sales cycle? Is it a function of enterprises just becoming that much more comfortable with Zoom Phone quality what's kind of putting you over top here? And maybe just help us kind of understand the sustainability of some of these large opportunities. Eric Yuan: Yes. That's a wonderful question. Believe it or not, actually look at the total Phone deployment. A lot of -- I think probably still more than 50%. I did not get the new number, still on-prem deployment, I mean, for large enterprise customer, right? And they deployed the on-prem phone system for a long time. And so yes, it's okay, not a great, and why they want to hurry to migrate to the cloud, right? This is kind of sort of a mentality before. Now with AI, that's a strong reason for those very large enterprise customer, they cannot lever the AI for the on-prem, right? So that's why I would say that will be acceleration for those large enterprise customers to migrate away from on-prem to cloud. Zoom is in much better position. We win quite a few very large, very competitive phone deployment for on-prem to the cloud. Again, AI is a driver and for those customers to migrate the AI first cloud phone system. And that's -- yes, that's a driver. Michelle Chang: And maybe just to add the numbers to what Eric said, it's about 130-plus million seats in the cloud and about 150-ish million on-prem. So Eric is spot on, on the rough 50-50. William Power: So lots of opportunity. Michelle Chang: Yes. Eric Yuan: Yes. Huge, because in order because the AI, it's hard to convince some, they say, it's okay. I use it for 20 years, it's okay. But now it's great opportunity ahead of us. Michelle Chang: Maybe the last thing that I'd mention is just increasingly how the deals reflect it's not just Phone alone as a workload. It's that sort of wanting that whole system of action. I think that's why you see so many Contact Center, Phone deals coming together. And so as we think about large competitive displacements, I think the inability to kind of have that full portfolio is one of the reasons. Operator: Our last question for today comes from Catharine Trebnick with Rosenblatt Securities. Catharine Trebnick: A quick question on the channel. So I get the fact that you go direct with the phone and the contact center, and you did mention systems. And you did talk this quarter that you had many more deals that were bundled. So are you seeing a different buying pattern from the enterprise and the SMBs that are forcing you or maybe being more -- or the system integrators are more attractive to you? Can you peel that back a bit for me? Michelle Chang: Your question, Catharine, is are we seeing, I mean I would... Catharine Trebnick: What are you seeing -- yes, it seems like you had more bundles this quarter than you have typically discussed. So how is that changing your go-to-market motion and you're working with the different partners? Because most of the partners typically just sell the phone or the contact center. So it seems to me if it's a more complex deal that you're going to need either a direct sales force or more of a system integrator. Michelle Chang: Yes. I mean I would say what we saw in Q4 was just an intensification of the pattern that we've seen previously, which is just what a natural sale it is for phone and contact center to come together. And then frequently, that also comes with a meetings portfolio. And look, in a lot of the deals, did they also include other great Zoom products? Yes. I think it speaks to sort of where the market is going, that system of action that we talked about, also stitching the AI value in. And then certainly, Catharine, investments that you've noted in your step about investments in the channel. Catharine Trebnick: Well, the other part is, are you seeing the enterprise want to move more towards a platform like they are in security and that you're feeling you have enough product pieces now to be part of that platform play? Michelle Chang: Yes. I mean I'll jump in and then, Eric, you should certainly jump in as well. I do think -- and you're seeing in a lot of those large deals, those platform things. I don't think it means all of them. I don't think like anything, there's a binary answer. But maybe just as a quick data point, like if you look at our top 10 deals and contact center, 6 of 10 included phones. So I think it's just an indicator that there is both those that really want that platform, that whole system of action stitch together with AI. And then there's others that are just going to have their own technology and come at it in different ways. But look, I think maybe just to the deferred revenue conversation, I see that as a great sign. It's these all-in with Zoom, large, longer-term deals. So I think there's some really great things on the future for our Contact Center business. Eric Yuan: Just quickly to add on to what Michelle said. So the Zoom workplace is our UCaaS platform. Contact Center is a CCaaS especially for those large enterprise customers, right? When they look at it from on-prem to cloud or maybe from the pre-AI solutions to AI solutions, if they can combine those 2, consolidate those 2 systems into one platform, one vendor, why not? This is a great ROI. That's the reason why quite often you see both UCaaS and CCaaS will [ bring in ] together. So that's the reason. Operator: Thank you. This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks. Eric Yuan: Thank you for Zoom employees, customers, partners and our investors for your greater support and we truly appreciate. We are very, very optimistic about FY '27. So see you next quarter. Thank you. Operator: This concludes today's earnings call. Thank you all for attending, and have a great rest of your day. Eric Yuan: Thank you all.
Operator: Good day, and thank you for standing by. Welcome to the Idorsia Full Year 2025 Financial Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Srishti Gupta, CEO. Please go ahead. Srishti Gupta: Thank you, Nadia. Good afternoon and good morning, everyone, and welcome to our webcast to discuss the financial results of 2025. My name is Srishti Gupta, I'm the CEO of Idorsia, and I'll start the call today with an overview of the operational progress we made in 2025 and the exciting plans we have for 2026. I'll then hand it over to Arno Groenewoud, our CFO, to walk you through the company's financial position. We'll then take your questions. Next slide, please. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Next slide, please. We entered 2025 facing significant financial pressure, but we leave the year stronger and more focused. 2025 was a year of stabilization and preparation. We reinforced our balance sheet, delivered disciplined commercial execution and positioned our pipeline for decisive milestones ahead. Most importantly, we continued advancing medicines that address meaningful unmet needs for patients. Our Idorsia-led QUVIVIQ sales for 2025 have more than doubled compared to 2024, rising from CHF 60 million to CHF 134 million, just above our target, which we upgraded in May last year. This performance was a result of strong commercial traction and growing demand for QUVIVIQ in Europe and Canada, the stabilization and optimized model in the U.S. I will share more on this later. Our non-GAAP operating results have improved from a loss of CHF 308 million to a loss of CHF 100 million. Key to this operational recovery has been our commercial strength paired with cost control. Arno will share more on our financial performance later. Next slide, please. Idorsia represents a rare combination of valuable assets. We are a commercial stage pharma company with 2 products that have blockbuster potential. We also have a rich pipeline of first or best-in-class medicines. We have a clear path to making QUVIVIQ the standard of care in insomnia. In parallel, we are actively engaging in partnership discussions to maximize the value of TRYVIO/JERAYGO and change the treatment landscape of uncontrolled hypertension. We also have plans to advance our innovative pipeline, leading where we can and partnering where we should. Next slide, please. Let's start with QUVIVIQ. As you know, QUVIVIQ is a best-in-class dual orexin receptor antagonist. It works by suppressing an overactive wake signal rather than sedation as some older drugs tend to do. As a result of this mechanism and the best-in-class pharmacokinetic properties, we can confidently say that only QUVIVIQ offers restorative sleep and revitalized days. Before we talk about the commercial performance of QUVIVIQ, it's important to ground ourselves in the patient experience of insomnia. Insomnia is not just the loss of a night's rest and it does not end when the night is over. It infects the entire next day. Patients describe difficulty focusing, feeling emotionally depleted and struggling to keep up with work and family responsibilities. What they value most is a treatment that helps restore their ability to function during the day. That next-day benefit is what matters to patients and it's central to how we think about addressing this condition. Next slide, please. We continue to expect sales growth of QUVIVIQ in 2026 as we guide to sales of around CHF 200 million, but this is just a step on our path to changing the treatment landscape and becoming a global blockbuster. We have a clear plan to achieve this. First, market expansion in Europe and Canada; second, unlock the true value of QUVIVIQ in the U.S.; and third, continue to build a global brand. Let's look at the progress we are making on this and what's ahead. Next slide, please. In Europe, QUVIVIQ is the only pharmacological treatment for long-term management of insomnia disorder. Our 3-pronged approach to market expansion in Europe and Canada is proving very successful. First, we secure public reimbursement. Second, we invest in focused promotional efforts targeting psychiatrists, neurologists and sleep specialists. Finally, we expand into primary care with co-promotion partnerships. Starting 2025, we had secured reimbursements in France, Germany, the U.K. and the private insurance markets in Switzerland and Canada. We continue to focus on reimbursement. And during the year, we obtained public reimbursement in Austria, successfully negotiated premium reimbursed price in Germany, entered price negotiations in Quebec, while submitting in Finland, and continuing our discussions in Spain. This continues to be our top priority for additional markets. And in 2026, we expect to secure public reimbursements in Spain, Finland and Quebec while preserving our price corridor, submit in the Republic of Ireland and continuing discussions in Sweden, Italy and the rest of Canada. Our promotional efforts targeting psychiatrists, neurologists and sleep specialists are leading to strong positioning in retail and hospital settings. We've expanded into primary care with co-promotion partnerships with Menarini in France in October 2024 and Germany in April 2025. And in February 2026, we added the U.K. This is having an incredible effect on our reach, and we continue to look for partners who have established presence and relationships with GPs in other countries. The result of these efforts has been an outstanding trajectory, particularly in France, but closely followed by Germany, the U.K. and Switzerland when considering the relative market sizes. And that trajectory can continue. Just to highlight a few markets, demand in the final quarter of 2025 increased by 25% in Germany, 38% in Canada and 45% in the U.K. Next slide, please. In the U.S., in 2025, we executed a targeted digital marketing strategy with Syneos Health to establish stabilize sales and maintain our core patient base. Going forward, ensuring more patients have access to QUVIVIQ remains a priority. To achieve this, we are advancing 3 key initiatives. First, descheduling the DORA class, recognizing the safety in the same way as it is recognized in all other countries. This would simplify prescribing, facilitate access, expand the prescriber base and improve the patient experience, especially with regards to refills. Second, we will conduct a streamlined label-enhancing clinical study agreed with the FDA to have QUVIVIQ's benefits on daytime functioning recognized in the U.S. label, again, in the same way as it is recognized in all other countries. This would reinforce our differentiated profile with physicians, patients and payers. Third, we will be launching a direct-to-patient digital distribution model aligned with the evolving U.S. market and to increase access. Next slide, please. In 2025, we continue to expand QUVIVIQ's global reach and change the standard of care for insomnia with new approvals, launches and strategic commercial partnerships. Several license agreements help cover markets shown here in green. QUVIVIQ is available in Japan through our partner, Nxera, and they recently saw positive Phase 3 results in South Korea. Our partner, Simcere, has had a very strong uptake in China within the private setting with 300,000 to 400,000 patients treated within the first 6 months. In June, we signed a licensing and supply agreement with CTS in Israel and more recently in 2026 with EMS in Latin America. In Brazil, the regulatory dossier has been submitted to ANVISA, marking an important step forward towards market entry in that region. In red, you can see the next wave of planned distribution agreements focused on Central and Eastern Europe as well as the Middle East and North Africa. These partnerships are part of our strategy to broaden geographic reach efficiently. We expect to make further progress through mid-2026, and we'll keep you updated as these agreements are finalized. Next slide, please. In 2025, we completed the recruitment into our pediatric study of daridorexant, enrolling children aged 10 to 18 with data expected in early Q2 2026. This will be an exciting readout that can pave the way for the first therapeutic option for children suffering from insomnia. Pediatric insomnia is a major unmet need with an estimated 12 million children in the U.S. affected and no FDA-approved therapies available. Insomnia is more prevalent in children with neurodevelopmental disorders like autism spectrum disorders and attention deficit hyperactivity disorder, and our study includes these patients. Daridorexant is the only DORA in pediatric development and, as the new standard of care, could revolutionize the treatment paradigm. We are particularly excited to share the results in the coming weeks and discuss the path forward with regulators. Next slide, please. Our second approved product is aprocitentan, commercially available under the trade name TRYVIO in the U.S. and JERAYGO in EU. We secured regulatory approvals in the U.K., Switzerland and Canada during 2025. It is the only -- the first and only endothelin receptor antagonist approved for the systemic hypertension market. We are actively engaged in partnership discussions, evaluating global and regional deals. Our objective is to expand access for patients while creating value for all stakeholders. Next slide, please. TRYVIO/JERAYGO is uniquely placed in the treatment landscape for difficult to control or resistant hypertension. Its efficacy and safety profile differentiates it to existing therapies and any of those in development. Our registration trial, PRECISION, remains the only hypertension study to enroll true resistant hypertensive patients, all on 3, 4 or more drugs when entering the study. Notably, there was no exclusion based on any antihypertensive drug class. It also had the broadest inclusion criteria, including patients with eGFRs as low as 15. Aprocitentan delivered a double-digit blood pressure reduction of 15.4 millimeters of mercury in just 4 weeks, on top of a standardized triple therapy administered as a fixed-dose combination pill. Aprocitentan has an excellent safety profile with low discontinuation rates observed over 40 weeks, no drug-drug interactions and no increased risk of hyperkalemia, hypotension or a decline in eGFR. The FDA approval provided a broad U.S. label that indicates TRYVIO is suitable for use in all patients who are not adequately controlled on other therapies with the cardiovascular outcome benefit cited within the indication statement. TRYVIO benefited from several important derisking milestones in 2025. In March, the FDA removed the REMS requirement, simplifying prescribing and distribution. Then in August, aprocitentan was incorporated into the updated comprehensive hypertension guidelines issued jointly by the American College of Cardiology and the American Heart Association, which was an important step in reinforcing its role in clinical practice. Our recently published CKD subgroup data shows strong blood pressure lowering plus significant reductions in proteinuria, supporting TRYVIO as a compelling and differentiated option for these patients. Market access work for JERAYGO is also underway in Europe to support our partnering efforts. Next slide, please. TRYVIO is currently being prescribed at more than 25 of the top hypertension centers as part of our focused prelaunch activities to generate on-market experience. In the clinical setting, we see consistent double-digit blood pressure lowering across subgroups, including CKD stages 3 to 4 with excellent safety and tolerability. We see prescriptions coming from key specialties, including nephrology and cardiology. Early on-market experience is translating into increasing new patient starts and improving refill rates, reflecting growing physician confidence in the therapy. Prescribers report meaningful and reliable blood pressure control and comfort using TRYVIO across diverse comorbid patient types. TRYVIO's early real-world experience confirms and reinforces the pivotal trial data from PRECISION. Next slide, please. Our U.S. label allows us to target patients with uncontrolled hypertension despite treatment on 2 or more therapies. Within this broad patient population, there are clear and identifiable patient subgroups that would be the natural initial choice for prescribers. These include patients who remain uncontrolled despite treatment with 3 or more therapies, truly resistant hypertension by definition. This is a group with significant unmet need and high clinical urgency. Second, patients with uncontrolled hypertension and comorbidities where endothelin is known to play a role, such as diabetes and obesity. Third, there is a clear need among patients with uncontrolled hypertension and chronic kidney disease, including those with eGFR down to 15. In this setting, TRYVIO offers a differentiated option without the hyperkalemia risk or eGFR decline that often limits other therapies. Importantly, our on-market experience shows strong uptake across these same patient segments. Notably, given the significant unmet need and clear medical value in these patient populations, the prior authorization process has been very smooth. Next slide, please. Let's turn now to our pipeline. 2025 was a year of meaningful progress, laying the foundations for long-term growth. We are making deliberate focused investments to accelerate our most value-creating assets, supported by a leaner and more streamlined R&D organization. We have advanced our first-in-class immunology portfolio of 3 chemokine receptor antagonists. The study for our CCR6 receptor antagonist is already enrolling in psoriasis with broad potential in T helper 17 driven autoimmune disorders. A study to show anti-inflammatory and remyelinating properties of our CXCR7 receptor antagonist is in progress and progressive multiple sclerosis will start shortly. And a study for our CXCR3 receptor antagonist as an oral precision treatment for vitiligo will begin later in the year. Each will be a proof of concept in a specific indication under investigation as well as a proof of mechanism for a range of related disorders. Next slide, please. We recently announced the exciting news that we have established a clear route to registration for lucerastat in Fabry disease. Fabry disease is a serious and progressive condition affecting around 16,000 people today, a number expected to rise to 21,000 by 2034. There is a high need for treatments capable of addressing disease biology across the full Fabry population as existing therapies are partially effective, have cumbersome intravenous administration or are limited to specific mutation types. Lucerastat's mutation-independent mechanism, oral delivery and long-term data make it uniquely differentiated option in a market expected to reach USD 4 billion. The body of evidence we have generated to-date shows that long-term treatment with lucerastat consistently reduces the glycosphingolipids substrates that accumulate in Fabry disease. We also observed a slower decline in kidney function compared with patients' prior historical trajectories. Importantly, kidney biopsy data from patients receiving long-term treatment demonstrate low to no levels of characteristic lysosomal deposits per our related data recently published at WORLD Symposium 2026. Next slide, please. Following constructive interactions with regulatory authorities, we now have a clearly defined clinical program for lucerastat. This program builds on the substantial body of data already generated and outlines the agreed path towards future NDA in the U.S. and in line with feedback from the European Medicines Agency. The agreed development plan includes a pivotal baseline controlled biopsy study supported by a second study designed to demonstrate that an oral therapy has the potential to deliver clinical benefits comparable to enzyme replacement therapy, which is complex and burdensome for patients. This developmental program is structured to reinforce lucerastat's potential as the first oral monotherapy suitable for all Fabry patients regardless of mutation type. If successful, the data are expected to support regulatory submissions as early as 2029. With that, I will hand it over to Arno to take you through the financial results and our guidance for 2026. Next slide, please. Arno Groenewoud: Thank you, Srishti. Good afternoon and good morning to everyone on the call. In my first slide, you can really see the impact of our increased QUVIVIQ sales and contract revenue, together with our cost-saving measures, resulting in a significantly improved operating result. Net revenue of CHF 214 million includes CHF 134 million from QUVIVIQ product sales, excluding partner sales, a significant increase compared to the CHF 61 million of sales in 2024. The main driver of the sales increase is the EUCAN region, where sales increased from CHF 32 million to CHF 108 million. The sales in the U.S. remained flat despite a significant reduction in sales and marketing costs. As mentioned by Srishti, the aim is to maintain our U.S. prescriber and patient base in a cost-efficient manner to bridge to a potential descheduling. Non-GAAP contract revenue of CHF 72 million includes the USD 35 million exclusivity fee from the undisclosed partner for aprocitentan that was received in Q4 '24, but recognized in Q1 '25 after the exclusivity period ended without resulting in a deal. As a reminder, the undisclosed partner was not able to close the deal for reasons absolutely unrelated to aprocitentan. In addition, we received a CHF 40 million signing and approval milestone from Simcere related to the out-licensing of QUVIVIQ in China. The cost rationalization efforts initiated in '24 and '25 further improved our operational cost base with savings of more than CHF 80 million compared to 2024. As a result, the non-GAAP operating results improved from a loss of CHF 308 million in 2024 to a loss of CHF 100 million in 2025. Based on successful negotiations with Viatris in Q1 '25, Idorsia's cost-sharing commitments were reduced by USD 100 million against a reduction of potential future regulatory milestones. This resulted in a gain of CHF 90 million. Other non-GAAP to GAAP differences mainly include depreciation and amortization and stock-based compensation. This resulted in a U.S. GAAP EBIT loss of CHF 33 million. The U.S. GAAP net loss of CHF 112 million also includes the financial expenses of CHF 72 million, which also includes a CHF 61 million noncash expense related to the convertible bond restructuring and the new money facility. And we had an income tax expense of CHF 6 million. Next slide, please. In addition to outstanding -- to an outstanding operational performance in 2025, we were also able to successfully strengthen our financial position and access to liquidity. As you know, we started the year with CHF 106 million in cash. Operational cash inflows included CHF 142 million from QUVIVIQ product sales, including sales to partners, and operational cash outflows included CHF 215 million of SG&A and CHF 93 million of R&D costs. The CHF 11 million other cash outflows mainly included working capital movements. Further, as announced in May '25, we secured a CHF 150 million funding facility from our bondholders. And in June '25, we drew the first tranche of CHF 70 million. We also raised CHF 68 million net of cost through an equity raise in October '25 by way of an accelerated book building process as well as the sale of some of our treasury shares to bondholders. We were very happy with the oversubscribed demand from the top-tier institutional investors that participated in the book building process. This resulted in a liquidity of CHF 89 million at the end of the year. And in addition to that, we still have access to a further CHF 80 million from the new money facility, which totals CHF 169 million liquidity available to Idorsia. All in all, I think we can conclude that we finished the year with a strong liquidity that puts us in a good position to fund our activities going forward and leading to next inflection points. Next slide, please. Here, we come to the comparison against the guidance. We are proud of our strong performance against an ambitious guidance target, which was significantly upgraded in May 2025. Our QUVIVIQ sales of CHF 134 million exceeded the guided sales of CHF 130 million due to an excellent execution of our commercial strategy, as Srishti already alluded to. The company also delivered on the announced reset of the cost base. And as a result, the operating expenses, net of other income, were in line with the guidance that we provided in May '25. The U.S. GAAP operating loss of -- or U.S. GAAP loss of CHF 33 million is lower than the guidance, mainly due to one-off lower stock-based compensation costs. Equally important compared to achieving the financial guidance for 2025 is that we've built the structures to transition this momentum into the future. Next slide, please. We continue to guide on Idorsia net sales, excluding sales to partners because this is the performance that we can actively steer and have control over. We expect a continuous QUVIVIQ sales growth and with sales of CHF 200 million, we will have a positive commercial contribution for the first time. Our 2026 OpEx, including cost of goods sold, will be flat compared to 2025, a little bit higher than might be anticipated in the market, but purposefully so, focused on creating shareholder value and within strategic guardrails. Our 2026 OpEx is fully consistent with a disciplined plan that supports the next wave of growth drivers. These expenditures are targeted, program-specific and clearly tied to our medium-term value creation plans, such as lucerastat program and the proof-of-concept studies with our immunology portfolio. In a nutshell, sales are going up, OpEx remains flat and overall losses are going down, reflecting the improved underlying business performance and the embedded operational leverage within our business model. And with that, I hand over to Srishti. Srishti Gupta: Next slide, please. Thank you, Arno. 2026 is shaping up to be a catalyst-rich year across commercial execution, strategic partnering and important scientific readouts. We are particularly looking forward to sharing the pediatric insomnia data in early Q2, along with several additional milestones throughout the year that we believe have the potential to meaningfully advance our portfolio and create value for shareholders. Next slide. With 2 approved products with significant commercial potential and a pipeline of first and best-in-class compounds, Idorsia is positioned to create meaningful value. I am proud of the team's performance in 2025. We delivered on upgraded ambitious guidance, accelerated QUVIVIQ's commercial trajectory and continued building the foundation for long-term growth. TRYVIO/JERAYGO represents the fourth endothelin receptor antagonist brought to approval from our pipeline, underscoring our deep expertise in this pathway and its potential in an area of high unmet need. We continue to advance other assets with discipline and focus. And as we look to 2026, we are committed to executing against even more ambitious objectives with a clear focus on delivering sustainable growth and long-term value. With that, Nadia, please open the line for questions. Operator: [Operator Instructions] And now we're going to take our first question. And it comes from the line of Raghuram Selvaraju from H.C. Wainwright & Co. Raghuram Selvaraju: Firstly, I was wondering if you could elaborate a little bit further on the digital distribution model for QUVIVIQ. And specifically, a, how you anticipate this to have an impact on the forward sales trajectory; b, how it might improve your operating efficiency going forward; and c, how it could conceivably be leveraged for the use of launching additional products in the future or if it's going to be very specific to the needs of QUVIVIQ as a product franchise and wouldn't be applicable necessarily to other potential products that you bring to market in the future? And then secondly, I was wondering if you could provide us with kind of what you see as the ideal time frame within which you would want to have a TRYVIO/JERAYGO partnership in the United States as well as regarding guidance, just some clarificatory points. Are you still confident in the previous 2027 top line guidance? Or how has that changed? And are you including in that forward assessment any potential contribution from TRYVIO/JERAYGO? Or is that going to be entirely driven by organic growth in the internal products over which you maintain commercial control? Srishti Gupta: Thank you, Ram. So the first question, area, we can tackle first on the distribution model that we're thinking about for the U.S. for QUVIVIQ. Is that the first question, area? Raghuram Selvaraju: Yes. Srishti Gupta: And so we have -- yes, we're thinking a little bit about -- I mean, what we've learned from the weight loss space is that when there's a high degree of self-diagnosis, the ability to then find a provider and find -- be able to go into online to broaden access and broaden the availability to patients that that can have a huge unlock for certain therapeutic areas. And we very much believe that sleep could be the next therapeutic area that could benefit from this type of model. So we've been exploring right now in the U.S. how we could do a direct-to-patient distribution model for QUVIVIQ. We've heard this is a friction right now in terms of both on the prescriber side as well as on the distribution side with pharmacies that they're not always stocking because of the DEA oversight. And so what we've understood is that some of these models for distribution can consolidate the regulations and the oversight, both on the telehealth providers as well as for the distribution. And so that's what we're exploring right now to start as a pilot in 2026. So we definitely anticipate that this could -- in addition to our current model, be on top of that, we would anticipate that as we can get this up and running, it would have some forward momentum on our sales for QUVIVIQ. And then we would also expect that given its efficiency, we could, at some point, it would have impact as having a lower OpEx. DTP models are common now, are getting more and more common in the United States. And so we would anticipate that if we were to make other products like TRYVIO available through that model, it might actually have an impact. But right now, the current focus really is QUVIVIQ, especially because we have more experience with QUVIVIQ and understand the points of friction that were there for patients and prescribers. So then moving on to your second question area of TRYVIO and the ideal time frame for a partnership in the U.S. I mean with the approval and the availability of TRYVIO in the U.S., obviously our focus is to make sure that this is available to patients as soon as possible. We would actually love to scale. We know that patients are benefiting already from our focused efforts to introduce this in the top hypertension centers. Prescribers are very eager to make sure it's available to patients. So we would absolutely love to be able to build on our very, very focused prelaunch work and scale that through partnership. And so that is top priority for the company right now is to be able to find a partner and move that forward as soon as possible. And our efforts to do all the work that we've done on distribution with Walgreens Specialty, our work with the hypertension centers, our work on the guidelines and making sure that we're continuously present at conferences and hosting ad boards and working with KOLs is really to make this as turnkey as possible for a potential partner. So we would love to make sure that as they -- as we find that partner in the U.S. that they are able to make TRYVIO available to more and more patients. In terms of your questions on guidance, I'll start with that, and then I'll hand it over to Arno. I think right now, the company is really focused on guiding on a one-year timeline. I think with the catalytic events and sort of the unknowns with things like descheduling, the partnership timeline, we -- it's not meaningful to guide beyond a year. And so our 2027 with outlook that we provided in May 2025, at the time it was the best available information we had. But of course, as we move forward, we are seeing more data. We see potentially we could see the descheduling, we could get more information on partnership. And so our forward-looking guidance could change in the next year. I think 2026 is actually quite a shaping year for us. But with that, I'll hand it over to Arno to see if he has anything to add. Arno Groenewoud: Yes. Maybe also to take it a bit broader because, I mean, the outlook that we gave in May 2025 was in the context of the whole financial restructuring. And I think after that, I think with the 2025 performance and the guidance for '26 and in particular, the growth of QUVIVIQ sales, we are really making clear steps to profitability and cash flow breakeven. The 2025 sales were in line with our guidance. And our guidance for '26 is also in line with what we said in May 2025. But like Srishti said, I mean, going forward, we will limit our guidance to the current year as there are many variables and inflection points in '26 and onwards in commercial, in partnerships and also with our pipeline. And considering these moving parts, I think giving guidance beyond 2026 would not be meaningful for the market. And we would like to stay credible and transparent with guiding on numbers where we have a solid visibility. Operator: Yes, of course. Now we are going to take the next question. And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: This is Joris Zimmermann from Octavian speaking. Two, if I may. First, on the QUVIVIQ pediatric data that you expect later this year in I think Q2, what is the immediate impact that you expect and kind of the next steps that would follow those data? And then also a bit from a longer term perspective, what's your strategy here? Will you pursue an updated label? Does it have -- does it come with a pediatric extension as well? So that would be on QUVIVIQ. And then the second question on your cash and cash reach. With the current cash of around CHF 89 million and the CHF 80 million remaining from the new money facility, how would you assess your funding situation? Kind of what is the estimated cash reach? And does that include all the costs to cover the -- kind of to drive your pipeline assets and to reach all the key inflection points that you outlined in the presentation? Srishti Gupta: Joris, thank you for joining, and thank you for the questions. I'll take the first one and hand the second one over to Arno. On the pediatric QUVIVIQ daridorexant study that is -- we're expecting in Q2 2026, it's a dose-finding study. So we tested in 3 doses and we'll do a dose response curve. And so what we're expecting hopefully to see is both positive results with daridorexant in insomnia in the pediatric population as well as to get some data on the dose. The next step would then be to take that information to the regulators and agree on a pathway forward, both with the U.S. as the FDA as well as the EMA. So we would have to run a Phase 3 program. We're expecting to be running a Phase 3 program, but we would like to shape that program based on the findings of the Phase 2. So that's where we are on the data. I mean we're very excited, though, because there is no FDA-approved therapy for insomnia in this pediatric population. And there are no other doors with the safety profile that does non-sedative to work on the wake signal in this population. And as we know from the data that we have in the adult populations that we use all around the world, the daytime functioning could have a huge impact for pediatric patients as well. So we're very curious to see how the Phase 2 results pan out, and we're very curious to be able to shape a Phase 3 program that is able to do that later. The other part of it for me that's very exciting is that there's the huge safety halo that comes from having a product that's effective in the pediatric population. And especially in the United States where we've had the burden of being a Schedule IV product, we would love to be able to have the safety halo that comes from showing use in the children with insomnia. With that, I'll hand it over to Arno. Arno Groenewoud: Yes. Thanks, Joris, for your question about the cash and the cash reach. I think we're very fortunate that we have a very strong liquidity at the end of the year with CHF 169 million. We clearly have sufficient cash to bring us to the next inflection points. And as already mentioned by Srishti with the previous question, I mean there are many variables and inflection points to come. So that will also clearly have an impact on our cash need going forward. But for now, I'm pretty happy with the cash runway that we have and that we're able to reach the inflection points based on which we can take additional decisions on whether to further invest or not. Operator: Now we are going to take our next question. And the next question comes from the line of Niall Alexander from Deutsche Bank. Niall Alexander: Hi, it's Niall Alexander from Deutsche Bank. So I guess maybe just moving to the pipeline, just on your CXCR7 antagonist in MS, I understand it's just a proof of concept right now. But it would be helpful to understand how you feel this mechanism could potentially be differentiating, and especially so to the likes of the CD20s right now or even the BTKs in the space. Just trying to understand what your hypothesis or views are on the mechanism. And then the same applies to the CCR6 and CCL20 in psoriasis. Just wondering how the mechanism there can potentially be different from the likes of IL-17s and 23s in this space. Srishti Gupta: Thank you, Niall, for the questions. Maybe I'll start with CCR6 first because that's the one that's enrolling right now. So it's a first-in-class oral small molecule, and it's selective for the CCL20-driven recruitment of the pathogenic CCR6 expressing immune cells. So we -- first thing, I think, is the potential for an oral therapy that delivers a biologic-like efficacy, and that's very compelling. We've designed the trial that evaluates the speed and the magnitude of the response as well as the dose performance and safety in the T helper 17 driven psoriasis in the PASI. And the reason we went with that test as well as with this -- with psoriasis is because that mechanism is the most clean. I think we don't see sort of off-target in that area. So we were really hoping that we could get a clean response on the PASI. So a positive outcome in this proof of concept would confirm that in the mechanistic validation and the expansion to other associated indications. And so that's kind of what we're thinking about for CCR6. In terms of CXCR7 and the kind of the unique or the differentiating is that we have this oral, again, that is both potentially anti-inflammatory as well as remyelinating. And the brain penetrating potential is quite strong, which would have an impact in the -- to be able to transform the treatment paradigm in MS. And so the proof of concept is primarily the progression and so of the multiple sclerosis. And so what we're trying to see is if we can -- through the -- its imaging -- yes, with via imaging, we could see a slowing of the demyelination. And so that's kind of our -- the proof of concept that we've designed for the CXCR7. Operator: Now we're going to take our next question. And the question comes from the line of Sushila Hernandez from Van Lanschot Kempen. Unknown Analyst: This is [ Sandrine ] on for Sushila. We have 2. First, could you provide more of an update on the QUVIVIQ descheduling process? Like how likely is it that it will happen this year? And second, on the Fabry disease, now that you've reached alignment with the FDA, what are the next steps? Like when will you start the kidney and the renal studies? Srishti Gupta: Thank you, Sandrine, thank you for joining. So on the first question on descheduling, we expect the next major update to be the initiation of the public comment period from the DEA. And so that's the next time we think we'll have public information available on the descheduling process. In terms of where we are, I mean, we've now seen that -- we have probably around 13 million patients ex U.S. that have been on ADAURA across the globe between Japan, China and Europe and a couple of million patients in the U.S. And we consistently know that QUVIVIQ is valued for its safety. We don't see any meaningful signals of abuse dependence or withdrawal. And so part of our update to the FDA has been to share this kind of comprehensive ex-U.S. data. This is on top of the Citizens Petition from '23 and a recent update that we did to the FAERS analysis. So the FAERS is the FDA's own adverse event reporting system database and where we -- again, we went back to the database and we did an updated analysis and we demonstrate that the DORA class has significantly reporting odds for adverse events related to drug abuse compared to the Z drugs and other nonscheduled drugs such as trazodone, which are used in the U.S. off-label. So we're kind of combining those things in our mind and hoping that the FDA's recommendation that moves forward is to be descheduled, but we'll only know when the DEA opens it for public comment. That being said, I think it's important to know that we're not waiting for the descheduling to unlock the value of QUVIVIQ in the U.S. The daytime functioning in the label, the label-enhancing study as well as the work with the direct-to-patient, we're setting up those -- we're setting up the model on direct-to-patient to be able to accommodate for the current schedule as well as then expand based on any descheduling that happens. So we are really focused on making sure that even in its current form that we can increase access for patients and they can have the benefit. And then, of course, all of those things in total, as we get more and more patients on QUVIVIQ, we can update the FDA with the safety profile and the lack of abuse signals. So that's the question, I think, probably on descheduling, but we'll only know when it goes from the DEA into public comment. On Fabry, we're expecting to initiate the pivotal study for the biopsy in this year. And so that's the pivotal. That's the 16 patients I showed it earlier. It's baseline controlled. We're expecting to take patients that are treatment naive or pseudo-naive, and it's 18 months of treatment, and we're expecting that it's in our budget to be starting that study this year. Soon thereafter, we'll do the second study, which is to show the switch from ERT. So we'll take patients that have been on ERT therapy for a year or more, and we'll do the switch study. And so with the idea that we'd like to submit in 2029. Did I answer? Operator: [Operator Instructions] And the question comes from the line of Myles Minter from... Unknown Analyst: Congrats on the progress. A couple on lucerastat. Just wondering if you can comment on kind of the powering assumptions for that 74-patient renal function study that you're doing against ERT in Fabry. And then I noticed at the WORLD Symposium, you seem to see a greater efficacy signal in patients with pretty severe declines in eGFR but at baseline and also antidrug antibody positive patients on the ERT side. So I'm just wondering whether you're going to stratify the readout of that trial in any way based on those factors? And the final one is just in terms of the number of patients that remain in the open-label extension there. I think it was 47% of the original amount that crossed over. Can you just provide any sort of major reasons as to why there was discontinuations there? That would be very helpful. Srishti Gupta: Myles, thanks for joining, and thanks for the questions. I think your first question was on the power of the second study. So we were not requested by the FDA to power the eGFR study. And so that's -- so we were working under the assumption that we don't have to have statistical significance. So we designed that study with that idea. In terms of the WORLD Symposium, the decline in the eGFR and the antibody and the stratification, I think we'll have to see where we are in terms of the eGFR study and the enrollment on how we might want to stratify that study. But right now, as we're looking for a broad monotherapy label for all adult patients with Fabry, we're not looking to kind of have a specific use in those patients with ADA. We are trying to get the label to be as broad as possible. We would like to make sure that our study design is consistent with that. And then finally, on the open-label extension for MODIFY, that was 43 months, which was, I mean, I think, 6 years, right? Like we're in total with the 6-month MODIFY trial, that's 6 years. I mean 50% is actually a really good retention rate after 6 years. I don't know if there's anything I'm doing right now that's the same as I was doing 6 years ago. So I think that retention rate actually seems pretty good for this type of study for chronic -- for a daily oral and with for chronic condition. Operator: And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: One more question from my end on the aprocitentan partnering, if I may. I was just wondering, looking at like the data is there, the data is good. The first market feedback, to my understanding, is also very positive. And now you have the whole REMS requirements omitted and you're even in the guidelines. So I was wondering what is it that is kind of -- why do the aprocitentan partnering discussions still go on? Can you maybe comment on that? So is it more on the finding the right partner in the U.S. and Europe probably? Or is it more on the deal terms? What's kind of the main discussion topic you're currently having here? Srishti Gupta: Thank you, Joris for the question. The second -- the third question, actually. So I mean, there's a lot of the positives, right? We have the data, we have the market feedback, the REMS, we have the differentiation, especially for those patients that have an eGFR down to 15 where there are no other options. And we've been in the process of looking for a partner for a while, I mean, especially even to the time when J&J decided to not pursue work in cardiovascular anymore, and we took the rights back for apro so that we could bring it forward because we have such conviction in the endothelin receptor antagonist space and its ability to be used in systemic hypertension. Now after the approval process, I think we have gotten into a point, we're having a commercial asset that has not had the ability to be resourced for a launch. That's a new mechanism of action that is -- needs to be introduced in a pretty complex health care system right now with incredible cost pressure. And with the commercial payer system that's highly under evolution with PBMs and it's like every other week, a pharma company is being hauled into the White House. I think it's really important for partners to be able to understand the commercial fit. And so with a commercial stage asset, the commercial fit, I think, from the partner perspective is one of the things that needs to be worked out on both sides. Like, we need to see that they're able to resource that apro or TRYVIO gets to the patients and are willing to put the effort to make sure that TRYVIO can reach the most patients, but they also need to make sure that it fits with their programs given that it's commercial stage. A lot of the -- sort of the sweet spot for most deals is kind of a little bit before Phase 3 or at this derisking stage where they can prepare the market. And so I think right now, we're just in a peculiar stage with TRYVIO, but we are actively engaged in a range of conversations. I think one last point to make is that the sort of complicated U.S. drug pricing system and its implications for internationally are also impacting. And so that's why I think we are exploring both global as well as regional partnership. We have 2 different labels, 2 different brands, 2 doses for TRYVIO/JERAYGO, and I think that gives us the flexibility to really pursue regional opportunities. And so that's also kind of evolved our focus on the partnership discussion. Operator: Dear speakers, please be advised there are no further questions for today. And I would now like to hand the conference over to the management team for any closing remarks. Srishti Gupta: Well, thank you, everyone, for the time today. We will have our first quarter results on April 28. And together with some of the participation that we have in investor conferences on this side of the Atlantic as well as in the U.S., we hope to get the opportunity to speak to more of you in the near future. Thank you again for joining. And with that, we can close the lines. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Good morning, ladies and gentlemen, and welcome to Veolia Annual Results 2025 Conference Call with Estelle Brachlianoff, CEO; and Emmanuelle Menning, CFO; and also Daniel Tugues, Country Director of Spain. [Operator Instructions] This call is being recorded today, Thursday, February 26, 2026. I would now like to turn the conference over to Ms. Estelle Brachlianoff. Please go ahead. Estelle Brachlianoff: Thank you, and good morning, everyone. Thank you for joining this conference call to present Veolia's 2025 results. I'm accompanied by Emmanuelle Menning, our CFO; and by Daniel Tugues, Head of Spain. I'm on Slide 4. 2025 was the second year of our 4-year GreenUp plan, and I consider it as a truly pivotal year in our trajectory, and I will tell you how. 2025 was another year of outperformance and historical high. We exceeded our guidance with an organic EBITDA growth of plus 6.3%, above the target range of 5% to 6% despite a complex environment and with a particularly robust fourth quarter. In the 2 years since the start of GreenUp, we have significantly improved our profitability with an increase of 150 bp in our EBITDA margin and plus 11.8% average annual growth of current net income. The first half of GreenUp is a real success, and we are fully in line with our trajectory, even ahead when it comes to our ROCE at 9.4% after tax at the end of 2025. This is 2 years in advance of our targets. But in 2025, above all, we resolutely resumed external growth with 2 major multibillion dollars acquisitions in Water Technologies and U.S. Hazardous Waste, two of our growth boosters accelerating, therefore, the group's transformation towards more international and technology-driven businesses and enhancing the group's growth profile for the years to come. We have also enhanced our shareholder return in 2025 as we complemented our dividend policy with a multiyear share buyback program related to our employee shareholder plan. The excellent 2025 result as well as our strong fundamentals allow us to be very confident for '26 with an ambitious guidance and full confirmation of our GreenUp trajectory building a stronger group going forward. I'm now on Page 4 -- 5, sorry, where you see that 2025 results are at a historic high and largely exceed our initial objectives. Revenue reached EUR 44.4 billion, up 2.8%, excluding energy price, which are essentially pass-through for us, as you know. EBITDA increased by a substantial 6.3% on a like-for-like basis, above our 5% to 6% guidance range and shows a margin improvement of 70 basis points, above plus 80 basis points in '24. We are now at the historical high of 15.9% margin rate -- EBITDA margin rate in Veolia. This is thanks to our continued performance improvement and recurring efficiency gains with an enhanced performance outside Europe, where EBITDA jumped by plus 9.3%, complemented by the last synergies coming from the Suez acquisition 4 years ago. Current net income was up plus 9.1%, in line with our guidance and demonstrating our strong operating leverage. Net financial debt remains well under control at EUR 19.7 billion, even after EUR 2.3 billion of net financial acquisition, closed in '25. Our leverage ratio is at 2.79x at the end of '25, well below 3x, testimony to our strong financial discipline and our capacity to have room for maneuver in the future. Finally, we reach our ROCE targets 2 years in advance and achieved a remarkable 9.4% after-tax ROCE in 2025. Page 6 illustrates our enhanced growth in international markets, notably outside Europe, where our businesses are not only faster growing, but also more profitable with an EBITDA margin already at 17.8%, which is better than the 15.9%, nevertheless, a historical high for the group as a whole. Our revenue grew by 4.1% organically outside Europe with an excellent performances in Latin America, Africa and the Middle East, notably. Emmanuelle will detail each zone performance in a minute, but I would like here to highlight a few key commercial successes. In the Middle East, after years in the making and technical design, we were awarded, and we've just signed a few days ago, a $500 million project in Saudi Arabia for the Saudi Aramco TotalEnergies Consortium, SATORP. We will design, build and operate a massive new plant to treat the super complex effluent of this petrochemical site. In the U.S., in addition to the strategic execution of Clean Earth, which we expect to close mid-'26, our biggest and most transformative acquisitions since the merger with Suez. As you know, we've complemented the strong organic growth with 3 tuck-in and hazardous waste, which are high value creative. In Chile, we signed the first hybrid municipal industrial desalination plant in Valpara so. In India, we secured 2 strategic contracts for 2 of Mumbai's larger water treatment plants. Both facilities will use Veolia cutting-edge technologies. Finally, in Europe, we also enjoyed a very encouraging commercial momentum. Page 7 shows our performance split by activities. On the one hand, our booster activities, which is Water Technologies, Hazardous Waste and Bioenergies have continued to grow at a steady pace in '25, plus 4.3% organic and plus 8% including tuck-ins, almost 2x faster than Strongholds. Strongholds on the other hand, confirmed their resilience and infrastructure life profile with a 2.2% growth. As you know, Strongholds and Boosters go hand in hand with 30% of our revenue coming from a combination of activities. Those numbers are a confirmation of the sustained demand for our proprietary solutions to tackle critical needs from securing water supply to treating pollutant and protecting health. This top line performance translates well into value creation with EBITDA up 4.8% for Stronghold and jumping by 12.1% for Boosters. Emmanuelle will give you all the details in a few moments. 2025 was also the year of the successful launch of new technology and offers. I would like to give you two examples on Slide 8. First, in PFAS treatment, which, as you know, is a fast-growing and very promising business unit opportunity for Veolia. We achieved EUR 259 million of revenue in PFAS in '25, which is up 25% versus 0 in 2022. And as you know, we aim to reach EUR 1 billion by 2030. In 2025, we developed BeyondPFAS, our end-to-end management solution from detection to disposal, combining Water Technologies and Hazardous Waste and including our DropFast proprietary technology to optimize HTI disposal. We already provide PFAS treatment in the U.S., in France and in Australia, and we've already deployed 30 PFAS removal units in our U.S. water operations and plan an extra 15. In the area of new urban energy, we presented our new Ecothermal Grid offer in Poznan last November. It's a truly green heating and cooling solutions for existing and greenfield networks, using untapped local sources of energy, which is really unique at Veolia. We target EUR 350 million extra revenue in 2030. We actually already have a pipeline of GBP 1 billion of projects in the U.K. as part of the deployment of our new Ecothermal Grid offering, and I'm very pleased we were recently awarded a first in this U.K. pipeline with flagship scientific Wellcome Genome Campus in Cambridge. I'm now on Slide 9. In 2 years, the delivery of the GreenUp plan, combining resilience and growth was above our own expectation, both in terms of growth performance and strategic transformation. And this in spite of a complex economic and political context, which impacted foreign exchange rates, fiscal stability and production costs, notably energy costs. These first 2 years were indeed marked by a strong improvement in our profitability and value creation with an average annual 11.8% growth in current net income group share between '23 and '25, combined with a spectacular improvement of ROCE post tax to a record high 9.4% in '25. Our performance during these first 2 years was also augmented by the completion of Suez Energy Plan, which evidenced our capacity to boost the performance of the business we integrate. On Slide 10, given our very strong '25 results, the Board proposed to the AGM a dividend of EUR 1.5 per share, up 7% versus '24 and 20% since '23 and in line with our EPS growth. Since the start of GreenUp, I really -- as I mentioned in the beginning, we have also enhanced our shareholder return as we complemented our dividend policy with a multiyear share buyback program in order to offset the impact of our employee shareholding program. And this represented EUR 402 million in 2025. 2025 was a pivotal year in many ways. I'm on Slide 11. First, 2025 was the last year of Suez integration. We successfully completed our integration plan with EUR 534 million of synergies delivered in full year, above our initial target of EUR 500 million. This clearly demonstrates our track record in securing delivery of value creation when it comes to external growth, and we will, of course, apply those skills to the Clean Earth's acquisition. Moreover, 2025 has also been the year where we've crystallized strategic move consistent with our GreenUp strategy, investing in priority in highly innovative and technology-driven activities, our Boosters and outside Europe. Two major acquisitions were signed or closed in '25, creating value and enhancing the group's growth profile going forward. This began in the spring with EUR 1.5 billion invested in Water Technologies to buy out the minority interest and to fully merge our entities, and be in a position to extract EUR 90 million of additional synergies and enhance our growth capabilities on a worldwide dynamic market. We then accelerated external growth in Hazardous Waste. First, with several tuck-ins for a total amount of almost EUR 370 million in the U.S., in Japan and in Brazil. And finally, with the strategic acquisition of Clean Earth in the U.S. This $3 billion acquisition, the largest in Suez will allow us to double our size in Hazardous Waste in the U.S., positioning us as #2. Veolia will strengthen its presence in the U.S. altogether with more than $6 billion turnover and a very strong position to deliver unique solutions and technologies to remove pollutants, to secure water supply and support reshoring of strategic industries. The complementary of Clean Earth and Veolia's assets in the U.S. will enable us to extract significant synergies of $120 million and will be accretive from 2027, excluding PPA, assuming a closing midyear '26. On Slide 12, we've illustrated the accelerated portfolio transformation underway with EUR 8 billion of asset rotation in 4 years towards a group that is stronger, more international and more technology-rich. This transformation enhances our sustained growth profile and will create additional value for many years to come. We started GreenUp with a divestment program of around EUR 1 billion, including the disposal of our SADE French construction activity and the non-duplicable sulfuric acid generation activity region. In '25, we will have crystallized major acquisition in our boosters, specifically in Water Tech and with Clean Earth to close in '26. We will divest an additional EUR 2 billion in the 2 years post closing of Clean Earth. The typical candidates for disposal are assets that are mature or nonstrategic or undercritical in size. I would like to highlight the fact that these divestitures are not all financing purposes as well finance Clean Earth on our balance sheet and recover 3x leverage as soon as '27, but rather in order to keep flexibility for investment in faster-growing activities or geographies. Acquisitions, net of disposal represent a cumulative net financial investment of EUR 2.5 billion compared to the EUR 2.2 billion initially envisaged for GreenUp. Before we move to our guidance for '26, I would like on Slide 13 to emphasize the group's sustainable growth engine, which explains how we could be confident about our future performance. The demand for our services has never been stronger. And it is here to stay whilst crisis multiple because the proprietary solutions Veolia provides are answers to critical needs for industries and cities alike. Indeed, our customers, businesses and committees are facing growing challenges in terms of water scarcity, water quality, pollution control, supply chain interruption and a growing determination to achieve strategic independence and accelerate industrial reshoring. In short, for cities to deliver essential services for industries to produce, for economies to grow, one thing is nonnegotiable. This is environmental security, securing water, securing energy, securing supply chains, protecting health. We secure water supply to cities by leveraging our unique patent of technologies, our efficient network distribution using AI, by resuming wastewater and running energy-efficient desalination plants. We secure supply chain for industries by mining waste or waste heat to secure local sources of energy or critical minerals, thus avoiding dependents on long-distance imports. We protect health with Hazardous Waste management and depollution, ensuring that drinking water is at the highest standard and securing the license to operate for strategic industries such as MicroE or pharma. Whatever the turbulence in the world, Veolia's mission and unique offer is, therefore, to keep vital resources available, reliable and affordable to enhance strategic autonomy and to take advantage of sustained demand for our services and technology. On Slide 14, I would like now to share how Veolia is uniquely positioned to benefit from this sustained demand as we've built a unique powerhouse for environmental security. Our worldwide leadership and presence in 44 countries always in the top 3, gives us size to innovate and develop unique technologies through our 14 R&D centers. As you may remember, we hold more than 4,400 patents in water treatment, for instance. Our proprietary solutions are then locally delivered, and tailor-made to fit each community or industrial complex specific needs. We are really multi-local in our delivery, which explains why we are not affected by tariffs and why ForEx does not impact our margin rate and central government are not central to us. In addition, our customer base is really varied. 50% from municipalities or public authorities, 50% from private customers and wide ranging from retail and hospitals to microelectronics, pharma or oil and gas. This variety is combined with the long duration of our contracts, 11 years on average. The high Net Promoter Score, which ensures a renewal rate of over 90% and with no one single contract representing more than a small percentage of the group revenue. This offers massive resilience in our performance. Finally, we provide a unique combination of waste water and energy solutions. That's our edge. It's already delivering 1/3 of the group's revenue from these combinations. Veolia has really transformed into a unique global powerhouse for environmental security, organized to grow and innovate whilst ensuring resilience and long-term performance in an uncertain world. This sustained demand and unique positioning gives me high confidence for the years to come as the group has never been stronger. I'm on Slide 15. The GreenUp trajectory is fully confirmed. I would like to highlight why our organic EBITDA and net result growth are sustainable for the years to come because they are fueled by top line growth, supported by sustained demand for critical services, boosted performance in certain activity, notably Hazardous Waste and Water Technologies, superior and continued effort on efficiency and cost control, as well as an ability to react quickly and strongly when needed with specific action plan, as we will see in a minute with Spain and a good track record in successful integrating companies when we complement organic with external growth. For 2026, we have very ambitious targets on an organic basis, which will be complemented by the Clean Earth acquisition when we close the deal. On a stand-alone basis, we expect a continued solid organic revenue growth, excluding energy price, an organic EBITDA growth of 5% to 6%, and I would like to highlight this is without Suez synergies since they are now behind us, a current net income growth of at least plus 8% at constant ForEx. The dividend will continue to grow in line with current EPS and our leverage ratio will be below or equal 3x before Clean Earth. And after Clean Earth, equal or slightly above 3x. As you know, we would consolidate Clean Earth for only part of the year, and we'll be back to 3x or below 3x in 2027. As you know, we have to go through various regulatory approvals before we close the Clean Earth acquisition, which we said will be accretive from year 2 and current EPS. Assuming the closing happens mid-'26, which is the best assumption we can do now, this would mean synergies will start in '27, and the transaction will be accretive to current net income from 2027 before PPA. The $2 billion -- sorry, EUR 2 billion disposal program should be delivered in the 2 years post-closing of Clean Earth acquisition. Before Emmanuelle details our '25 results, I will hand over to Daniel Tugues, Head of Spain. He will give you some color about how we can drive performance improvement and sustain margin increase as well as top line growth in what is a historical activity and typical stronghold for us, thanks to our agility. Daniel, floor is yours. Daniel Tugues: Thank you, Estelle, and good morning, everyone. I'm Daniel Tugues, Country Head for Spain. I'm very happy to be here today to present Veolia's 2025 results and illustrate our GreenUp execution with a focus on our activities in Spain over the past 2 years. Estelle just mentioned, Veolia is unique because we are an environmental security powerhouse. and this is highly relevant in Spain, where climate change and the scarcity of resources, notably water are central to our citizens' concerns. Indeed, 70% of Spanish people believe that they are vulnerable to the effects of climate change, which are already happening in Spain. Citizens still vulnerable, and I'm afraid they are right. 75% of our land is threatened by desertification. We just went through the worst drought on record, which ended last spring, and it is going to get worse with 20% less precipitation expected by 2050. As it is recognized, these impacts could prove far more costly than the capital expenditure required for adaptation. This is precisely what Veolia is doing in Spain, driving ecological transformation by providing efficient water networks and reuse solutions, by securing supply chains for industries, providing them with local energy and by protecting health with waste management and depollution. Given this geography, it is no accident that we developed innovative solutions early on, such as wastewater reuse, which already accounts for 15% of our water supply and growing and other nonconventional resources such as desalination. To illustrate the point, during the past drought, the water coming out of the tap in Barcelona was sourced 1/3 from traditional sources, rivers and wells, 1/3 from desalination and 1/3 from water reuse. We have shared this experience with our Veolia colleagues. First, with our French colleagues across the building and also with our American teams who are very much looking forward to deploying those solutions in their countries. Veolia is strongly positioned to tackle Spain's critical needs. Spain is the fourth largest country of operations for Veolia, with EUR 2.8 billion in revenues or EUR 3 billion if we include the activities of our specialized business units for Water Technologies and Hazardous Waste. Our presence has grown significantly since 2022 with the integration of Suez and notably Aguas de Barcelona. The defining feature of our presence in Spain is our strong local footprint, deeply embedded across territories and communities. Starting with water, which represents 70% of our revenue. In a nutshell, Veolia is the #1 water provider in the country, locally anchored and positioned across the complete water cycle management from production and distribution of drinking water to the collection and treatment of wastewater. We run long-term concessions such as Aguas de Barcelona, Aguas de Murcia, Aguas de Alicante and many others, and we are also active in water technologies and operate several industrial wastewater treatment plants and desalination facilities. such as those in Tenerife and Almer a. In energy, Veolia is the #1 in building energy services and also leader in energy efficiency. Examples include EcoEnergies, the Barcelona District Heating and Cooling network using residual energies and energy efficiency projects for sites like Hospital Reina Sofia in Cordoba and maybe other similar sites around the country. In waste, we provide circular economy solutions for municipalities and industrial clients, notably in plastic recycling, waste-to-energy and hazardous waste, the latter including a high-temperature incinerator near Tarragona. Our strategy going forward is not only to continue developing those businesses and enhance profitability but also to constantly innovate at EUR 1 billion, especially given the strong demand for treating new pollutants for more simpler solutions and for new sources of local energy from waste or wastewater. On a personal level, having spent many years focused on water, I can say that the One Veolia project is like a tremendous opportunity to me. As for the whole of Veolia, 2025 has been a pivotal year for Spain, and I would like to show you how we have been able to recover while improving our profitability over the past 2 years since the launch of GreenUp. Given the underwhelming performance we faced in 2022 and '23, notably in water concessions, we decided to launch a specific action plan in 2023 called Hunter associated with specific objectives and incentives for managers, not only at the national level but also at the regional one. And I must say that Hunter benefited a lot by leveraging Veolia's performance culture and tools in our Spanish operations, including internal benchmarking on operational costs and KPIs as well as a proven methodology. To boost the top line, we launched a tariff campaign to catch up with cost in water concessions with a tailor-made approach for each of our more than 1,000 contracts. In parallel, we deployed a commercial excellence program to enhance our offers, and we also complemented our organic growth with 13 tuck-ins, mainly in energy efficiency, which were highly value accretive as they are actually plug and play. Over 2 years, this represented EUR 87 million in enterprise value, bought at an average multiple of 7.4x EBITDA. In terms of operational performance, we largely improved our efficiency, not least with AI. For instance, we put in place an AI customer service tool across Spain, that currently deals with more than 1,000 daily transactions, improving availability of our customer service, omnichannel 24/7 no waiting, while at the same time, saving nearly EUR 1 million. Those efficiency measures were complemented by the synergies delivered from the Suez integration. All in all, Spain delivered EUR 109 million in efficiencies plus synergies from 2023 to '25. All that resulted in a very significant improvement of our growth and performance. In 2 years, revenue has grown by 12% and EBITDA by no less than 40%. We are very proud of these results as we are even ahead of our plan to hence Spain's performance. But this is not the end of the journey, as I am focused on continuing to deliver sustainable and profitable growth for Veolia. Demand for all our services in the country is strong, and the power of One Veolia offers many possibilities for combining our diverse expertise to secure essential services. Thank you for your attention, and I will now hand over to Emmanuelle. Emmanuelle Menning: Thank you, Estelle. Thank you, Daniel, and good morning, everyone. Veolia 2025 results are very strong, perfectly aligned with our GreenUp trajectory and above our initial guidance and that on many grounds. For growth, we continue to deliver solid growth, thanks to strong underlying business trends and fueled by boosters, which progressed by 4.3% and even 8% if we consider tuck-ins. Second, performance in the first 2 years of GreenUp, we considerably improved our profitability driven by strong intrinsic growth and synergies, leading in 2025 to an EBITDA organic growth of 6.3% and to a very strong improvement of 70 bp of our EBITDA margin in 16%, which reflects the success of our strategic choices. We maintain a robust operational leverage, enabling us to grow current net income at a faster pace. And third, capital allocation, while we resume external growth in 2025, we maintain a very strong balance sheet with a leverage ratio below 3x at year-end, thanks to our strong free cash flow. And finally, value creation, the successful GreenUp execution led to an outstanding ROCE, which is the best measurement of our value creation at 9.4%, which was our objective for 2027, so delivered 2 years in advance. With EUR 34.4 billion in revenue, we experienced a solid growth of 2.8%. The operating leverage and the delivery of efficiencies and synergies were excellent and resulted in solid organic EBITDA growth of 6.3%, above guidance, current EBIT growth of 8.9%, current net income growth of 9.1%, with underlying higher growth, even higher if we restate for last year set capital gain. Net financial debt reached EUR 19.7 billion. The leverage ratio reached 2.79x, below 3x as expected. ForEx impact was significant as announced due to lower U.S. dollar and LatAm currency. This reflects the improved performance of our international activities, which is increasing value creation. But as you know, as a multi-local group with very limited international trade, ForEx has very limited impact on margin rate and on net income level. Moving to Slide 23, you can see the revenue and EBITDA evolution by geography. The main features in 2025 was the enhancement of our growth outside Europe and the superior growth of EBITDA in both outside Europe and Water Tech segments. In Q4, EBITDA growth accelerate as announced at the end of Q3, thanks to the benefit of our action plan notably in France and the good performance of Water Tech. I will start with Water Technologies, for which 70% of our activities are recurring, corresponding to product, mobile unit and chemicals, while 30% is more volatile by nature, what we call projects. In 2025 and especially in the first 9 months, project revenue was impacted by the timing of milestone delivery and a strong comparison basis versus last year. And as we announced in Q3, Water Tech revenue rebounded in Q4 and grew by 3.6% for the full year, excluding project by 4.6%. Operational performance was excellent with EBITDA growth of 14%. America, Africa, Middle East and APAC performed well in 2025 with revenue growth of 4.1% and EBITDA growth of 9.3%. Europe grew by 3.3%. And finally, France and Hazardous Waste Europe, revenue was flat, but EBITDA increased by a significant 6.3%, thanks to good Hazardous Waste performance, efficiency action in solid waste and resilient water activity. Now let's take a look at our performance by businesses. Very solid growth in our Strongholds, which proved themselves very resilient with very high margin and capacity to continue increasing EBITDA growth. Let's start with Municipal Water. Revenue increased by 3.5% with a remarkable EBITDA progression of plus 6.1%. We continue to benefit from good indexation, have achieved successful tariff renegotiation in Spain, and in the U.S., which protect our future earnings. Volumes were on a very good trend, up close to 3% in Europe. Solid waste revenue grew by plus 0.5% with a very strong EBITDA progression of plus 6.8%, which illustrates our capacity to implement efficiency plan, supporting EBITDA improvement. Revenue from District Heating Network increased by plus 1.7%, excluding energy prices, thanks to a sustained e-tariffs. Let's move on to our Boosters performance on Slide 25, which have gone very well, with revenue up by 4.3% and by 8% including tuck-ins. Overall, EBITDA performance is excellent, up by 12% with an increase of the average EBITDA margin by 100 bp, which confirms GreenUp choices. Skipping Water Tech that I am just commenting and started with Hazardous Waste. Revenue increased by 5.3%, including tuck-ins and 3.8% organically with EBITDA up by 12.8%, which is outstanding. I would like to highlight especially the strong growth in the U.S., up plus 9.2%, including tuck-ins, fueled by incineration volumes and mix. In Bioenergy, revenue was up plus 5.8%, excluding energy prices, and EBITDA increased by 5.1% with strong sales momentum in Belgium, Southern Europe and in the Middle East. The revenue bridge on Slide 26 explain the drivers of our growth in 2025. Negative ForEx impact decrease in Q4. Scope was slightly negative as the impact of 2024 divestiture, SADE, Lydec and RGS was compensated for a large part by the favorable impact of 2025 external growth. The impact will turn positive in 2026. The expected consolidation of Clean Earth in the second semester 2026 will further contribute. The impact of energy prices was as expected, divided by 2 compared to last year. Recycled prices were neutral. Weather effects after a colder winter at the beginning of year in Europe, Q4 was marginally helpful. The contribution of commerce and volume was comparable to last year. And finally, price effects were, as expected, lower than in 2024 due to lower inflation and contribute plus 1.4% to top line growth. On Page 27, you have the EBITDA bridge detailing our organic growth of 6.3%, above the annual guidance between 5% and 6%. Negative ForEx impact increased in Q4, as mentioned earlier. This impact was very much ups and down the line for EBIT and current net income. Scope was slightly negative, but as expected, was positive in Q4. The impact of energy was minus EUR 40 million, less than last year as expected, while recycled prices were slightly up, plus EUR 10 million. Intrinsic growth contributed by a significant plus 4.8% to EBITDA growth, thanks to the combination of commerce volume works for 2% and pricing productivity efficiency for 2.8%, it accelerated in Q4, thanks to the benefit of our action plan in France and the rebound in Water Tech, including new synergies, and I'll come back later to those synergies. Now let's dive into our second lever of value creation after growth, which is performance and efficiency. I am now on Slide 28, which shows our 2025 performance. In terms of our yearly efficiency plan, we achieved EUR 399 million in gain in line with our annual target of EUR 350 million, which we will, for sure, renew in 2026. Efficiency are indeed a permanent level of value creation embedded in our operation and therefore, one we can count on for years to come, not to say forever. It is worth noting that digital and AI gain already account for 23% of our recurring operational efficiency. Suez synergies are fully completed, as Estelle mentioned. We have achieved another EUR 100 million of gain in 2025 for a cumulative total of EUR 534 million since day 1, well above our initial objective of EUR 500 million, which, as you know, was raised a year ago to EUR 530 million. This overachievement is a testimony to our capacity to successfully integrate our acquisitions and the clear marker of the success of the Suez merger. Going forward, we will benefit from the synergies coming from the merger of our 2 Water Technology entities following the buyout of the 30% minority stake of CDPQ in June '25. We target EUR 90 million by '27 and EUR 20 million have already been achieved. On top of that, after we closed the acquisition of Clean Earth mid-'26, we will start the integration process and target a total amount of $120 million of synergies between 2027 and 2030. Let's now analyze our performance below EBITDA, and I am on Slide 30. Going down to current EBIT, this slide illustrates perfectly the operational leverage of our business model. 2.8% revenue growth, 6.3% EBITDA growth and 8.9% EBIT increase. Current EBIT grew to EUR 3.7 billion at a faster pace than EBITDA. I am particularly pleased with our financial results, which excluding financial capital gains, show a slight decrease of EUR 21 million of our financial charges. This was due to a combination of a well-controlled cost of debt and lower other financial charges coming notably from French exchange results. We did not benefit in 2025 from net financial capital gain contrary to 2024 with the SADE disposal. The tax charges were only slightly higher by EUR 11 million, and our current tax rate decrease from 27.1% to 25.4%, thanks to the benefits of Water Technologies fiscal synergies. Finally, current net income increased by 9.1% at constant ForEx in line with our debt. Moving to net income group share, I am on Slide 31. Noncurrent charges were stable at minus EUR 433 million. They include additional integration costs coming from Water Tech merger, one-off restructuring charges and an exceptional litigation provision in 2025. Net income group share reached EUR 1.2 billion, showing an excellent growth of 10.9%. Now free cash flow generation, which is key. I am on Slide 32. I am satisfied with the progression of the net free cash flow of EUR 39 million at constant ForEx, which we achieved despite the working capital evolution due to less project down payment in Q4 and one-off litigation payments in 2025, including Flint for around EUR 70 million. The underlying evolution of our working capital was, in fact, quite good with another reduction in the DSO of 5 days to 74 days. Thanks to our dedicated plan, which will continue quicker invoices. We have a clear plan to reduce time to invoice, cash collection, new ERP with use of AI. CapEx was once again under site control and was stable in 2025. CapEx will remain under control but continue to include significant growth CapEx, which will generate EBITDA. As you can see on Slide 33, net financial debt is well under control, which is EUR 19.6 billion at the end of 2025 versus EUR 17.8 billion at the end of 2024. This increase of EUR 1.8 billion is due to the resumption of external growth with EUR 2.3 billion of financial investment, which includes the purchase of the Water Tech minority stake for EUR 1.5 billion. This was not at the detriment of our leverage, which remained well below 3x at 2.79x. This bridge also reminds you of our share buyback program, which has been launched to offset the dilution of the employee shareholding program for EUR 400 million in 2025. We have, again, in '25, successfully issued new bonds, which attracted market interest and was done with very good market conditions. I will also mention that 85% of our net financial debt is at fixed rate. Our balance sheet, therefore, remains very strong. Both rating agencies confirmed strong investment-grade rating in '25. Before concluding, this slide reminds you of our 2026 guidance, which Estelle has commented earlier, continued solid organic revenue growth, excluding energy prices, EBITDA organic growth between 5% and 6%; current net income of minimum 8% at constant ForEx, excluding Clean Earth, which we will close mid-'26 and which will be accretive as soon as '27, excluding PPA, leverage ratio equal or below 3x, including Clean Earth and equal or slightly above 3x with Clean Earth acquisition. And as usual, our dividend will grow in line with our current EPS. And we fully confirm our GreenUp objective. Finally, let me remind you that we have started our $2 billion nonstrategic asset divestiture program, which I cannot, of course, give you detail, but which will also contribute to the continued soundness of our balance sheet while providing us with balance sheet headroom. Thank you for your attention. Estelle Brachlianoff: Thank you, Emmanuelle. Thank you, Daniel, and we are ready, 3 of us, to take your questions. Operator: [Operator Instructions] Your first question comes from the line of Arthur Sitbon with Morgan Stanley. Arthur Sitbon: I was wondering basically about your 2026 current net income target, which is at constant FX and basically without the Clean Earth impact. I was wondering if you could provide some more thoughts on at the current FX levels, what do you see as the mark-to-market impact from FX on your 2026 numbers as well as potential comments to understand a bit the magnitude of the Clean Earth impact for 2026? And you confirm the GreenUp target. So you talked about 8% growth in net income in 2026, but there is more growth. It's a 10% pace annual for -- by 2027 for the GreenUp target. So I was wondering basically if we should understand that net income growth will considerably accelerate in 2027. And my last question is just on your broader medium-term objectives. I was wondering if at some point you would consider rolling over your targets and maybe guiding to 2028 and 2029 or if we should wait for early 2028 for your new business plan? Estelle Brachlianoff: Thank you for your questions. Many different ones. Just a few things. We're very happy about the 2025 results, which was a very value accretive and a history high and well on our trajectory of GreenUp and even exceeded some of the target in EBITDA and in ROCE, just to mention the 2 of them. In terms of the guidance for '26, you have noted that the guidance left-hand side of the slide, if you want, is without Clean Earth and after Suez merger. So in a way, it's a kind of stand-alone. But of course, the acquisition of Clean Earth will be accretive for years to come. So the way to have a look at it, and that's why it's an ambitious one. We are saying that without any Suez synergies and before the accretion and the synergies of Clean Earth, we are able to deliver in '26 5% to 6% organic growth of EBITDA and at least 8%. So it can be more than 8%, but it's at least 8% of net results. That's what the guidance says. So I just wanted to highlight that it was after Suez and before Clean Earth. which means that it's really a confident and ambitious guidance, which I'm very confident we will deliver. In terms of the global ForEx element, and it's not only on like net results, it's on everything. I just want to highlight again that ForEx for us is a translation, not transaction. In other terms, as I tried to explain, we are a multi-local delivery company, which means that the cost and revenue are in the same currency. And therefore, ForEx up or down doesn't impact our margin. And we've proven it in '25. We've proven in '24, within 2 years, plus 150 business point -- bp, sorry, of margin increase. So proof is in the pudding, as you say in English, that it doesn't impact our margin. And as you know, ForEx translation at 100 at the top of our P&L goes down to 20 basically, so 20% or divided by 5 when it comes to net results, that's the global figures that we've already mentioned. But again, ForEx for us is not a real thing, as you know, like it doesn't impact our margin. It's more a sign of our being international and goes up and down, but it's not a question of anything, but the translation of us being very international. In terms of the targets midterm. So what the GreenUp trajectory, which I could fully confirm today and have fully confirmed it today, is 10% on average over 4 years, assuming, of course, more than 8% this year, and there is no reason why it should slow down going forward. We've achieved already 12% in the first 2 years of the plan. So we are really on the at least 10%, which we've said we would deliver in the GreenUp trajectory. So I guess that's a confirmation again. So another way to see the guidance for '26 on net result is in '25, we said and we have delivered around 9% of net result increase. And this was with Suez synergies in. And in '26, we said we'll do more than 8% without Suez synergies, and again, before like any positive effects of the Clean Earth synergies. So in terms of rolling over targets, that's always a good question. We have a few moving parts here. And the big one is the timing of the closing of Clean Earth, which everything is running exactly as we expected so far. But I will wait until we have the various authorization before we can have a clear timing, but that's a good point. At one point, we will be able to show visibility over years beyond 2027 GreenUp. But what I can say from now on is we've already crystallized with the acquisition of Clean Earth, value creation beyond 2027 with the synergies as well as enhanced revenue growth. So the more the company is international innovation-driven, which we are transforming quite rapidly the portfolio into, the more in the years to come and beyond '27, you will have a company, which is enhanced growth and enhanced value creation, in particular, thanks to the synergies of Clean Earth. I don't know if you want to complement something, Emmanuelle? Emmanuelle Menning: So maybe one element. So very quickly, as mentioned by Estelle, the figure that you see and the 2026 guidance is fully aligned with GreenUp. We have demonstrated in the past a very good result for the first part of GreenUp. I'm not going to mention again the ROCE, which is absolutely amazing 2 years in advance. And as mentioned by Estelle, you have seen the trajectory in terms of EBITDA with a target between 5% and 6% which is very strong, which is long term and which also show our capacity to grow on high potential growth and high-margin businesses as without the merger -- the Suez merger synergies, we are continuing on the same trend. In terms of ForEx impact, you will have at net result level, it's our estimation based on the ForEx rate for -- at the end of December, an amount which is similar to what you had in 2025. So '26 equal to 2025. You were mentioning... Estelle Brachlianoff: It's difficult to say because ForEx goes up, ForEx goes down, like it's super uncertain. Emmanuelle Menning: Yes, it's with the estimation that we have for the -- at the end of 2025. And where you're right is that, of course, in 2027, we will benefit from synergies from Clean Earth and the full synergies also of Water Technologies. And the element, which is, for us, very important is that you know at Veolia that the trains are arriving on time. You have seen what we were able to do with ROCE, with EBITDA, and we don't have any intention to stop and to not have this impact. Estelle Brachlianoff: You can't confirm that. Operator: Your next question comes from the line of Bartek Kubicki with Bernstein. Bartlomiej Kubicki: I would like to discuss 2 aspects as well, please. Firstly, if we think about tariffs overall in waste and water in 2026, where do you see them moving and more specifically in France as 2025 was relatively subdued in terms of revenues increase in both waste and water? And secondly, if we think about your M&As, which has just happened and which are about to happen this year, just 2 sub questions. A, what will be the contribution of Clean Earth into your net income once it is being acquired? And secondly, what will happen to your integration costs with now 2 companies, or in 2026, 2 companies being integrated into your group? Shall we expect an increase going forward? Or shall we stay flat at around whatever EUR 30 million, EUR 40 million per annum as in the past? Estelle Brachlianoff: Thanks for your two questions. So in terms of waste and water price more so than tariff, probably, I don't know, and specifically in France, a few things. Altogether in terms of price for our activities, as you know, 70% of the Veolia revenue is indexed and 30% is prices in pricing. And as we said, like inflation is relatively neutral or slightly positive for us, which means that when the cost base goes up, the price go automatically up or via pricing and vice versa. So everything is a way to protect our margins. So I think the priority for us is to protect our margin. In terms of anticipation for '26 in France, it will depend on inflation and a few indexation formulas, which have anniversary dates. I don't expect a big plus in '26 in terms of this indexation given the inflation is relatively low, but that was anticipated. And again, that cost base and revenue base are in the same type of range. What I could say in addition is, in a way, the proof is in the delivery of our performance in France in '25 because we had a revenue which was relatively flat roughly but a big plus in EBITDA, which you see on slide -- I can't remember where it is. But anyway, you will see that in our pack. And this is thanks to our action plan. And in a way, that's exactly the same example, which Daniel just highlighted in Spain. We increased our EBITDA by a lot more than our revenue, thanks to a lot of efficiency plans, and it was specifically the case in Spain and France because we anticipated it. We knew that there won't be a big push from the revenue, from tariff or from specifically or indexation or from the economy. And we launched specific action plans. So it was Hunter in Spain. It was called Ariane in France, and it delivers results. It delivers results in EBITDA level. So what we expect in '26 is exactly the same as we've seen in '25. Top line probably modest, but EBITDA will grow again in '26 in France and in Spain, plus Daniel has ambition on the top line as well, as you've heard him explaining earlier on. In terms of M&A and Clean Earth's net income. So basically, the question is the timing of the closing. We said it would be accretive in current EPS from year 2. So assuming the closing is mid-'26, it will mean year 2 is mid-'28. So mid-'28 is not a point where you look at the net result because it's end of the year. So assuming, again, end of mid-'26 we close. It will mean that in '27, it will be accretive before PPA and in '28 accretive even after PPA, if you want. So more accretive before PPA and accretive altogether, including the PPA. And it's a very modest dilution in 2026. Again, assuming the timing I just highlighted, modest as in what really, really less than 0.5% of potential dilution, again, assuming the timing I just highlighted. And integration costs, we've highlighted, we will have integration costs in the 4 years of the delivery of the synergies. So synergies $120 million in 4 years. And integration costs, we said... Emmanuelle Menning: We communicated when we when we did the signing at the end of November, so it's less than the $120 million. It would be around $90 million. Estelle Brachlianoff: Yes, we said $90 million over 4 years. You have years with a bit more, years with a bit less. But roughly, if you divide on average the $90 million by 4 years, you have a good estimate. Operator: And your next question comes from the line of Olly Jeffery with Deutsche Bank. Olly Jeffery: Two questions for me as well, please. The first one is staying on the topic of M&A. You're looking to divest EUR 2 billion of investments or assets rather within 2 years of closing the Clean Earth deal. Could we expect you to get on the front of that and do that potentially some divestments by the end of this year? And do you have any color at all now on what type of assets you might be looking to or geographies you might be looking to divest in? And the second question is on hazardous waste in the U.S., but again, connected to Clean Earth. In the U.S., you've got finite incinerators, potentially more onshoring coming to the country. That seems like quite a good combination for having pricing power going forward. Compared to when you made the Clean Earth acquisition, do you think actually the environment for hazardous waste in the U.S. has improved? And we've seen some hazardous waste peer share prices in the U.S. do particularly well year-to-date. Estelle Brachlianoff: Two good questions. So on the EUR 2 billion disposal in the 2 years following the closing of Clean Earth, a few things. The timing I mean, we have, as you can imagine, a list with Emmanuelle and with the various options, and I won't be detail -- I will not detail them today. Nevertheless, I can give you a little bit of color on this list. So we have not anticipated a big sell in '26. We will go on with the traditional small and medium portfolio rotation, which we do every year anyway, but nothing as a big as a big object is in our plan so far. So what are the typical candidates in this list, which is another way of answering your question. I guess, threefold, one is mature. The other one is nonstrategic. And the third one is not in the top 3. Let me explain them one by one. What I mean by mature, it means a business, which we don't think we can grow much more the profit in the years to come. I'm talking about the profit here. As you can imagine, in some of our Stronghold activities, we still have a way to increase our profitability, and therefore, we would keep them. So it's really the -- if we are the max of profitability, and we don't anticipate any way to go better. The second, like criteria is what I call nonstrategic. Nonstrategic, typically, it's what we've done when we've divested the SADE, which is a construction business. We said years ago, we don't want to be in construction. We want to be in technology. And that was a good example of that. The third one is what I call non-top 3. As you've seen in our geographical strategy, there is an element of when we are in a country, we want to be in the top 3 of this activity in this country. It's a key element to have pricing power, for instance, which is what we said earlier on. We have a few smaller objects which are not yet in the top 3. So either we have a way to put them in the list in the years to come or if not, we will divest them. So that's the 3 criteria lists, which met the list which we have with Emmanuelle, and we have various option and will deliver in the 2 years following the Clean Earth closing. In terms of Hazardous Waste, you're right, we're super happy about Hazardous Waste business in the U.S. And there is nothing in the last few months, which is anything but confirming it's a very good acquisition, the Clean Earth one. Synergies-wise, platform-wise, including to be able to develop other services of Veolia beyond the Hazardous Waste. So you're right, the trend is good. We've seen a very good Q4 in Hazardous Waste in the U.S. for us. If I remember why it's a 7% organic growth for Q4, which is a very good positive way to end the year, and to begin the next one. So all the lights are really on a green light. We are very, very confident it will create a lot of value for years to come. Operator: Next question comes from the line of Juan Rodriguez with Kepler. Juan Rodriguez: I have two on my side, if I may, more follow-ups. The first one is on guidance at the net income level in 2026. I want to be clear. You said that you expect no synergies from Suez, but it does include water tech synergies on 2026. Is that right? And can you please quantify the fiscal positive effect that the water tech synergies had on your 2025 results because it supported a lower tax rate? And are they part of the EUR 90 million synergies that you're targeting. So this is the first one. And the second one is on France. You said that performance was slightly better in 2025 despite weaker revenues. Can you please quantify the level of the performance that you had in here? And what is expected ex Hazardous Waste? And what is expected for 2026? You signal some improvement in the region, [indiscernible] in the low to mid-high single digits. So some color on that would be helpful. Estelle Brachlianoff: So I've tried to note down all your question. Hopefully, I won't miss anyone, anything. So you're right, the net income guidance before Clean Earth acquisition in '26 does not include any Suez synergies because it's over. Does include, of course, the recurring gains, which will, again, efficiency gain more than EUR 350 million again in '26. And does includes some of the CDPQ water tech synergies, but they are not of the same magnitude of the Suez acquisition. That's why I won't compare apple and pear. But you're right, they do include some synergies of the water tech. I want to say that it started well with -- in H2, we already had EUR 20 million, if I remember, Emmanuelle, of synergies from the Water Tech acquisition, which was delivered in H2. We've closed in on the 1st of July. So EUR 90 million over 3 years, EUR 20 million already delivered in H2. There will be another lot in '26, another lot in '27. And that's when I mentioned the synergies as in EUR 90 million over 3 years. This is the EBITDA synergies, if you want, because we said clearly that they were on top of that fiscal and in a way, net income synergies, which already were delivered a lot in '25. So EUR 20 million of EBITDA, if you want synergies already, plus already some fiscal synergies in '25. Do you want to comment on the fiscal tax rate. Fiscal tax rate, maybe, Emmanuelle. Emmanuelle Menning: With pleasure. Thank you for your question. So as you know, in the GreenUp plan, we targeted a tax rate of 27%. Our current tax rate in 2025 decreased significantly from 27.1% at the end of '24 to 25.4%, thanks partially to the benefit of our water technology synergies. As an example, in the U.K., we have been able to offset past and future tax losses, which were not recognized before. In France, also, we were able to merge the total group of Water Technology. And also in 2025, we benefit from a positive impact led by the anticipation reduction of the CIT rate in Germany. So all of that is contributing to the good tax rate and we have also a positive ambition for 2026, which participate to the net result as the fact that we have the cost of debt fully under control. And on your question about France EBITDA, hopefully, you have the answer on Slide 23. Where you see the business unit Front and Hazardous Waste Europe with a revenue which was basically flat compared to -- or slightly negative compared to '24 with all the -- what we said about indexation formulas and so on and so forth, but a plus 6.3% EBITDA growth. So I think that's the type of results we see from the specific action plan we've launched 2 years ago in Veolia, we just don't wait. We anticipate and act quickly and strongly. So this was called Ariane in France, and you see the results. And this was called Hunter in Spain. And you've seen in Spain, and it was presented by -- because it's kind of a bit the same, plus 14% EBITDA growth in '25 compared to '24 in Spain. And we won't stop here. So you can go on with this type of improvement in '26 for France and for Spain. Operator: And your next question comes from the line of Davide Candela with Intesa Sanpaolo. Davide Candela: I have two, if I may. The first one is if you can share with us sensitivity on energy prices, mostly with regards to Europe. I know that in most cases, the energy component is a pass-through for you, but at least if you can provide a bit of sensitivity that would likely most refer to your WTE plans throughout Europe and so on? That would be the first one. Second one is with regards to your approach to demand. You said that the demand for your services is strongly increasing. I was wondering if you can share how you approach that in the sense that you are being selective in waiting. And so taking the most valuable contracts or opportunities or on the other hand, you are taking a more aggressive approach in trying to put more pressure on power on your prices and just being proactive in trying to take demand from your clients directly. And with regards to that also on volumes, which is the capability you have to attract more and more and if there is a risk of saturation in that respect And yes, that will be the second one. Estelle Brachlianoff: Thank you. So energy price sensitivity. So you're right, energy price for us are global pass-through. This is why we published and we've been publishing for years now, excluding energy price. Why is that so? Because we mainly sell heat and when you know the price of the entrance as in what we have to buy to produce the heat for the district heating net price goes up, the tariff goes up. And that's why it protects our margin again. The little effect, which is not what I said, is on the cogeneration of electricity, if you want, and the ancillary service is associated with it, where it's a little bit more into our margin. So it's more -- it's not the main product for us. We're not a producer of power. We're not at all. But we use all the equipment and infrastructure we have, specifically in district heating and things like that to try to deliver ancillary services in addition and on top. So this top-up is what can go up and down, and it's a little bit more like variable for us. If you have a view over 3, 4, 5 years in a way, you can see that in our figures because as you can imagine, the price of energy in Europe has gone through the roof in '22 and then down very massively in '23 and '24. And you can have a look at the sequence of our EBITDA in our Energy business over 4 years. There was a big plus, a small minus for the reason I just mentioned in terms of the cogeneration of electricity. But altogether, the curve is on the up over these few years. So in a way, we've demonstrated what I said in the figures from '22 to '25. In terms of the demand for our service, what I was trying to highlight is, I was asked a lot of questions about, okay, is Veolia about ecology, the environment? Yes, we are, but we are more about critical needs. I think this is important. So whatever the elections results are in a country, we're not about politics here. We're about critical needs for industries and population. That's what makes us super resilient when it comes to supply of water, when it comes to supply of critical materials and critical minerals, when it comes to supply of energy, we produce local resources Therefore, they don't depend from like far away imports, disruption of supply chain and so on and so forth, which is very key for all our customers. So that's why the demand is, in a way, the more the crisis, the more the demand is paramount because we are really critical for our customers. In terms of your question about how selective are we shooting everywhere? It's the former of the latter. We still are very selective. We don't want revenue for the sake of it. We want revenue, which can create value not only for 1 year but for years to come. The 2 keywords are resilience and growth here. The business model of Veolia is really sustainable growth and for years, which means that we've intentionally decided not to bid for specific tenders, for instance, in West municipal collection because it was not value creative for us to focus on what is very value creative, typically our growth boosters. So we are very selective and the choices are clear, the growth Boosters. So Water Technologies, Hazardous Waste and bioenergy. In terms of where we go for saturation at one point in terms of volume, do have a limit in a way, in our plants and installed base. This is not exactly the way it works. In water, the needs go with the growth of the population or the growth of the industries and the plants do follow, if you want, and that's what we've seen regularly. In terms of Hazardous Waste, it could have been a limiting factor, and that's exactly why we have invested in 5 new facilities across the globe, which are just ramping up from last year till 2028, exactly to be ensuring we unlock the future growth. So we're not only at Veolia talking about the guidance for '26. And when I say we have an enhanced profile of growth for years to come, I can talk to you about '28, '29, 2030, even with the Clean Earth acquisition synergies and investments we've made. Operator: And your next question comes from the line of Philippe Ourpatian with ODDO BHF. Philippe Ourpatian: I have three questions, in fact. One is a slight, I would say, a clarification concerning the efficiencies means that the Slide 27 is showing EUR 326 million growth in performances on which you have some price effects and volume effects. I would like to know exactly what was the amount of the efficiencies you were mentioning, in fact, previously in your slide has separated from works, volumes and commerce. That's the first question. And in this question, there is also another one concerning the next slide, which is the 28, where you are mentioning EUR 399 million. It's over the target of EUR 350 million of efficiencies. Could you spread it a little bit more by activities or geographies? You mentioned France and Spain as a specific plan, but to have more color about where this EUR 399 million were generated? Second point -- second question is hazardous waste. Could you just remind us or elaborate more about the new facilities because Germany -- in Hazardous Waste, Germany has started, if I'm not wrong. And there is some other geography where you are working, U.S., U.K., Saudi Arabia and Asia. Could you just remind us, in order to take into account those volumes and maybe value creation effects? And last, you just issued a press release concerning India. Your famous French competitor also issued a lot of press release concerning this area. It seems to me that India was not an easy country. We have seen Suez losing a lot of money years ago in this contract. What has changed in this market concerning water? And what are the level of risk or capital employed you are injecting in this kind of country, even if I do think that it's mainly through OEM contract? Estelle Brachlianoff: It looks like you have not only the question, but the answers, and you're right. But I will elaborate in a minute. So efficiencies in a way, the answer is on Page 28. So efficiency, EUR 399 million, which we've retained 47%, right, Emmanuelle? Emmanuelle Menning: Absolutely. So [Foreign Language] Philippe. So roughly, when you say -- you're absolutely right, from the EUR 399 million which have been fueled by all the specific action plan also which were in France and in Spain and the rest is, as you know, fully embedded in our business for 70%. We have been able to retain 47%. When you look at this number, if you want precise number, we have volumes commerce, which is around 10% growth and pricing net efficiency, which is around 2.8% growth. So roughly EUR 140 million and EUR 190 million. Estelle Brachlianoff: So 47% of EUR 399 million equals EUR 189 million, plus volume and commerce, roughly equals what you see on the slide. And where is it mainly? So the beauty of the Veolia's model, it's everywhere. That's why we're so confident we can keep it forever because it's a series of plants everywhere in the globe, which have initiatives, which combined give you the number. The specifics where you have more than the average are France, Spain and China. France, Spain and China launch specific plans, which were more than the average, given the fact that we're disappointed by the result in '23, basically for those geographies. So we've launched specific action plan with specific names, the Hunter, the Ariane and there was an equivalent one in China. And that's why on those geographies, we have a perfectly big disconnect between revenue and EBITDA growth because this was thanks to the very, very well-executed delivery of this plant, which again won't stop. Hazardous Waste. So the various Hazardous Waste -- yes, do you want to add something on the... Emmanuelle Menning: Yes, with pleasure. So you know us perfectly well, Philippe. Regarding the efficiency, one point that I wanted to add. As you know, 70% is fully embedded in our business model. It's what we sell, selling price increase, purchasing and procurement improvements. And on top of the 3 specific plans that Estelle has mentioned, and which are taking a lot of energy to the French team, but also to Daniel in Spain. So with very, very specific action plan where you have strong SG&A efficiency on top of procurement and on top of operational improvement, we have launched this year, and you see it in our results. What we call, it was a project which was called Mobi. So we are dealing with a lot of energy of what we consider as assets, which are not as performance as we wanted them to be, meaning that for us, it's a clear approach of upper out and all the team is working very, very strongly to it, and it's in all our geographies, and it is contributing toward our leverage -- operational leverage that you see and the increase of EBIT of 8.9%. Estelle Brachlianoff: In terms of Hazardous Waste, you're right, we have 5 new plants which are under construction or under commissioning. In terms of the sequence, we've showed it during our deep dive on waste a few months ago. So we are exactly on the trajectory we showed you at that time, which means that just to refresh your memory, you have a phase of construction, but then you have like what we call cold commissioning and then hot commissioning and then ramping up of operational performance with a commercial -- commercializing the plant. So depending on the difference, what we call by ramping up, again, cold commissioning, hot commissioning and then commercializing progressively the total capacity of the plant. It takes quite a while. It's not you press a button and it's on and off and 100% instantly. It takes usually between the cold, hot commissioning and the full capacity 2 to 3 years. Just to give you an idea. This is classical in this business, but then you're here forever, which has its merit. And in terms of the as orders of the being in this situation, the first to come online has been the Saudi one which has already gone through the -- and I hope I won't miss one, but the cold and hot commissioning and we are in the ramping up of the commercial activity, then the next on the line is Blue Jay, which is our facility in the U.K. in solvent, which is in the ramping up mode as well. I think we've finished the hot commissioning, and we are in the ramping up of the commercial activity. Then the next on the new will be the German one you mentioned, but which is not there yet. We are more at the end of the construction phase, if you want, not yet in the commissioning one. The next one will be in Asia and the next one will be in the U.S. All that means that combined, if I remember well, we've put again the figures in our presentation. But if I remember what it's 285,000 tonnes of capacity, which will be active at the end of GreenUp, but out of 130,000 tonnes of capacity when they are fully ramped up 100%, so 1 or 2 years after the end of GreenUp. And India, you're exactly right. We're not doing crazy things in India. That's why I was super proud about this contract, which is new of its kind. You've answered yourself the question, like there is not funds employed at all of Veolia. We've delivered technologies, and then we'll have 15 years of O&M contract. So it's not about funds employed here. It's about selling technology and know-how in terms of maintaining plant. Those are massive ones. We are talking about a plant, which will be able to sustain the water supply for 60% of the entire Mumbai global population, which I remember is a 12 million like population. So those are massive, and I'm very happy that it was without risk associated exactly, as you said. So we're not chasing revenue for the sake of it. So we said we will exit construction. So in India, many, many -- so it's EUR 250 million backlog, by the way. We are not chasing revenue for the sake of it. So that's why a lot of the contracts which were announced by competitors, we didn't even bid to be honest, because we don't want to be in construction and pouring concrete. This is not what we do. We do sell technology, plus we do want to be in the O&M. All the rest, we just don't go for it at all. So we are super selective in India as elsewhere, but this opportunity was a very, very good one. Operator: [Operator Instructions] Your next question comes from the line of Charles Swabey with HSBC. Charles Swabey: Just one question for me on efficiency gains. And the '23 that came from digital and AI in '25, can you give us an idea how this compares to your assumptions when you put together the GreenUp plan? Would you say that they have exceeded expectations? And how should we think about this going forward? Estelle Brachlianoff: Thanks for your question. We have no idea there will be AI at this level when we launched GreenUp, which was at the end of '23, we've conceived the whole thing and launched it beginning of '24. So we had no specific expectation. We knew we were already very much into digital. or AI, but not GenAI, if you want. And this is really ramping up and a big potential for future efficiencies in the years to come. I think 23% is already a big figure. So we're not the style of talking about things we're trying to deliver that instead of talking too much. And I think that was a proof of it. We've picked our battles as well because some of it is more a miss than delivering new results. We've picked the tools, which actually are delivering real efficiencies. Real efficiencies for us means consumer less water, produce more green energy. This is the criteria, which we've picked a few proof of concepts and there were many of them, we've picked a few just to be on the scaling up front. Emmanuelle Menning: And what is also absolutely amazing is the increase of the percentage of digital. It was in the past 5%, 10% of our efficiency gain and now it's 20%, and it will continue to increase. Estelle Brachlianoff: You're right. Yes. I will say thank you very much. It looks like we have no further questions. And just wanted to say how happy we are about 2025, which not only was on target or even beyond targets in a few different KPIs, but as well as really a pivotal year for Veolia. We've crystallized major transformation in our portfolio, which will generate really enhanced growth and value creation for years to come and years with a lot of assets, as in '26, '27, '28, '29. I'm very confident about Veolia's trajectory, and there is more to come. Thank you very much. And let me, before I finish, I invite you not to miss what we've put on the slide, which are a few dates. If you want to have more information about our ESG agenda and multifaceted performance that's a webinar on the 23rd of March, and we'll have a deep dive on innovation, tech and AI in London on the 14th of April. Thank you very much. Operator: Thank you. And ladies and gentlemen, this now concludes today's presentation. Thank you all for joining. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Nautilus Biotechnology Q4 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ji-Yon Yi, Investor Relations. Please go ahead. Ji-Yon Yi: Thank you. Earlier today, Nautilus released financial results for the quarter ended December 31, 2025. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to investorrelations@nautilus.bio. Joining me today from Nautilus are Sujal Patel, Co-Founder and CEO; Parag Mallick, Co-Founder and Chief Scientist; and Anna Mowry, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking within the meaning of the federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release Nautilus issued today. Except as required by law, Nautilus disclaims any intention or obligation to update or revise any financial or product pipeline projections or other forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast on February 26, 2026. With that, I'll turn the call over to Sujal. Sujal Patel: Thanks, Ji-Yon, and thank you all for joining us today. Before turning to the quarter, I want to briefly remind everyone of what we're building and why we believe it matters. Nautilus was founded to address a long-standing challenge in life sciences, the lack of technologies capable of comprehensively measuring the proteome with the sensitivity, scale and reproducibility needed to fully understand biology and disease. Our proprietary Iterative Mapping methodology is designed to analyze single intact protein molecules at scale and generate highly reproducible digital protein counts. This methodology is delivered through the Nautilus platform, an integrated system of instrumentation, consumables and software, which can support both broad-scale proteome analysis and targeted proteoform characterization on a single platform. Over time, we believe this data foundation will unlock new biological insight, integrate more effectively with other omics modalities, support next-generation AI-driven discovery in human health and medicine and ultimately help accelerate the development of new therapeutics and diagnostics. With that context, Q4 marked a strong close to 2025 as we continue to make tangible progress towards commercialization, deepen external validation and build momentum with leading research institutions. A key highlight of that progress was our presence at the US Human Proteome Organization Conference, or US HUPO in St. Louis, Missouri this week, where we publicly unveiled the Nautilus Voyager instrument in dramatic fashion to a large audience of influential researchers and prospective future customers, providing the proteomics community with its first tangible view of the instrument we've been building. The response was highly positive and reinforced the strong interest we're seeing from researchers seeking a new class of protein measurement technology. Importantly, when designing Voyager, we were intentional about creating an instrument that looked and felt different, one that conveyed sophistication and innovation while still being approachable and easy to use. We wanted an instrument that reflected the ambition of what we're building while also fitting naturally into modern research environments. And the feedback we received confirmed that this balance resonated strongly with the community. Building on the capabilities of the Voyager instrument and supported by the encouraging tau data we've seen emerging from our early collaborators, we elected to launch our Early Access Program for Iterative Mapping in January earlier than previously communicated. This milestone represents a meaningful step in Nautilus' transition from development to active customer engagement, enabling partners to submit samples, receive data and provide feedback in a streamlined manner. Initial customer response has been encouraging. And while these early engagements are not intended to drive near-term revenue, they are designed to enable real biological discovery, support publications and grant applications and ensure our workflows and data outputs align closely with customers' needs, an approach consistent with how many transformative life sciences platforms has successfully entered the market. The Early Access Program will begin with our Tau proteoform assay and establish a foundation for future assay expansion covering additional proteoform targets and broad-scale applications. Importantly, we believe this early access launch also reflects a forthcoming diversity of assays for our platform beyond tau. For example, in late January, we announced a collaboration with Weill Cornell Medicine-Qatar and The Michael J. Fox Foundation focused on alpha-synuclein proteoforms in Parkinson's disease. This MJFF-funded project, $1.6 million in total with $1.2 million coming to Nautilus, combines Professor Hilal Lashuel's deep expertise in neurodegeneration with Nautilus' ability to measure proteins and their functional variants at the single molecule resolution. Understanding alpha-synuclein proteoforms is a priority for MJFF, and we believe this collaboration is a strong example of how Iterative Mapping can be extended to additional high-value proteoform targets and disease areas over time. On the technology front, we continue to make strong progress as we moved into the later stages of our broad-scale assay configuration change. This work is designed to better align with our expanding probe library and improve overall platform performance. We're now seeing the first data from the updated assay on new chips and early readouts are encouraging. Parag will walk through these technical details in more depth, and I'll return later to discuss how this progress informs our expectations for 2026. Taken together, these developments reflect steady progress towards commercialization grounded in real samples, real data, real customer engagement and increasing external validation. Throughout 2025, we remain disciplined in how we invested our resources, meaningfully reducing expenses while continuing to advance our most important technical and strategic priorities. I want to recognize our scientific and engineering teams for their continued focus and execution. With that, I'll turn the call over to Parag. Parag Mallick: Thanks, Sujal. I'll now provide an update on our technology and product progress, including what we're learning from our development work and the external validation we're seeing through collaborations. Overall, Q4 was a strong quarter of execution for our product and scientific teams. We continue to see growing validation of the Nautilus platform through both internal development and external partnerships. Importantly, we are increasingly moving beyond demonstrating that the technology works and towards applying it to obtain remarkable biological insights, not possible with existing proteomics approaches. This shift from capability to meaningful application is an important marker of platform maturity and a central focus for the team. Collaborations continue to play a critical role in validating the platform and demonstrating real-world relevance. During the quarter, we completed work with the Buck Institute for Research on Aging, culminating in the presentation of novel tau biology at World HUPO and most recently at US HUPO, and we are now supporting our partners as they prepare their findings for publication. In parallel, through our collaboration with the Allen Institute for Brain Science, we analyzed human brain samples spanning multiple brain regions, genetic backgrounds and disease severities. We believe this work represents the most comprehensive and quantitative Tau proteoforms landscape study to date. Notably, we are observing clear differences in Tau proteoforms patterns across disease severity and brain regions, signals that are not detectable using conventional proteomics approaches and that may help explain variability in disease progression and clinical outcomes. We also anticipate that such insights may be essential for developing the next generation of therapies for neurodegenerative diseases. Stepping back, what stands out is that the data emerging from these collaborations is not only technically robust, but biologically compelling. With each additional study, we gained confidence that Iterative Mapping is enabling access to important biology that has remained out of reach for existing technologies. We believe this new class of proteoform level data has the potential to drive real-world impact by deepening our understanding of disease mechanisms, revealing new therapeutic targets and enabling the development of more precise biomarkers for diagnosis, patient stratification and treatment monitoring. Ultimately, our goal is to demonstrate to the broader scientific community that this represents a transformative foundation of information, one that can help accelerate drug discovery workflows and improve the probability of success in developing new therapeutics. From a platform development perspective, we made meaningful progress across both our broadscale assay and our proteoform assay portfolio, while also gaining greater clarity on the remaining work required to reach our next milestones. Starting with the broadscale assay, we continued advancing our assay, including advancing the assay configuration change we have discussed previously and are now routinely employing our new configuration. During the quarter, we achieved several encouraging milestones, including performing our largest scale experiments to date, which demonstrated Iterative Mapping-based decoding of proteins from increasingly complex mixtures, including cell lysates. In addition, we made good progress on hardening the fabrication process for our new flow cell configuration, and showing assay performance characteristics such as increased on-target binding that give us indications our new assay configuration will enable an expanded affinity reagent library. The work completed in Q4 helped validate key elements of the new configuration and clarify the primary levers needed to drive further performance improvements as we scale towards complex biological samples. Progress on Proteoform assays remains strong. The Tau Proteoform assay continues to track as our first early access offering, and we remain on schedule to begin processing samples through the Early Access Program by the end of Q1. Verification and validation activities are largely complete, and the assay is meeting our requirements for accuracy, dynamic range, reproducibility and stability, marking an important step as we transition tau from development into a high-quality commercial-ready product. In parallel, we formally initiated our proteoform expansion pipeline. As Sujal mentioned, we launched an 18-month collaboration funded by The Michael J. Fox Foundation to develop an alpha-synuclein proteoform quantification assay, extending the platform into Parkinson's disease. This program includes development of a pilot assay focused on key post-translational modifications, optimization of enrichment and sample preparation workflows and application of the technology to human brain and biofluid samples. We view this collaboration as an important opportunity to further demonstrate the breadth of Iterative Mapping beyond tau and to expand our proteoform capabilities into additional high-value disease targets. While much of our current momentum is in neurodegeneration, it's important to emphasize that Iterative Mapping is not limited to neuroscience. We see meaningful long-term potential across oncology, immunology, cardiology and beyond. We are currently evaluating multiple oncology-focused candidate proteins with the goal of having an oncology-focused proteoform assay enter early access in the second half of 2026. We believe oncology represents a compelling next market opportunity, providing access to a broader customer base while also aligning well with the capabilities of our platform to deliver proteoform level resolution and highly reproducible measurement in complex biological systems. Overall, Q4 represented a strong quarter of technical execution as we continued advancing our Voyager instrument and end-to-end platform. We made meaningful progress on the broadscale assay configuration change and began generating initial data from the new approach while also advancing our proteoform portfolio with tau on track for early access sample processing by the end of this quarter. At the same time, the growing body of externally generated data from collaborators like the Buck Institute and the Allen Institute continues to validate both the robustness of our measurements and the unique biological insight enabled by Iterative Mapping. Taken together, these developments reflect continued platform maturation and reinforce our confidence in the technical foundation required to scale our assays, broaden our target portfolio and support future commercial deployment. With that, I'll turn the call over to Anna to review our financials. Anna Mowry: Thanks, Parag. Turning to our financial results. We continue to demonstrate strong operating discipline in Q4 and throughout 2025. Total operating expenses were $15.4 million for the fourth quarter of 2025, a decrease of 23% from the prior year period and $66.8 million for the fiscal year 2025, a decrease of 18% year-over-year. Research and development expenses were $41.1 million for fiscal year 2025 compared to $50.5 million in fiscal year 2024, representing a decrease of $9.4 million or 19%. This decrease was driven primarily by a $4.5 million reduction in laboratory supplies and equipment expenses, reflecting operating efficiencies, lower development-related costs and continued cost optimization efforts. We also saw a $2.4 million decrease in salaries and related benefits, driven by savings from the reduction in force implemented in the first quarter of 2025, along with a $1.9 million decrease in stock-based compensation expense. General and administrative expenses were $25.7 million for fiscal year 2025 compared to $31.0 million in fiscal year 2024, a decrease of $5.3 million or 17%. This decrease was primarily due to a $3.9 million reduction in stock-based compensation expense, along with a $1.3 million decrease in professional services, largely attributable to lower legal and consulting costs. We ended the quarter with $156.1 million in cash, cash equivalents and investments. Cash burn in 2025 was $50.2 million, down from $57.8 million in 2024, reflecting the benefit of lower headcount and development expenses. Looking ahead, we expect total operating expenses for the full year 2026 to increase as we continue investing in platform development, support the expansion of our Early Access Program and advance commercial readiness activities. We currently anticipate total operating expense growth of approximately 15% to 20% in 2026, and we expect full year 2026 cash burn to be in the range of $65 million to $70 million. Based on these assumptions, we continue to believe our financial plan supports a cash runway that extends through 2027. Following the launch of our Early Access Program in January, our initial customer engagements are primarily with academic key opinion leaders seeking early access to the tau offering to support exploratory research and grant applications. While we expect modest services revenue later in 2026, we anticipate the primary revenue ramp will begin in 2027 once we start shipping instruments. As a reminder, instrument placements drive our recurring consumables business and together, they create a scalable top line. We believe the instrument and consumables ramp will accelerate meaningfully once both our proteoform and broadscale capabilities are generally available, enabling customers to deploy the full power of the platform and driving broader commercial adoption. As Sujal noted earlier, we also announced grant funding from The Michael J. Fox Foundation to support development of an alpha-synuclein proteoform assay. Under this agreement, we expect to receive approximately $1.2 million with development and sample analysis work occurring over approximately 18 months across 2026 and 2027. Revenue will be recognized as the underlying work progresses. Back to you, Sujal. Sujal Patel: Thanks, Anna. As we wrap up, 2025 was a year of meaningful progress for Nautilus as we continued advancing the platform and began transitioning toward external engagement. That momentum carried into early 2026 with the launch of our Iterative Mapping Early Access Program and was further highlighted this week by the debut of the Voyager instrument at US HUPO, where we introduced the system directly to the proteomics community. Together, these milestones represent important steps in putting the platform into the hands of researchers. Looking ahead, we expect 2026 to be a pivotal execution year. We plan to begin progressing early access customers into tau services projects, expand early access to include a second proteoform assay focused on an oncology target and introduce broadscale capabilities into early access later in the year. In parallel, we expect to place Voyager instruments externally through beta deployments as an important validation step ahead of commercialization. We expect to initiate our commercial launch in late 2026 by opening the Voyager platform for preorders with instrument installations at customer sites beginning in early '27. At launch, we expect general availability to include the Voyager instrument, our Tau proteoform assay and a second proteoform assay. We anticipate general availability of our broadscale capabilities in the first half of '27 as we continue expanding our platform's assay portfolio. We're encouraged by the momentum we continue to see from collaborators and partners applying Nautilus' Iterative Mapping technology to complex disease-relevant biology, and by the steady progress we've made across our assay development and operational priorities. Together, these efforts position us to begin translating years of investment in what we believe will be meaningful scientific and ultimately commercial impact. I'm proud of the work that our team has accomplished and grateful to our collaborators for their partnership and trust. With a strong foundation in place and a clear path forward, we remain focused on disciplined execution as we advance the platform towards broader deployment. Thank you for joining us today. With that, we'll be happy to take your questions. Operator? Operator: [Operator Instructions] Our first question comes from Subbu Nambi from Guggenheim. Subhalaxmi Nambi: There was a lot of focus on the technical milestones you achieved in Q4 that provide you with the foundation for further technical improvements. Building off of that, I have a couple of questions. What comes next? By that, I mean, what are the next milestones and what metrics materially get better building off of the technical milestones you achieved in Q4? And second, have you shared these milestones with any of the key customers, especially those focused on tau? And if so, have these new developments catalyzed the path to placements? Parag Mallick: Thanks, Subbu. I'll take that one. I think there are a couple of key sets of technical milestones, and I'll try and describe each of them. One of the really key technical milestones was the completion of the final studies of the Tau proteoform assay to make sure that it was ready and an incredibly performing assay for our Early Access Program. That data has been shared back with early customers. They're excited about the quality of the assay and really thrilled that we're -- at the data that we're able to produce. The second set of progress were on instrument readiness. And as we mentioned, coming out of our evaluation instrument at the Buck, the data we learned from that. And internally, that was really what positioned us for the announcement of the reveal of the instrument at the US HUPO conference earlier this week, and tremendous excitement about folks really being able to get their hands on the instrument and see it was great. I think the other aspect that we've been discussing in terms of moving forward are the expansion of the proteoform platform to additional targets. We mentioned alpha-synuclein and an oncology-focused target. And I think the people are -- remain very excited about proteoforms across domains. And so seeing progress towards other proteoforms validating that the platform is not just a neuro platform, but is a platform that can apply across different domains is something that we've heard a lot of positive excitement about. And then on the broadscale side, as we mentioned, the expansion of both the scale of assays that we're performing as well as the further progress on the configuration change. I think all of those things are really key contributors. As we look forward, what we're looking at are levers like increase -- further increasing on-target binding, minimizing off-target binding. We continue to progress working on assay stability of the new configuration chips that are stable over hundreds of cycles. All of these are challenges that require optimization, not innovation. Operator: [Operator Instructions] our next question comes from Dan Brennan from TD Cowen. Kyle Boucher: This is Kyle on for Dan. So starting with this year, I know you said no material contribution from early access in terms of revenue and a modest contribution later this year from service and reiterated the commercial launch for later this year. But do you anticipate any revenue at all from a commercial launch later this year? I think the Street was modeling a few million dollars in revenue all the way out in the fourth quarter. And then maybe building off of that, have you discussed anything new around pricing for the Voyager instrument? Anna Mowry: Kyle, I can definitely give you a little bit more color there. As you reiterated, we don't see our early access engagements as a major driver of revenue that although we do expect some modest services revenue later in the year, our revenue for 2026 will really come from two sources. First, I'm anticipating a portion of The Michael J. Fox grant funding to be recognized as revenue in 2026 with the remainder flowing into 2027. While the work that we do for that grant may vary depending on the quarter, I think it's reasonable to expect some revenue coming in from that. On top of that, with a handful of early access customers converting to revenue within the year. I'm looking at a target of closer to, say, $0.5 million for 2026. The revenue ramp tied to instruments is really coming in 2027. On the pricing front, we don't have anything in addition to any changes from what we've talked about previously. Kyle Boucher: Got it. And then maybe can you just give a little bit more color on how the Early Access Program is going, maybe some of the feedback you've received from these early customers? And then I guess building on that, can you speak to how your sales funnel is building ahead of the commercial launch later this year? Sujal Patel: Yes. Let me tackle -- Kyle, let me tackle, this is Sujal. I'll tackle the commercial pieces of that, and Parag can give you some of the early feedback because really the early feedback is just from the Buck Institute and the Allen Institute who've been working with us in the very early stages of the early access or the late stages of their collaborations. In terms of funnel, when we launched that Early Access Program, one of the things that we said in our prepared remarks was that we elected to launch it earlier than previously communicated. And that is because the data quality and the excitement that we are seeing from customers based on the early data from the Buck and from the Allen Institute, and our own internal data as well as through our partners who were -- who worked with us on the preprint that is out now, which is MSCI and Mount Sinai. All of that data was really exciting. We elected to get out to launch. Now it's a little bit earlier than we were thinking. It's important to point out, we have absolutely 0 sales capacity in the company right now. There's not a single salesperson in the company. And so the funnel build is something in earnest that we really just began. And so HUPO was a great opportunity to get in front of a lot of potential customers. And in earnest, we will begin the sales capacity build this quarter and then continuing through the year with just a few targeted headcount. And so it's a pretty much a surgical strike sort of approach, right? It's not going to be a lot of commercial build, but we'll start to see that funnel build. Parag, do you want to talk about the feedback that we've received? Parag Mallick: Yes, absolutely. I think a highlight of the US HUPO meeting was very much Birgit Schilling's presentation of her latest data, looking at both different brain regions of -- that complemented across these 3-xTg mice models. And then a study where she was looking at genetic alterations that predispose people -- well, either predispose people to Alzheimer's disease or are protective. And that has been a really big open question in the field about why there was this link between this gene called ApoE and Alzheimer's disease, what actually occurred, how was this linked to tau. And her data this proteoform level detail really highlighted that those genotypes potentially led to changes in tau phosphorylation and that was a critical predisposing factor. Now it's very early data, but it is exciting to have a tool that can allow us to finally see what the downstream consequences of this either protective or extremely deleterious mutation might be. And so I think we've heard from other folks at the conference, both how excited they were to see the data, how much they appreciated the quality of the data that the story itself and the multiomic link was extremely exciting to them and something that they want the ability to be able to forge those connections and see things they haven't been able to see before. So it was really exciting to get that feedback from the community. Operator: I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good morning, and welcome to the Qnity Fourth Quarter and Full Year 2025 Conference and Webcast Call. [Operator Instructions] Please be advised that today's call is being recorded. I will now turn the call over to Nahla Azmy, Vice President of Investor Relations. You may begin. Nahla Azmy: Thank you, and good morning, everyone, and welcome to Qnity's Fourth Quarter and Full Year 2025 Earnings Call. I'm joined by Jon Kemp, Qnity's Chief Executive Officer; and Mike Goss, Qnity's Interim Chief Financial Officer. Earlier today, we issued our earnings release along with a supplemental slide presentation, which can be found on ir.qnityelectronics.com. Before we begin, I would like to remind you that today's discussion will include some forward-looking statements. These statements represent our best view of predictions and expectations for the future, but numerous risks and uncertainties may cause actual results to differ. Please refer to our earnings release and SEC filings for a discussion of these risk. We will also be discussing certain non-GAAP financial measures. And I refer you to our earnings materials for information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure. With that, it's now my pleasure to turn it over to Jon. Jon Kemp: Thank you for joining us this morning for our first earnings call as a stand-alone public company. When we launched Qnity late last year, we detailed our focus on establishing ourselves as the premier technology solutions provider across the semiconductor value chain. That means being the partner of choice to customers at every stage from chip fabrication to advanced packaging and interconnect to thermal management. And it means understanding where the market is going, so that we can stay one step ahead, delivering more innovative and integrated solutions to address our customers' most complex challenges. As the industry continues to rapidly evolve, we're proving that the next lead in AI and other advanced technologies will be powered by materials innovation, and that's where Qnity leads, with chip designs becoming more complex, materials fit smooth, shape, connect and protect our paramount as the leading pure-play provider of integrated solutions for the semiconductor value chain, this dynamic creates powerful near and long-term growth drivers for Qnity. We're leveraging three core structural advantages to capitalize on these demand tailwinds. First, the unparalleled breadth and depth of our portfolio enable us to offer end-to-end solutions to our customers. Second, our innovation capabilities have earned us a seat at the design table with global technology companies. And third, our local-for-local approach with manufacturing facilities and R&D centers located close to customers wherever they operate. Turning our attention to last year's financial results, our fourth quarter and full year 2025 performance is a testament to the strength of our portfolio, the trust our customers place in us and our ability to execute on our value creation strategy. We delivered our seventh consecutive quarter of strong organic growth, and we outperformed the market exceeding our full year 2025 financial objectives. We grew organic sales by 10%, including strong growth in both operating segments. Reflecting a full year of stand-alone public company costs. Pro forma adjusted operating EBITDA was up 11% year-over-year with strong margins. In our Semiconductor Technologies segment, we grew organic sales 8% in 2025, driven mostly by strong demand for semi fab consumables. AI and high-performance computing led demand drove double-digit sales growth in advanced nodes and advanced packaging, and we benefited from ongoing improvement in mature nodes and NAND. Our Interconnect Solutions segment had an exceptional year, growing organic sales 12%, led by continued AI and data center tailwinds. Our core drivers in this segment continue to be advanced packaging, advanced interconnects and thermal management. Across the portfolio, our innovation engine remains at the heart of our growth strategy. In chip fabrication, our customers require improved performance, quality and yield. That's because even small gains in quality or yield can create huge value. We're continuing to execute our strategy to increasingly shift our portfolio to leading-edge technology. In 2025, our advanced logic and high-bandwidth memory business grew mid-teens. And we made further progress towards reaching the 45% to 50% advanced node exposure target we highlighted at our Investor Day. Our CMP portfolio is evidence of that strategy at work. It's a structurally growing opportunity that's directly linked to advancing the AI semiconductor road map. In October, we introduced our Emblem CMP pad platform a breakthrough innovation that set a new standard for pad design, defect control and performance. These new pads address the aggressive planarization requirements of the most advanced chips including N3 and N2 Logic and HBM3 and 4 memory. The feedback from customers has been outstanding. And the platform's external recognition underscores the differentiated value we're bringing to the market. Similarly, we're continuing to see strong growth from our CMP advanced cleans and slurries products across leading-edge logic and memory devices. By targeting specialized formulations, we're building on our leadership in CMP and extending our position in this critical manufacturing process securing new wins across both front-end chip fabrication and advanced packaging. As you can see, our innovation approach is driven by listening to our customers. building on decades of experience as a partner of choice to leading fabs and OEMs, pushing the boundaries of what's possible and investing in the kind of collaborative innovation that moves the industry forward. As we continue to roll out new solutions, our Process of Record or POR wins are building meaningful long-term momentum. These wins are tied to high-growth opportunities aligned directly with our customers' technology road map. And in 2025, we secured POR wins across every single line of business. These wins represent early design selections that typically scale into commercial production over the next 2 to 3 years. Positioning our technology to be embedded in future generations of semiconductors and other advanced electronics. This only deepens our level of partnership and expands our content with leading players in the semiconductor value chain and gives us greater visibility into future sales growth and conviction that our strategy is working. Our top priority is creating additional high-value opportunities to progress alongside customer road maps. And we're committed to making the R&D and manufacturing capacity investments necessary to support the strong advanced node ramp activity we expect in 2026 and beyond. Given this surge in activity, I'd like to share some more details on what we're currently seeing in each of our segments and how we expect our end markets to evolve in 2026. In semi, customers continue to invest in their most advanced technologies. In advanced logic, this includes the continued scaling of 3-nanometer and early production of 2-nanometer. In memory, we're seeing next-generation DRAM and HBM as well as transitions to higher layer count NAND architectures. We remain ideally positioned to capitalize on this shift through both the increased use of more complex 3D structures and the adoption of more chip layers, giving us a stable, repeatable revenue stream as production volumes increase. In ICS, advanced packaging continues to be a core theme of every recent customer conversation because of the central role it plays in unlocking next-generation technologies. Including increasing chip density and performance while also reducing power consumption, facilitating development of smaller, more efficient devices. One of the reasons Qnity is so well positioned to capture meaningful growth in advanced packaging is because it integrates solutions from both semi and ICS. In 2025, advanced packaging solutions represented approximately 10% of Qnity net sales. From an end market perspective, our portfolio continues to evolve based on more durable structural demand shifts. Data centers are where we're seeing the most benefit from these dynamics. However, we're also seeing continued signs of increasing content and demand recovery in other industrial markets like automotive, communication infrastructure and aerospace and defense. As these end markets start to incorporate more advanced AI-driven technology into applications, we expect meaningful opportunities to continue increasing Qnity content. On the consumer side, next-generation devices are increasingly shifting towards edge computing, meaning on device generative AI, which is also requiring greater content opportunities for us. The significant demand for AI and high-performance computing workloads is creating additional pressure on the global memory market. We continue to watch for signs of potential downstream impacts into end market demand. The key here is that our exposure is primarily to premium devices, which we expect to be a more resilient part of the market. I also want to mention some of the trends we're seeing on the ground floor, namely the ongoing improvement in fab utilization rates. In advanced logic, we expect utilization to increase from the high 70s at year-end 2025 to low to mid-80s in 2026, while mature logic will continue improving towards the mid- to high 70s. In memory, we expect DRAM fab utilization to increase from mid-80s in 2025 to high 80s while NAND utilization is expected to reach the upper 70s or low 80s in 2026. With strong utilization rates and accelerating capacity expansion more than ever, customers are prioritizing supply security. We've spent the past several years making strategic investments in capacity and capabilities across our network to support growth in advanced logic and memory as well as advanced packaging and thermal materials. Our local-for-local model and recent expansion throughout Asia and the United States position Qnity to capture additional content and share while ensuring long-term strategic relevance. Before turning the call over to Mike, I'd like to touch on the multiyear transformation plan we're also announcing today, which is expected to deliver approximately $100 million EBITDA run rate benefit by the end of 2028. This plan, which Mike will step through in more detail, reflects our commitment to continuous improvement and ensuring Qnity remains well positioned to lead in the markets we serve across the semiconductor value chain. It's all about driving future growth and profitability by simplifying our operating structure, increasing quality and efficiency, unlocking innovation capacity and concentrating our efforts on high potential markets and customers. With that, I'll turn it over to our Interim CFO, Mike Goss, to discuss our financial results and 2026 guidance. Mike brings deep experience and knowledge of the business, having served as Qnity's Chief Accounting Officer and FP&A leader. I've known Mike for many years, and we've been fortunate that he was able to jump right in. Mike? Michael Goss: Thanks, Jon, and good morning, everyone. We had a strong finish to the year with fourth quarter net sales of $1.2 billion, up 8% year-over-year as we continue to capitalize on key growth drivers namely advanced nodes, advanced packaging and interconnect as well as thermal management solutions. We delivered this strong performance even as $40 million of sales shifted from the fourth quarter to the third due to our spin-related transition as discussed on our last call. Adjusted pro forma operating EBITDA was $349 million and adjusted pro forma EPS for the fourth quarter was $0.82. For the full year, we grew net sales by 10% to $4.75 billion and achieved adjusted pro forma operating EBITDA of $1.4 billion. Resulting in adjusted pro forma operating EBITDA margin of 29.5%. Margins reflect segment mix dynamics as the strong growth in ICS influenced our overall margin profile. Adjusted pro forma EPS for the full year was $3.35, equating to a 12% year-over-year increase, including adjustments for including investments. In Interconnect Solutions, we delivered net sales of $2.1 billion with organic growth of 12%, led by advanced packaging, advanced interconnects and thermal management, all of which increased more than 20% for the year as we sealed up several exciting wins at leading fabs and OEMs. As a reminder, these are the fastest-growing solutions in our ICS portfolio, which led to significant operating leverage for the year. Segment adjusted pro forma operating EBITDA margin was just over 25% as strong growth more than offset strategic investments driving margin expansion of over 175 basis points year-over-year. For the full year, we generated $706 million of adjusted pro forma free cash flow, equating to 15% of net sales, reflecting strong operating performance, disciplined execution and favorable working capital following the spin. At year-end, our total cash balance was over $900 million. This healthy cash position enhances our overall financial flexibility enabling us to fund strategic investments and maintain a balanced return-focused capital allocation framework. At our Investor Day last fall, we outlined a clear and comprehensive set of capital allocation priorities. Our first priority will always be organic reinvestment into the business to sustain above-market growth. We anticipate elevating CapEx investment in 2026 to 9% of sales, driven by investments to strengthen our local for local footprint in key geographies and our transformation initiatives. Consistent with our midterm financial objectives, we expect CapEx to return to our normal run rate of roughly 6% of net sales in future years. As Jon highlighted, the industry is continuing to see advanced node ramp activity in 2026, supported by substantial global investment. Over the last 3 years, we've added new capacity in all of our semi businesses, and we'll continue to invest in growth to keep pace with the industry. Importantly, as these near-term investments moderate, and CapEx returns to our normalized run rate. We expect free cash flow margins to be in the mid-teens as a percentage of net sales. With our strong financial position, we have the optionality to explore selective accretive M&A. The industry is growing rapidly, and we view acquisitions as a compelling use of capital to bolster our trajectory. We're actively pursuing a robust pipeline that would further enhance our portfolio and will remain disciplined in evaluating any potential transactions. We're also committed to capital returns. In December, we declared our first quarter dividend. In addition, today, we announced that our Board of Directors approved a $500 million share repurchase authorization. This program is designed to provide flexibility for opportunistic purchases depending on market conditions. Finally, we have the option to voluntarily pay down debt to continue strengthening our balance sheet. We ended the year with net leverage of approximately 2.2x, well below our long-term target of less than 3x. I'd now like to share some additional details on our transformation plan, which we expect to further improve our growth potential and financial strength. Our actions will focus on three key areas: first, commercial and innovation excellence to enhance speed and sales effectiveness, deepen our foothold with customers on the cutting edge of technology and continue spurring innovation within our powerful R&D engine. Second, driving productivity and quality improvements across the company through operational automation and tailored AI applications. This work will be further enabled by our ongoing IT systems independence effort. Finally, strengthening our local for local operating model by streamlining our supply chain, simplifying our legal entity structure and optimizing our footprint to more effectively leverage our scale. We expect these combined actions to deliver approximately $100 million in EBITDA run rate benefit by the end of 2028 with approximately $140 million in cost to achieve over the next 2 to 3 years. We will pursue long-term structural investments, executing against three key areas during these early phase of the program, resulting in a majority of these onetime costs occurring in 2026 and 2027. Now I'd like to talk about our financial guidance for 2026. Overall, our strong financial performance in 2025 positions us to enter the year with solid momentum. Looking ahead, our competitive advantages and consistent execution give us confidence in our ability to continue driving growth as we capitalize on the demand trends we're seeing across end markets, fueled by AI, high-performance computing and advanced connectivity. MSI wafer start data remains a good indicator for Qnity's overall demand, and we continue to expect MSI to grow approximately mid-single digits this year. For full year 2026, we expect net sales to be in the range of $4.97 billion to $5.17 billion. Adjusted operating EBITDA to be in the range of $1.465 billion to $1.575 billion, adjusted EPS to be in the range of $3.55 to $3.95 and adjusted free cash flow to be in the range of $450 million to $550 million. Looking ahead at the first quarter, momentum from AI-led demand continues across high-performance computing and advanced connectivity with notable strength in the ICS segment. Overall, we expect sequential net sales growth high single digits with a similar margin profile to the fourth quarter. Our team continues to be focused on keeping pace with customer demand and delivering solutions for the most advanced technologies. With that, let me turn it back over to Jon for his final thoughts before we begin the Q&A. Jon Kemp: Thanks, Mike. I'd like to briefly recap a few key takeaways from today's discussion. First, we sustained our strong organic growth momentum in 2025 and delivered on each of our financial objectives for the year. Our newly introduced full year 2026 guidance reflects our conviction that we can continue building on this momentum. Second, we've established ourselves as a partner of choice to customers in the semiconductor value chain, and we are relentlessly focused on investing in cutting-edge innovation and capacity to create high-value growth opportunities alongside our customers. Finally, as we look ahead, we're taking decisive steps to create even more value for shareholders, including our transformation plan and share repurchase authorization, providing avenues to increase returns. In short, our team is focused on delivering on our strategic priorities. We have strong confidence in the strength of our platform and our ability to capitalize on the opportunities ahead. Thank you again for joining. Operator, we can now open the line for Q&A. Operator: [Operator Instructions] And we'll go first to Bhavesh Lodaya with BMO Capital Markets. Bhavesh Lodaya: Semiconductor trends are pretty strong here. I appreciate some of the color you provided on your prepared remarks. As we look at your EBITDA guide, can you provide some thoughts on what you're building into that, maybe perhaps on MSI, PCBs or any of the key metrics that you would like to touch on. Jon Kemp: Yes. Thanks, Bhavesh. I appreciate that. And when we think about it, we're expecting MSI, as Mike indicated in his prepared remarks, we're expecting MSI to be mid-single digits, not terribly different from what we saw in 2025. And I would say on the printed circuit board side, we believe MSI is the best overall indicator. But if you look at the indicators around PCB, they're kind of in that same ballpark kind of that mid-single-digit range. So there's not a lot of spread between some of the broader macro indicators, which is really kind of why we've anchored our guidance to kind of where the -- right down the fairway towards where the market estimates are plus our outperformance content advantage, which is kind of how we got to the midpoint of the guidance range that we gave today. Bhavesh Lodaya: Got it. And in terms of -- if I caught the tail end of your remarks, correct, for the first quarter, you're expecting high single-digit top line growth sequentially and similar margins to fourth quarter. Could you touch on how you see -- just because it's your first year, could you touch on how your quarterly cadence for the year? Michael Goss: Yes. Thanks for the question. At a high level, ever since we came out of the 2023 downturn, we've seen less seasonality in our business. And so as we move into 20 the guide we have for the first quarter, like we said, is high single digits. And we will expect to see consistent steady performance through the year. We do tend to see a peak -- a little bit of a peak in the third quarter. But overall, we do see that steady performance through the year, and that's what reflected in our -- at least in our first quarter guide that we talked about. Jon Kemp: And I would say that's not terribly different from what we saw in 2025. But keep in mind, as Mike alluded to in his prepared remarks, we had a little bit of a timing swing of some sales in the third quarter, which created a little bit of an elevated peak in the third quarter of 2025 because of the IT system cutover. But if you strip that out, we expect a very similar seasonal pattern in 2025, 2026. Operator: Thank you. And we'll go next to John Roberts with Mizuho. John Ezekiel Roberts: The base tax rate in 2026 is low 20%. That's a nice improvement from the initial pro forma rate, but it's still above many of our other companies. Do you have a long-term rate target? And how much further reduction in tax rate do you think you can do? Michael Goss: Yes. Thanks, John. It's a good question. At a high level, we've seen nice improvement, obviously, from '25 versus what we're forecasting for '26. Over the medium term, I expect we'll continue to work through that and eventually get into place consistent with our peers in that high-teens percentage. John Ezekiel Roberts: Great. And then is CMP used in advanced packaging as well? Is there a planarization step before the devices are directly connected to each other? Jon Kemp: Yes, John, great question. So at a high level, yes, the CMP processes, including pads, slurries, cleans are used in advanced packaging. It's one of the fastest growth areas within our advanced packaging portfolio. and that continues to increase over time as you get into taller, more complex structures, the planarization to ensure that really efficient copper-to-copper bonding, whether that's in traditional formats or even going to hybrid bonding format, that planarization step is critical for advanced packaging. Operator: And we'll move next to Christopher Parkinson with Wolfe Research. Christopher Parkinson: So I'll keep it simple. Now that it's -- you're a fully independent company and you've gone through the CMD and kind of all the outlooks and we have a pretty good sense of your algo relative to your end market expectations. How should we be thinking about op leverage throughout the year in both semi and ICS, where you've been in the last couple of quarters and where you expect to be and kind of what -- the Street should be monitoring to assess that aspect of your business? Jon Kemp: Yes. [ John ], I think that overall, I think our -- if you take a look at how we performed in 2025, I think we're pleased with that performance. Given the relative segment mix, that 29.5% overall margin performance, 40 bps of margin expansion year-over-year is a nice outcome, obviously, really strong operating leverage within the ICS segment. Within the semi segment, margins came in kind of in the mid-30s, kind of right in line with our expectations in that business with all of the intense activity around the scaling of advanced nodes we've made some incremental investments in our R&D and engineering organizations to support the scale-up of those advanced nodes. And so -- and within there -- from any quarter-to-quarter, there's always a little bit of fluctuation in product mix, and that's what's really driving that in that segment. When you look at the ICS business, you look at where the growth drivers of that business continue to be between advanced packaging, advanced interconnects and thermal management. All of those grew more than 20% in 2025. Those are also the highest value parts of that business. And so we got the benefit of really great volumes in that business combined with some favorable product mix, that led to the 175 basis points of margin expansion. I would expect kind of similar dynamics next year and we've talked about even going back to our Capital Markets Day that we believe that the Interconnect segment had opportunity to kind of grow margins at a faster pace than the semi. But over time, I think there's opportunity to do better in both segments. Christopher Parkinson: Great. And a quick follow-up. Can you just, once again, a lot of moving parts out of the spin on the balance sheet, free for cash flow people are going to be pleasantly surprised with the $500 million share repo. But in terms of just the free cash flow in terms of the outlook conversion, where you currently are and where you expect to be, can you just give us a little walk throughout the year and how you think -- how you believe things are ultimately going to play out. Michael Goss: Yes. Thanks. Great question. Yes, we've ended the year with obviously a real strong cash position and strong cash flow generation in the $700 million range. And as you said, in the guide for '26, we are guiding to about $500 million of free cash flow, on an adjusted basis. And that's really driven by the main updates are accelerated or elevated rather, CapEx to around 9% of sales, and that's driven by the continued ramps that we're seeing in node transitions. And so we're accelerating our elevating that CapEx to support our local to local investments. We also have the IT independence work that we're continuing through as well as the transformation program that we've announced today. And so that really drives an elevated CapEx in '26. And that's the main driver versus what we talked about back at Investor Day and puts us in that $500 million range of free cash flow for the year. Jon Kemp: What I would add, Chris, there is the way that we think about it is this business really kind of generates cash flow on an annual basis. in that mid-teens percentage of sales, right? And so that's really kind of as you think about us over time. Mike said, we've got some of these onetime items that will influence kind of the cash flow in 2026. But over time, we should be generating cash in that mid-teens percent of sales. Operator: We'll go next to Jim Schneider with Goldman Sachs. James Schneider: I was wondering if you could maybe address specifically how you expect the Internet connect growth to play out over the course of 2026, whether that's sort of higher or lower than the overall corporate average you outlined? And the reason I ask is because as you talked about the memory pricing seems to be generating some demand destruction in the consumer electronic supply chain particularly in China. So maybe can you talk about whether you baked in any kind of material headwind in ICS for this year? And then related to that, can you specifically talk about your China sales in the quarter and what you're expecting for China over the course of this year? Jon Kemp: Jim, you'll have to help me. I think that was like three or four questions in one. So I'll try and cover some of these pieces. Maybe I'll start with just to road map this a little bit. I'll start with some of the dynamics that we're seeing in the memory market. I'll give it to Mike and have him comment on kind of the ICS segment, how we think about kind of the segment differences between the segments and the year, and then I'll come back to your China question to finish. So when we think about -- from a growth perspective, we're excited about the progress that the memory market continues to make, especially in next-generation DRAM and HBM as well as the ongoing transition to higher layer count NAND architectures. We're capturing nice growth from rising content in those advanced technologies, and we're still seeing utilization rates. Obviously, there's some capacity concerns there that I think everybody is aware of. It's been a hot topic over the last few weeks. I just want to level set our exposure the memory market is about 20% of our semi portfolio. About 80% is on the logic side. And within memory, our exposure is largely driven to unit-driven consumables. So kind of a pricing kind of out of the equation, it's really driven by the volumes on that side. It is important to note that our exposure is primarily on what I would call premium devices. And in any type of constrained environment, we would expect premium devices to be the more resilient side of the overall market, which kind of limits our relative exposure. Obviously, we're closely monitoring the situation in constant conversations with our customers. And then if you take a step back for a minute and you think about where these chips are going, whether they're going to data centers or whether they're going to consumer devices, we're really well positioned to pick up that demand no matter which end market it ultimately goes to. And that's kind of why we feel really good about kind of our growth prospects for the year. Mike, I'll hand it off to you. Michael Goss: Yes. Thanks, Jon. And just to reground obviously, we've guided for our first quarter at high single digits for the total company. And for full year, we've got a midpoint -- the implied midpoint in our guidance. But sales of that, a little over 6.5% growth year-over-year. And obviously, that's a mix of the two segments. We exited the year nicely with ICS continuing to see a lot of strength where they outperformed the semi growth a bit. And so we're really expecting to see that same momentum in that same mix profile continue through the year where ICS will be probably a little bit stronger than sunny. Jon Kemp: And maybe just to finish up, Jim, on your -- on the China question to come back to that. China remains a critical market for us given its central role in the semiconductor value chain and just position is a large domestic market as well. In 2025, China grew high single digits for us. Frankly, that was better than what we were expecting. And China accounted for just over 30% of our total sales, also kind of in line with our expectations. In terms of what we're seeing on the ground floor in China, I would say that particularly in the second half of the year, we sort of normalize to what I would say, the same type of buying behavior we see in other geographies, namely that customers are buying based on a combination of performance, quality and supply reliability. And that's where our local-for-local operating model really serves us well in places like China because we have that really well built out local infrastructure to be able to serve the market. If you think about it from a growth perspective, I mentioned the high single-digit growth rate in China. We are seeing faster growth kind of -- in all of our other geographies, the rest of Asia as well as the Americas both grew double digit for us over the course of the year, and we're expecting similar dynamics going into 2026. Operator: And we'll go next to Arun Viswanathan with RBC Capital Markets. Arun Viswanathan: I guess I just wanted to ask a question about the guidance, first of all. So at the low end, I think you're up about 4.5%. What would be some of the things that would maybe push you towards that end? And similarly, at the high end, it's pretty significant growth. So maybe you can just kind of help us frame that -- those two ranges as well? Jon Kemp: Yes, Arun, thanks for the question. When you think about the guidance range and some of the puts and takes, obviously, I characterized it before with Bhavesh's question on kind of what got us to the midpoint of the guide. When you think about kind of the low end of the range, what would have to happen for that to happen, it would be kind of more constraints really coming from the memory market and if that started to see kind of significant demand destruction that's outside the parameters of how we think the year is going to unfold. If you go to the high end, a lot of the growth expectations that we have this year, given the strong utilization rates and the most advanced technologies across our portfolio, it's really tied to capacity expansions at our customers and their ability to scale new node transitions and bring that capacity online. Obviously, there's a significant amount of global investment in those most advanced technologies, and we're working closely with our customers to help them scale up that production as effectively as possible. If we can get some of that incremental capacity online, we've got a lot of really nice content growth connected to no transitions and that capacity. So as it comes online, we'll benefit not just from the volume growth, but from the increased content coming off of those advanced nodes. Arun Viswanathan: Okay. And on the transformation plan, is there a kind of a framework on how we should think that should play out over the next 3 years? Do you expect that -- those gains ratably? And maybe you can just detail some of the initiatives that you're undertaking there? Is it mainly kind of footprint optimization, SG&A reduction? Or what else would you describe as part of the plan? Michael Goss: Yes. Thanks for the question. The transformation initiatives are in a couple of big buckets, as I said in my prepared remarks, really around productivity efforts commercial and innovation and our local-for-local model. And I'd say roughly of that $100 million benefit for EBITDA. We'll expect to see that come roughly half in the productivity space. And then the other half is split equally across commercial innovation as well as that look for local to local model. As far as what's in our guide for '26, I do expect we'll have a small amount of that benefit and that's reflected in our guide. And then ultimately, the remainder of that benefit comes in the 2027, 2028 time frame. Jon Kemp: Maybe just to give you a little bit of specifics on some of the things we're excited about are as part of that within the productivity space, we're excited to really go aggressively after deploying some of the automation and tailored AI applications that we believe will help unlock incremental capacity strengthen our quality and ultimately improve our supply resiliency for our customers. That's a nice lever there. Some of the procure -- I think there are some procurement benefits and there's also some simplifications in our supply chain, around optimizing our warehouse presence and how we're positioned around the globe to better serve our customers. I mean if you think in some of the other categories, particularly on the commercial and innovation excellence, it's really about how we're driving the right level of attention to each of our customer segments. Obviously, historically, we've had a really strong focus kind of on our top 10, and we've talked about that in the past. But there's a lot of folks in the middle and maybe at the lower end that we can still do better with. And so taking advantage of digital tools to make sure that we can serve the customers more effectively and accelerate and on the innovation side, deploying some of those tools to increase the clock speed and the pace of our product development, which ultimately will give us an opportunity to work on more engaging with our customers. Over the past few years, we've seen a steady increase in the number of engagements that we have with customers and OEMs, and we want to unlock the innovation capacity to support as many of those as possible. So those are some of the bigger items inside this transformation program. Operator: We'll go next to Melissa Weathers with Deutsche Bank. Melissa Weathers: I wanted to, I guess, first, talk a little more high level on the ICS business. It seems like there's a lot of innovation happening over the next 2 years on the packaging side, on the thermal side. The thermal side is the piece that I understand the least. I think a lot of semiconductor investors you don't really get that part of the story. So can you talk about as we think about the next 2 years, like which parts of this ICS business, should we be excited for what kind of content increases should we be expecting maybe on a per device basis? Jon Kemp: Yes. So when you think about kind of the ICS business, the three core drivers in that business are really advanced packaging, advanced interconnect and thermal management. within the advanced packaging space. We've got new technologies on [ starter ] and copper interconnect chemistry, which really brings great surface uniformity and purity to help make sure that those advanced packaging or maintaining the right level of signal integrity and reliability. And it's being broadly adopted from kind of our key fab as well as the OSAT customers that are really driving the growth in advanced packaging. We're also doing some -- in the advanced interconnect space. It's really getting to upgrading circuit board technology from traditional circuit boards to high layer count and HDI circuit board where you're getting finer lines and tighter spaces in order to help drive the signal reliability in places like data centers. And if you do that, you're starting to get into that again where there's nice technology leverage between kind of what maybe we were using 10, 15 years ago in the semi side, it's now relevant on the ICS side because of the tighter lines and spaces that those circuit boards are doing. So really nice technology leverage, as you get into high-density interconnect and high layer count circuit board. And then on the thermal side, this is -- all three of these spaces grew by 20% year-over-year in 2025, and they will really continue to be the source of growth going forward. On the thermal side, we've launched some new novel technologies in both thermal pads as well as gap filler -- liquid gap fillers. Some Phase Change Materials, and we're excited by other innovations and working closely with some of our OEM partners. Obviously, it's a critical need, especially in the data center segment. And we've seen a rapid adoption by a lot of the cloud service providing companies and OEMs in that space, and we're excited by the opportunity to continue to partner with them to bring these next-generation thermal solutions into the market. All of this is connected to what I said in my prepared remarks really around kind of the increasing number of POR wins across every business. Melissa Weathers: If I could squeeze one more in. Just on the mainstream side, the mainstream nodes in foundry logic. I get -- it seems like you're expecting utilization to maybe gradually improve throughout the year. I think we've heard some pretty mixed takes from like, say, the analog or the power semi guys on the demand trends that you're seeing. So can you just give a little more color on what you're seeing in mainstream nodes, maybe across, I don't know, end markets? Just any other color there would be helpful. Jon Kemp: Yes, happy to do that. So at a high level, I would say that we're encouraged by the ongoing recovery in mature logic. We believe that inventories are relatively healthy. Customers are already seeing small sequential improvements in utilization rates. I think we've seen that from a lot of those players kind of through this earnings season. We expect the recovery will likely, from a pacing standpoint, continue to be relatively modest given the connection to the global memory market. From a utilization point of view, we expect utilization rates, which kind of steadily improved through 2025. And from the low 70s into the mid-70s. I would say our expectations are for a similar pace -- a similar recovery in 2026 as to what we saw in 2025, maybe going from the mid- year-end to the mid, maybe even start to get into the high 70s range. Depending on the availability and kind of how the broader industrial economy goes. Obviously, the biggest drivers there, the data center markets have done really well. And I think there's plenty of room in the broader industrial economy across communication infrastructure and automotive just to name a few for us to have some additional wins. And as we see that, that's really what will allow kind of the semi segment to get back to kind of the normal -- the more normalized growth rate that we would expect. Operator: And we'll come next to Aleksey Yefremov with KeyBanc Capital Markets. Aleksey Yefremov: I wanted to come back to your first quarter comments. I think you talked about high single-digit sequential growth. It does seem quite a bit above your normal seasonality, if I look at the history. Is there anything unusual in Q1? And as a result, are there any consequences or how we should think about second quarter? Is kind of second quarter being flat versus Q1 the bad gas for us at this point? Jon Kemp: So I'll maybe start there, Aleksey, and then ask Mike to comment further. So when we think about the first quarter, we are seeing some different types of behaviors. Usually, there would be a little bit of a seasonal decline kind of third quarter to fourth quarter and then fourth quarter into first quarter. I think I'll go back to what I mentioned in my prepared remarks around some of the structural demand shift that we're seeing in some of our end markets. that as we get into really a lot of the strength in the current market environment is really driven by data center, the high-performance computing. And that -- and the benefits that we're seeing there is sort of overshadowing and the benefits there are greater than the normal seasonal weakness that we would see from consumer electronics. And I think it's a testament to the strength of our portfolio that we're really well diversified and positioned across different end markets to be able to pick up those benefits. And so the same type of trends that we saw in the fourth quarter results is continuing into the first quarter with that strength. And all things being equal, that's kind of the state of play in the different end markets right now. As we get through the year, going back to the previous question, to the extent that we start to see opportunities in some of the other parts of the industrial markets, whether it's automotive, communication infrastructure, aerospace and defense, all of those represent nice content as you start to get AI capabilities, moving from, say, cloud computing and data centers to edge computing kind of at point of interface, whether that's in the car, the factory or with the consumer as we start to see more of that AI capability diversified into different end markets we expect that will continue to drive fairly robust growth rates. Mike, anything else to add there? Michael Goss: Yes. Thanks, Jon. I think the thing I would add to that is, as I said before in one of the earlier questions, would you expect to see the steady demand through the year with a little bit of a peak in the third quarter. I'd say the other color I'd give is on the back half of the year, we do expect some scale-up on node transitions, as well as the ongoing evolution in the memory market dynamics. And so as you'd expect, we'll continue to provide additional perspective and information on what we're seeing as the year progresses. Aleksey Yefremov: And I think you said that you had 20% growth and 20% plus growth in both advanced packaging and thermal management, EMI shielding. Kind of a 2-part question. Should we think about those types of growth rates as sort of achievable in your thoughts for '26? And also, it seems to me that thermal management kind of stepped up because I recall you've been talking about kind of growth there in the teens now. It's in the 20s. So is it the case that thermal management growth have accelerated? Jon Kemp: Yes. Great question, Aleksey. It's obviously a dynamic that we're watching closely, and we're in constant conversations with our customers if I take a step back and I think about kind of what happened in 2025 and how that plays forward into 2026. In 2025, the ICS business broadly kind of the custodian of those key technologies, benefited from a lot of available capacity that was able to rapidly scale up in 2025. And what we're seeing as we go into 2026. Obviously, a lot of our customers and folks throughout the industry are making significant investments to expand the capacity for both advanced packaging as well as kind of the place in the manufacturing process where the thermal materials would get added as a lot of the pacing and the growth rates that we expect in 2026, are largely driven by the incremental capacity that our customers are able to bring online. So demand is strong in those areas. So it's not a matter of demand. It's really a matter of how fast can we get that incremental capacity online. And then we'll work with our customers as we make those we're pretty consistently getting increasing content wins with the customers in both of those areas. So is that incremental capacity comes online, we're confident in our ability to sustain that growth. Operator: And our last question comes from Edward Yang with Oppenheimer. Edward Yang: Jon, nice quarter, and thanks for the time I just wanted to come back to the level of conservatism that's embedded in the 2026 revenue guide around 6.5% or so. And again, if we step back, you did 10% growth in 2025, it looks like according to the first quarter guidance, up high single digits sequentially, that would mean you'd be growing more like mid-teens year-over-year growth in the first quarter. So is it just conservatism? And Mike talked about, again, steady growth throughout the year and even possibly second half, I guess, inflection, which would be consistent with what we're hearing from the rest of the semi food chain. So just some additional color to tie everything together, I suppose. Jon Kemp: Sure, Ed. I think what I would what I would maybe start with is just go back to kind of where we started the Q&A part of today in terms of how did we get to the midpoint of the guide. The midpoint of the guide was really anchored around the expectations for MSI and the PCB market is the two best market indicators, both of those kind of being in that mid-single-digit range. And then adding on that, our expectations that we can outperform that. Obviously, we had nice outperformance in 2026. I'd like to think that we can be able to -- we're in a good position to be able to sustain that outperformance. To some extent, it is contingent on getting some of the incremental capacity for those most advanced technologies. And then obviously, the memory market dynamics that we talked about is what's kind of keeping us a little bit on the we want to take a little bit more of a wait-and-see approach to see how that continues to evolve as we get into the year. And kind of given where we're at in the first quarter, obviously, we're highly confident in where we're at for the first quarter. And then we'll provide additional color as to how these dynamics are unfolding as we get to the second half of the year. Mike, anything else you'd add there? Michael Goss: Yes. I think the other thing I would add is just anchoring back to our overall midterm framework with sales growth in that 6% to 7% range, and that's part of what drove the midpoint of the guide that we have this year, obviously, we're continuing to see, as Jon said, the mix dynamics between the two segments, and we'll obviously continue to strive for opportunities to drive margin expansion from volume and product mix enhancement as we continue to serve and see growth in the most advanced technologies. So over time, I would also expect the transformation program that we're launching to help drive that enhanced performance as we move through the year. Edward Yang: Okay. And for my follow-up, I just want to come back to this, I guess, your leverage to the memory cycle and the various puts and takes. And obviously, we understand what the upside is from your exposure to the memory cycle. And Jon, you touched on, again, maybe there could be some potential offsets. But I think during the call, you also mentioned you do expect to grow stronger than semi in 2026. So I guess the base scenario, is it fair to say that you're not really seeing any offsets necessarily from higher memory cycle. But again, just to be conservative, you are baking in some potential impacts that may or may not occur. Jon Kemp: Yes. I think, Ed, the way that we think about it is, as I said, when I was talking a little bit about the specifics in the memory market is that wherever those memory chips are going we're going to pick up the benefit of that demand. So it's not so much of some of the reasons why we're confident in that ICS growth is if we're getting growth in the consumer -- from consumer electronics devices, that's great. We've got great content, a lot of that, especially on the premium side of the market, which we expect to be more resilient. If instead, those chips are being allocated more to serve the needs of data centers. That's -- I might argue that's slightly even more favorable because we're going to pick up probably higher content in data centers and margin and even we will in the consumer electronics side. So we're really well positioned from the diversification of our portfolio to be in a position that no matter where that growth comes from, we're going to be able to pick it up with kind of premium content. Operator: Thank you. At this time, we have reached our allotted time for questions. This does conclude today's question-and-answer session as well as Qnity's Fourth Quarter and Full Year 2025 Call and Webcast. You may now disconnect your line at this time, and have a wonderful day.
Alexander Saverys: Good afternoon, and welcome to the CMB.TECH Earnings Conference Call for the Fourth Quarter of 2025. My name is Alexander Saverys, and I'm joined here by my colleagues, Joris, Enya and Ludovic. We will touch upon our classic topics. We'll start with our financial highlights. We will then give you a market update and finish with a conclusion and a Q&A. And for the financial highlights, I'd like to hand it over to Ludovic. Ludovic Saverys: Thanks, Alex, and good afternoon, everybody. As usual, we start with a snapshot of our company, where here, we've shown you the key metrics of the fleet, roughly 40 ships with about a $10.7 billion fair market value. This is excluding the vessels we have sold already. Our market cap sits today at $4.2 billion after a nice run-up on the share. We have $1.5 billion CapEx remaining as from end of January and operate a modern fleet of 5.9 years. Dry bulk today is predominantly 60% of our total fair market value with the other divisions showing the rest of the value of the fleet. Zooming in on the highlights of the Q4, we had a net profit of $90 million bringing the full year profit to $140 million. And the EBITDA of this quarter was $322 million to end the year on a $943 million EBITDA. Our liquidity sits at a pretty strong $560 million and our covenants for the bonds on the equity on total assets sits at 31% and for the rest of our loan agreements at 44%. We've had a pretty remarkable Q4 where we were able to delever the company, at the same time, pay dividends again, which we'll discuss later and strengthen the balance sheet with a couple of actions that we've performed in the company. Running through it, the result, I mentioned $90 million. We had some nonrecurring one-off and sometimes even noncash impact on the results, which are mostly related to the finalization of the integration of the merger with Golden Ocean. There's IT costs, but there was also, I would say, refinancing costs that we had to take as a one-off on arrangement fees, success fees in Q4. On top of that, we had roughly $15 million, 1-5 of nonrecurring costs on the SG&A, which is tax reversals and other, again, integration fees from the Golden Ocean merger. The liquidity stands at $560 million, which is quite strong with the good markets, with the sale of assets, and we'll discuss later, gives us a lot of capabilities to further strengthen the balance sheet in 2026. The acquisition, if you recall, the first 50%, 49% of Golden Ocean, we bought through a bridge facility. Happy to inform that it was fully paid back end of January. There was also some costs related to that of acceleration of arrangement fees. But this will give an interest saving of roughly $42 million for 2026. So quite happy to say that we were able to do this, but that also we were able to repay it out of own cash, but also some releveraging on other dry bulk ships. The contract backlog sits at $3.05 billion. Alex will go in further detail, but we added in Q4 roughly $304 million, primarily on Capesizes and on one CSOV. Happy to tell that there an interim dividend declared of $0.16. This is roughly $45 million of dividend being paid later in April. We feel that the balance sheet has strengthened good enough to increase from the $0.05 we previously paid in the quarters to a somewhat higher dividend. This dividend is not yet the dividend that we announced in the press release on the sale of the 6 VLCCs of 50%. So this -- the capital gain on those ships will be taken in Q1 and Q2, and the Board will decide on the dividends at that moment. We've had a very active delivery schedule in Q4, 6 newbuildings, but Alex will talk about it later. But more importantly, for our balance sheet, we were able to, in Q4, Q1 and Q2 already secured more than $420 million in capital gains. That's profit that is locked in. $50 million was booked in Q4. But in Q2 and in Q1, we have already a guaranteed $370 million profit, which gives us a lot of opportunities for the rest of the year. We have a large spot exposure still on tankers, but predominantly on dry bulk. If you look at 2026, we have roughly 53,000 shipping days from which 44,000 are spots. And if we zoom in into dry bulk, where we have a pretty strong feeling that there will be a good market in 2026. We have 36,000 days from which 27,000 on Capesizes and Newcastlemaxes. This means $10,000 up on our breakevens brings in $270 million in cash flow. When we look on the right side, we always like to position on the segments we are active in compared to the order book to fleet ratio. The bottom segments are compared to some of the other shipping segments on the relatively low side on the order book. When we look at Capesize and Panamax, I think we're very well positioned to look for better markets in 2026. Looking at the CapEx program. It's a recurring slide we like to show. As of end of January, we have roughly $1.5 billion remaining CapEx from which $216 million will come from our own cash. You can see in this slide, which is quite interesting is that the next 12 months will be a heavy delivery schedule, roughly $1.2 billion will be paid to the yards. All the financing has been secured. And if we look at the cash from the sale of the VLCCs and Capesize we've already done, the whole CapEx has been taken care of. This also shows that within 12 months, every sale, every cash flow generation we'll have will give us an opportunity again to look at dividends, delever further in an even more accelerated way. The free cash flow, we've given an estimation based on hypothetical rates that you see on the bottom right. I think we're still pretty conservative if you look at today's markets. But should we have the estimated rates even with 20% where we're already in today, this would create a $700 million free cash flow on top of the normal debt repayments. This gives us ample capability to pay back the Nordic bonds, which we anticipate just to pay out of own cash, continue to fund the CapEx and delever the company in an accelerated way. This was the financial highlights. I'll move on to the market update and give the floor to Alex. Alexander Saverys: Thank you, Ludovic. I want to update you on the various markets where CMB.TECH is active. You see our overview sheet where we put all our markets and zoom in on the demand side, supply side and where we see the balance. This slide has fundamentally not really changed compared to 3 months ago. We are still positive on dry bulk tankers and offshore. We are cautious on the container side and on the chemical side. If you look at dry bulk specifically, you see that we see very nice ton-mile growth for iron ore and bauxite in 2026, which is a positive. On the supply side, the order book to fleet has grown a bit. There's been some more orders for Capesizes and Newcastlemaxes for delivery in 2028 and 2029, but we still believe it's a manageable 12.4%. The fleet growth this year in Capes specifically will only be 2.3%, and we see the trade growing by more than that. So all in all, the balance is positive. On our dry bulk side in Bocimar, we have 87 spot vessels. There's another 9 vessels that will be delivered to us that will also be traded spot unless we have fixed the charter. And with the addition of the recent charters that we concluded, we have now 16 ships on charter, and that's another 3 newbuildings on charter as well coming later this year, beginning 2027. On the tanker side, the figure in pure supply/demand is a little bit more muted. There is more fleet growth than demand growth at least on paper, but there's a big element of sentiment, and I'll zoom into that when we speak about Euronav that has propelled the market to very, very high levels. All in all, sentiment is good. Earnings are good. The tanker market is still very positive. Our tanker fleet with the sales of the 8 vessels recently has reduced a bit. We still have 12 vessels on the spot, another 3 newbuildings coming. And then we have 10 vessels on time charter with another 2 newbuildings that will also be on charter, but I'll talk about that when we talk about Euronav. Containers and chemicals, I'll handle a bit later. And then just on the offshore energy, which is both on the offshore wind and the offshore oil and gas. Specifically on the wind, we are seeing a slight acceleration again of the installation of capacity, which should support our CTV and CSOV markets. And on the supply side, we have seen basically a slowing down of ordering new vessels. The order book to fleet for CTV stands at 13%, which we think is very manageable. Order book to fleet for the CSOVs is much higher. But again, there is also a lot more demand for that type of vessels, specifically from the offshore oil and gas markets. I want to run you through a couple of slides for Bocimar and dry bulk, starting with the overview of what Bocimar has done in Q4 and Q1. We have 36 Newcastlemaxes on the water. We have another 10 newbuilding Newcastlemaxes that will all be delivered by the first quarter of 2027. In Q4, we achieved actuals of close to $35,000. Q1 quarter-to-date, we are at slightly more than $30,000 a day. We have 37 Capes on the water. There, the results in Q4 were $30,000 and Q1 to date, we are at $26,000. These are strong rates Definitely, for the first quarter of the year, we are seeing rates that have not been as strong over the last 15 years. So we are seeing a very strong Q1. We have sold the Golden Magnum and the Belgravia and we'll record a capital gain of $8 million in the first quarter. Our 30 Kamsarmaxes and Panamaxes are all on the water. We achieved rates of $17,300 in Q4 and $13,200 so far in this quarter. You can see the breakeven levels and what we have achieved on the right side. Just a couple of important indicators on the right side. We see that there's a lot of green indicators, a lot of support for dry bulk demand. Just the inventories on iron ore in China are up. The coal imports in China are down. These are slightly more negative indicators. But all in all, we see more positive signs than negatives for dry bulk. Here on this slide, we look at the order book to fleet ratio for Capesizes and why we believe that vessel values could well be supported for the next 2 or 3 years. We basically have put on the right side of the slide, the recent number of vessels that have been delivered, including the newbuilding prices that are being quoted by brokers and compare that to the last time we were in a dry bulk boom. Here, basically, we want to say that as long as the order book is around the levels that we see, this market still will be supported on asset values. We don't see an oversupply coming. The fleet profile for Capes and for Panamaxes, again, it's a recurring theme. There's very little scrapping going on. We see that vessels are aging, aging rapidly. We are now at close to 150 Capes that are over 20 years of age, close to 600 Capes over 15 years of age, and the numbers on Panamaxes are even more important. So if the market one day would correct and scrapping would start, this would definitely be something that can balance the market. When we look at Q4 and Q1, the 2 big themes for us, definitely for our Capes and NUCs have been iron ore and bauxite. You can see on these graphs, the rainfall and then the volume of iron ore and bauxite that's being loaded in the Atlantic, in West Africa and in the Pacific. What we have seen specifically with West Africa on the bauxite side, but now also the iron ore will start playing a very important role is that it is a bit counter seasonal compared to the weaker seasons that we have used to be seeing in the Pacific for Australia predominantly and the Atlantic for Brazil. So it is helping our market. It is balancing the market. There are more opportunities for large bulkers to load cargo even in the first quarter of the year. And as you can see, the rates have reacted very positively to these volumes. Capesize market fundamentals this year are positive. I mentioned it when we spoke about the overview. We see a ton-mile increase in demand of 2.7% and a fleet growth of 2.3%. So we expect the utilization to creep up. We are already around the 90% utilization mark. This could go to 91%, 92% in the coming months. The big market moves in dry bulk and then specifically for iron ore is -- well, you can see them on this slide, all the volumes coming out of West Africa, Brazil, Australia. We see that iron ore, according to the forecast will continue to grow. So seaborne iron ore will continue to grow. It will come from areas that are far away from the main customer for these goods, which is China, which is good for ton-mile demand. And you can see that the same story can go for bauxite. We have been very surprised by volumes of bauxite in January. So the number of 184 million tons could well go higher if this trend continues this year. So very supportive of these 2 commodities, both in volume and in ton-mile for 2026. I will say a few words about Euronav and the crude oil tanker market. Starting with our fleet of VLCCs. So the fleet has been reduced. We have sold 8 of our older vessels as we have announced last month. We are left with 3 VLCCs on the water. That's one 2016 built ship and 2 newbuildings. And then we have another 3 eco VLCCs coming in the next couple of months. So our fleet of VLCCs is 6 ships in total. You can see what we have achieved in terms of rates, around $75,000, both in Q4 and in Q1 quarter-to-date. The Suezmaxes, we have 17 Suezmaxes on the water. We have another 2 vessels delivering very soon. These 2 vessels, these 2 newbuildings have been fixed on long-term time charters. But for the spot fleet, we achieved rates around the $60,000 to $65,000 mark, both in Q4 and in Q1. The markets there are very, very supportive, watch the space because the numbers that we have been seeing over the last couple of weeks are way higher than the numbers that we are reporting here. If you look at the key indicators, a lot of green indicators, the market is supported. We are seeing the tanker fleet growing a bit. But all in all, both in sentiment and in fundamentals, we see that the tanker market right now is very supportive, and that's probably the understatement. It is more than supported is actually very high. The sustainability of the expanding crude tanker order book will depend a lot on the durability and the potential uptick in scrapping. The order book has risen. We are seeing more orders for VLCCs and Suezmaxes. These orders will not come through this year or next year. But as from 2028, this is something to watch because the market balance will depend a lot on how many vessels we can scrap to make sure that the amount of newbuildings that are coming to the market will not distort the market to the downside. Demand durability of crude tankers, all the different agencies have different numbers. It's not always easy to follow. It looks like we are producing more oil in the world today than we are actually using. And so the only big explanation for that can be that someone and particularly the Chinese are probably stockpiling oil in great numbers. That as long as this continues, it is, of course, very supportive for the oil tanker markets. Depending on what will happen in the next 6 months, both with the oil price and on geopolitics, of course, all these scenarios can be rewritten. But for the time being, what we're seeing is an oversupplied oil market, whereby the oversupply is absorbed in stockpiling. Sanctions remain a very important theme, the Russia-Ukraine conflict, what's happening or what will happen in Iran and of course, Venezuela. We just wanted to highlight one interesting graph on the right side, whereas we see that the Indian crude imports from Russia have gone down after the sanctions that the U.S. imposed in December. We see actually that probably China has picked up some of that slack, as you can see on the graphs to the right. A few words about Delphis and our container vessels. As you know, our 4 container vessels on the water have been fixed on long-term charters for 10 years. We have one more newbuilding delivering this year, which will be under a 15-year time charter contract. So we are not really exposed to the spot market. If you look at the spot freight market, it's a downhill slope. We see that the SCFI is actually trending downwards. So spot freight rates are down. Interestingly, the charter market is still quite supported. So not a lot of charter vessels available. Some big liners still fighting for market share and chartering vessels. We expect this actually to go down going forward because there is still a very significant order book to be delivered both this year in '27 and in '28. Bochem and our chemical tankers, we have 8 ships on the water. You can see the performance in Q4 on the right side. So there's a mix of time charters mostly, but we also have 2 vessels operating in a spot pool. Bochem still has an order book of 8 vessels. We have 2 product tankers coming this year. We then have another 6 chemical tankers in '28 and '29. All these vessels have been fixed on long-term time charters. So our spot exposure is relatively limited. And what we see on the spot market is a slightly declining market, nothing dramatic, but definitely, the rates are not what they were in 2024. So still seeing okay rates, but definitely, things are going down a little bit. And then I want to end with a very good performing business unit recently. That's Windcat. We have taken delivery of 2 of our CSOVs last year. One CSOV has been trading for the last 4 to 6 months on the spot market, but earning very good rates, as you can see on the right side, the equivalent in Q4 of $108,000 a day. The other one has been fixed on a 3-year agreement for work in the North Sea. We still have another 4 CSOVs coming and one larger CSOV is CSOV XL this year and next, but the market is very supportive. And it's supported because the oil and gas market requires good modern offshore supply vessels. And these good modern offshore supply vessels, in some instances, were earmarked for the wind business but actually can now earn better rates in oil and gas, and that is where they are going. On the wind market, we're actually seeing some positive evolutions as well. Last year was a bit slow in terms of delivery of new projects. But in North Sea and Europe, we are seeing new projects coming on stream this year and next, which will necessitate demand for CSOVs and CTVs. CTVs, we have a large fleet of close to 60 vessels on the water. You can see the rates that we achieved. We definitely are satisfied with the rates that we achieved and are looking forward for probably a better 2026 than 2025. So this ends our market update. I'd now like to hand it over to Enya for the Q&A. Enya Derkinderen: [Operator Instructions] So we will now start taking the first question. Frode Morkedal, you can now unmute and ask your question, please. Frode Morkedal: Yes. Can you hear me? Alexander Saverys: Yes. Perfect. Frode Morkedal: Okay. Perfect. On this Golden Ocean bridge repayment, is it fair to assume that the strong tanker market helped you with this? And specifically, obviously, the sale of the 8 VLCCs must have been instrumental in being able to repay this way ahead of schedule, right? So that's -- and also you could just remind us the numbers we're talking about, how large was the bridge facility? And what's the net proceeds of these 8 plus 2 Capes, I guess, you sold? Ludovic Saverys: Yes. If it's okay, Alex, I'll take that one. So just to remind, we had a $1.4 billion acquisition facility given by the banks. We only drew upon $1.3 billion. So that was the actual exposure we had fully drawn to buying the first 40% and then another 9% of the market. Of that $1.3 billion, quite quickly after the merger in August, we re-levered the ships of Golden Ocean with a $2 billion facility. And we used $750 million of cash of the releveraging to pay down to $550 million. And that $550 million was what we carried since, I would say, September until 2 weeks ago, $550 million, which half of it has been paid with operational cash flow and cash from sale of vessels with a little bit of the Q3 vessels we sold delivered in Q4, but also some of the tankers, as you mentioned. And then there is roughly half of it, $270 million, which we shifted from the "expensive $2 billion facility with Golden Ocean with some Chinese leasing that we did execute last December." And that was -- so roughly $260 million that we did. So own cash, only about $260 million, $270 million on that. And I think the sale of the tankers, especially the 6 plus 2 Capes and then the remaining 2 has even further strengthened, I think, the belief on the Board to pay more dividends, delever more and then also get a comfort on the Nordic bonds for the remaining of the year that the cash out of the 8 tankers was roughly $420 million cash. So that obviously gives good opportunities to do all of the above that we mentioned. Frode Morkedal: Right. So is it still that the target is to bring down the LTV -- net LTV to around 50%? And at that point, you could... Ludovic Saverys: At that point, Frode, I think the target -- the long-term target is at 50% LTV. The LTV today end of December was roughly 55%. Now with the increase in tanker rates -- in tanker value, sorry, as everybody has seen in the market, we're probably already at those levels. But that is the target. I think it's more important to say what are the opportunities with every dollar that comes in from sale of operational cash. And then we stick to the point that it can be dividends, it can be further deleveraging. It can be accelerating the payments on some of the revolvers that we have to reduce the interest costs. Because one thing, when you do M&A, there is a cost of it, especially when you leverage buyouts. And we have seen that in 2025, the SG&A was higher because of lawyer, success fees, refinancing. And hopefully, going forward, our interest costs in '25 should go much lower, that is because there's no more bridge because we are changing expensive or more expensive bank debt sometimes with Chinese leasing and other cheaper, I would say, instruments. Frode Morkedal: Right. So is it fair to assume that you would probably wait for the bond maturity or some type of refinancing before you step up the dividend payments, even if you are probably approaching 50% earlier than this, right? Ludovic Saverys: I think the decision of the Board of the $0.16 that we paid today is testimony that I think we can do both paying dividends, both delevering and both continuing to delivering all the newbuilds. Frode Morkedal: Great. Final question is on NAV. What do you see about investment opportunities, specifically newbuilds, I guess. For example, in tankers, I mean, I'm hearing it's starting to get tempting to start ordering VLCCs, right, because you can order at $120-something million and the prompt resale is $40 million to $50 million higher. So that type of, let's say, [ arm ] is opening up and maybe that is interesting. What's your view? Alexander Saverys: Our view is that the ship you ordered today at $120 million, delivers in 2029. So today, it might look cheap. In 2029, it might look very expensive. Right now, Frode, we are not actively pursuing tanker newbuilding plans. We are, of course, opportunistic. We will look at any possibility that comes across. But right now, right now, we'd rather enjoy the spot market and not order any tankers. Enya Derkinderen: The next one is Petter Haugen. You may now unmute and ask your question, please. Petter Haugen: In terms of -- well, I suppose then turning through this question upside down. You still have tankers, although now it's predominantly Suezmax tankers, obviously. Would you consider to sell some of those in order to, well, do the combination of further paying down debt and dividends? Alexander Saverys: Yes, Petter. Look, the first thing we wanted to do over the last 1.5 years is to sell our older vessels. I think we've done a good job at that so far. So obviously, we still maybe have 1 or 2 older vessels that could be up for sale. The second thing is if we see an exceptionally high price for any asset, we will always look at it. Look, trading ships, buying and selling ships is part of our business. And where we like to keep our younger vessels, we will never say no to a very high price. Do we need it to deliver? No. That I would say, I think the heavy lifting on delevering has been done. I think operational cash flows can bring us to a very comfortable leverage over the next 9 months. But we will always be ship traders. If someone comes with a very high price on any assets, we will look at it. Petter Haugen: Understood. And in terms of your dry bulk fleet, sort of the same question there. I suppose we've seen how the market has appreciated your -- yes, your sales and the communicated increase in dividends. So on the Capesize fleet, there are, I suppose, more opportunities still to sell older ships. But is that done now? Or is that still on the table? I know that you say that you sell at the right price. That's true to all of us, I would say. But in light of the very strong tanker market and increasingly strong dry bulk markets. I would -- well, in interpretation of your earlier statements, I would think that you were contemplating to sell more rather than the opposite. Alexander Saverys: No, I think that is not really correct. I think on the dry bulk side, we believe we are not yet where the tanker market is right now. We think this market has a lot more in it, and we would like to let it run. So stay spot exposed unless we find some good charter parties. And as you've seen, we fixed 5 of our Capes for 5 years at what we believe are very good rates or unless, again, an exceptional price comes along. But I don't think we're there yet. So we're very happy with the dry bulk fleet we have now. We have sold some of our older vessels. And now we really want to just enjoy the market for the next couple of quarters. Enya Derkinderen: Now, Kristof Samoy, you can now unmute and ask your question, please. Kristof Samoy: I have 2. One on long-term charters. You've concluded these 5-year charters for your Capesizes. Could you disclose the counterparty? And then secondly, we've also seen in the market that Vale has been ordering quite some newbuild VLOCs. Would your Newcastlemaxes have been competitive for the trade? Or were they particularly looking for 400,000 deadweight ton plus vessels for the transportation? That's the first bulk of my question. And then secondly, on the U.S. Maritime Action Plan proposal. I recall when we discussed USTR and the impact or the potential impact of USTR in previous calls that you indicated that the impact would be fairly limited because you have little port calls in the U.S. Does this logic still apply to the now proposed U.S. Maritime Action Plan? Or are there like substantial differences there that you see for CMB? Alexander Saverys: Okay. Thanks, Kristof. So first, the counterpart of the charters, that's confidential. So we are not disclosing that, but it's a very good counterpart. On Vale and their large ore Valemaxes, typically, what they like is to do very, very long-term deal at very, very low returns. That's not something we like. Could our Newcastlemaxes have completed, of course, but then we would have accepted a very, very low return. That's usually these large projects, and we leave that to some of the specialists in Asia. And our relationship with Vale on the spot market is still there. We do business with them with our Newcastlemaxes. On what is happening in the U.S., Kristof, you will agree with me that the only thing we know is that we don't know. Things are changing by the day. When you say that we don't have a lot of port calls in the U.S., that's actually not true on the tanker side. Don't forget, we do quite a lot of business with our tankers in the United States. But under the USTR and all the other regulations, we would have been exempt anyway because energy was going to be exempt. The new package that is there, it's too early to assess what the impact would be on our business. Enya Derkinderen: Climent Molins, you can now unmute and ask your question. Climent Molins: I wanted to follow up on Kristof's question on the Capesize charters. Could you disclose the rate on the contracts? Or is it confidential as well? And secondly, what's your current stance on potentially adding more coverage based on your forward outlook on the dry bulk side? Alexander Saverys: Yes. Thank you, Climent. So no, again, we can't disclose the rate. But I think if you look into broker reports, how they quote a 5-year Cape rate, and add a little bit to that because our vessels are more modern and better than what brokers are quoting, then you're probably in the ballpark. But so unfortunately, we cannot disclose the rate. Would we look at taking more coverage? Yes. Answer is yes. We have said this in this call many times. We think that, ultimately, we want to create stable cash flows in our company. We will not do it at any price. But when markets move in the kind of zones we are now, we will actively engage with our customers to see whether we can take more long-term cover. Climent Molins: Makes sense. And I also wanted to ask about the dividends on the gains on sales. I assumed a few minutes late, and you may have already touched upon this, but is it fair to assume you'll declare a dividend on that front on both Q1 and Q2 based on the reported gains? Alexander Saverys: The answer is definitely on Q1. And again, if you take back full discretionary dividend policy, I think every quarter, we look at it. We had a very good Q4 quarter. We were able to achieve a lot of the internal check the boxes to reinstate, I would say, a somewhat higher dividend than before. So the $0.16 was purely on Q4. Q1, we have already $270 million profit, which we announced our intention to pay a dividend on it. So that will be decided and confirmed, I would say, on that part in the May earnings release for Q1. And as the market continues, as we continue probably to shift from sales to really operational cash flow and take out the remaining parts of the new build program and the bonds, it frees up a lot more capacity for dividends. But again, we're not going to commit to a fixed percentage. I think it will be quarter-by-quarter that we look at, but it's fair to say that it all looks pretty good. Enya Derkinderen: We have 2 more questions in the Q&A. So the first one is, do you expect Sinokor?behavior to trigger a regulatory reaction? Alexander Saverys: I don't know. You should ask Sinokor. Enya Derkinderen: And then the second one is, what are your expectations on framework changes after the European Industry Summit? Alexander Saverys: I think the theme of that summit was more the industry based on land and not specifically on the maritime side. But I do think it's great that our politicians are aware that if we want to make sure that prosperity continues in Europe, we need to change certain things. And that can only help our vibrant maritime industry, which, as you know, is very strong here in Europe. Enya Derkinderen: We have one more question live. [ Victor ], you may now unmute and ask your question. Unknown Analyst: I had a quick question regarding your leverage. Do you intend to lower it back to pre-2025? Or do you have a figure in mind on the leverage you're looking for? Also on the equity ratio, you haven't moved a lot on this part. And just wondering how far you are within your covenants? And last question, can you give us more flavor on the recent cooperation you signed with China for your new project there? Ludovic Saverys: Yes. [ Victor ], thanks for the questions. On the leverage, we have a target of 50% loan-to-value. I think we're not far off. If you would take today's value, especially with the increase in tankers, we're there or thereabouts. I think it's about making sure that combined with the long-term cash flows that you have, but also the opportunities you see. I just recall, we did increase our leverage quite dramatically with the Golden Ocean opportunity. But I think as shareholders, we're all pretty happy that we did. That leverage has reduced. and we're now positioned with another 90 dry bulk ships in what is seemingly a strong market. So we do justify that increase in leverage tactically. The equity ratio, just to remind, we have a pretty low book value, which is, I would say, taking a long success because we buy or order quite cheaply, and we don't re-rate our assets in book values. If you look more towards the value-adjusted equity, which we showed on slide -- on the overview slide, that has, I would say, equity ratio increased quite dramatically with the adjustment on fair market value. The bond covenant of 31% in Q4, you don't have to be a mathematician to see that if you add another $370 million of profit in Q1, Q2 on fixed sales. I think that covenant is high and dry definitely until the maturity of the bonds in September. And so we mentioned that we will probably not issue a new bond to just pay back at maturity. So we're good in all covenants, by the way, and you'll see that in the audited financials end of March. Alexander Saverys: And then Victor, to answer your question on our investments and our joint venture in China. You know that we are building ammonia-powered vessels that will deliver this year. We have secured an offtake of green ammonia in China. And we have also invested in a company that provides the logistics for that ammonia, bringing the ammonia from the factory where it is produced to the tank and from the tank with a bunker barge to our ship. So that is the nature of our investment there. Ludovic Saverys: And for everybody, we mentioned this, this is quite a small investment. We took a stake to better understand, to better control that logistics and to see how that is developing. But we we're talking a couple of tens of millions, but definitely not a huge investment. Unknown Analyst: And last question, if you allow me this. Do you have a target on the EU ETS price? Alexander Saverys: That I want to pay or that I want the market to go to. Unknown Analyst: That you want the market to go to for your investments to be more interesting for our customers. Alexander Saverys: It's a very good question, Victor. Of course, the higher, the better because then there will be more incentive for people to use our assets in European waters. Okay. Thank you, Victor. Enya Derkinderen: Okay. Then Quirijn want to ask a question. You can now unmute. Quirijn Mulder: Quirijn Mulder from ING. You sound quite optimistic about the wind offshore market. Can you maybe give some idea about the utilization and let me say, the future prospects? Let me say, is it more what you see from your order book? Or is it more what you see in the market happening? Maybe you can elaborate a little bit on that. Alexander Saverys: Yes. So I think the optimism comes from 2 sides. The first side is purely related to the wind and the new parks that will be developed in the next 3 to 4 years. As you know, a lot of projects over the last 2, 3 years have been either halted or delayed. What we do see is that certain projects are still coming through in the North Sea, which will create additional demand for offshore wind supply vessels. But we're also optimistic Quirijn because our assets that we are deploying for wind parks can also be deployed in offshore oil and gas markets. There, the fleet has been aging, has not been renewed sufficiently. The quality and the comfort of the assets in the oil and gas markets is much less than the ones in the wind markets. So our assets that are suited for wind are actually in very high demand to serve the oil and gas markets. And what we're trying to do over the last 6 to 9 months is basically to make sure that our ships can earn good money in oil and gas. And then once they have done their job, their transition to better wind markets. Quirijn Mulder: Okay. But let me say the contract size is very different in wind compared to oil and gas, as you might know. So wind in general is longer, more -- let me say, more -- takes longer time, especially. And oil and gas short time, short time contracts, et cetera. So... Alexander Saverys: That's not really true. You see long-term contracts in oil and gas and you see spot contracts in wind. Our CSOVs have been ordered to operate on the spot market first. And as and when we see longer-term contracts, then we go for it. What we have not done, unlike some of our competitors is order these vessels with a charter attached because there the charters were very, very low paying. Ludovic Saverys: It's a little bit the similar analogy with the Vale contracts that, yes, there are certain peers that accept not the IRRs we would accept. And hence, with the balance sheet that we have, the strength we have, the knowledge in the market, we order speculatively spot based on long-term fundamentals and then wait a little bit until, as Alex mentioned, we see good long-term contracts as we've done on the second CSOV, which is actually quite profitable contracts over 3 years. Enya Derkinderen: I think this concludes the questions. Alexander Saverys: Okay. So I'd like to thank everyone for dialing in today. Thank you for your questions. Thank you for your attention. You know that if you have any other questions, we are here to answer them. Do reach out to us if you have any further questions. And I look forward to speaking to you on our next call. Thank you very much. Bye-bye.
Suzanne Thoma: Ladies and gentlemen, welcome to our annual results communication. Thank you very much for taking the time and the effort to be here personally. It's a great honor for us. Thank you also to the 27 or so audiences that -- not audiences, but the people who are joining us from remote. Thank you for your interest in our company. And now 2025 has been an exciting year, I think, for all of us. One thing that you can see in our results, hopefully, here we are, is that we -- as Sulzer, we are serving essential industries. Now this is not just something we are saying because we need to have a nice slogan. It has a deeper meaning. The deeper meaning is that we are producing or we are serving industries that are essential for people and industries, customers, businesses around the globe. And with industries like energy, the chemical industry, and definitely, natural resources, which in the case of Sulzer is mostly linked to water, we have an underlying growth trajectory because there are more people in the world and more people moving into middle classes. And we also have in the already developed economies, a trend towards using more energy, more chemicals, and definitely also more water. But at the same time, these industries have a heavy ecological footprint. So whether this topic is in right now or not, we, as a society, will have to find way to have a higher energy efficiency to reduce emissions, to reduce pollution while keeping everything affordable. And that is what Sulzer is doing for our customers in our industries. This is why although 2025 was, let's call it an interesting year, we had an underlying growth momentum and an obvious growth momentum in all of our industries. This has not gone away. Due to the situation with the volatile political environment and the tariffs and all things that you know very well, we did in some industries, for example, in the oil and gas industry and also in the chemical industry, see that customers don't mind delaying some final decisions for their large-scale projects. If I look at our order pipeline in this industry, it is still growing. Not all the projects were only delayed, some of them were also stopped. But if I look at the figures, it's about 80% of the projects that were supposed to happen in 2025, and I'm speaking about the large-scale projects, have moved into 2026. So they're not dead. They will come this year or next year. We are still running against an ever-increasing Swiss franc, which for all the Swiss companies that are reporting in Swiss francs, of course, is on the one hand, a continuous fitness training. And at the other hand, of course, does have a certain influence on our results, particularly in sales and order intake because we are really very well distributed regionally. It does have a certain impact, but not such a high one when it comes to our profitability. Thomas Zickler will be speaking more about that. So let's look at 2025, a little bit more concretely on what we did. Well, we accelerated our strategy implementation. And our strategy is a rather down to earth, not so complicated strategy. It doesn't mean it is easy to implement it because it's thousands, many thousand different steps that we are taking. We concentrated on our markets and on our customers. And this means, for example, that we invested in our sales force. So while we were very cost conscious, we also consciously invested in our sales force and in the upgrade of our sales force. We also upgraded or invested in supporting technologies for commercial excellence. And you see it a little bit in our margin development. We learned to find a price point better than in the past, and we are on a journey to improving that. We have made important steps, but we are not there yet at all to stop having a fragmented approach to our customers to go as a One Sulzer wherever it made sense. We accelerated in the area of effectiveness and efficiency, which we summarize under the term of Sulzer Excellence. This is quite a fundamental culture change in Sulzer because we come from a history, a successful history that prides itself almost only on innovation and engineering excellence. Now this is still important for our company, no doubt, but it has to be paired with being effective and efficient from the first moment we analyze a market until we do aftermarket business with our customer. We reorganized Chemtech. We did not restructure Chemtech. It's reorganizing. That is an interesting word because we -- or interesting plain word because we believe that Chemtech is going to come back to a good level. This is also why we invested also in Chemtech in more salespeople and in an upgrade of the salespeople. But at the same time, of course, we cut costs wherever they did not contribute to value creation or not enough. And what we also did, and that was very important for Chemtech, we streamlined innovation. What do I mean with streamlining innovation? We made sure that our innovation is set up in a way that it really serves market needs and customer needs. We still have some budget for blue sky research, but most of it is now really mid-term oriented and also research for our core business, which is focusing on purification and separation. We upgraded and developed our supply chain, finding the right balance between resilience in this volatile time and purchasing from best cost country. Also, this is a journey, but we made nice progress in it, and we did report a good contribution to our profitability. And I am very proud to say that we have improved in on-time delivery. We have improved in quality, and we have improved in safety records. Now for you, that might not be so important as a very financial outlook, but it shows an underlying -- again, an underlying quality improvement in the company, including the safety record. That is why I mentioned it. And all of this leads that we can report highest reported sales, order intake, and profit. Now our CFO, Thomas Zickler said, and you have to say, Suzanne, currency adjusted and also, sorry, in constant currency and also adjusted for acquisition and divestment. And yes, he's, of course, right, like mostly, but it is also almost -- we could almost say nominally. But we are correct, right? Yes, of course. So I will go quicker through these figures because Thomas will go a bit deeper on that. We had an order intake of 2.1%. We had strong growth in aftermarket and in what we call noncyclical or water, which is more than 60% of our turnover. Our business of smaller projects, short-cycle projects grew nicely in all 3 divisions because this is the type of decisions that our customers like to do also in those volatile environments that we are acting. And we did have some large projects, customer projects that were delayed, particularly as I mentioned already, in oil and gas, in the chemical industry, and also some in what we call the new technologies. We still have order intake above sales of 1.06%. So the company is still definitely growing. And what is also growing is the customer pipeline. Now a pipeline -- and I don't mean the technical pipeline -- but, I mean, the order pipeline. Now an order in the pipeline is -- a project in the pipeline is not an order, clearly. But if you don't have a full pipeline, it's probably difficult to have orders. So it's like an early sign. We are happy to say that we grew our sales, and we did grow them with commercial discipline. We increased our margin. We were not buying sales and we're not buying order intake. And so we increased our profitability figures significantly. As you see it here, Thomas will speak about them more. These are our figures at the glance. I would just like to highlight earnings per share going up very nicely and also our EBITDA, which is a record EBITDA. We're a little bit lower in free cash flow, in line with expectation. Thomas will speak about it more. Here, you see the relative development. Again, what can I mention, yes, we upped 140 basis points in the return on capital employed. The return on capital point is a very important figure for us and the earnings per share went up 19%. If you look at this slide, we look back a little bit for the last 3 years. And the summary of this slide is the strategy is working. The strategy is working. You see that our sales grew on the average 10%. We increased the EBITDA since 2022 by more than 700 basis points, and we really upped the return on capital employed, one step after the other very systematically. And this is how we are running Sulzer with a lot of fire in our heart and at the same time, very systematically, it goes together actually quite -- it goes quite well. Given this very positive development and because we are really convinced that independent of how good 2026 is then really going to be, our company is on the right way forward. The industry that we are serving are growing and what we have to offer is more needed than ever. And at the same time, internally, we are becoming better. So we increased our dividend again by CHF 0.50 if it is approved by the general assembly to CHF 4.75 per share. So ladies and gentlemen, now let's look a little bit deeper into our figures with our CFO, Thomas Zickler. Thomas Zickler: Thank you very much, Suzanne. So good morning and good day also from my side. A lot of well-known faces I see here in the room, and thank you also for dialing in. As you heard already from Suzanne, we had in 2025, quite a good year when it comes to our profitability, but also to sales. Before I go into the details of the year 2025, let me say one thing upfront, and Suzanne mentioned this already. When you look at our order intake and sales numbers, you have to have the following thing in mind and Suzanne stressed that I noted when she's doing her presentation that we need to be aware of the FX impact. So when you look at our order intake and our sales, on both KPIs, we have around about CHF 190 million negative FX impact. So in other or in easy words, our order intake and our sales would have been around about CHF 200 million higher, excluding the negative FX impacts. Let me talk about our growth. We have a very robust growth. And when you look at our share of the aftermarket business, over the last 3 consecutive years, Services has grown double digit. So we have achieved over the last years that our aftermarket share has grown to 62%, which makes us really a highly resilient company. Why I'm addressing this? I'm addressing this because when I have to characterize the year 2025 in 1 or 2 sentences, it's that overall, I will say, smaller and non-cycle business is running very well. However, the larger orders, this was the topic of 2025, and I'm not going into the story of the geopolitical uncertainties. But you see here was then landing at around about 2% plus order intake and 5.6% plus on sales, that we are really a resilient company. When we look in Q4, you have seen on a quarter-to-quarter comparison, so Q4 2025 to Q4 2024, that we had by the end of the year 2025, our order intake growing by around about 12%. So you see that towards the end of the year 2025, we really picked up in our business development. Also, when you look at our order intake margin, we haven't really bought any orders in just to get order intake. And this is very important. I'm saying this for now 4 years in a row. We are getting our order intake with a still increasing order intake margin. And you see this compared to last year, still 70 basis points higher order intake margin. And as said by Suzanne, we have overall talking about the whole Sulzer Group, still positive book-to-bill ratio of 1.06. So talking about our EBITDA profitability. It is indeed a record profitability over the last at least 20 years. And when you look at our profitability at the EBITDA, you see it's CHF 556 million. And what you have to know, and I mentioned on the first slide that we were seeing headwinds from the FX side. On our EBITDA, we had a negative FX impact of around about CHF 40 million. So to say it in other words, our EBITDA without this negative FX impact would have been close to CHF 600 million or somehow around CHF 600 million. When we talk about the success, why is our EBIT and EBITDA increasing so much? And you see 140 basis points compared to last year. It is on the one hand side, yes, we still have very favorable markets. We are growing in most of our market segments, except of Chemtech, where I go a bit in the details later on. But we have also a lot of success from our rigorous improvement of our Sulzer commercial and operational excellence. What do I mean by this? I really mean that we have improved our production efficiency, our project execution efficiency. We are much better on the supply chain side. And we are much better on people excellence. We discussed about getting on the sales side more, from the farmers to the hunters, changing the company. And here, you see in the numbers, the success. This is what I want to address here. On the return on capital employed, I think the story is very simple because, yes, we have a higher EBIT because of all this what I explained. And on the other hand side, we have more or less a stable CapEx and, say, efficient use of our capital. And this means higher EBIT, stable capital, that the return on capital is growing up by 140 basis points. So now let me come very proudly to this slide. This is basically a reflection on the period when Suzanne and I started beginning of 2023, you see the total shareholder return of Sulzer is 121% compared to the Swiss Performance Index already also including the dividends with 33%. So we really have outperformed the market. Also when you look at the tables with the dividend and the proposed dividend for the year 2025, you see we increased the dividend then finally by almost 40% over the last years. And market capitalization, I checked just 5 minutes ago, our share price, we are more or less flattish compared to yesterday. So you see that our market capitalization from 2023 to end of 2025 went up to CHF 5 billion. When you take our share price as of today, we are close to CHF 6 billion. So I calculated we are currently at CHF 177 million. If we would have been at CHF 178 million, we would be at exactly 6.0 market capitalization. So let's go a bit deeper into our individual divisions. When we talk about Flow, what is the overall story? In Flow, we had in 2025, a really good development on the sales side and on the profitability. Look at the profitability increase. Flow increased by 160 basis points compared to last year when we talk about EBITDA profitability. They are currently standing at 13.3% EBITDA profitability. And as I said, in Flow, we have also seen a lot of operational excellence measures really realizing in 2025, helping to optimize the cost setup, helping also to improve the profitability by also, in parallel, increasing the sales. And when I talk about the sales, you see that sales in Flow increased double digit by 12.3%. And when you look at the sales increase, you see that we have here one BU really standing out. This is energy with over 20% sales increase compared to the prior year. But we also have had a very good sales development in the water and in the industry area. So overall, it is really on the sales side, on the top line, a success story for Flow. Let me also talk a bit about order intake in the Flow division. Order intake is a bit of, I call it, a more mixed picture. Why is it mixed? Because let me start with Energy. In Energy, we had in H1 2024, one large big order -- elephant order from the Middle East with USD 100 million. And these large orders, they haven't come in, in 2025. This is the overall storyline for 2025. So when you look where Energy landed by end of the year 2025, Energy landed with around about minus 3%. So minus 3% without having the USD 100 million large order means if you would have taken out this one order, energy would have been at least plus 5% and more. So you see that also on the energy side, we have a very, very good base business, which is reflected in these numbers. What we see also on the order intake side in Water, that on the Water side, we grew double digit. As you know, we are not announcing the numbers separately for Water and for Industry. So let me leave it here with the statement, Water grew double digit in 2025. And annoying Water grew double digit, you maybe have seen in January, our announcement where we announced a water treatment center of excellence, combining all our expertise, which we have in our company and even -- to even focus more on the further development of the water and wastewater treatment. As I said, when you look into Flow, you see a really very excellent improvement on profitability and sales. And as explained on profitability because of a high base with large orders, a bit of a mixed picture. When we look in the last quarter of Q4 2025, we have also seen in Flow, a very positive development. Flow had in Q4 compared to Q4 the prior year, a plus of around about 18%. So you saw also in Flow an uptick when it comes to the business performance in 2025. Then let me go to Services. Services is also really -- I'm so proud to tell you all these stories. It's a new record result when it comes to profitability. You see services, they grew by 150 basis points. So there's an internal competition, 10 basis points lower than Flow, but they grew with 150 basis points on the profitability. And what is the reason for this? Yes, also operational excellence. But as I have mentioned on the first slide, services is growing for the third consecutive year in order intake and also in sales. And you see it here in the headline, we have done in services a lot of investments into growth. Let me just give you an update of what have we done in 2025 for this growth. So in services, we opened a new service center in Argentina for the market there, for whole Latin America. We have bought in January a company called Davies and Mills for the Middle East in Bahrain. This was basically an EMS company, where we now with our full services network, we expand this. We use this as a regional footprint to tackle much more the market in the Middle East for services because you know more than half of the services business is coming out of America. This is a very important strategic move to also grow services more in the Middle East region. And last but not least, we have invested in the U.S. in our, and I wrote it down, in our largest turbomachinery center in North America. And we further invested to extend the production and service capacities there because of the still highly booming U.S. markets when it comes to pump services and turbo services. Why is it growing so much on the services side? Story is very simple. We have on the CapEx side, a bit the hesitation, the delays, the postponements from the customers. But we have also, on the other hand side, a lot of equipment which needs to stay really reliable and safe for the customers. And here, services is on its way with upgrades, modernization, repairs, retrofits to really ensure that all the customers have a reliable energy, yes, equipment available. That's from my side. I forgot one point, also order intake because I got this question this morning in some analyst calls. They said, Thomas, what's going on with services? The Q4 to Q4 order intake is only growing -- is only growing by 3.8%. I tell you the story. The reason is very simple. Last year, in Q4, we received a larger order in the region Europe, for South Africa for a big energy provider there. And when you have then the like-for-like comparison, Q4 to Q4, you have the impact that then the region Europe and Africa, they were in the minus because of this high base impact last year. But believe me, still Americas, and you saw it also in the e-mail, which we shared this morning with most of you and in the press release that Americas is still growing almost by 10% and also EMEA by more than 25%. Then more challenging environment, Chemtech. Chemtech, what is here the headline is really the overcapacity, especially the refining overcapacity on -- sorry, it's not working. Okay. Chemtech, we have the overcapacity, especially in the refining area for the refineries in China. But we have also the overall, yes, weak market sentiment in the chemical industry. When I talk about orders in Chemtech, we have seen a mixed picture. We are missing here also the larger orders, which we have received in the past because of this uncertainty in the markets. So we have basically in this smaller projects, short-cycle base business, we have a reasonably good order intake. We also have grown in Chemtech, our aftermarket services share where we go now because the equipment is there more on the services side, in the tower field services, turnaround services, and so on. So here, the strategy is really working very well. We have, on the Chemtech side, also achieved when we talk about order intake. And you know that we had our footprint mostly coming out of China and Asia. We have reduced the share of, say, orders coming in from Asia from around about 50% to 37%. So this is a reduction by 12% of the Asian share. And on the other hand side, we have increased the share in EMEA by around about 11%. And some of you remember, we are going to open a service shop in Saudi Arabia for Chemtech this year, by mid of this year. So you see also from the numbers, our strategy a bit, going out is the wrong word, relocating our focus from Asia, which were historically grown more now to the Middle East. This is working out. Last word to Chemtech on the profitability side. Yes, the profitability on Chemtech went down by 2 percentage points. But here, and Suzanne already addressed it, I really want to explain to you, this is a very value-accretive margin. And why I'm saying this? Because, yes, the profitability went down because Chemtech lost 13.6% of their sales. But on the other hand side, we have done a lot on operational excellence on the Chemtech side. We have done a reorganization where we refocused on the regions, India and Middle East and combined. We also have, on the R&D side, focused more on market topics. We have improved our supply chain by centralizing a lot of functions. And we also merged 2 BUs within the Chemtech organization. And we did cost cutting, cost cutting in the headquarter, cost cutting also in China, where basically, we dismissed more than 200 people in our factories in China. So all in all, you see that with this 2% decrease in the profitability for Chemtech, this is a very good result, seeing the sharp decrease on our sales. And on the other hand side, this means when we achieved this year on the Chemtech side, that they are slightly going up in 2026. This is what we expect, that then you have a much lower cost base, and then you will see that we have also an acceleration coming on the Chemtech side when we talk about profitability. Outlook also a bit with the Q4 to Q4 comparison. Also in Chemtech, we had around about 18% plus in order intake Q4 compared to Q4 2024. What is very important for me to address is that especially in MTCS, we had on a quarter Q4 '24 to quarter Q4 '25, an increase of more than 13%, which indicates that we most probably have seen the end -- the light at the end of the tunnel. Then let me go to the EBIT and net income. EBIT, you see here with 22% plus. I think story is the same. I don't want to repeat it. It is that we really were able to expand our gross margins, rigorous cost management, and implementation of Sulzer Excellence. Also here on the EBIT, I want to address the FX impact. Our EBIT would have been around about CHF 36 million higher if we wouldn't have had a negative FX impact on our EBIT. Net income, kind of the same story. Why is net income not growing so much than our EBIT in percentages, mainly, say, 2 reasons for this. We have because of the lower interest rates globally, lower interest income for Sulzer. And also since we earn more and more and get a higher and higher profitability, finally, we also have to pay higher taxes, and this is the reason why we are a bit lower in the growth on the net income side. Then let me talk about our cash flow. Cash flow, most of you remember when I gave updates, I think cash flow really came in, in line with expectations. Why I'm saying in line with expectations? Some of you said, hey, Thomas, why is the cash flow not going up to almost CHF 300 million? Explanation is very simple. Please recognize that in the year 2025, because of Chemtech delivering no cash flow -- free cash flow because of their business situation because they had to invest in one-offs. They had to take care of their profitability. We have missed completely the contribution for Chemtech for our free cash flow. Okay. Well, thank you. Yes. And with this, we would have been close to CHF 300 million with a working Chemtech. However, when we look in our free cash flow, you see that we are CHF 22 million less despite the fact that we have higher tax payments and lower interest income, and just to drop the numbers, tax payments are around about CHF 10 million higher and lower interest income is around about CHF 7 million. So alone, when you add these 2 ones, you see that we can explain the lower cash flow. Now it's working. So balance sheet and net debt-to-EBITDA ratio. What I did this time, I changed a bit the layout on this slide and the content because some of you were almost always addressing, Thomas, why do you show not just the net liquidity of Sulzer, and this is what we have done here, and we do it in the future. You see that when you talk about our cash and cash equivalents, and these are the cash and cash equivalents, which belong to Sulzer. This is not including the Tiwel cash. You know that we have the dividends which we basically keep in our house, and this would then increase the cash. But this is only the cash which you see for 2025 with CHF 640 million. It's only our own Sulzer cash. And on the other hand side, the debt, nothing has changed. Why is the debt around about CHF 30 million higher? Very simple. Last year, we had an expiring bond of CHF 300 million, and we replaced this bond with 2 new bonds in the total amount of CHF 330 million, and this is why we have CHF 30 million more debt. And then when you do the calculation, net debt divided by EBITDA, we have then a net debt in 2025 of CHF 555 million and an EBITDA of CHF 556 million. So you see it's 1.0x. And when you compare this with last year, it's basically a no change. It's a stable 1.0x on the net debt side. Okay. So now my last slide. Let me talk about the dividend. Suzanne already addressed it that we are proposing for the AGM to increase the dividend to CHF 4.75 per share. Just let me give you some reasoning. Look at the left side of the chart, we started with 2015 with a dividend of CHF 3.50 and you see then a lot of dots. And then until 2021, you have here still CHF 3.50. And you see in the last years that we steadily increased the dividend because we are, as you know, on our Strategy 2028, we are focusing on organic growth. We always said that we are not doing big M&A transactions, but we are also sharing a portion of our success with the shareholders. And this is why we have steadily increased the dividends. What is important because some of you already addressed, is this too high or how does it look like? We have a dividend policy within Sulzer, which stays between 40% and 70% of our core net income is in our dividend policy, what we can pay as dividend. And you see it here on the right side, in the last bullet point, we have a dividend payout ratio of 50%, in this range between 40% and 70%. So we are still on the lower end side of the possible range of the dividend. And I think with this, you see that we are very carefully also deciding on the dividend increases, and we are focusing more on a steady development in the future than increasing the dividend onetime by higher amounts. With this, I would like to hand back to Suzanne and then ask -- should we do the question? No? Suzanne Thoma: No. I still have a few things to. But as a matter of fact, we have already 45 minutes, so I will try to really stick to the most important things and not mention every word on the slide. I'll try to be short, but still, yes, interesting, I hope. So these are our industry spoke about it. The change that we have in our understanding of Sulzer is -- well, it is a fact. We just see it differently now is that our divisions serve by and large the same industries. And in many cases, they serve the same customers. This is something that we have started to leverage in 2025 and that we are going to increasingly leverage going forward. That does also require some internal changes. I'm not speaking of a reorganization, but of the way we are handling business demands from one customer to several divisions. There we are sometimes a bit our own enemy. Yes. So let's look at energy, our #1 market. We have spoken about it that large projects, exploration, large extensions, rather a little bit subdued. We do expect in 2026 to get some large orders coming through because momentum is really still there, both in the Middle East, but also the large American companies do speak about producing more in the area of oil and gas, and not less. What stays is that these operations, all energy operations have to be safe and have to be clean and compliant. And this helps our business because what is it that we are doing, we are helping to make the processes and the infrastructure of our customers more efficient and cleaner and better. Power generation is the topic. We need more electricity around the globe, which also leads to the fact that, for example, old gas-fired turbines are coming back up into operation after having been overhauled very often by our service division. The chemical industry, new capacity is indeed subdued, except for some specialty segments, purification and separation, very, very high-level purification and separation, for example, for semiconductors, for example, for batteries and other high-tech applications are increasing. If you have infrastructure, it has to be safe. It has to be compliant. It has to be energy efficient. And if you have an aging infrastructure, this is even more the case. So this is where Sulzer has a growth potential also short-term in the chemical industry. If we look at water, that is a simple story. Water is like power production, the topic around the world. We need more water, cleaner water. We cannot take, for example, for mining more and more groundwater out. We have to take care of our water, and we need more. And so industrial and municipal wastewater treatment is very important. Water in mining, you see it here in the picture, is a big topic. Desalination is coming up more and more. And water infrastructure also to transport a lot of water, for example, from the sea to a desalination plant and then to a city is an increasing business. We are looking forward to double-digit growth in water as well. New technologies, mostly Chemtech, not only. There are some uncertainties. But what you read in the news right now about new technologies does more reflect the political speech, let's say that, than what we do see in our market. We clearly see improved interest and, hopefully, large projects in 2026 when it comes to bio-based plastics. We see it in the Middle East and in Asia, not in the United States and not so much in Europe. We see carbon capture still being there, but it is clearly a niche market. It depends on the regulation and, also, let's say, on the social license that, for example, large oil companies want to have or don't want to have when they invest heavily into gas-fired power plant for data centers in the United States. What we see growing in many regions is alternative fuels, be it sustainable aviation fuels, be it bioethanol. So what do we expect for Sulzer in 2026? We see a solid order intake. It is most likely going to be somewhat muted in the first semester. And there, we are also suffering from the comparison base. If you look at our Q1 order intake, the base is around about CHF 1 million -- CHF 1 billion. So if you have a CHF 50 million order in March or you have it in April, makes a difference of 5 percentage points. This is why we really don't think that the Q1 order intake has too much of an information value. So we see not so much momentum in H1. We see very good momentum in H2. We are not just saying that because we hope that this is the case, but we see it in the pipeline of the large projects. And the communication of our customers when these orders are going to be placed in a legally binding way. We do see for all 2026, continued growth in aftermarket in small-scale project and in the water. And we do see an upwards trajectory for our new technologies in most of the regions of the world. Trying to summarize it. Our markets are growing structurally for the reasons that I mentioned at the beginning of my presentation. The macroeconomic situation creates a certain volatility, which leads to our customers maybe hesitating a bit longer than they would otherwise for projects that they are planning to do. At the same time, if we look at what is happening with population growth and so on, the global opportunities are there for our company and the challenges that our customers have in order to have safe, clean, less emission, and so on is also driving our markets. So we believe that Sulzer is clearly on an upward trajectory, potentially not every quarter. So what do we do in 2026? We accelerate and intensify our strategy implementation. It is not so easy because this company is successful. And we are now really changing the ways that we are doing certain things, and we are making it better and more efficient, but it's still a change. And human beings are not so comfortable with change. But we are pushing that through. We strengthen our aftermarket business. We are further streamlining our order winning process. We are too slow and too complicated when it comes to order winning, when it comes to tendering and when it comes to order specific engineering. And we are moving towards integrated customer solutions, solutions for specific industry centers like water, where all of our 3 divisions are selling into right now, still mostly in a fragmented way. Again, this requires to change how we are doing things. We are going to push that forwards in 2026, which also means One Sulzer. Our fragmented way of accessing customers, I put it in a positive way. There is a lot of potential for growth if we eliminate the fragmented way of accessing our customers while still staying very effective, no, becoming more effective and efficient in how we are doing our processes. This leads us to the following outlook. Now giving an outlook these days, ladies and gentlemen, is not that easy. And this outlook stands unless we -- what I want to say is this is a quite significant information. There would have been some reasons to give you a higher outlook. But it is difficult. The visibility is rather low because of the geopolitical situation. So we are guiding an order intake of 1% to 5%. We are guiding sales for 2% to 5%. And we do see an EBITDA margin that is further improving to about 16.5%. Very short. I have been told you like these examples. So I will do it, but I'll be 3 in 5 minutes, I promise. So we are still making traditional energy cleaner and less expensive and readily available. And that will continue this business for a very long time because the world needs more energy. And you see an example here where a customer of our thought they had to replace 2 full compressors, which would have shut down their offshore operations for apparently several years. But we came in with our retrofit solutions from the Services division and could upgrade the compressors. We contributed to less -- to a smaller environmental footprint because the energy consumption of the operations is now down 14%. And for the customer, most importantly, we could -- the project time was strongly reduced. This is really engineering. When we speak about repair and maintenance, it sounds so easy, but this is real engineering work and Sulzer is very good at that. Now we still speak about keeping the energy transition moving because it is still moving almost worldwide, and this is a nice example for a bioethanol plant in Brazil, where we were the main supplier and the feed for this plant is biomass from waste, very important. Now the water treatment, the Global Center for water treatment, Thomas mentioned it. We have launched it now 2 months ago. This is following the strategy of having industry-specific offers from a One Sulzer perspective. And here, very specifically, we have around the globe quite some very, very good, but smaller companies active in water treatment, who are regionally well established, and now we are opening our sales channels to them globally, and we expect very nice growth from the water treatment. Last but not least, we are scaling our global capabilities through shared business hubs. We have 4 business hubs now in Mexico, in Madrid, in Pune, and in Suzhou for the type of work that can be very easily standardized and automated mainly in some business functions and in the finance function. It has to do with sales support and tendering support and, of course, supply chain support. This is another important building blocks to support a One Sulzer approach in our back office processes. This is one example from the excellence front. Let me finish, ladies and gentlemen, key takeaways. We see further order intake and sales. In a volatile market, in the areas that we have grown nicely already in 2025, but we do see some large projects that are in the pipeline, this growing pipeline that we have that will materialize in 2026. We are working together to strengthen the foundation of Chemtech so that it is very well prepared to pick up the growth that we are expecting this year, growth compared to 2025. We don't expect a full recovery to the level of 2024 in this year. But as Thomas said, it will also then improve the profitability significantly. Sulzer Excellence is the key to making Sulzer a top industrial company. We are going to intensify and accelerate what we are doing there with also an increased excellence organization that works hand-in-hand with our business to improve the many, many good things that we are doing. So our strategy is working, and we push on with this strategy by staying very adaptable to what is going on in the world. Thank you very much, ladies and gentlemen, for your interest. That is what we wanted to present to you looking back and looking forward in 2025. We are now going to take questions, if you have any, Thomas and I together. Thank you. Patrick Rafaisz: Okay. Patrick Rafaisz from UBS. Is it -- how many questions? Can I go with 3 to start? Suzanne Thoma: It depends how complicated they are. Patrick Rafaisz: Okay. Let's start with 2 first. One is on the order intake margin. And Thomas, you mentioned the 70 bps improvement. But if I look at H1, H2, H2 was actually down, on my calculations. Can you elaborate on that? Is that mostly mix? And how should we think about the order intake margin in '26? Thomas Zickler: I'm thinking about the answer, but I'm like always, very transparent. The order intake margin when you compare H1 to H2 is a bit lower in H2 because we had the difficulties with our order intake to really come to the guidance to the end of the year. So this means towards H2, we pushed really on the order intake side to get some more orders in. And this is the true story. It is no business development, no change on the business side. It's just that really we then landed at above 2%. Patrick Rafaisz: That is indeed very transparent. Thank you. Does that maybe also explain the softer guidance for H1 or the more muted guidance because you may be brought forward some orders? Suzanne Thoma: No, it did. It was not to a large extent, definitely not. H1 is simply that when we look at our pipeline, we believe that the large projects will rather come in H2. Many of our customers have no reason to decide finally in H1. Patrick Rafaisz: Okay. And then a question on the margin expansion. It's very impressive, adding another almost percentage point or thereabouts in '26. If you allocate that to the 3 divisions, I mean, Chemtech you already mentioned will definitely improve. But how do you think about services and Flow versus '25, right? Suzanne Thoma: For 2026. Well, I definitely expect a further margin expansion in services because their relative increase was less than in Flow. Definitely still expect a continuation of the margin increase, maybe at a little bit lower level, not -- well, rate in Flow. But we are not buying sales that is very -- and not buying order intake. Patrick Rafaisz: Yes. Suzanne Thoma: The margin, of course, also not only depends on the price, it also depends on the efficiency of our operations production, and we will work heavily on the efficiency of our operations. Patrick Rafaisz: Can I go for one more? Suzanne Thoma: If it's a short one like that. Okay. Patrick Rafaisz: It's a short one like that. I just -- you talked about the large orders for the second half. Just trying to understand how much do you build in? How much optionality do we have if all goes well versus the guidance? Suzanne Thoma: We are business people, not analysts. So we don't do quite such calculations. That was meant in a referent way. Just really also like Thomas answering how this really are. I can just -- I know you want the figure for your thing. What's now? Thomas Zickler: Maybe I take over. Suzanne Thoma: Yes. Thomas Zickler: For the guidance, which we have given on order intake, we have planned very conservatively, which includes I wouldn't say almost no larger order, but say, the big orders which we are planning for and which are in our order intake pipeline for H2. These orders are not included in this guidance because of the geopolitical environment, and this was also what Suzanne addressed when she talked about the guidance. These uncertainties are too high that we are really able now to forecast for the next 12 months or next 10 months on our order intake coming in. Christian Arnold: Christian Arnold from ODDO BHF. On the margin, EBITDA margin, I mean, you achieved the record high EBITDA margin, 15.6%. Now you are guiding for quite a step actually in '26, 16.5%, which is impressive. Thinking about your order intake margin increase of 70 basis points, sales growth of 2% to 5%, which probably leads to some operating leverage. And then think about the Chemtech division, which you refocused and probably also achieving higher margins. I mean, we could even think about a higher margin than the 16.5% you are targeting despite the fact that the level is very, very high. So what could go against you? Are these higher personnel costs? Are these product mix effects, which we have to think about? Yes. Suzanne Thoma: Well, one thing that theoretically could go against us is a tightening in the raw material situation with higher costs, let's say, for steel, for example, that could be -- we don't -- we see it only a little bit right now. We don't see it in a significant way. That is one thing. We still believe that to go another percentage step up, percentage point, is already quite ambitious. It is true, some of the measures that we have taken in 2025 and also have costs will have an effect in 2026. But then you never know what's going to happen. So we give our best guess, not estimate, but assessment. Thomas Zickler: Yes. And also, we want to be in line and sustainable with the last 4 years, where we have almost every year guided with 1 percentage point growth. And we think, as Suzanne explained, we think also for 2026, we can do it. However, and I don't want to repeat everything, the geopolitical uncertainties, just think about what is happening with Iran, what is happening to other topics. I think the 1% with our excellence, which we do, we are quite comfortable. And the rest, let's see how it really develops during the year. Christian Arnold: Okay. Thank you very much. And maybe just a small question on CapEx. What do you think what will you spend in '26 and '27? Suzanne Thoma: I have to say... Christian Arnold: Yes. Sorry, same levels. Thank you very much. Alessandro Foletti: Alessandro Foletti of Octavian. Can I ask you also 2, 3 questions, please. Maybe first on the H1, H2 split. I think you guided in the press release that H1 will be lower than H2. But the backlog entering the full year is quite high, like basically like last year. Why still this H1 weakness somehow? Suzanne Thoma: Our guidance was related to order intake, not sales. Alessandro Foletti: Okay. So that means on sales that we should not expect this huge H1, H2. Thomas Zickler: Yes. Alessandro, sales is always much more stable coming from the order backlog than order intake. But our message was addressing on the order intake, where we see really from especially the larger projects in our pipeline that they are coming in the second half of this year and not in the first 6 months of this year. Alessandro Foletti: Okay. Thanks. On the profitability again, in Flow, particularly, I think Ms. Thoma, you mentioned that you did have some help from the market to increase the profitability there. Can you dissect how much of this improvement is your own actions and how much is market tailwind? Suzanne Thoma: What do you mean with help from the market? Alessandro Foletti: Good markets mean good prices, means good margin. Suzanne Thoma: Well, the markets are quite competitive in the Flow area. We did definitely have good markets in Water. I cannot dissect it per se. Maybe you can. Thomas Zickler: No, it's very difficult. What we have on the Flow side, especially is still a market where we have a bit of a pricing power left. It is much more competitive than it was whatever 2 years ago, for sure. And then this combined with our, say, cost measures, this enables us to get the profitability up. But on the pricing side, I think we are very disciplined. We have new pricing tools. We are using here a bit more sophisticated tools. But overall, yes, the markets, they are supporting this development, but I cannot really give you whatever XYZ percent. Alessandro Foletti: All right. Maybe last one on the large orders again. There were some discussion with you during the year, last year about carbon capture. Now you mentioned it, but I'm not sure that there's still the levels. Are they still around these projects? Are they not around, where? Suzanne Thoma: So we have a large project in 2025, the Teesside project in the U.K. And we are speaking about several larger carbon capture project interestingly in the United States. Why? Because they are going to use so much more energy, they will need the gas-fired turbines to do so. And there is not only -- not only a question of whether there is political support for the big AI companies. It's also a question of the social license. I mean there are still many people also in the United States who think we should reduce our CO2 footprint even if the government says something different. And in that sense or in that playing field, for the moment, we see momentum. You see in my long explanation that I'm also not completely sure about it, but we do see momentum in carbon capture. Also in the Middle East, we do not -- we see discussion in China, but that will come much later. We do not see it in India. Alessandro Foletti: Right. But is it correct -- I understand correctly that these hyperscalers or data centers, they would do it voluntarily basically? Suzanne Thoma: Possibly. Possibly. Well, voluntarily in the sense that they like to do it, I don't know. But they also -- they already do have some push for that. Thomas Zickler: Without the regulation. Suzanne Thoma: Without regulation, possibly, yes. That is the discussion they are having with us. Are they -- with very clear projects. Are they pushing it through, that I cannot guarantee. Alessandro Foletti: Right. And your assessment of the competitive landscape for those projects? Suzanne Thoma: We are definitely the market leader when it comes to large-scale carbon capture projects. Unknown Analyst: If I remember correctly, you mentioned of the 9-month orders that you have a couple of bigger projects in the pipeline where you hope to let them materialize before the end of the year. Can you tell us if some of them materialized and the projects you see now, the bigger projects coming rather in the second half of these new projects? Or are they still the same and wait another half year. Suzanne Thoma: Very good question. They are partly new project, but it is also true that many of them have moved into 2026, even H2. Some were also lost. I mean I can give you a bit of feeling for our Energy and Infrastructure business unit. In September, we were still speaking about project volume. We wouldn't have gotten all the projects, but in the order of CHF 300 million, of which we maybe would have gotten half or 40%. And of those, CHF 220 million have moved into 2026 and CHF 80 million were lost, but there are some new that have become more concrete so that they -- they weren't that concrete in September, so, I didn't speak about them. So all in all, that's what I was trying to say with my underlying momentum. There is a strong underlying momentum when it comes to energy generation worldwide, not only in power, also in oil and gas. We will -- would be very amazed if we wouldn't have any orders in the next 12 to 16 months that are really major, most likely in -- very likely in the H2. Arben Hasanaj: Arben Hasanaj from Vontobel. My question would be around the outlook for the service business for this year and also next 2, 3 years. I mean, if you look at the CapEx budgets also in the area of data centers, they have become even more bullish. So I was wondering how confident are you that this kind of momentum continues and maybe even still double-digit momentum. Yes, I was wondering, how do you see the market this year and next 2, 3 years? How long can this super cycle last in your view? Suzanne Thoma: We are very positive over the next 2, 3, 4 years because of some underlying drivers. Thomas Zickler: Yes. Let me add to this. I just want to manage a bit the expectations, and you know me, in the meantime, I'm a bit more conservative on the expectation management and then overachieve, then vice versa. So you said double digit in the next years. If we can agree mid-high single digits over the next years, I'm fine. But I think we cannot commit on double-digit growth over the next year. Suzanne Thoma: No, that was not -- that was an ambition and expectation. It was not an additional guidance. Thank you for raising that. Any other questions? Well, then we come -- no, then we come to the -- yes, exactly Marlene coming in with maybe questions from. Marlene Betschart: Yes. I have 2 questions from Fabian Piasta from Jefferies. The first one is, can you please provide more details on specific measures taken as part of operational excellence program? How much headroom is there left for improvement? Suzanne Thoma: There is a lot of headroom left for improvements. I cannot quantify it. In my assessment, we have only started in 2025 in a very systematic way with operational excellence. Now operational excellence is also many, many, many small steps. So it does take energy and it does take time, and it is a continuous improvement that we will have and not a step change. But we are definitely at the beginning in many dimensions. Marlene Betschart: Thank you. Second question for Thomas. Can you provide more details on the strong Q4 order intake? Does this mark a trend reversal or is this more seasonally driven with respect to your guidance implying a more muted first half of 2026 versus second half of 2026? Thomas Zickler: It's the latter one. It's more the year-end, the strong Q4, which we normally in the industry have every year. When with the customers, we push for the year-end closing. So we had very strong numbers in 2025, and this doesn't indicate a trend. This is why we are so cautious with our H1 order intake guidance. If it comes better, then it comes better. But seeing it, I really would say it's a normal process which happens every year in Q4, where the industry as well as the industrial companies push for order intake and also for sales in the year-end race for the Q4 numbers. Suzanne Thoma: Which also means we have already done it in 2024. So the comparison basis also Q4 in every year. So -- right? But I would also not take it as a -- not yet take it as a fundamental trend change, too early. Marlene Betschart: Fabian Piasta says, great. Thanks. And this has been -- no, wait a second. Sorry. I have another question from [ Loui Bion ]. Could you give us more details on your operational capacity in North America for the energy market? If the gas turbine maintenance market experiences a boom, will you be able to keep up with demand? Suzanne Thoma: Okay. Our business is not linked to the new turbines directly. As you know, the new turbines, they now have delivery times of 4, 5, and 6 years. Now that does still impact our business positively because in many cases, let me say, it a bit old turbines are being dug out or, let's say, reinstate with reengineering and put into operations again because that goes much faster. So taking care of the older and the old turbines is our business, a very good business because also the new turbines become old within a cycle. So indirectly, we will profit from that. Definitely, we see it today. And yes, we have invested in our operations in the United States, also capital investments, which our American colleagues were very happy about because they haven't gotten that much over the years. And also, we have improved our operational excellence, which also means that you can do the more things, more volume with plus/minus the same operations. So yes, we are going to profit from that, but not in an extreme way because there is this distribution over time in our business, which is good. Marlene Betschart: This has been the last question online. Thank you. Suzanne Thoma: Thank you very much. So again, thank you very much for attending online, and thank you very much for taking the time and the effort to come here, is much appreciated. And we are happy to invite you now for a small uncomplicated lunch like every year and continue our conversation. Thank you very much. Thomas Zickler: Thank you.
Operator: Good day, and thank you for standing by. Welcome to the Cactus Q4 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alan Boyd, Treasurer and Director of Corporate Development and Investor Relations. Please go ahead. Alan Boyd: Thank you, and good morning. We appreciate you joining us on today's call. Our speakers will be Scott Bender, our Chairman and Chief Executive Officer, and Jay Nutt, our Chief Financial Officer. Also joining us today are Joel Bender, President; Steven Bender, Chief Operating Officer; Steve Tadlock, CEO of Cactus International, and Will Marsh, our General Counsel. Please note that any comments we make on today's call regarding projections or expectations for future events are forward-looking statements covered by the Private Securities Litigation Reform Act. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Any forward-looking statements we make today are only as of today's date, and we undertake no obligation to publicly update or review any forward-looking statements. In addition, during today's call, we will reference certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release. With that, I will turn the call over to Scott. Scott Bender: Thanks, Alan. Good morning to everyone. We finished 2025 with strong performance in both segments. Pressure Control revenues and margins exceeded expectations on a strong mix of product sales and a more resilient rig count than anticipated, while Spoolable Technologies declined seasonally as expected, but maintained strong profitability, thanks to all of our associates for remaining customer-focused and for delivering excellent performance to close a year, that was challenging from a macro perspective and transformational for the company. Some fourth quarter total company highlights include revenue of $261 million, adjusted EBITDA of $85 million, adjusted EBITDA margins of 32.7%. We paid a quarterly dividend of $0.14 per share, increased our total cash balance to $495 million. And on January 1, we closed on the acquisition of the majority interest of Baker Hughes Surface Pressure Control business which we will refer to as Cactus International. I'll now turn the call over to Jay Nutt, our CFO, who will review our financial results. Following his remarks, I'll provide some thoughts on our outlook for the near term, including the Cactus International business before opening up the lines for Q&A. So Jay? Jay Nutt: Thank you, Scott. As Scott mentioned, total Q4 revenues were $261 million, which were lower 1% sequentially. Total adjusted EBITDA of $85 million was down 1.7% sequentially. For our Pressure Control segment, revenues of $178 million were up 5.8% sequentially, driven primarily by higher levels of products sold per rig followed and improved rental revenues on an increased customer activity. Operating income increased $4.1 million or 9.3% sequentially with operating margins expanding 90 basis points. Adjusted segment EBITDA was $4 million or 7.2% higher sequentially, with margins improving by 50 basis points. The margin increase was due to a fuller benefit of cost reduction initiatives as compared to the third quarter. We believe our U.S. Pressure Control business is performing at its highest level, since the inception of the company. For our Spoolable Technologies segment, revenues of $84 million declined 11.6% sequentially as anticipated due to the lower U.S. customer activity levels in the seasonally slow quarter. Operating income decreased $4.9 million or 18.9% sequentially, with operating margins compressing 220 basis points due to reduced operating leverage. Adjusted segment EBITDA decreased $4.9 million or 13.6% sequentially while margins declined by 90 basis points. As a reminder, Q2 and Q3 are usually our strongest periods. Corporate and Other expenses were $9.7 million in Q4, up $700,000 sequentially due to increased transaction and integration costs. Adjusted corporate EBITDA moved unfavorably in Q4 by $0.5 million to $4.7 million of expense. On a total company basis, fourth quarter adjusted EBITDA was $85 million, down 1.7% from $87 million during the third quarter. Adjusted EBITDA margins for the quarter were 32.7% compared to 32.9% for the third quarter. Adjustments to total company EBITDA during the fourth quarter included, a noncash charge of $6 million in stock-based compensation, $3.3 million for transaction-related professional fees and expenses, $164,000 for additional restructuring actions to rightsize the organization in response to the lower activity levels and a $1 million loss related to the revaluation of the TRA liability. Depreciation and amortization expense for the fourth quarter was $16 million, which included $4 million of amortization expense related to the intangible assets resulting from the FlexSteel acquisition. During the fourth quarter, the public or Class A ownership of the company averaged and ended the quarter at 86%. GAAP net income was $48 million in the fourth quarter versus $50 million during the third quarter. The decrease was largely driven by lower operating income and the loss booked for the revaluation of the TRA. Book income tax expense during the fourth quarter was $14 million, resulting in an effective tax rate of 22%. Adjusted net income and earnings per share were $52 million and $0.65 per share, respectively, during the fourth quarter versus $54 million and $0.67 in the third quarter. Adjusted net income for the fourth quarter and the full year 2025 were net of a 25% tax rate applied to our adjusted pretax income. During the fourth quarter, we paid a quarterly dividend of $0.14 per share, resulting in a cash outflow of approximately $11 million, including related distributions to members. We also made a cash TRA payment of $23 million following completion of the 2024 tax filings during the fourth quarter. We ended the quarter with a cash balance of $495 million, including $371 million of cash held in escrow to facilitate the closure of the Baker SPC acquisition on January 1. The cash balance represented a sequential increase of $49 million, despite the TRA payment and transaction-related disbursements associated with the acquisition. Net CapEx was approximately $4 million during the fourth quarter, and net CapEx for the full year 2025 was $39 million, just under the range guided to, in October. In a moment, Scott will give you our first quarter operational outlook. Some additional financial considerations when looking ahead to the first quarter include, an effective tax rate of approximately 20% and an estimated tax rate for adjusted EPS of approximately 24%. Our tax rates will be impacted by the ongoing purchase price allocation exercise that will affect reported earnings. I would also like to further explain our reporting structure following the Cactus International acquisition. Full results of Cactus International on a 100% basis will be included in our Pressure Control segment going forward. Additionally, a pro forma illustrated balance sheet and income statement as of September 31 -- as September 30, 2025, will be filed before the end of the first quarter, including the initial purchase price accounting-related adjustments and details. Total depreciation and amortization expense during the first quarter is expected to be $21 million, $12 million of which is associated with our Pressure Control segment, including Cactus International and $9 million in Spoolable Technologies. The Pressure Control D&A guide includes our preliminary estimates regarding purchase price accounting write-ups to fixed assets and intangible assets. Our full year 2026 net CapEx expectations are in the range of $40 million to $50 million, including our investments at Cactus International. Continued manufacturing efficiency investments in FlexSteel, routine U.S. branch facility upgrades and the completion of our Saudi Arabia Wellhead facility enhancements initiated in 2025 are the primary drivers of the planned spend. 2026 anticipated CapEx is largely in line with 2025 spend despite the addition of Cactus International. Finally, as previously announced, the Board approved a quarterly dividend of $0.14 per share, which will be paid in March. That covers the financial review, and I'll now turn the call back over to Scott. Scott Bender: Thank you, Jay. I'll now touch on our expectations for the first quarter by individual reporting segment and provide some introduction to historical and future trends in our Cactus International business. During the first quarter, we expect total Pressure Control revenue to be approximately $295 million to $305 million. In North America, we see stable drilling and completion activity, and we expect modestly softer sales on lower levels of products sold per rig, following the high rates achieved in the fourth quarter of last year. International sales are expected to contribute approximately $130 million to $140 million to Pressure Control in the first quarter. Adjusted EBITDA margins in our Pressure Control segment are expected to be 23% to 25% for the first quarter. This adjusted EBITDA guidance excludes approximately $4 million of stock-based compensation expense within the segment and the expected amortization of the write-up of Cactus International inventory due to purchase price accounting. Margins are expected to decline from those achieved in the fourth quarter due almost entirely to the inclusion of Cactus International. The tariff environment as it applies to our imports in the U.S. had stabilized over the last several months, while future costs now appear to be trending down slightly but remain far from certain. To be clear, tariffs implemented under Sections 301 and 232 still totaled 75% on the majority of goods imported from China. Our Vietnam facility, where Section 232 tariffs remain at 50% is ramping up in Q1 with API certification now expected early in the second quarter. This should allow us to progress the displacement of shipments into the U.S. from China later this year as planned. I'd also like to take this opportunity to explain trends in the Cactus International business over the course of 2025 and through early 2026. As previously disclosed, the company closed 2024 with over $600 million in backlog. In 2025, the company recorded $627 million of revenue, including a substantial amount associated with unbilled revenue and the backlog ended 2025 at approximately $550 million. Considering this order slowdown, we see the full year 2026 as being more in line with previously announced 2024 results from both the revenue and adjusted EBITDA perspective. We are anticipating increased order activity in the second half of 2026 and into 2027. Having owned Cactus International business for nearly 2 months at this point, we remain very pleased with our decision to pursue this transformational acquisition. As we shared since announcing the agreement in June of last year, we believe there are even more opportunities to improve the business, which currently lags its largest competitors in the Mid-East from a technology and customer execution standpoint. We believe that our U.S. conventional expertise and execution focus, will benefit clients throughout the Mid-East and are encouraged by early customer responses in the region. More on this next quarter. You may recall, we announced a target for $10 million of annualized synergies within 1 year of transaction close. And we now have far better visibility into meaningful supply chain savings into 2027, not incorporated into our original budget as we leverage our U.S. model. Such actions will take more time to achieve due to the timing of order placements in this long-cycle business. We intend to share more on this topic over the next 2 quarters. Switching over to Spoolable Technologies. We are proud of how we finished 2025 with another strong quarter of international shipments, which led to a record level of international products sold in 2025. Despite accelerating strength in international orders, we expect first quarter revenue to be down mid-single digits relative to the fourth quarter on continued North American seasonality, similar to what we saw in 2025 as our customers have been slow to increase activity through January and early February. We expect adjusted EBITDA margins to be approximately 33% to 35% in Q1, which excludes $1 million of stock-based comp in the segment. Lower operating leverage and somewhat higher input costs are the primary contributors to the expected step-down in margin. In addition, we are introducing several new SKUs, which we expect will enhance our market share and improve the moat around our technology in the future. We expect to pilot several of these new SKUs with a large Mid-East customer in 2026, which should impact 2027 revenues. Adjusted corporate EBITDA is expected to be a charge of approximately $5 million in Q1, which excludes approximately $2 million of stock-based comp. In closing, our team and I are energized by the formation of the Cactus International joint venture, and we're pleased to have a strong footprint in the most important oil and gas service markets in the world, North America and the Mid-East. The near-term outlook for domestic and international markets remains soft, which presents short-term challenges to our business. However, we will continue to deliver industry-leading margins and returns with a focus on the fundamentals of our business and by introducing our responsive, agile customer-focused culture into the Cactus International operations. With that goal in mind, I'm pleased to confirm that Steve Tadlock has been appointed CEO of Cactus International. Steve has been highly successful in leading our FlexSteel segment and integrating it into Cactus these past several years, which gives me the utmost confidence in this continued success in leading the joint venture through similar culture shifts. With that, I'll turn it back over to the operator so we may begin Q&A. Operator? Operator: [Operator Instructions] Our first question comes from the line of Stephen Gengaro of Stifel. Stephen Gengaro: I have two things for me. The first on the Cactus International side, you talked a little bit about the synergies. When you think about sort of applying the Cactus way to that business, any guidance on how we should think about margin progression in that business over the next 3, 4, 5 quarters? Scott Bender: Well, I think you will see -- let me start again. Stephen Gengaro: And Baker is not listening. Scott Bender: How do you know that? Stephen Gengaro: I'm joking. Scott Bender: I think that, we're going to see very, very meaningful supply chain savings as we begin to use our own supply chain. The problem with that, Steve, is that most of the orders have been placed for 2026. So we won't begin to see that margin enhancement until 2027, at which time I think it will be fairly substantial. In terms of flattening the organization, we can discuss that more, perhaps in the next call, but you have to understand that after only 2-months, we're still feeling our way through that. I can tell you that although my team may kick me under the table, I'm very optimistic that we'll exceed our projected synergies even for 2026. Stephen Gengaro: Okay. That's helpful. And then the other quick question was on the U.S. Wellhead side. When you think about just kind of the rig count progressions that we've seen, can you just give us kind of your view of how you see the U.S. activity evolving? You generally have a very good insight into activity in the U.S. So I'm curious what you're thinking? Scott Bender: You mean my unpopular insight into the progression of it. I think that most analysts are around $510 million exiting 2026, from $530 million. This is onshore only. So we're at $530 million now. Most of them have an exit rate of $500 million to $510 million. I think the outlier would be TPH at $475 million. My personal opinion is we're going to be in the range of probably $490 million because we have yet to see the full impact of consolidation. And I'm always very, very concerned when prices are supported largely by geopolitical factors because they can change so rapidly. I don't know what premium our current oil price places on Iran and Russia, but they're having talks today. And I really can't predict the outcome of that. But that lack of perhaps clarity on that subject makes me nervous. We all prefer to rely upon supply and demand. So call it high 400s. Operator: Our next question comes from the line of Scott Gruber of Citigroup. Scott Gruber: I wanted to ask about the International segment. Congrats on the close. Scott, you mentioned orders likely picking up later this year. I would assume that likely reflects some increased activity in Saudi. But we're also hearing about additional tenders outstanding across the region. So just how do you think about the growth prospects for the International segment over the next, call it, 3 years or so? Scott Bender: Yes. Well, Scott, everything is relative. So I think that you're going to see far greater growth prospects, particularly in the Middle East, you know that, then we're going to see in the U.S. So we're in a period now, particularly in Saudi with some de-stocking. The Saudi's ordered far in advance, and they're on a program right now to increase their cash flow. So you can be sure they're going to be using what they have in stock and moderating, and we're already seeing some evidence of that moderating their forward purchases. But they are adding 70 rigs, and that's why I'm so optimistic that 2027 is going to be considerably better than 2026. In Abu Dhabi, it looks to be very stable. I think that Qatar has prospects of improving. I think Kuwait has prospects of improving. I think that as we begin to expand our sales team, at International, you're going to see some additional revenue coming out of Sub-Saharan Africa. We're also -- these are areas that were chiefly -- I wouldn't say ignored, but they were sidelined, by our predecessor. So look to see some improvement from the Far East and for Sub-Sahara Africa. So in general, I feel much better about it. Scott Gruber: Good, good. And then you're starting to answer my second question, but I wanted to just hear your thoughts around share capture in the Middle East. Obviously, in the U.S., you guys are on a pretty steady trajectory for a decade, and you guys operated in the Middle East in the past life. So just some thoughts around the puts and takes of picking up share in the region, the kind of the strategy -- some thoughts on strategy to go about doing so? I know you don't want to reveal too much, but just some thoughts about it. Scott Bender: Yes. I think that we see a huge opportunity in Saudi because our market share there is well below what it should be at roughly 1/3. And that has -- there are a lot of reasons for that, all of which we've identified and are addressing right now. So look to Saudi to be a large market share gain for us going forward. In Abu Dhabi, we shared that contract 50-50 with FMC. But throughout the Mid-East, we have quite a bit -- quite a few new opportunities. And frankly, these were opportunities that just were not prioritized by the previous management. So we've always been really great salespeople at Cactus, and we intend to pursue that strategy in the Mid-East as well. Operator: Our next question comes from the line of Derek Podhaizer of Piper Sandler. Derek Podhaizer: I guess sticking with the Cactus International, maybe some comments around the aftermarket services piece of Cactus International SPC. I believe North Sea, you have a pretty good footprint there. Just hoping to hear some color on how impactful this is to the business as your installed base grows? I would imagine it's margin accretive. Just maybe some more thoughts and outlooks around the aftermarket piece of the business. Scott Bender: That's an excellent question and one we are intensely focused upon. Legacy Vetco Gray has a huge installed base. So let's forget about increased market penetration and let's think about installed base. So right now, we're undergoing an extensive exercise into identifying where Vetco Gray had the largest installed base, that particular area has been -- has not been a focus of Baker. They talk about it. It's the highest margin part of the business, but we see very substantial opportunities, particularly in West Africa and in the Far-East, where Vetco Gray had dominant positions. So we're going to be focusing our attention on that. It's honestly been ignored. Derek Podhaizer: Got it. No, that's helpful. And then maybe just -- I know you've already provided some color and comments around the forward outlook. But just to clarify, '26 should look more like 2024. Are you hoping '27 then looks like what we heard from Baker on their previous call around the 2025 financials? Just trying to think about how we ramp back to the 2025 levels and when that could come? Scott Bender: Yes. So let me just qualify my statement by telling you that, although Baker provided their financial reporting in accordance with GAAP, we differ in how we report our financials. So if you look at their full year 2025, we underwrote a number substantially below that amount, to account for the way we approach our financials. So you have to temper your expectations a bit. But to answer your question, I think that 2027 will probably be north of the midpoint between 2025 and 2026. The substantial improvement in EBITDA will come from supply chain initiatives. This is a big number for us. Operator: Our next question comes from the line of Jeffrey LeBlanc of TPH. Jeffrey LeBlanc: I just wanted to see if you could talk about how you're thinking about U.S. drilling efficiencies because it seems like every year, operators continue to find ways to improve cycle times. And what inning you think we are, though, for you all? It's somewhat agnostic given that you're well count levered, but just kind of curious your thoughts on continued drilling efficiencies. Scott Bender: I get asked this question, it seems like every year. And we all think that increased drilling efficiencies are behind us, and we're always very surprised. So we are seeing greater efficiencies. We certainly saw them in 2025, which translates, frankly, into more wells per rig. So the best proxy for our business is really wells drilled, not rig count. And when we do our budget, we think about wells drilled. It's just that, it's so much easier to use rig count as a proxy. Where we go from here? I don't know. But I think that some of our very large customers have deployed some very interesting technology. And I think that you'll see over time that some of the smaller operators will mimic that. So I'm actually pretty bullish on increased efficiencies. Operator: Our next question comes from the line of Don Crist of Johnson Rice. Donald Crist: I wanted to ask about Vietnam and kind of API certification. I know it's been a quarter or 2 since you talked about that. And what kind of margin impact that could have as you're importing those pieces and parts to the U.S. today that have to be -- go through a different step before they're actually sold. Can you talk about that, [ Tom ]? Scott Bender: Well, keep in mind that in the ever-changing landscape of tariffs, Vietnam is going to be -- we expect about 25% percentage points lower than the tariffs out of China. So if you consider -- I don't know, can we talk about how much we paid in tariffs? No. Well, if you consider the volumes that we were bringing in from China and as we displace that from Vietnam, I think it's going to be pretty substantial, particularly in 2027. In terms of API certification, we have already begun to move product from Vietnam into the U.S. and then we're applying the necessary value added in Bossier City to apply the Bossier City monogram. We've already gotten through the first stage of our API certification in Vietnam. And Joel, now we expect the second part of the audit to occur when? Joel Bender: It's in process as we speak. It's supposed to finish this week. And then we'll get reports back from API. So I would say pending the results, another 30 to 60 days before we actually have the monogram. Scott Bender: Okay. So once we -- we're still operating as quickly as we can, but we're constrained by not having that monogram in place. Donald Crist: That should boost the margins, right? Scott Bender: Absolutely. So Vietnam is inherently lower cost than China and then you apply the tariff differential and that boosts the effective margin even higher. Donald Crist: Okay. That's what I thought. Good to hear. And one quick one on North Africa. I know you talked about Sub-Saharan Africa. But we're hearing a lot of operators start to talk about Algeria and Egypt and other places, Turkey, et cetera, in that area. Do you all have an installed base that you got with the international acquisition that could grow that meaningfully over the next couple of years? Scott Bender: Yes, indeed. Operator: I'm showing no further questions at this time. I'll now turn it back to Scott Bender, Chairman and CEO, for closing remarks. Scott Bender: Okay. Everybody, I want to thank you very much for your attention, and we look forward in the coming quarters of giving you more visibility into what we expect on a go-forward basis with Cactus International. Thanks a lot. Have a good day. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Idorsia Full Year 2025 Financial Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Srishti Gupta, CEO. Please go ahead. Srishti Gupta: Thank you, Nadia. Good afternoon and good morning, everyone, and welcome to our webcast to discuss the financial results of 2025. My name is Srishti Gupta, I'm the CEO of Idorsia, and I'll start the call today with an overview of the operational progress we made in 2025 and the exciting plans we have for 2026. I'll then hand it over to Arno Groenewoud, our CFO, to walk you through the company's financial position. We'll then take your questions. Next slide, please. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Next slide, please. We entered 2025 facing significant financial pressure, but we leave the year stronger and more focused. 2025 was a year of stabilization and preparation. We reinforced our balance sheet, delivered disciplined commercial execution and positioned our pipeline for decisive milestones ahead. Most importantly, we continued advancing medicines that address meaningful unmet needs for patients. Our Idorsia-led QUVIVIQ sales for 2025 have more than doubled compared to 2024, rising from CHF 60 million to CHF 134 million, just above our target, which we upgraded in May last year. This performance was a result of strong commercial traction and growing demand for QUVIVIQ in Europe and Canada, the stabilization and optimized model in the U.S. I will share more on this later. Our non-GAAP operating results have improved from a loss of CHF 308 million to a loss of CHF 100 million. Key to this operational recovery has been our commercial strength paired with cost control. Arno will share more on our financial performance later. Next slide, please. Idorsia represents a rare combination of valuable assets. We are a commercial stage pharma company with 2 products that have blockbuster potential. We also have a rich pipeline of first or best-in-class medicines. We have a clear path to making QUVIVIQ the standard of care in insomnia. In parallel, we are actively engaging in partnership discussions to maximize the value of TRYVIO/JERAYGO and change the treatment landscape of uncontrolled hypertension. We also have plans to advance our innovative pipeline, leading where we can and partnering where we should. Next slide, please. Let's start with QUVIVIQ. As you know, QUVIVIQ is a best-in-class dual orexin receptor antagonist. It works by suppressing an overactive wake signal rather than sedation as some older drugs tend to do. As a result of this mechanism and the best-in-class pharmacokinetic properties, we can confidently say that only QUVIVIQ offers restorative sleep and revitalized days. Before we talk about the commercial performance of QUVIVIQ, it's important to ground ourselves in the patient experience of insomnia. Insomnia is not just the loss of a night's rest and it does not end when the night is over. It infects the entire next day. Patients describe difficulty focusing, feeling emotionally depleted and struggling to keep up with work and family responsibilities. What they value most is a treatment that helps restore their ability to function during the day. That next-day benefit is what matters to patients and it's central to how we think about addressing this condition. Next slide, please. We continue to expect sales growth of QUVIVIQ in 2026 as we guide to sales of around CHF 200 million, but this is just a step on our path to changing the treatment landscape and becoming a global blockbuster. We have a clear plan to achieve this. First, market expansion in Europe and Canada; second, unlock the true value of QUVIVIQ in the U.S.; and third, continue to build a global brand. Let's look at the progress we are making on this and what's ahead. Next slide, please. In Europe, QUVIVIQ is the only pharmacological treatment for long-term management of insomnia disorder. Our 3-pronged approach to market expansion in Europe and Canada is proving very successful. First, we secure public reimbursement. Second, we invest in focused promotional efforts targeting psychiatrists, neurologists and sleep specialists. Finally, we expand into primary care with co-promotion partnerships. Starting 2025, we had secured reimbursements in France, Germany, the U.K. and the private insurance markets in Switzerland and Canada. We continue to focus on reimbursement. And during the year, we obtained public reimbursement in Austria, successfully negotiated premium reimbursed price in Germany, entered price negotiations in Quebec, while submitting in Finland, and continuing our discussions in Spain. This continues to be our top priority for additional markets. And in 2026, we expect to secure public reimbursements in Spain, Finland and Quebec while preserving our price corridor, submit in the Republic of Ireland and continuing discussions in Sweden, Italy and the rest of Canada. Our promotional efforts targeting psychiatrists, neurologists and sleep specialists are leading to strong positioning in retail and hospital settings. We've expanded into primary care with co-promotion partnerships with Menarini in France in October 2024 and Germany in April 2025. And in February 2026, we added the U.K. This is having an incredible effect on our reach, and we continue to look for partners who have established presence and relationships with GPs in other countries. The result of these efforts has been an outstanding trajectory, particularly in France, but closely followed by Germany, the U.K. and Switzerland when considering the relative market sizes. And that trajectory can continue. Just to highlight a few markets, demand in the final quarter of 2025 increased by 25% in Germany, 38% in Canada and 45% in the U.K. Next slide, please. In the U.S., in 2025, we executed a targeted digital marketing strategy with Syneos Health to establish stabilize sales and maintain our core patient base. Going forward, ensuring more patients have access to QUVIVIQ remains a priority. To achieve this, we are advancing 3 key initiatives. First, descheduling the DORA class, recognizing the safety in the same way as it is recognized in all other countries. This would simplify prescribing, facilitate access, expand the prescriber base and improve the patient experience, especially with regards to refills. Second, we will conduct a streamlined label-enhancing clinical study agreed with the FDA to have QUVIVIQ's benefits on daytime functioning recognized in the U.S. label, again, in the same way as it is recognized in all other countries. This would reinforce our differentiated profile with physicians, patients and payers. Third, we will be launching a direct-to-patient digital distribution model aligned with the evolving U.S. market and to increase access. Next slide, please. In 2025, we continue to expand QUVIVIQ's global reach and change the standard of care for insomnia with new approvals, launches and strategic commercial partnerships. Several license agreements help cover markets shown here in green. QUVIVIQ is available in Japan through our partner, Nxera, and they recently saw positive Phase 3 results in South Korea. Our partner, Simcere, has had a very strong uptake in China within the private setting with 300,000 to 400,000 patients treated within the first 6 months. In June, we signed a licensing and supply agreement with CTS in Israel and more recently in 2026 with EMS in Latin America. In Brazil, the regulatory dossier has been submitted to ANVISA, marking an important step forward towards market entry in that region. In red, you can see the next wave of planned distribution agreements focused on Central and Eastern Europe as well as the Middle East and North Africa. These partnerships are part of our strategy to broaden geographic reach efficiently. We expect to make further progress through mid-2026, and we'll keep you updated as these agreements are finalized. Next slide, please. In 2025, we completed the recruitment into our pediatric study of daridorexant, enrolling children aged 10 to 18 with data expected in early Q2 2026. This will be an exciting readout that can pave the way for the first therapeutic option for children suffering from insomnia. Pediatric insomnia is a major unmet need with an estimated 12 million children in the U.S. affected and no FDA-approved therapies available. Insomnia is more prevalent in children with neurodevelopmental disorders like autism spectrum disorders and attention deficit hyperactivity disorder, and our study includes these patients. Daridorexant is the only DORA in pediatric development and, as the new standard of care, could revolutionize the treatment paradigm. We are particularly excited to share the results in the coming weeks and discuss the path forward with regulators. Next slide, please. Our second approved product is aprocitentan, commercially available under the trade name TRYVIO in the U.S. and JERAYGO in EU. We secured regulatory approvals in the U.K., Switzerland and Canada during 2025. It is the only -- the first and only endothelin receptor antagonist approved for the systemic hypertension market. We are actively engaged in partnership discussions, evaluating global and regional deals. Our objective is to expand access for patients while creating value for all stakeholders. Next slide, please. TRYVIO/JERAYGO is uniquely placed in the treatment landscape for difficult to control or resistant hypertension. Its efficacy and safety profile differentiates it to existing therapies and any of those in development. Our registration trial, PRECISION, remains the only hypertension study to enroll true resistant hypertensive patients, all on 3, 4 or more drugs when entering the study. Notably, there was no exclusion based on any antihypertensive drug class. It also had the broadest inclusion criteria, including patients with eGFRs as low as 15. Aprocitentan delivered a double-digit blood pressure reduction of 15.4 millimeters of mercury in just 4 weeks, on top of a standardized triple therapy administered as a fixed-dose combination pill. Aprocitentan has an excellent safety profile with low discontinuation rates observed over 40 weeks, no drug-drug interactions and no increased risk of hyperkalemia, hypotension or a decline in eGFR. The FDA approval provided a broad U.S. label that indicates TRYVIO is suitable for use in all patients who are not adequately controlled on other therapies with the cardiovascular outcome benefit cited within the indication statement. TRYVIO benefited from several important derisking milestones in 2025. In March, the FDA removed the REMS requirement, simplifying prescribing and distribution. Then in August, aprocitentan was incorporated into the updated comprehensive hypertension guidelines issued jointly by the American College of Cardiology and the American Heart Association, which was an important step in reinforcing its role in clinical practice. Our recently published CKD subgroup data shows strong blood pressure lowering plus significant reductions in proteinuria, supporting TRYVIO as a compelling and differentiated option for these patients. Market access work for JERAYGO is also underway in Europe to support our partnering efforts. Next slide, please. TRYVIO is currently being prescribed at more than 25 of the top hypertension centers as part of our focused prelaunch activities to generate on-market experience. In the clinical setting, we see consistent double-digit blood pressure lowering across subgroups, including CKD stages 3 to 4 with excellent safety and tolerability. We see prescriptions coming from key specialties, including nephrology and cardiology. Early on-market experience is translating into increasing new patient starts and improving refill rates, reflecting growing physician confidence in the therapy. Prescribers report meaningful and reliable blood pressure control and comfort using TRYVIO across diverse comorbid patient types. TRYVIO's early real-world experience confirms and reinforces the pivotal trial data from PRECISION. Next slide, please. Our U.S. label allows us to target patients with uncontrolled hypertension despite treatment on 2 or more therapies. Within this broad patient population, there are clear and identifiable patient subgroups that would be the natural initial choice for prescribers. These include patients who remain uncontrolled despite treatment with 3 or more therapies, truly resistant hypertension by definition. This is a group with significant unmet need and high clinical urgency. Second, patients with uncontrolled hypertension and comorbidities where endothelin is known to play a role, such as diabetes and obesity. Third, there is a clear need among patients with uncontrolled hypertension and chronic kidney disease, including those with eGFR down to 15. In this setting, TRYVIO offers a differentiated option without the hyperkalemia risk or eGFR decline that often limits other therapies. Importantly, our on-market experience shows strong uptake across these same patient segments. Notably, given the significant unmet need and clear medical value in these patient populations, the prior authorization process has been very smooth. Next slide, please. Let's turn now to our pipeline. 2025 was a year of meaningful progress, laying the foundations for long-term growth. We are making deliberate focused investments to accelerate our most value-creating assets, supported by a leaner and more streamlined R&D organization. We have advanced our first-in-class immunology portfolio of 3 chemokine receptor antagonists. The study for our CCR6 receptor antagonist is already enrolling in psoriasis with broad potential in T helper 17 driven autoimmune disorders. A study to show anti-inflammatory and remyelinating properties of our CXCR7 receptor antagonist is in progress and progressive multiple sclerosis will start shortly. And a study for our CXCR3 receptor antagonist as an oral precision treatment for vitiligo will begin later in the year. Each will be a proof of concept in a specific indication under investigation as well as a proof of mechanism for a range of related disorders. Next slide, please. We recently announced the exciting news that we have established a clear route to registration for lucerastat in Fabry disease. Fabry disease is a serious and progressive condition affecting around 16,000 people today, a number expected to rise to 21,000 by 2034. There is a high need for treatments capable of addressing disease biology across the full Fabry population as existing therapies are partially effective, have cumbersome intravenous administration or are limited to specific mutation types. Lucerastat's mutation-independent mechanism, oral delivery and long-term data make it uniquely differentiated option in a market expected to reach USD 4 billion. The body of evidence we have generated to-date shows that long-term treatment with lucerastat consistently reduces the glycosphingolipids substrates that accumulate in Fabry disease. We also observed a slower decline in kidney function compared with patients' prior historical trajectories. Importantly, kidney biopsy data from patients receiving long-term treatment demonstrate low to no levels of characteristic lysosomal deposits per our related data recently published at WORLD Symposium 2026. Next slide, please. Following constructive interactions with regulatory authorities, we now have a clearly defined clinical program for lucerastat. This program builds on the substantial body of data already generated and outlines the agreed path towards future NDA in the U.S. and in line with feedback from the European Medicines Agency. The agreed development plan includes a pivotal baseline controlled biopsy study supported by a second study designed to demonstrate that an oral therapy has the potential to deliver clinical benefits comparable to enzyme replacement therapy, which is complex and burdensome for patients. This developmental program is structured to reinforce lucerastat's potential as the first oral monotherapy suitable for all Fabry patients regardless of mutation type. If successful, the data are expected to support regulatory submissions as early as 2029. With that, I will hand it over to Arno to take you through the financial results and our guidance for 2026. Next slide, please. Arno Groenewoud: Thank you, Srishti. Good afternoon and good morning to everyone on the call. In my first slide, you can really see the impact of our increased QUVIVIQ sales and contract revenue, together with our cost-saving measures, resulting in a significantly improved operating result. Net revenue of CHF 214 million includes CHF 134 million from QUVIVIQ product sales, excluding partner sales, a significant increase compared to the CHF 61 million of sales in 2024. The main driver of the sales increase is the EUCAN region, where sales increased from CHF 32 million to CHF 108 million. The sales in the U.S. remained flat despite a significant reduction in sales and marketing costs. As mentioned by Srishti, the aim is to maintain our U.S. prescriber and patient base in a cost-efficient manner to bridge to a potential descheduling. Non-GAAP contract revenue of CHF 72 million includes the USD 35 million exclusivity fee from the undisclosed partner for aprocitentan that was received in Q4 '24, but recognized in Q1 '25 after the exclusivity period ended without resulting in a deal. As a reminder, the undisclosed partner was not able to close the deal for reasons absolutely unrelated to aprocitentan. In addition, we received a CHF 40 million signing and approval milestone from Simcere related to the out-licensing of QUVIVIQ in China. The cost rationalization efforts initiated in '24 and '25 further improved our operational cost base with savings of more than CHF 80 million compared to 2024. As a result, the non-GAAP operating results improved from a loss of CHF 308 million in 2024 to a loss of CHF 100 million in 2025. Based on successful negotiations with Viatris in Q1 '25, Idorsia's cost-sharing commitments were reduced by USD 100 million against a reduction of potential future regulatory milestones. This resulted in a gain of CHF 90 million. Other non-GAAP to GAAP differences mainly include depreciation and amortization and stock-based compensation. This resulted in a U.S. GAAP EBIT loss of CHF 33 million. The U.S. GAAP net loss of CHF 112 million also includes the financial expenses of CHF 72 million, which also includes a CHF 61 million noncash expense related to the convertible bond restructuring and the new money facility. And we had an income tax expense of CHF 6 million. Next slide, please. In addition to outstanding -- to an outstanding operational performance in 2025, we were also able to successfully strengthen our financial position and access to liquidity. As you know, we started the year with CHF 106 million in cash. Operational cash inflows included CHF 142 million from QUVIVIQ product sales, including sales to partners, and operational cash outflows included CHF 215 million of SG&A and CHF 93 million of R&D costs. The CHF 11 million other cash outflows mainly included working capital movements. Further, as announced in May '25, we secured a CHF 150 million funding facility from our bondholders. And in June '25, we drew the first tranche of CHF 70 million. We also raised CHF 68 million net of cost through an equity raise in October '25 by way of an accelerated book building process as well as the sale of some of our treasury shares to bondholders. We were very happy with the oversubscribed demand from the top-tier institutional investors that participated in the book building process. This resulted in a liquidity of CHF 89 million at the end of the year. And in addition to that, we still have access to a further CHF 80 million from the new money facility, which totals CHF 169 million liquidity available to Idorsia. All in all, I think we can conclude that we finished the year with a strong liquidity that puts us in a good position to fund our activities going forward and leading to next inflection points. Next slide, please. Here, we come to the comparison against the guidance. We are proud of our strong performance against an ambitious guidance target, which was significantly upgraded in May 2025. Our QUVIVIQ sales of CHF 134 million exceeded the guided sales of CHF 130 million due to an excellent execution of our commercial strategy, as Srishti already alluded to. The company also delivered on the announced reset of the cost base. And as a result, the operating expenses, net of other income, were in line with the guidance that we provided in May '25. The U.S. GAAP operating loss of -- or U.S. GAAP loss of CHF 33 million is lower than the guidance, mainly due to one-off lower stock-based compensation costs. Equally important compared to achieving the financial guidance for 2025 is that we've built the structures to transition this momentum into the future. Next slide, please. We continue to guide on Idorsia net sales, excluding sales to partners because this is the performance that we can actively steer and have control over. We expect a continuous QUVIVIQ sales growth and with sales of CHF 200 million, we will have a positive commercial contribution for the first time. Our 2026 OpEx, including cost of goods sold, will be flat compared to 2025, a little bit higher than might be anticipated in the market, but purposefully so, focused on creating shareholder value and within strategic guardrails. Our 2026 OpEx is fully consistent with a disciplined plan that supports the next wave of growth drivers. These expenditures are targeted, program-specific and clearly tied to our medium-term value creation plans, such as lucerastat program and the proof-of-concept studies with our immunology portfolio. In a nutshell, sales are going up, OpEx remains flat and overall losses are going down, reflecting the improved underlying business performance and the embedded operational leverage within our business model. And with that, I hand over to Srishti. Srishti Gupta: Next slide, please. Thank you, Arno. 2026 is shaping up to be a catalyst-rich year across commercial execution, strategic partnering and important scientific readouts. We are particularly looking forward to sharing the pediatric insomnia data in early Q2, along with several additional milestones throughout the year that we believe have the potential to meaningfully advance our portfolio and create value for shareholders. Next slide. With 2 approved products with significant commercial potential and a pipeline of first and best-in-class compounds, Idorsia is positioned to create meaningful value. I am proud of the team's performance in 2025. We delivered on upgraded ambitious guidance, accelerated QUVIVIQ's commercial trajectory and continued building the foundation for long-term growth. TRYVIO/JERAYGO represents the fourth endothelin receptor antagonist brought to approval from our pipeline, underscoring our deep expertise in this pathway and its potential in an area of high unmet need. We continue to advance other assets with discipline and focus. And as we look to 2026, we are committed to executing against even more ambitious objectives with a clear focus on delivering sustainable growth and long-term value. With that, Nadia, please open the line for questions. Operator: [Operator Instructions] And now we're going to take our first question. And it comes from the line of Raghuram Selvaraju from H.C. Wainwright & Co. Raghuram Selvaraju: Firstly, I was wondering if you could elaborate a little bit further on the digital distribution model for QUVIVIQ. And specifically, a, how you anticipate this to have an impact on the forward sales trajectory; b, how it might improve your operating efficiency going forward; and c, how it could conceivably be leveraged for the use of launching additional products in the future or if it's going to be very specific to the needs of QUVIVIQ as a product franchise and wouldn't be applicable necessarily to other potential products that you bring to market in the future? And then secondly, I was wondering if you could provide us with kind of what you see as the ideal time frame within which you would want to have a TRYVIO/JERAYGO partnership in the United States as well as regarding guidance, just some clarificatory points. Are you still confident in the previous 2027 top line guidance? Or how has that changed? And are you including in that forward assessment any potential contribution from TRYVIO/JERAYGO? Or is that going to be entirely driven by organic growth in the internal products over which you maintain commercial control? Srishti Gupta: Thank you, Ram. So the first question, area, we can tackle first on the distribution model that we're thinking about for the U.S. for QUVIVIQ. Is that the first question, area? Raghuram Selvaraju: Yes. Srishti Gupta: And so we have -- yes, we're thinking a little bit about -- I mean, what we've learned from the weight loss space is that when there's a high degree of self-diagnosis, the ability to then find a provider and find -- be able to go into online to broaden access and broaden the availability to patients that that can have a huge unlock for certain therapeutic areas. And we very much believe that sleep could be the next therapeutic area that could benefit from this type of model. So we've been exploring right now in the U.S. how we could do a direct-to-patient distribution model for QUVIVIQ. We've heard this is a friction right now in terms of both on the prescriber side as well as on the distribution side with pharmacies that they're not always stocking because of the DEA oversight. And so what we've understood is that some of these models for distribution can consolidate the regulations and the oversight, both on the telehealth providers as well as for the distribution. And so that's what we're exploring right now to start as a pilot in 2026. So we definitely anticipate that this could -- in addition to our current model, be on top of that, we would anticipate that as we can get this up and running, it would have some forward momentum on our sales for QUVIVIQ. And then we would also expect that given its efficiency, we could, at some point, it would have impact as having a lower OpEx. DTP models are common now, are getting more and more common in the United States. And so we would anticipate that if we were to make other products like TRYVIO available through that model, it might actually have an impact. But right now, the current focus really is QUVIVIQ, especially because we have more experience with QUVIVIQ and understand the points of friction that were there for patients and prescribers. So then moving on to your second question area of TRYVIO and the ideal time frame for a partnership in the U.S. I mean with the approval and the availability of TRYVIO in the U.S., obviously our focus is to make sure that this is available to patients as soon as possible. We would actually love to scale. We know that patients are benefiting already from our focused efforts to introduce this in the top hypertension centers. Prescribers are very eager to make sure it's available to patients. So we would absolutely love to be able to build on our very, very focused prelaunch work and scale that through partnership. And so that is top priority for the company right now is to be able to find a partner and move that forward as soon as possible. And our efforts to do all the work that we've done on distribution with Walgreens Specialty, our work with the hypertension centers, our work on the guidelines and making sure that we're continuously present at conferences and hosting ad boards and working with KOLs is really to make this as turnkey as possible for a potential partner. So we would love to make sure that as they -- as we find that partner in the U.S. that they are able to make TRYVIO available to more and more patients. In terms of your questions on guidance, I'll start with that, and then I'll hand it over to Arno. I think right now, the company is really focused on guiding on a one-year timeline. I think with the catalytic events and sort of the unknowns with things like descheduling, the partnership timeline, we -- it's not meaningful to guide beyond a year. And so our 2027 with outlook that we provided in May 2025, at the time it was the best available information we had. But of course, as we move forward, we are seeing more data. We see potentially we could see the descheduling, we could get more information on partnership. And so our forward-looking guidance could change in the next year. I think 2026 is actually quite a shaping year for us. But with that, I'll hand it over to Arno to see if he has anything to add. Arno Groenewoud: Yes. Maybe also to take it a bit broader because, I mean, the outlook that we gave in May 2025 was in the context of the whole financial restructuring. And I think after that, I think with the 2025 performance and the guidance for '26 and in particular, the growth of QUVIVIQ sales, we are really making clear steps to profitability and cash flow breakeven. The 2025 sales were in line with our guidance. And our guidance for '26 is also in line with what we said in May 2025. But like Srishti said, I mean, going forward, we will limit our guidance to the current year as there are many variables and inflection points in '26 and onwards in commercial, in partnerships and also with our pipeline. And considering these moving parts, I think giving guidance beyond 2026 would not be meaningful for the market. And we would like to stay credible and transparent with guiding on numbers where we have a solid visibility. Operator: Yes, of course. Now we are going to take the next question. And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: This is Joris Zimmermann from Octavian speaking. Two, if I may. First, on the QUVIVIQ pediatric data that you expect later this year in I think Q2, what is the immediate impact that you expect and kind of the next steps that would follow those data? And then also a bit from a longer term perspective, what's your strategy here? Will you pursue an updated label? Does it have -- does it come with a pediatric extension as well? So that would be on QUVIVIQ. And then the second question on your cash and cash reach. With the current cash of around CHF 89 million and the CHF 80 million remaining from the new money facility, how would you assess your funding situation? Kind of what is the estimated cash reach? And does that include all the costs to cover the -- kind of to drive your pipeline assets and to reach all the key inflection points that you outlined in the presentation? Srishti Gupta: Joris, thank you for joining, and thank you for the questions. I'll take the first one and hand the second one over to Arno. On the pediatric QUVIVIQ daridorexant study that is -- we're expecting in Q2 2026, it's a dose-finding study. So we tested in 3 doses and we'll do a dose response curve. And so what we're expecting hopefully to see is both positive results with daridorexant in insomnia in the pediatric population as well as to get some data on the dose. The next step would then be to take that information to the regulators and agree on a pathway forward, both with the U.S. as the FDA as well as the EMA. So we would have to run a Phase 3 program. We're expecting to be running a Phase 3 program, but we would like to shape that program based on the findings of the Phase 2. So that's where we are on the data. I mean we're very excited, though, because there is no FDA-approved therapy for insomnia in this pediatric population. And there are no other doors with the safety profile that does non-sedative to work on the wake signal in this population. And as we know from the data that we have in the adult populations that we use all around the world, the daytime functioning could have a huge impact for pediatric patients as well. So we're very curious to see how the Phase 2 results pan out, and we're very curious to be able to shape a Phase 3 program that is able to do that later. The other part of it for me that's very exciting is that there's the huge safety halo that comes from having a product that's effective in the pediatric population. And especially in the United States where we've had the burden of being a Schedule IV product, we would love to be able to have the safety halo that comes from showing use in the children with insomnia. With that, I'll hand it over to Arno. Arno Groenewoud: Yes. Thanks, Joris, for your question about the cash and the cash reach. I think we're very fortunate that we have a very strong liquidity at the end of the year with CHF 169 million. We clearly have sufficient cash to bring us to the next inflection points. And as already mentioned by Srishti with the previous question, I mean there are many variables and inflection points to come. So that will also clearly have an impact on our cash need going forward. But for now, I'm pretty happy with the cash runway that we have and that we're able to reach the inflection points based on which we can take additional decisions on whether to further invest or not. Operator: Now we are going to take our next question. And the next question comes from the line of Niall Alexander from Deutsche Bank. Niall Alexander: Hi, it's Niall Alexander from Deutsche Bank. So I guess maybe just moving to the pipeline, just on your CXCR7 antagonist in MS, I understand it's just a proof of concept right now. But it would be helpful to understand how you feel this mechanism could potentially be differentiating, and especially so to the likes of the CD20s right now or even the BTKs in the space. Just trying to understand what your hypothesis or views are on the mechanism. And then the same applies to the CCR6 and CCL20 in psoriasis. Just wondering how the mechanism there can potentially be different from the likes of IL-17s and 23s in this space. Srishti Gupta: Thank you, Niall, for the questions. Maybe I'll start with CCR6 first because that's the one that's enrolling right now. So it's a first-in-class oral small molecule, and it's selective for the CCL20-driven recruitment of the pathogenic CCR6 expressing immune cells. So we -- first thing, I think, is the potential for an oral therapy that delivers a biologic-like efficacy, and that's very compelling. We've designed the trial that evaluates the speed and the magnitude of the response as well as the dose performance and safety in the T helper 17 driven psoriasis in the PASI. And the reason we went with that test as well as with this -- with psoriasis is because that mechanism is the most clean. I think we don't see sort of off-target in that area. So we were really hoping that we could get a clean response on the PASI. So a positive outcome in this proof of concept would confirm that in the mechanistic validation and the expansion to other associated indications. And so that's kind of what we're thinking about for CCR6. In terms of CXCR7 and the kind of the unique or the differentiating is that we have this oral, again, that is both potentially anti-inflammatory as well as remyelinating. And the brain penetrating potential is quite strong, which would have an impact in the -- to be able to transform the treatment paradigm in MS. And so the proof of concept is primarily the progression and so of the multiple sclerosis. And so what we're trying to see is if we can -- through the -- its imaging -- yes, with via imaging, we could see a slowing of the demyelination. And so that's kind of our -- the proof of concept that we've designed for the CXCR7. Operator: Now we're going to take our next question. And the question comes from the line of Sushila Hernandez from Van Lanschot Kempen. Unknown Analyst: This is [ Sandrine ] on for Sushila. We have 2. First, could you provide more of an update on the QUVIVIQ descheduling process? Like how likely is it that it will happen this year? And second, on the Fabry disease, now that you've reached alignment with the FDA, what are the next steps? Like when will you start the kidney and the renal studies? Srishti Gupta: Thank you, Sandrine, thank you for joining. So on the first question on descheduling, we expect the next major update to be the initiation of the public comment period from the DEA. And so that's the next time we think we'll have public information available on the descheduling process. In terms of where we are, I mean, we've now seen that -- we have probably around 13 million patients ex U.S. that have been on ADAURA across the globe between Japan, China and Europe and a couple of million patients in the U.S. And we consistently know that QUVIVIQ is valued for its safety. We don't see any meaningful signals of abuse dependence or withdrawal. And so part of our update to the FDA has been to share this kind of comprehensive ex-U.S. data. This is on top of the Citizens Petition from '23 and a recent update that we did to the FAERS analysis. So the FAERS is the FDA's own adverse event reporting system database and where we -- again, we went back to the database and we did an updated analysis and we demonstrate that the DORA class has significantly reporting odds for adverse events related to drug abuse compared to the Z drugs and other nonscheduled drugs such as trazodone, which are used in the U.S. off-label. So we're kind of combining those things in our mind and hoping that the FDA's recommendation that moves forward is to be descheduled, but we'll only know when the DEA opens it for public comment. That being said, I think it's important to know that we're not waiting for the descheduling to unlock the value of QUVIVIQ in the U.S. The daytime functioning in the label, the label-enhancing study as well as the work with the direct-to-patient, we're setting up those -- we're setting up the model on direct-to-patient to be able to accommodate for the current schedule as well as then expand based on any descheduling that happens. So we are really focused on making sure that even in its current form that we can increase access for patients and they can have the benefit. And then, of course, all of those things in total, as we get more and more patients on QUVIVIQ, we can update the FDA with the safety profile and the lack of abuse signals. So that's the question, I think, probably on descheduling, but we'll only know when it goes from the DEA into public comment. On Fabry, we're expecting to initiate the pivotal study for the biopsy in this year. And so that's the pivotal. That's the 16 patients I showed it earlier. It's baseline controlled. We're expecting to take patients that are treatment naive or pseudo-naive, and it's 18 months of treatment, and we're expecting that it's in our budget to be starting that study this year. Soon thereafter, we'll do the second study, which is to show the switch from ERT. So we'll take patients that have been on ERT therapy for a year or more, and we'll do the switch study. And so with the idea that we'd like to submit in 2029. Did I answer? Operator: [Operator Instructions] And the question comes from the line of Myles Minter from... Unknown Analyst: Congrats on the progress. A couple on lucerastat. Just wondering if you can comment on kind of the powering assumptions for that 74-patient renal function study that you're doing against ERT in Fabry. And then I noticed at the WORLD Symposium, you seem to see a greater efficacy signal in patients with pretty severe declines in eGFR but at baseline and also antidrug antibody positive patients on the ERT side. So I'm just wondering whether you're going to stratify the readout of that trial in any way based on those factors? And the final one is just in terms of the number of patients that remain in the open-label extension there. I think it was 47% of the original amount that crossed over. Can you just provide any sort of major reasons as to why there was discontinuations there? That would be very helpful. Srishti Gupta: Myles, thanks for joining, and thanks for the questions. I think your first question was on the power of the second study. So we were not requested by the FDA to power the eGFR study. And so that's -- so we were working under the assumption that we don't have to have statistical significance. So we designed that study with that idea. In terms of the WORLD Symposium, the decline in the eGFR and the antibody and the stratification, I think we'll have to see where we are in terms of the eGFR study and the enrollment on how we might want to stratify that study. But right now, as we're looking for a broad monotherapy label for all adult patients with Fabry, we're not looking to kind of have a specific use in those patients with ADA. We are trying to get the label to be as broad as possible. We would like to make sure that our study design is consistent with that. And then finally, on the open-label extension for MODIFY, that was 43 months, which was, I mean, I think, 6 years, right? Like we're in total with the 6-month MODIFY trial, that's 6 years. I mean 50% is actually a really good retention rate after 6 years. I don't know if there's anything I'm doing right now that's the same as I was doing 6 years ago. So I think that retention rate actually seems pretty good for this type of study for chronic -- for a daily oral and with for chronic condition. Operator: And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: One more question from my end on the aprocitentan partnering, if I may. I was just wondering, looking at like the data is there, the data is good. The first market feedback, to my understanding, is also very positive. And now you have the whole REMS requirements omitted and you're even in the guidelines. So I was wondering what is it that is kind of -- why do the aprocitentan partnering discussions still go on? Can you maybe comment on that? So is it more on the finding the right partner in the U.S. and Europe probably? Or is it more on the deal terms? What's kind of the main discussion topic you're currently having here? Srishti Gupta: Thank you, Joris for the question. The second -- the third question, actually. So I mean, there's a lot of the positives, right? We have the data, we have the market feedback, the REMS, we have the differentiation, especially for those patients that have an eGFR down to 15 where there are no other options. And we've been in the process of looking for a partner for a while, I mean, especially even to the time when J&J decided to not pursue work in cardiovascular anymore, and we took the rights back for apro so that we could bring it forward because we have such conviction in the endothelin receptor antagonist space and its ability to be used in systemic hypertension. Now after the approval process, I think we have gotten into a point, we're having a commercial asset that has not had the ability to be resourced for a launch. That's a new mechanism of action that is -- needs to be introduced in a pretty complex health care system right now with incredible cost pressure. And with the commercial payer system that's highly under evolution with PBMs and it's like every other week, a pharma company is being hauled into the White House. I think it's really important for partners to be able to understand the commercial fit. And so with a commercial stage asset, the commercial fit, I think, from the partner perspective is one of the things that needs to be worked out on both sides. Like, we need to see that they're able to resource that apro or TRYVIO gets to the patients and are willing to put the effort to make sure that TRYVIO can reach the most patients, but they also need to make sure that it fits with their programs given that it's commercial stage. A lot of the -- sort of the sweet spot for most deals is kind of a little bit before Phase 3 or at this derisking stage where they can prepare the market. And so I think right now, we're just in a peculiar stage with TRYVIO, but we are actively engaged in a range of conversations. I think one last point to make is that the sort of complicated U.S. drug pricing system and its implications for internationally are also impacting. And so that's why I think we are exploring both global as well as regional partnership. We have 2 different labels, 2 different brands, 2 doses for TRYVIO/JERAYGO, and I think that gives us the flexibility to really pursue regional opportunities. And so that's also kind of evolved our focus on the partnership discussion. Operator: Dear speakers, please be advised there are no further questions for today. And I would now like to hand the conference over to the management team for any closing remarks. Srishti Gupta: Well, thank you, everyone, for the time today. We will have our first quarter results on April 28. And together with some of the participation that we have in investor conferences on this side of the Atlantic as well as in the U.S., we hope to get the opportunity to speak to more of you in the near future. Thank you again for joining. And with that, we can close the lines. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Guy Featherstone: Okay. Good morning, everyone. I'm Guy Featherstone, Investor Relations. Before we start, I'd like to remind you that any forward-looking statements or projections made by Hikma during this call are made in good faith based on information currently available and are subject to risks and uncertainties that may cause actual results to differ materially from those projected. For further information, please see the Principal Risks and Uncertainties section in Hikma's annual report. Thank you for joining this Q&A meeting for Hikma's 2025 full year results. Our pre-recorded presentation is available on our website, and this will be a Q&A session. We're joined today by Said Darwazah, CEO; Mazen Darwazah, Executive Vice Chairman and Deputy CEO; Khalid Nabilsi, Deputy CEO, North America and Europe; Hafrun Fridriksdottir, President, U.S. and Global Head of R&D. We're also joined by Jon Kafer, who heads up the U.S. Injectables Commercial Business. And we have Areb Kurdi recently appointed acting CFO; and Susan Ringdal, Investor Relations, also in the room. And with that, I will hand over to Said. Said Darwazah: Thank you very much, and good morning, everybody, and to my old friends, hello again. The decision for me to take over as CEO again was not really a very easy decision, giving up the beach and the sun and the good life was difficult. But I really felt very strongly compelled to do this, okay? I remember before we IPO-ed, we were discussing the ideas of IPOing and not IPOing and my father saying my worry is that one day, the team we lose sight of the long term and start looking at short-term and short-term wins. This is the only thing that I'm worried about. And frankly, in many ways, this is what happened. I think the company had sort of started looking at short-term wins and fixation on modules of the injectable and so on and really lost track. So that's why I felt very, very strongly about coming back again. And as you know also, I had to -- I decided to give up the Chair position to concentrate 100% for the next 2 years on the CEO role. I want to also remind you that last time when I came in, we had a similar situation with Rx business, the generic business was also doing not very well when I had to step in back again. And for a long -- for a period of a year or so, everybody was on us saying get rid of this division, it's weighing you down. Why are you keeping it? But we said we will do what's required. We set reasonable targets of GBP 100 million to GBP 130 million in EBIT, and we said we will fix it. And here we are, a few years later, we're looking at that business, and it has margins of close to 20% and EBIT of GBP 200 million or so. So we've done this before. And we feel -- I feel, we feel that we know exactly what needs to be done. It really is not a complicated formula. It's a simple formula. You need to do the right investments. You need to get the right people, the right talent, and take quick decisions. So as I've said this morning, my focus is very clear. So number one, you want stability. We want this 2 years where people can relax and focus on what is required for them rather than worry who is going to come in and what's going to happen. So we're reassuring our people, our stakeholders, our investors. This is -- Hikma is a very, very strong company, and we have a slide that shows the CAGR of the last 5-year growth. This company has consistently delivered growth and quite good growth. Also, I'd like to remind you all that we have EBITDA margins of 25% while many of our competitors are striving to get to 22%. The second thing is agility. We want to implement a structure of quick decision-making and to allow people across the Board to take these decisions. We don't want the decision-making to be centralized with one or a few people or the executive committee. Rather, we need to empower people across the Board to take decisions. I've always said companies that empower their youngsters, their under 40 crowd are the ones that will be here tomorrow, those that do not will disappear. So we'll be focusing on empowering everybody across the business so that we take these decisions. And the investment, we have to accelerate the investment. We have to take the investments that we need to do. So one of the first things we've done is we've taken the R&D budget out of the segment. So the segment heads cannot play with R&D budget to achieve their targets. It's now a corporate decision. We have a budget for it, which is an aggressive budget. We have spent last year building the team. As you remember, we acquired a great team in Croatia. Hafrun joined the company 2 years ago now and Hafrun has a long, long track record in R&D, and she is directly in charge of the R&D team. So the other things we need to do is hire the right people. Again, Jon took over as Commercial Head of North America or U.S. injectables and immediately said we need to hire so many people. Well, what are you doing? We need to -- somebody said, Jon, go ahead and do it, and he has already hired so many people and added to the team. We also hired a supply chain. We have now a fantastic supply chain team in place that will be working to make sure that we don't have bottlenecks across the group. And we are still looking to hire some more people like ahead of CMO. We are interviewing now. We want to hire somebody that has a lot of experience in CMO because we feel very strongly that Hikma is well primed to be a major CMO supplier. And finally, what I started by saying the fear of my father when we went IPO-ed, long-term growth, focus on the long term, and that's what we are doing now. We are focused on the long term. We are doing the right investments. We are adding, as we said, the R&D budget is much higher than it was before. I think we're targeting 5% to 6% now to spend on R&D. Hiring the right people. Giving the plant managers the decision to buy the right equipment when they needed, not waiting for central engineering to come before they can buy that. So all these changes that we are taking, all these changes we are implementing, I think, will be excellent for the future. Then I think we have to look at the structure that we are saying, why this new structure? Some people have said it looks too complex. In my opinion, for me at least and for the team, it's a very simple structure. The MENA team is a fantastic team, strong team that has been doing an excellent job for the last 40 years. Hikma this year was #1 company in MENA among all companies, this is a big deal. And it's the MENA team that has delivered this. Mazen and his team have been doing this. So it was a no-brainer that the injectables and the MENA report to them instead of being a distraction for the whole team. And then Europe and, let's say, North America, U.S.A., they share many plants, and they share the products. So although doing businesses in Europe is different, but it's the same products and the same manufacturing teams. Khalid has been with us for quite some time now, and he has shown to be doing a great job. He understands this business, and we believe that it was time for him to step up and take a strong P&L position. I am very comfortable that he will do a great job. And Hafrun since she joined the company, has just [indiscernible] us all. She has done such an incredible job with Rx, such an incredible job with the R&D team and hiring the right people and getting the right things in place and at some point, we will be sharing a clear R&D strategy for everybody. We are more than comfortable that with the help of Jon and his team and the Rx team that has already proven to be an extremely effective team, we are very confident that this is the right way to go. So we believe it's an extremely good company. We're in a very good position. We have a strong track record, a very strong record of growth. We will be investing heavily in the next 2 years. And we know that we will go back to the -- moving forward, we will go back to much stronger growth than what we have shown. Although what we have done is still quite good. We believe that we will do much better than that. James Gordon: It's James Gordon from Barclays. Maybe first question, just on the organizational structure you mentioned, and I do follow the logic about having people in each geography running the geography. But then at least your reporting, I believe, is still injectables, Rx and branded. So might you actually just change the company and make it by the 3 geographies rather than the 3 types of division. Because ultimately, who is ultimately responsible for injectables now because it seems like lots of people have got responsibilities is the first question, maybe if I break them up. Said Darwazah: Well, we said that for this year and maybe for the foreseeable future, we'll continue to report the injectable results because we didn't want to say, why are you running away from that? But reality from a management point of view, when you look at Europe and the U.S.A., it's 90% of the injectable business. And as I said, it is very different from the MENA injectables. The MENA injectables, there's a lot of products that are in-licensed and brought up from outside while the U.S. is much more focused than Europe on manufacturing. So Khalid, Hafrun, obviously, but ultimately Khalid is in charge of the U.S. and Europe and will be in charge. And of course, myself, I will be working very, very closely with them. So I think this gives us the opportunity to really focus on the business rather than -- I think just forget the tail end, which is the MENA injectables. And as I said, I'm very comfortable that the MENA team will do a much better job than before. So the bulk of the business now, there is a clear focus on it. And we will be reporting geographically as well as segmentally for the foreseeable future. James Gordon: Maybe just the second question would be, so what is the outlook now for injectables as in what's going to make it grow faster? And is the idea that now you've reset the margin to the level of this year, but you'd have a similar growth rate on the top line as you were previously hoping for? Said Darwazah: First of all, as we said, the amount -- the budget for the R&D is much bigger than it was the year before. So actually, if R&D growth was similar to the years before, then the results will be much better. But we said, no, we have to do this. We have to take this decision now. We have to invest. So again, it's investing. There's really -- it's not -- you have to invest in the right people. And as I said, we have hired many, many people and there's still more to come. The R&D team, and we will be sharing more about R&D moving forward. And we believe that Hikma is extremely well positioned for CMO business. And we are in the process of recruiting a Head of CMO in addition to the CMO team we have. So all these things will be working together to achieve, let me say, growth in the midterm to long term for the injectables. Khalid Nabilsi: So James, just on the outlook for the injectable business. We know that this is not something that we would like to be growing. It's we have challenges at '25, and this is something that we know that and '26. There are different reasons for this. It's -- as I said in my presentation, is reduced CMO. One of our main customers want to do a domestic manufacturing in the U.S. So we have a reduced contribution from that. This is something that we cannot offer until we have Xellia up and running in 2028. We are less optimistic on, let's say, the biosimilar that we have, although it's a very small part of our business and liraglutide. And one of the product launches -- main product launches has been pushed. So of course, going forward, we are going to go back to return to very good growth for the injectable on top line and in terms of the EBIT. So any company, any business goes into challenges, '25, '26 was a challenging year. I think from here, from '27, we are going to see a different outlook for the injectable business, as we used to see in the past. Susan Ringdal: And just some examples. So of course, TYZAVAN is an important product for us. That will drive some of the growth that we achieved this year, but we expect that to do even better in 2027. So that will be an important growth driver. Some of the products that we expected to launch this year push to next year. So that will be, again, another growth driver for '27. We've got, of course, continued expansion in Europe. That's been an important growth driver for us. That will continue. MENA has been also a good business. We signed 6 new biosimilars in MENA. So there is -- there are a lot of opportunities to grow, but I think as Khalid said, this is sort of a reset. Said Darwazah: So the challenge is, obviously, as you right point out with the injectables and what we're doing with it. But I'd also like to remind everybody, this is a much bigger company than just the injectables, right? We have 3 very strong divisions. Two of them that are doing extremely well. The MENA is growing at a very fast rate with very good margins. And the Rx as I said, has done much better than anybody anticipated 2 years ago, if I told you we'd be doing 20% margins and this kind of EBITDA, people -- why did we keep on pushing you to sell it? So we -- there will be a lot of focus. There will be a lot of investment and we feel very, very strongly that in the medium to long term, this business will -- it is already, in my opinion, one of the best businesses. If you compare our margins to our competitors yesterday who upgraded from 18% to 19%. We are way ahead of them. Again, other competitors saying we want to be at 22% EBITDA, we are at 25% EBITDA. So this is a very good business. It's driven by 3 engines. And as we said, the focus is on long-term cost and total profitability growth in earnings per share rather than just focus on -- keep on focusing. And I think this is what really hurt us the last few years. The over focus on the margins of the injectables where people are saying, don't sell anything less than 32, don't accept anything. If I can get $300 million worth of orders opportunity and 28%, I shouldn't take them. Of course, we need. So that's why the focus will be on top line growth and bottom line growth rather than margin. Hafrun Fridriksdottir: If I may add a little bit about that, how we are going to grow the injectable business moving forward. I don't know if you had the opportunity to listen to our presentation this morning. But I mean we talked -- at least talked a lot about the ready-to-use platform. And even though, of course, the first product is TYZAVAN, as Susan mentioned, but we have multiple others in the pipeline and -- but those products that will be launched probably in early '28. So do you not see short-term, I mean, growth because of those products, but we have multiple products in the pipeline and I talked about, I think, 15 ready-to-use product in our pipeline. And so of course, moving forward, we will see the revenue and we will see the growth from this platform, which I'm very excited about. So I just to revisit, I think it's a really good business. Zain Ebrahim: Zain Ebrahim, JPMorgan. So the first question would just be a follow-up on the previous answer in terms of what you described on the CMO challenges from one of your customers wanting to switch the manufacturing from Europe to the U.S. So how do you see that risk going forward for the rest of the injectables CMO business? And just broadly, how do you see outlook for CMO overall from here, I know you've got the -- there's the small molecule contract in Rx contributing this year, ramping next year. So just to remind us how you're seeing that outlook? Said Darwazah: Well, the first thing we did, we looked at our plants in the U.S.A., for instance, we looked at the Cherry Hill plant. And see -- so what were the bottlenecks, what was needed. Many times, it's a small thing that you need to do to increase capacity. So working on increasing capacity significantly at Cherry Hill and that will help us with the CMO business as more and more companies want to manufacture in the U.S.A. Of course, we'll talk about the Rx later CMO because they already have a lot of orders in business. And then we acquired the Bedford site specifically for this. And it's a big site. It has a lot of equipment in it. It needs to be reengineered in a more modern way. We're working on that diligently, sometimes new lines take a bit long to get -- you need to order them it takes 1.5 years to 2 years for the lines to be again. After they come in, you have to install, qualify and get FDA approval. So it's a bit of a long process, long-winded. That's why we're guiding to '28. But with most of the CMO, the big business you get the order and the expectation as you deliver 2 to 3 years down the road. They don't expect to deliver tomorrow because it's a process of moving products and so on. So that's why we feel very strongly about hiring ahead of CMO, somebody that has already strong experience, has well good knowledge of the industry and has good contacts with the companies that want to have CMO business. So we're very confident like in '28 and forward for the injectables will have a very strong CMO business. For now, we will be showing that the Rx already has very strong CMO business. So overall, it will become a quite significant part of our business, let's say, 3 years down the road. Zain Ebrahim: Very helpful. And second question is on R&D. So an increase of 5% to 6% of group sales. Are you now comfortable with that as a ratio in terms of thinking about that level going forward? And I... Said Darwazah: You ask me or you ask her? If you ask her, she says, no, we need more. If you ask me, it's enough. Zain Ebrahim: And when do we say pay off from those investments? Because I know you mentioned '28 for the ready-to-use but you started something increase in R&D last year. So just to... Hafrun Fridriksdottir: Yes, of course, we slightly increased the investment in R&D last year, but that was I mean, really a slight increase. But we also reorganized R&D organization. So now we have a global R&D organization. And we also moved activity from U.S. into Croatia. So of course, that is clearly helping significantly on the injectable business, but we also have a very strong team focusing on inhalation, semisolid and liquids in Columbus in Ohio and then, of course, our team in Jordan is focusing on solid oral. So I strongly believe that we have the right team in place. Would always like more money for R&D, yes, of course, I would, so Said is correct there, but I feel very confident with 5% to 6% of the revenue in spent of R&D. I think that's just in line with what our competitors are doing. Khalid Nabilsi: And we are going to see these returns coming into the coming years. Some of it will come in '27, some of it to come in '28 or '29 onwards. Hafrun Fridriksdottir: Yes. Of course. R&D takes time, everyone knows that. Beatrice Fairbairn: Beatrice Fairbairn at Berenberg. You discussed the focus on long-term growth. I mean one of the targets out there is this kind of GBP 5 billion 2030 revenue target. My question really was does it still stand? And would you be able to give some color in terms of what is needed to get there and how that looks like over the coming years? And then just on your delay systems timing of some of the product launches and injectables, do you feel like the new time line that you've got are realistic and kind of how confident you that you're going to be able to launch these products on time. Said Darwazah: Why don't you take this first part about the GBP 5 billion? Susan Ringdal: Yes. So the GBP 5 billion, when we set the GBP 5 billion target, we said that this was -- it was an aspirational target, but we felt that it was very achievable with the business plan that we had and our business model, which has been to do bolt-on acquisitions as a matter, of course. So we still do feel comfortable that GBP 5 billion is within reach. It is -- we have -- we definitely see an acceleration of growth after 2026. And I think today, it would require a bit of inorganic growth, but yes, it is very much within the reach. Khalid Nabilsi: [indiscernible] organic growth. It's not like we are talking about transformation, like more of a product acquisition. So we are very close to the aspirational target of GBP 5 billion. And if you look into the 3 businesses, like the branded is delivering very good growth and acceleration. If you look into the past, it was 5%, 6%. Today, we are guiding more at 7% to 8%. This is driving growth, high-value products that we are getting into the MENA region. If you look into the number of licensing deals that we've been signing over the past 5 years has increased significantly. And now we are becoming more and more the partner of choice. So this is going to be a key driver. Rx has grown with the CMO business. We are going to see more contribution coming in '27, '28, '29. So this is as well going to drive the growth. And injectable, of course, with all these RTUs and the products that we are working on, it's going to accelerate the growth for the injectable business. Remember, the injectable business has a large portfolio. So there will be always opportunities. There will always be shortages. Europe, we are seeing a very good growth. Great potential, especially that the market is lacking products. So we are being the, I would say, most reliable hospital supplier in Europe now. All hospitals are coming to us and governments coming to us, say, we want this product. The agility that we have in Europe, providing the products on time is differentiating us versus others. And this is why we've seen 23% growth this year in the injectable in Europe. Same for MENA. It's not just like the 6 biosimilar. We have many products that we have that we are going to launch in MENA for biosimilars. So this is going to be the growth driver and we are very confident of our ability to continue growing the business. As said, '25, '26 might look challenging for the business, but this is a business cycle. But from here, we are going to continue growing. Said Darwazah: The short answer is yes, the GBP 5 billion is very achievable. We are extremely confident in our '26 guidance. And yes, the injectable launches that we'll be seeing in '28 and further will deliver the kind of growth that we need to be there. Victor Floch: Victor Floch, BNP Paribas. Maybe just 1 question on Rx. That one seems to be -- to go pretty well. And it looks like you have like even some room in terms of margin. You've been investing even like more than what you're using -- actively investing for injectables. So can you discuss like the different moving parts this year? I mean the base business, I mean, I think there might be some competition on certain products. On the other -- on the flip side, you have some service payment from your CMO partner. And are you expecting at some point to be able to update the market on was that CMO? What kind of -- what is the product? And what are the economics behind that? I mean, just have a bit more visibility on the CMO because it's a huge moving plant for Rx for sure. Hafrun Fridriksdottir: Yes. So this year, the revenue from the CMO business will probably be around 10% of our business, but our target in 2030 is up to 20%, at least my target. So we are not going to share the name of our customers, but we are working with not only 1 big customer, but actually multiple and some of them were talking about contracts which have not been signed but are in negotiation phase and we will be signing within the next, let's say, next few months. So that's going very well. And you also asked about the base business. For example, a product like Advil has been doing very well last year, and we expect the same this year. Fluticasone, we are the biggest volume driver in U.S. for fluticasone, as an example or for nasals, so -- and that is a business which continues to do very well. And all our base business has been doing really well last year, and we haven't really seen any change at least for the first 2 months of the year. So it's quite -- it's more stable than maybe most people believe it is. Susan Ringdal: And I can just remind people that we have Jon who's the Commercial Head of Injectables on the line; and Mazen, Deputy CEO for MENA. So don't hesitate to address questions to them as well. Hafrun Fridriksdottir: Certainly for Jon. You should really ask him questions now because he woke up very early for you. Christian Glennie: Christian Glennie, Stifel. Again, not to belabor the point, but on injectables and the margin, just to be clear around it's been quite a dramatic shift, right, from mid-30s to high 20s now. There isn't something sort of -- well, combination, one is you talked about the extra investments needed implication potentially maybe that you were underinvested before to some extent. So the margin was sort of where it was at -- and/or is that fair? And then the second part is, is there something more structural around the market from a sort of pricing and competition issue that means margin has -- the direction of travel has gone. Said Darwazah: Okay. So first one, as I said, I mean, clearly, we said we're taking the R&D budgets out of the divisions and putting as a corporate. So clearly indicating that at some point, division heads were sort of reducing R&D expenditure to get higher margins. So by taking that out and having it as a corporate with a fixed number that we agree on, I think that will -- there will be lower margins a little bit to start with. But we are very confident that with the investments they are making in R&D, the new pipeline, the expansion in the manufacturing and the CMO that we will be achieving higher margins mid- to long-term. Okay. The second question was? Christian Glennie: Structural something in the market because you've got [indiscernible]. Said Darwazah: There's always competition. There's always people coming in. You lose a few products. We lost 2 or 3 products that not lost. We have competition coming in 2 or 3 products that we're doing extremely well. And that's why when you have such a well-diversified portfolio and you have so many products, other products can pick up and the new launches can pick up. So the market has always been competitive. It's always been competition is coming in. Do we feel that there's more competition in some areas, yes, in some areas, no. But we are confident that with all the changes we're making, we are fine. Khalid Nabilsi: It's not like structural change in the market. It's the pricing is around, let's say, if we exclude the 2 top products that we have, it's 4% or almost less. So low to mid-single digit plus erosion that we've seen in this business. So nothing is abnormal. Hafrun Fridriksdottir: And maybe if I may add. So I think over the last few years, the supply from third party has increased significantly. And third party, of course, is not as profitable as if you're making the product internally. So I think it has been going from 20% to 30% over the last few years. So that's, of course, affecting the profitability. But also, I mean, there are different part of the business, which has higher profit than other parts. Of course, while you are building the business -- injectable business in MENA, which is less profitable than the business in U.S. and in Europe, of course, that will affect the overall injectable profitability, and that business has clearly been growing as well. So those are at least 2 reasons in addition to... Khalid Nabilsi: If you exclude the MENA margins, both for the Europe and North America injectable business, the margin is not 30%. Christian Glennie: Maybe the natural follow-up, I know you're probably reluctant to guide beyond kind of '26, but just to get a sense for that margin and is '27 to '28 the floor? And then maybe that's similar until you really get into Xellia and then margins to improve? Or is this... Said Darwazah: And again, we're saying we're very comfortable that '28 and further margins improve. I think once we assess everything and we have the plan, the right plan in place. Are we going to be giving... Khalid Nabilsi: May I take this one. In a way we'll be guided to '27, '28. And I said in my presentation this morning, you can assume this is for the coming few years, but it's not like if we have an opportunity that is top 30, we are going to say no to it. So we don't want to be strictly held on these margins because we are going to focus on growing the profits and the EPS rather than just focusing on the margin, as I mentioned. So you can't consider like this '27 or '28 to the next 3 years. But what has changed, just repeating to what I said earlier this morning. From the November, when we said the floor is 30% is literally increased investments in R&D. We are increasing GBP 15 million this year versus last year in injectable. You look into the investments that we are having, as I mentioned, fitting in sales and marketing, so -- and the CMO. This is why we are going down like 2 to 3 percentage points. It's not something structural in the business, but it's more investing for the future. Guy Featherstone: Just going to jump to the line for a quick question. Operator: [Operator Instructions] Our first question comes from the line of Kane Slutzkin of Deutsche Bank -- Deutsche Numis. Kane Slutzkin: Just -- sorry, could you just clarify, I missed the last point on the higher R&D in injectables. But could you just sort of clarify sort of lower guide as sort of those moving factors between higher R&D versus the lower CMO work like in terms of which has moved the needle more there? I assume it's the R&D, but if you could just clarify that. And then just -- you're obviously spending some time doing the strategic review. I'm just wondering at what point do you think you will be able to sort of reinstate a midterm or a new midterm guide? And then just finally, on the buyback, just I guess, why has it sort of taken so long to do it? And could we see a more permanent feature going forward if shares sort of remain where they are? Hafrun Fridriksdottir: I think I can maybe take the R&D question. If I could hear him correctly. I think he was asking for the spending for R&D and the overall increase in spending for R&D this year compared to last year is around $45 million year-over-year. I think that was your question, but I'm not really. Guy Featherstone: Kane, could you just repeat your last question? Kane Slutzkin: Yes, I was just wondering sort of in that lower guide, how much of it is sort of the lower CMO work you referred to versus R&D in terms of what's impacting the guide down? Guy Featherstone: Injectables margin guide, how much is CMO versus [indiscernible]. Susan Ringdal: I think, Kane, it's more evenly split across R&D, sales and marketing and CMO. I would say those are the 3 biggest factors there of more or less the same magnitude. Said Darwazah: And the buyback, I agree with you, is taking too long, but we have taken the decision to do that GBP 250 million this year. Susan Ringdal: In terms of the medium-term guide, I think we'll get back to you on that. We know that it's important for the market. We want to get it right. And so yes, I think we'll come back to you. Operator: Thank you. There are no further questions. I'd now like to hand the call back to the Hikma team. Unknown Analyst: Julie Simmons, Panmure Liberum. Just on a more product-specific basis. I'm wondering with TYZAVAN. Clearly, you've just launched it. It feels like the sort of momentum is pushed out a little bit to '27. Are you noticing anything from the first sales in the market there? Unknown Executive: This is Jon. Said Darwazah: You're on mute Jon. Unknown Executive: No, I am not on mute. Okay, great. Good morning, everybody. So we are an active launch mode for TYZAVAN. Let me just frame the market because this is important to understand because the RTU bag platform will follow a similar pattern. Vancomycin is a widely used product within the U.S., there's about 41 million grams of the product used in multiple forms from a very lyophilized powder to a frozen bag to obviously our ready-to-use bag. What we are selling is a system and a process change, which in large hospital systems and large hospital groups that by default, TYZAVAN would become the vancomycin of choice. So it is really more of a process change. Now to put it in perspective, we have already converted 13% of the entire gram market with our existing vancomycin ready-to-use bag. So we have a platform. We will expand that. Within that network, there's about 22,000 sites of care that use vancomycin within the U.S., all forms, long-term care, hospitals and such. Our existing customer base on the existing bag product represents about 15% of those sites. So there is a very large universe of hospitals and health systems that have not used our historical bag. So there is a large opportunity there. So you have to think in terms of it as a process progression. So we're going to expand our existing base by expanding the usage of the product without restriction, and then we're also penetrating the customer bases that have been -- that have not used our bag in the past. So yes, this is going to be a progression into the back half of the year. But the momentum that we're seeing right now is very active and very encouraging. Unknown Analyst: And just following up on that from a sort of RTU perspective longer term. Do you think once a site has switched over to 1 RTU, it makes it easier to switching to another for a different product? Unknown Executive: Yes. And that's exactly why the way we're approaching this first one is extremely important. We want to make sure we have the processes in place. Hospitals and groups, they have to reprogram medical -- electronic medical record systems, infusion pumps, SOPs, ordering patterns, storage platforms because you're bringing in a new form. So as we work with TYZAVAN as the foundational product, we want to make sure we fully integrate it properly. And I do believe that, that will help us going forward with the additional bags as they come to market. Charlie Haywood: Charlie Haywood, Bank of America. First one is just in our models, would it be reasonable to assume that a I guess, at this stage, mid -- 30% midterm injectable margin is off the table, given focus on profitable growth. And then I'll get to the second one in a sec. Susan Ringdal: Yes. Charlie Haywood: Okay. And then the second one is just on the midterm guide, which obviously since giving you, we've seen 2 cuts too. So first is, I guess, talk through the decision to issue the midterm guide if there were some underlying concerns on the spending, the short-term focus to give that? And then secondly, sort of how can you reassure us and the market that this is sort of the last of the big cuts and we're back to something profitable. We can be returning some in growth from here. Said Darwazah: Again, as I said before, it's not a complicated formula. You do -- you have the right people. You have the right equipment, you have the right facilities, you have the right R&D. All of these things, when you invest properly, you take timely decisions to take -- to move the business forward. This is a formula for success, and we've got this formula for 40 years. So we sort of slowed down decision-making. It became too centralized. We were not investing properly in the right places, and now we're reversing that. So that's why we feel very confident that midterm, we will deliver what we're talking about. Khalid Nabilsi: And this is why, as well, '27 is going to be a year where we -- '27 is going to be as well a year that we'll see a growth. So it's the bottom on the injectable. And from here, we are going to grow the top line and in bottom line. In addition to the other 2 businesses, they continue to grow, as I said earlier. Charlie Haywood: Just a third one if I may. You talked to obviously heavy investment in the next 2 years. How confident are you that this is a 2-year journey of heavy investment, and that won't spill into 3 or 4 as the investments start continuing? Said Darwazah: The investment is -- it's not a short term. It will continue to be, but we will see that -- we'll start seeing the results of what we're doing now, 3 years down the road and will it further, but when we look at our 5-year CapEx, our 5-year R&D orders, all this will continue to grow. Khalid Nabilsi: Maybe just to add to what Said just mentioned. In terms of the R&D, it takes time to see results, as Hafrun said, in terms of sales and marketing, these are quick wins. So you invest today, it's not like going to take so much time till you get the returns. And this is what Jon is focusing on. So you will have these investments and at the same time, give you an example on the supply chain, having somebody now focusing on the global supply chain would reduce our inventory levels will reduce the slow-moving items, which it was very big this year, failure to supply, so the immediate impact will be significant improvement to margins. So this is why we are saying that we are moving in the right direction. And I think the results of this will come in the coming years, and we are confident about our medium-term outlook. Unknown Analyst: Christopher Richardson from Jefferies. A couple if I may. You lowered CDMO or CMO expectations, sorry, for the year as some customers require domestic production, which you said you can't offer. I was just wondering if there are any reasons for that. Khalid Nabilsi: It's -- as we said, in Xellia, our Bedford acquisition is going to be up and running towards 2028. So it's the same machinery, the same lines. It's replicate to what we have in Portugal. Now we couldn't offer because we don't have that facility up and running. So once we have that facility up and running, towards the end of '27, early '28, we'll be able to offer. Said Darwazah: And as I said, again, the Cherry Hill plant and the other plants we looked at optimizing the capacity there looking at the bottlenecks, bringing in the lines that are required to up the manufacturing capacity. Hafrun Fridriksdottir: And if I can add something about the Rx business because we are only talking about injectables and as I mentioned, I mean, we have this huge, I mean, of course, manufacturing site in Ohio, both for solid orals, for nasals, for inhalations. And that site has been getting a lot of attraction over the last year or so since all this discussion about domestic manufacturing started to happen in U.S. So there's a lot of interest in us in producing products for different clients. So I think this is going to be a big opportunity for us moving forward, both in the Rx and also in the injectable business. Said Darwazah: Many times clients come in, let's say, for the solid oil, then they feel you're very comfortable with you and they open up and move injectables and other things to for you. Unknown Analyst: Great. And just the guide cut in November was due to equipment delays. I was just wondering what the situation is now and what caused you to walk away from '27 and whether the timing for Bedford has changed at all? Khalid Nabilsi: There's no change to the guide that we had in late November. So all what we said that we are going to ramp up -- start ramping up towards the end of '27 and the commercialization will start '28. So no change to our plans. Unknown Analyst: Great. And maybe just a quick follow-on. I was wondering if you could comment on the oral generics pipeline and the margins in U.S. Rx excluding any Xyrem impact. Hafrun Fridriksdottir: Excluding, sorry? Unknown Analyst: The impact of Xyrem? Hafrun Fridriksdottir: Sodium oxybate. Okay. So last year, sodium oxybate was dragging down our profitability so the rest of the business was actually compensating for the low profit of that product. We managed to negotiate a better deal, at least for this year and for next year. So we will have slightly better profit on that product. But -- so it will not be dragging down the overall profit for the Rx business. Is it helping this year? It potentially will. Said Darwazah: Zain, some more. Zain Ebrahim: Zain Ebrahim from JPMorgan. Thanks for the follow-up. So on CMO, you mentioned you're looking for a new head of CMO. So just the characteristics you're looking for in the Head of CMO in terms of the type of -- the kind of the profile that you're looking at and when we could expect the appointment? And does this mark a potential shift to making CMO like a fourth division that we source also about in the past in terms of strategically. So integrating the Rx and injectable team. Said Darwazah: Historically, we used to the CMO as a fill-up. So we focus -- this is extra capacity, let's get products to fill it up. And then when we were approached or we found a client to come in and use the Rx side it was more of a long-term agreement. So long-term agreements require dedicated facilities, they require dedicated lines and sometimes dedicated teams, and it's a lot of investment to do that. And it takes time to come in and -- but it's a long term. So this is the right -- this is what we want to do, not just bringing in short-term fixes. So to do that, you need somebody that has been doing that for a very long time that knows which companies require CMO business. And also, I think more importantly, when you do the contract, when you're looking at, let's say, 5 billion tablets or something, $0.05 per tablet extra gives you $50 million in profitability. So having the right negotiation skills, the right contract skills all these things. So this is what we're looking at. Now we have this but we think that getting a very senior person that has done this successfully is the right way to go. And as I said, we are interviewing, there are several people out there that are available with this kind of talent. And yes, it could be a fourth division very much so. Zain Ebrahim: Just a question on the CMO headwind for '26. Is that -- was that 1 customer you lost, that's gone from Europe to U.S. I guess how is that conversation and how are conversations with the remaining customers to ensure that won't happen with someone else before the '28? Khalid Nabilsi: It was 1 of our customers. It's not like they are shying away completely. They still have business with us, but they decided to -- some of their manufacturing for their own benefits. They wanted to have it in the U.S. So it's not like the business is going down. It's to replace, it's going to take some time to get a new customer, but we are confident of our ability to continue growing the CMO business. So it's a matter of time. But when we have the Xellia, of course, up and running, and we will have much more clients, much more capacity to offer as well. Said Darwazah: There's a lot of demand for U.S. manufacturing and I think the Bedford acquisition and what we're doing now although it's going to take a little time. But like I said, if you want to get a client that will work with you long term, anyway, it will take 2 years before you can move in the product. So now is the right time to get the clients and get the orders so you can put the processes in and do the submissions and all these things, the tech transfers and so on and so by '28 and more, you'll be ready to launch. So it's the demand is there, and we are talking to a lot of companies. Hafrun Fridriksdottir: So what they are saying is that if we would have that capacity in U.S. to take on those products in U.S., we could probably potentially have kept that customer. So -- but we didn't have the capacity at that time. So I think that's -- but now we are building that. So moving forward, we are. Susan Ringdal: And if you remember as well, when we did this acquisition and we took the Bedford site on, it was because we were reasonably capacity constrained in our existing facilities. And so we weren't really very actively selling CMO business at the moment because we're pretty much and we don't have a lot of spare capacity for CMO without the Bedford site. Christian Glennie: Christian Glennie. Thanks for the follow-up. Just maybe on Rx and just a couple of ones there on the I think you've alluded to a couple of other things around the moving -- the margin to 20% just to clarify the step-up this year to 20%? And is the 20%, again, another kind of the base for the business going forward, do you think? And then just finally on nasal epinephrine, what's the update there? And obviously, it's been delayed. So what's the expectation around that? I think it had been seen as potentially quite a significant product for you. So just an update there. Hafrun Fridriksdottir: So maybe first on the margin. Is 20% the best we can do? No, I think probably you will probably see some improvement moving forward as, I mean, in '27, even '28 as well. I'm not going to give you any numbers, but I think -- I don't think that's necessarily the top of the pie. With regards to epinephrine as I think we -- I talked about last time when they had this conversation, we -- there were some requirements from FDA to run some additional study. That study is ongoing and we are planning to submit in U.S. in, let's say, after a few months now. And we did file a product in U.K. last year, we will be filing in Europe as well. And we are actively discussing our licensing product in Europe. So that's -- yes, so that's the update. But because we have been working so closely with FDA over the last year or so on the product, I strongly believe that the review time will potentially be shorter than and maybe we thought in the beginning. So it will be an exciting product for us. Said Darwazah: Somebody asked Mazen a question about the MENA. He's bored. James Gordon: James from Barclays again. Just we're talking about margins, and we're talking about generic margin and an injectable margin? Hafrun Fridriksdottir: Rx. Unknown Analyst: Rx, apologies. But then I've also heard effectively, you're going to centralize R&D spend and that we could think of the divisions as being a bit ex R&D. You're going to think about what that ex R&D performance is. So if we're rebuilding our models of today, is that how we should be thinking about Hikma now? And are you going to start giving us then what the margins are for these 3 divisions without R&D and then the central R&D line? What do we do with [indiscernible]? Khalid Nabilsi: Eventually, this year, we did not want to -- too much changes to you -- changing your model. But eventually, next year, you'll start seeing the margin without the R&D. With and without. James Gordon: Bridge this year and then we do a rebuild for our next year. Yes. Susan Ringdal: Mazen, I think it would be great. Maybe I think 1 of the strengths for the business in the MENA in the past year has been all of the partnerships that we've signed. We have excellent momentum in terms of signing new partnerships. Maybe you could just talk a bit about why Hikma seems to be the partner of choice and MENA. Said Darwazah: You are on mute. Mazen, mute. Susan Ringdal: No, he's not. The sound is just very low. Said Darwazah: Looks like he's on mute. Hafrun Fridriksdottir: Luckily, you didn't ask him any questions. Said Darwazah: Okay. Next question till he comes back. Guy Featherstone: [indiscernible] Said for closing remarks at this point. Said Darwazah: Sorry? Khalid Nabilsi: Closing remarks. Said Darwazah: Well, again, it's -- first of all, it's good for me. I'm very happy to be back as CEO, and I'm very happy to give up the Chair position to be able to do this. We have an extremely good team. We work very, very well together. We have, I think, a very, very strong business. As we said, if you look at the last 5-year CAGR and the years before, you've seen how this business continues to grow. We will continue to grow. We are taking quick decisions. We are implementing a culture of quick decision-making. I also talked about the younger people in the company. So for instance, from now on, the executive committees and the leadership council and so on, we will have -- we will mix and match not only beyond seniority, we will be having more younger people join. There is obviously something we didn't talk about, a lot of focus on AI and seeing how AI can be implemented to move the business forward. So all in all, I feel very, very positive about this. This is a strong company that has been growing for a very long term, has very solid foundation as a strong leadership team and a lot of talent across the board. And I'm very confident that we will be delivering the kind of growth that we expect from ourselves and our shareholders expect from us. Thank you. Thank you, everyone. Appreciate you joining us.
Unknown Executive: Welcome to everybody. We're just going to wait half a minute or so, to let everybody get on to the event today. There's been a lot of interest, which is good to see. So just bear with us. Right. Okay. I think we've got a decent number now. So welcome to the webinar today from McBride, who will be covering their recently announced interim results and also talking a little bit about the outlook for the business. One or two administrative points first. This presentation is being recorded. So should you miss any of it, you can watch it again. We will be very keen to address questions after the formal presentation, which you can submit via the question button on your screen. And the presentation deck that the boys will be talking to is already available on the McBride Investor Relations page as well, along with lots of other useful materials. We're very pleased to be welcoming back CFO, Mark Strickland; and the CEO, Chris Smith. And I'm now going to pass over to you, Chris, if you can start the presentation. Christopher Ian Smith: Thanks, Andy. Good morning to everyone, and welcome to our interim results deck and presentation for the 6 months to the 31st of December 2025. We'll cover today -- on the next slide, please, Andy, a series of -- I will cover off headlines and an update on our business progress before I hand over to Mark, who will take you through a more detailed look at some of the financials, and then I'll come back to myself for the outlook and then into questions, as Andy said. Before I step through the various slides, I'd just like to comment that there are three key themes that the past 6 months can really be summarized by: First, a continued delivery of our strong financial and operational performance for the third consecutive year now. Secondly, the passing of a significant milestone in our transformation journey with our first SAP go-live in November. And then third, a clear demonstration of a balanced approach to capital allocation to support both short-term shareholder returns and longer-term value creation from business investment. Next slide, please, Andy. This is the sixth set of results, interims and finals that I presented, where the group has reported profitability levels at double the historic average, cementing our new financial strength and our optionality to deploy resources to support future growth, in line with our ambitions as we set out at our Capital Markets Day about 2 years ago. The market continues to move in favor of the private label offer we provide with the latest data showing that private label share has started rising above recent all-time highs, providing a solid platform for McBride to continue to prosper. Our divisional and central teams continue to drive the business forward, tightly aligned to their strategies, supporting our customers as our private label proposition expands to provide value to the retailers and consumers alike. McBride's private label volumes continued to grow this past period, albeit at slightly lower levels than we saw in the past 2 years, with total sales revenue increasing just under 1% to GBP 475 million. We have secured a robust pipeline of new business wins, expected to start during the second half year, leading to positive momentum as we exit financial year 2026, and we move into the next financial year of '27. Our excellence and transformation agenda has continued at pace these past 6 months. Productivity and other operational improvements, together with tight management of overheads has seen margins maintained despite competitive pricing pressures and inflationary pressures. EBITDA, EBITA, and PBT all remain consistent with the first half of last year, with EBITDA margins just under 9% for the first half and with the full year expected to be over 9%. I'm really pleased to be able to confirm that our first SAP S/4HANA go-live in the U.K. was successfully completed in the period after 2 years of preparation and design. This multiyear program is the platform for future efficiency and operating excellence as we upgrade McBride to the latest best-in-class ERP systems. Our continued strong profit levels and cash generation has supported a balanced approach to capital allocation. In the period, nearly GBP 13 million of shareholder returns were deployed in the form of reinstated dividends, share buyback program and share purchases to reduce future dilution from employee share awards. Our overall share price rise since September 2025, represents a market cap price of approximately 40%. Additionally, capital expenditure rose to support growth, efficiency and transformation programs. The group remains active in considering all options for deployment of capital in seeking to grow shareholder value. I'm now going to move on to provide an update on a series of key business progress topics. At our Capital Markets Day in February 2024 -- the next slide, please, Andy -- we set out a number of key ambitions to measure our progress. At this midpoint of FY '26, we remain committed to these key targets over the coming years, and our progress since 2024 continues to perform in line. Our volume growth, whilst a little slower these past 6 months, is comfortably ahead of the target set in 2024 cumulatively. We have an encouraging set of contract wins starting in the second half, which is expected to support better growth rates into FY '27, and a number of other material growth options in development at this time. Our EBITDA margins are consistently around the 9% level, with another 1% required to reach our 10% ambition and almost at the double of the level of the historic levels of 5%. We said at the Capital Markets Day in February 2024, that shareholders should expect some minor variability of this ratio as modest input cost swings will either benefit or impact the group's profitability between periods. Our debt position remains well within our targets, and this is after nearly GBP 13 million deployed in the past 6 months for shareholder returns. Our long-term committed facilities and liquidity availability provides ample scope for further capital deployment in pursuit of our strategic ambition. ROCE remains well above the targets and our work on excellence and transformation is delivering tangible improvements to support and develop the robust platform the group needs to support long-term success. Moving on to an update on the markets that we supply. We present here the usual panel data, which we receive each quarter. As a reminder, the data is 12 months trailing value and volumes. It covers the top 5 economies of Europe, all the bricks-and-mortar retailers and all the household categories that we supply. We've been tracking this data for over 4 years now. Having grown substantially between 2022 and 2024, private label market share in volume terms, as shown by the green line on that chart, stabilized over the last 12 to 18 months. This latest data insight, however, shows that the overall total market continues to grow a little bit towards the lower end of our 1.1x to 2x -- sorry, 1% to 2% projections, with private label again outperforming brands across all categories, with private label volume share now up to 36.1%, a 0.3% rise compared to the last 4 quarters. We will wait to see over the next 2 data drops if this further rise is sustained, but this latest data confirms our view that the more likely direction of travel is for private label to continue to take share and not revert back to pre-2022 levels. Moving on to the divisions, and I'll now give a brief update from all the businesses. Next slide, please, Andy. Mark will cover off the financial performance later, but we have seen strong profits progress overall in Unit Dosing, and Aerosols, but Liquids, and Powders was slightly weaker. The Liquids division has had a very busy period and at the same time, has had to handle the first go-live of the S/4HANA program at the U.K. Liquids site. The division saw overall volumes higher, especially from contract manufacturing, which was up 9%, with private label flat. The uncertainty on the rollout of the EU's deforestation regulation or EUDR, has seen pressure on certain raw materials, especially for the Liquids business, where palm oil derivatives are actively used. As a result, the division did see modest rises in material costs in a market where such small rises are not really able to be passed on. The business, however, was vigilant, of course, in its cost management and product engineering, and managed its margins very well in the period. With future growth anticipated, especially from laundry, the division continued to invest in capacity and new packaging formats to be able to secure new business going forward. In Unit Dosing, we saw a strong operational performance with the benefits of our Flexilence program, where we now ensure that all our pod formats can be supplied in all the various packaging formats required by customers, yielding output and headcount efficiencies. Overall volumes here were lower year-over-year, but all in contract manufacturing, where a loss contract from last year annualized out at December. Private label volumes were flat, some ins and some outs amongst various customers and some delays in a few product launches. But strong wins in recent tenders are expected to launch in the second half and early into FY '27 to provide good growth prospects ahead. The Powders business continues to outperform its strategic targets overall. The market for private label laundry has remained steady with private label share growing as branded volumes continue to fall. Total volumes for our division in McBride in Powders were broadly flat with an overall private label slightly weaker than our contract business, which is about 40% of revenues in this division. Like the other divisions, recent wins expected to launch again in the next 6 months or so will provide good growth in future periods. In the meantime, strong operational control and focus has seen margins steady with some automation capital investment introduced helping drive margins higher. Our Aerosols team have delivered again this year. Volumes were 15% higher and are now close to the 100 million cans target. Very strong growth in Germany was a result of focus over the past few years in this targeted market. A GBP 2.5 million investment in a new production line is mostly complete now and is providing the capacity needed to take us past the 100 million cans level. Finally, our Asia business, so we had a bit of a mixture with weaker-than-expected private label sales in Southeast Asia, and a quieter Australia with a loss of one part of the traded goods supply from our European business. However, prospects are looking more positive with our first household wins in Australia for products made in Malaysia expected to launch in the next month or so and a series of new contract manufacturing opportunities in discussion. Moving on to an update on our transformation program or excellence agenda, as I call it, and this has continued at pace through the period. After over 2 years of setup and design work from the SAP team, we successfully launched the new global template with the first go-live start of November in the U.K. business and Corporate Center. It is pleasing to confirm that the business is operating as usual with some limited disruption in the early few weeks to our warehouse operations, where whilst the systems are working, we became capacity limited. We did miss some sales in that short period of time, which we estimate to be about GBP 3 million with a roughly GBP 1 million impact to EBITA. This challenge was resolved quickly, and the business has seen record output and shipment days since. The focus here has now moved quickly to lessons learned, and we're now deep into planning the Wave 2 rollout of this new global template to ensure we maintain pace towards the efficiencies and benefits that will accrue once we have more locations on this new platform. The other 3 main programs in the overall plan: service, commercial, and productivity are all now into business as usual, with the service program completing in September and the commercial excellence project completing in December. Both are yielding good results with improved processes in use across the business and visible KPI improvements. Next slide, please. The past 6 months has demonstrated the group's flexible approach to capital allocation. With the strength of the group's trading position and its funding capacity, we have deployed nearly GBP 30 million in shareholder returns. At the AGM in December, shareholders approved the Board's recommended recommencement of annual dividends with the resulting payment in November of GBP 5.2 million. In light of the market valuation so far below the Board's view on where the group should be valued, the Board launched two value initiatives in the autumn. First, GBP 6.4 million was spent on buying shares at an average price of GBP 1.26 through the Employee Benefit Trust, or EBT, in order to fund the EBT with adequate share levels to use for satisfying future incentive awards that are expect to divest in the next 2 years. These share awards would normally be satisfied by new issue shares, thus diluting the total shares in issue. And hence, this action worth approximately 0.7p per share of reduced dilution in future EPS calculations. Secondly, the Board launched a GBP 20 million share buyback scheme in December. There was only 1 month for buying until the end of the half year, but GBP 1.3 million have been deployed to 31st of December. All of these actions have supported a strong recovery in the share price and our market capitalization, up approximately 40% since final results in September last year, a significant rise. But as a reminder, we are still only trading on a 4.9x EV EBITDA multiple. At this point, I'm now going to hand over to Mark for a more detailed financial review. Mark Strickland: Thank you, Chris, and good morning, everyone. The McBride business has delivered another solid set of results. As well as delivering good results, the business has also demonstrated a balanced approach to capital allocation, prioritizing short-term shareholder returns whilst at the same time, retaining the flexibility to fund our longer-term ambitions. As a result, I continue to have huge optimism for what the business can continue to deliver for its shareholders into the future. So looking at the financial highlights. Group revenues were up GBP 3.8 million, 0.8% on an actual basis, but on a constant currency basis, they were down slightly 2.1%. Whilst private label and contract manufacturing volumes were both up, McBride branded volumes suffered slightly and declined. Adjusted operating profit was down slightly to GBP 31.5 million. Without the SAP impact, adjusted operating profit would most likely have been up slightly. As in previous years, profit levels have been maintained through good margin management and overhead cost control. Adjusted EBITDA at GBP 41.8 million was on a par with the previous year's first half. Earnings per share were down to 10.8p per share, predominantly due to a particularly hard prior year comparator in relation to taxation, which was 25% in the last year first half versus 30% this year. We expect full year 2026 taxation to be broadly in line with the full year prior year rates. Over the last 3 years, we have progressively strengthened our balance sheet through cash generation and debt control, this period being no different. For the first half of the financial year, our free cash flow was a generation of GBP 24 million. And our debt -- net debt only increased slightly to GBP 120.6 million despite the nearly GBP 13 million paid out in dividend, the EBT and on share buyback. This shows that the business through its proactive capital allocation policy has the ability to balance both the short-term shareholder returns whilst retaining a flexible platform for future investments in growth, be they organic or through M&A type activities. Looking at financial performance. This slide looks at the group and divisional performance on both an actual and constant currency basis. There were 3 main drivers of the actual revenue growth of 0.8%. One, firstly, volume; secondly, price and mix; and thirdly, FX. The volume growth of 0.4% arose from contract and private label volume growth, combined with the Aerosols continued growth. And as I said earlier, that was offset by a reduction in the McBride branded volumes. The second impact was the price and mix impact with two elements at play. Firstly, there's been an element of pricing pressure, but this has predominantly been offset through product reengineering and ongoing margin management. Let me explain that further. In other words, whilst the selling price may be lower, the profitability is often similar to other products as these are often lower cost format products. Secondly, there were more sales of lower value products in the first half of the financial year compared to that of the prior financial year. The third and final impact was FX, mainly with the pound-euro exchange rate moving towards the EUR 1.15 to the pound. Next, the divisional review. So looking at Liquids. At a revenue of GBP 269 million, the Liquids division represents around 57% of the group. As mentioned earlier by Chris, there was a limited impact in November and December from the SAP S/4HANA go-live. Despite this, volumes grew 0.1% with most markets stable and only France displaying a slight decline. Margins were impacted by competitive pressures, inflation and some marginal raw material increases that couldn't be passed on to the customers given their small size. The division still delivered an adjusted operating profit of GBP 17.7 million, which represents a return on sales of 6.6%. We continue to invest in this business for the future. Now moving on to Unit Dosing. For the first half of the financial year, the Unit Dosing division delivered a revenue of GBP 116 million. On a revenue basis, the Unit Dosing represents circa 24% of the group. Whilst contract manufacturing volumes were weaker in the first half, the outlook is good for year-on-year overall volume growth in the second half of the financial year. The division delivered improved profitability in the period of GBP 12.5 million as a result of continued production efficiencies, the benefits of transformation and ongoing tight overhead cost control. At 10.8%, the division's return on sales is a pleasing step-up from the prior year. Finally, the Unit Dosing division through its Flexilence initiative and the range of its formats it can now offer -- for example, its soft pods portfolio -- continues to be well set to continue to gain business in future tenders. Moving on to Powders. At circa 9.5% of our overall revenue, the Powders division operates within an overall steadily declining market. Sales at GBP 44.9 million were lower than expected, impacted by slightly softer private label demand, primarily in the U.K., together with delayed launches of new contracts and product mix changes. Adjusted operating profit declined by GBP 1.1 million to GBP 3 million, mainly due to the aforementioned lower revenue. However, because of good cost control, operational efficiency and again, product cost engineering, the division continues to deliver a healthy return on sales, in line with our medium-term expectations. Finally, as with Unit Dosing, this business segment has a good pipeline for growth into the future. Now moving on to Aerosols and Asia Pacific. Between them, Aerosols and Asia Pacific represents circa 9.5% of the group's revenue. Over the last few years, our Aerosols division has been a huge success story. This was no different for the first half of 2026. Volumes grew by some 14.6%, whilst revenue grew by 18.1% to GBP 33.9 million, delivering an adjusted operating profit of GBP 2.1 million and closing in on our midterm return on sales ambitions. The growth is supported by significant contract wins in Germany, combined with personal care launches elsewhere in Europe. The first half of financial year 2026, also saw the continuation of the significant investments for capacity expansion at the Rosporden site in France. This investment is on course for completion in the second half of this financial year. Our smallest division, Asia Pacific, has been impacted by subdued private label demand in Southeast Asia, and has had to focus on cost management to preserve its profitability. That said, it has made good progress in private label household in Australia. Whilst currently being an incubator business, we still remain optimistic that there are significant opportunities, which will mean that we will be able to grow this business over the next couple of years. Now looking at costs. For the first half of the 2026 financial year, input costs remained flat, benign overall. But as you can see from the left-hand chart, they still remain significantly higher than in 2021. Inflation is still prevalent and some costs are still rising, albeit at slower rates than over the last few years. Hence, McBride's continuing focus on margin management has been key to the delivery of this solid set of results. This consistency of performance means that McBride as a group remains very well placed to sustain underlying profits in future years. As with most businesses, technology remains a key focus. And indeed, McBride has embraced new technology, believing that this will be a key positive differentiator going forward. Chris has indicated that the Wave 1 of the S/4HANA project has successfully gone live in the U.K., and we expect to complete the rollout of the project during the 2028 financial year, which is in line with what we indicated when we set sale on the project. We continue to invest into and benefit from our data analytics function. Real-life example of this capability is some of the market analysis information that you saw in Chris' earlier presentation. In terms of overheads, as you would expect, we continued our focus on cost optimization. Overhead costs have been tightly controlled with reductions in both distribution and administrative costs as a percentage of revenue. Moving on to other financials. Year-on-year interest remained broadly flat as did interest cover. Exceptional costs were GBP 2.4 million relating to the SAP S/4HANA implementation and an ongoing review of the group's strategic growth options. Regarding taxation, the effective tax rate in the first half was 30%, which compares to the first half in 2025 of 25%, but a full year rate of 32% in 2025. The actual tax paid in half 1 was GBP 1.8 million compared to GBP 7.1 million the previous year as the cash payments normalize for the payment of in-year liabilities only as opposed to FY '25 when there was an element of catch-up from the financial year 2024. At GBP 14.8 million, capital expenditure levels were up from GBP 12 million the previous year as the business continued to invest in the future. It is expected that the group will spend around GBP 30 million to GBP 33 million over the current full year and that the level of expenditure will continue at circa GBP 30 million for the following year before dropping off in line with the completion of the SAP project. Finally, on to net debt. As indicated at the start of my presentation, the business continues to generate strong cash flows and resulting in net debt control and a small increase to GBP 120.6 million. The business has strong core liquidity with around GBP 135 million of headroom and also has an unutilized EUR 75 million accordion facility, providing continued optionality for future capital allocation decisions. In conclusion, the business continues to be run well. The share buyback delivers good value for our shareholders. As a result of the successful SAP global template implementation, future implementation risk has been significantly reduced. And the business still has optionality through its balance sheet strength. Thank you, and I will now pass you back to Chris. Christopher Ian Smith: Thank you, Mark. As you've heard throughout the presentation, business momentum is good, and the first months of our second half have seen volumes in line with our estimates, with the start-up of new business wins still on track to meet the time lines required to meet our second half targets. As mentioned earlier, the private label market overall is expected to maintain its strong position of recent years with some potential for further growth if private label continues to grow share. We expect material costs to remain stable, possibly with some weakening of pressure for natural alcohol-based materials and recycled content plastics. Other inflation is being managed through tight overhead control and vigilance on allowing new costs to creep in. Our teams have delivered really well on all our transformation initiatives and the recent success of such a major milestone of the first SAP go-live gives confidence about the rollout of our global template to all other locations over the next 2 to 3 years. This should be seen as a big risk reduction point for investors, and the focus will turn to driving expected efficiencies, enhanced insights, and better decision support. At this stage, nearly 2 months into the second half, I'm pleased to confirm we expect to deliver full year results in line with analyst expectations. With our normalized funding position alongside ongoing high profitability levels, the reset resilient and stronger McBride is poised to consider a range of future value creation ideas to support our midterm ambitions to grow the group further and deliver still higher margins. Thank you. Now for questions. Unknown Executive: Yes. Thank you very much, gentlemen, very comprehensive and impressive performance continuing, which is good to see. Right. Plenty of questions already in. So let's dive in. First of all, about S/4HANA and the Wave 1. Can you comment a little bit more about what you've learned from the process, because no systems integration usually happens without some teething issues. And we have a related question, why did you choose to roll it out in Liquids first? Mark Strickland: Shall I pick that one? So we've learned an awful lot through the process, far, far too much to sort of go through in this 30, 40 minutes. The biggest one is testing in volume. It's the volume testing, particularly in warehousing. We had a very, very narrow issue within what's called a V&A, a pick and dispatch area. Third-party logistics worked well. Third-party warehousing worked well, but Middleton has a very specific need for putting product into and out of what's called very narrow aisles. And we didn't test the volume enough through that. Ultimately, it worked, but we became a little bit capacity constrained. So testing volume was a big learning. Training was a little bit last minute, possibly need to do a couple of weeks earlier, but we also know we don't want to do it too early. And we also concentrated on what's called the happy path. So when things go right, we probably, in hindsight, should have concentrated a little bit more on what's called the unhappy path. So how do you correct things when they go wrong. But overall, I've got to say I'm very pleased with the implementation. There's lots of peripheral learnings. There always are. But I think the way the whole team pulled together really displayed the McBride ethos and the McBride values, both the project team and the site team. It was a combined effort. Sorry, what was the second part? Unknown Executive: Why U.K.? Mark Strickland: Why the U.K. Essentially because we had two instances of SAP, one in the U.K. and one in Europe. And the U.K. only had 2 sites. So it was the simplest to move across on to new SAP. We would have had to move 12 sites and we would have ended up with 3 different instances of SAP, whereas moving the U.K., we only -- we kept 2 instances. So it's a bit of an easy decision really. Unknown Executive: Understood. Thank you. A number of questions about inorganic growth. And Chris, you referred to your low EV/EBITDA rating, although it is improving. We have a question, is that a hurdle for you to make larger acquisitions? Christopher Ian Smith: Well, yes, I think certainly, when it was down at 3 and a bit times as a multiple, it was a huge hurdle. I mean, look, the level of M&A that we might be looking at and in fact, the inorganic can also extend to contract manufacturing opportunities with where you might need capital. You may not need new sites. You just may need to fill your existing facilities with new capital. The ranges of values that we're talking about are all manageable with our debt facilities. Look, we look -- there's a lot of benchmarks in the industry at the moment around what people are paying for home care businesses with the Reckitt transaction with Advent recently. We also know there was one in Spain recently. So we have a -- I think the industry is kind of honing in on what that range of multiples need to be. And I guess having got the share price back up a little bit and got better value for shareholders with our rating today, we get closer to making it not so meaningfully difficult, if you like. Look, and I think in most cases, on the M&A side, the synergy benefits can be quick. And therefore, we look -- we'll also look at speed with which we get that multiple down post acquisition with synergies. So we're acutely aware of the challenge around multiples, but I think we've narrowed the gap, and I think we know what we need to pay. And I don't think shareholders will be -- we're not going to be out there paying 8x or 9x for anything. So people shouldn't worry. Unknown Executive: Okay. And looking at potential targets, could you say in a perfect world, which we definitely don't live in, which segments or which region would you most like to increase or find bolt-ons to add on to the current structure? Christopher Ian Smith: Yes. Look, we will absolutely align our M&A targets and contract manufacturing, frankly, with the key missions and the strategies of the company, right? So look, we're a European-focused business. So we're not going to be, I suspect, suddenly acquiring stuff in the U.S. or South America. Our focus is in Europe. There's a little bit of obviously, focus in Asia around how we develop that business, that incubated business that Mark talked about to make that more substantial, a little like we've done with Aerosols, right? We've got that business now to be credible and valuable to us. And we're on the same mission, of course, with Asia. But look, the bulk of it will be in Europe. And then we talk strongly about the bulk of our activities are going to be in the higher-margin, high capability categories where we're strong. So laundry, dish, that sort of area, probably the main focal areas. Unknown Executive: You've pre-empted a question here about contract manufacturing. Is that another part of the business quite competitive at the moment that you would still be looking to grow capacity and scale in? Christopher Ian Smith: Totally. Yes. I mean, we've said strongly, we want to get contract manufacturing to be 25% of the business. We don't want to do that by shrinking private label. We want to do by growing contract manufacturing. We believe that 25% is the right level for us to have a kind of core, core layer of solid long-term partnership relationships with some branders for categories and volumes that may not be efficient for them to manufacture. So yes, absolutely, that's a key part of our focus, and it's another potential use of capital to create long-term value. So absolutely. There's quite a lot going on in the industry at the moment. So we're quite busy with potential opportunities, nothing certain, but there's more at the moment perhaps than we've seen for some time potentially out there. Unknown Executive: Yes. This leads on to a question about capital allocation and perhaps an opportunity for you to say how, how long gestation period certain acquisitions can take to come to fruition. But the question submitted is, how do you look at the contrast between value in your own shares and doing more buybacks or allocating it in terms of nonorganic growth? Christopher Ian Smith: Well, we're constantly looking and reviewing this, of course. I think we like to think of -- we believe we've got a short-term need sometimes like with the share buyback right now and the acquisition of shares for EBT. We recognize that we have investors that like the dividend stream, and we think that the share and the equity is a mixed proposition on index re-rating as well as cash from things like dividends and other shareholder returns. But we also recognize we -- the industry and I would say the McBride platform needs to expand in the mid and long term, and we recognize in this industry that consolidation of the space for the benefit of retailers. I think the sustainability journey and regulatory environment is going to become tougher, and you need to be bigger and bigger in this industry to lead. And I think -- so we have all those at play, and we have active conversations. I guess the Board's call here is at each juncture, what is the right decision. But I think we'll -- we've demonstrated in this last period a fairly agile and what's the word variable, not variable is the wrong word, mixed approach. We're looking at all options. Unknown Executive: Yes. Well, that's the benefit of financial health and the balance sheet that allows flexibility to adapt to opportunities, I would think. Perhaps a couple of questions for you, Mark, on costs. Impressive progress. And the question is, you can't add infinitum cut costs as a percentage of revenues. So what do you think is a realistic target in the medium term as the transformation benefits all work their way through? Mark Strickland: Yes. So I think it's a very good point. At the end of the day, on occasions, it may actually be worthwhile putting extra cost into the business because the benefits you get back from that extra cost far outweigh the cost. So I don't have a particular target in mind because it depends on the different segments of the business. So the different segments will have different overhead needs. As we invest into technology, I would hope that a lot of the speed of decision-making comes down, but also the cost of that decision-making comes down. But also, let's not forget that the software companies also like to put up the license fees as well for utilizing that software. So it is a balance. I don't have a specific ratio or a specific cost in mind, but I always talk about cost optimization, not necessarily cost saving because we can't save ourselves rich. We do have to invest in this business, and we do have to grow the business. Saving will keep us in business, but I don't know anybody that's ever saved themselves, rich. Unknown Executive: Wise words, wise words. And specifically, on input costs, we've got a comment, which is very true that you're not involved in the supply of precious metals or rare earths that can make some businesses in a particularly painful position at the moment. But are there any concerns within the supply chain more about the cost of shipping or anything like that as you move some of the basic commodities around to your sites? Mark Strickland: So at the moment, being honest, it's pretty benign. It's relatively flat, okay? We've got underlying inflation, but we can recover that through efficiency. So at the moment, we don't foresee any particular headwinds. The only caution I would say is we don't know what Donald Trump may do next. So I guess -- but that's a concern for everybody. But everything else being equal, we see the raw material environment, the shipping environment as being pretty benign. Unknown Executive: Okay. And probably also for you, Mark, you've mentioned that in the half, there were more -- the mix saw more lower-value products. Is there any specific factor behind that? Or might we see that rolling into the second half as well? Mark Strickland: I shouldn't get overly concerned that it's a lower headline price because ultimately, we're interested in pound notes margin. And it will depend on which retailer, which product sets, what we've won, what we've lost -- sorry. So there will always be a natural ebb and flow in our mix going through. So no, I don't think there's anything -- there's certainly nothing concerning me about our mix at this stage. Unknown Executive: I suppose related, not necessarily a question from McBride, but someone has commented that is there an ongoing trend of end consumers effectively getting less volume in their product at a higher cost. I suppose that all weighs up in the battle for market share with brands. Christopher Ian Smith: Well, there's a trend a bit some sustainability driven even cost of transport and so forth to compaction. So I mean, it's even quite variable across Europe. If you buy a laundry liquid in Southern Spain, you might have to need weightlifting training to lift your 4-liter bottle home. The same number of washes in Germany or the U.K. will be in a 1-liter bottle. And there is a perception -- potential perception of value gap when you make that transition because what you're buying looks a lot smaller. So -- but I think it's the right thing to do, and we will continue to progress that on the grounds of sustainability and -- we got a lot more bottles of 1-liter laundry liquid in a lorry than 4-liter bottles, right, and value too. So I think the value position for consumers is perhaps more driven by quality of performance than it is around pure value position in price points on shelf because the reality is that the private label continues to outperform many of the brands in tests and wider and wider audiences are learning that. And I think understanding the value option does just as good a job, right? So I think we will continue to fly the flag for private label as a whole, not just for McBride, of course, around helping consumers understand the value. It's not just a product for expression for poor people. This is for smart people because why do you need to spend twice the price and have no improvement in your cleaning performance. And by the way, most of the things you buy, you put under the sink and never look at again. So it's not that you're buying something beautiful to look at. So I think the consumers are becoming more savvy and the retailers are supporting that with their proposition. Unknown Executive: Then perhaps just a couple of more strategic questions to finish with. Can you comment as much as you'd like to about what your various competitors in certain divisions are doing? And also the same question for contract manufacturing. Christopher Ian Smith: Look, I think the industry as a whole is relatively steady, I would say, in the private label space. I think we see quite an orderly setup at the moment. Look, we've all -- the private label industry -- the private label share chart I showed earlier, which went from around 31% up to 36%. You think that's only 5% or 6% growth. But actually, it's 5% or 6% on 30%, right? So the private label space, the majority of the big players in private label are still active in private label. They've all grown with that market, and I think we've all been going through that. And of course, it's helpful when you -- we're a manufacturing business, right, putting volumes through manufacturing plants is always helpful in terms of overhead costs and recoveries. So nothing particular to comment, I would say. The contract manufacturing space, there's obviously some publicity around the Reckitt's disposal of home essentials into private equity hands. That's going through a transition at the moment. That may create opportunity. And we are seeing on average across the European space, at least and some to Asia where there's optionality being considered on outsourcing more perhaps than we've seen for a while. So maybe I'll leave it at that, Andy. Unknown Executive: Okay. And then I think good notes on which to finish. You referred that consistently to very good progress against the Capital Markets Day targets that were set a couple of years ago. So there is a question is, given that rate of progress, might you be reassessing some of those targets and setting further medium-term objectives in the not-too-distant future. Christopher Ian Smith: Well, look, look, we look at strategy every year. We look at our targets every year. We're not going to reset them every year, of course, in the public domain. But we would, of course, look at some point to update that and refresh that. We haven't set a time on that at the moment. In fact, Mark and I were just talking about it yesterday as to when that might be. But look, we are -- I'm a big believer in being clear on the direction we're taking the business, the understanding of that within our teams and for our customers and suppliers, of course, is super important. And we remain vigilant on adapting, course correcting, filling in gaps that we think we've missed all the time. So we don't sit still with those ambitions and those strategic ambitions. Yes, there will be a point maybe in the next year where we will have to do that update and refresh. But look, we're very positive about the progress. We need to continue to progress our medium-term ambitions of getting revenues over GBP 1 billion and EBITDA up to 10%. And Mark and I've always said that we wanted to continue to move the EBITDA up double again, right? And -- but we will need a bigger train set probably to do that than we've got today. But we're also going to do that in the right judicious way when the time is right. Unknown Executive: Well said. Great. Well, can I thank our audience for their interest and the very interesting range of questions. You will receive a feedback format of this event, which the company would be delighted if you could share your thoughts over. As mentioned already, the deck use is on the McBride Investor Relations page, along with lots of other materials. In terms of looking forward, which the company can't be too specific about, there is, of course, a recent equity development research note after the interims with, I'm glad to say, an increased fair value of 245p per share that these 2 gentlemen are smiling at approvingly that I'd recommend you review for further detail. Last but not least, of course, many thanks to Chris and Mark, and congratulations not only to them, but the whole McBride team on many years now of very impressive progress, which we hope will continue through the second half and beyond. So thank you for your time, gentlemen. Christopher Ian Smith: Thank you, too. Thanks, everyone.
David Baquero: Hello. Welcome to this presentation of Atresmedia. This year, we were going to give the presentation in Spanish, but you can also receive the translation in English. We have a simultaneous translation service. And Silvio Gonzalez, who is the VP, will give the presentation presenting the results for 2025 and a quick overview of the strategic plan update. and also the Financial Director and myself, helping with the question of the issue of the questions. Without further ado, I'd like to hand the floor to Silvio to present the results for the year. Silvio Moreno: Good afternoon. We're going to have a quick overview of 2025. And as always, 2025 was a complicated year for the sector for macro reasons and certain sections such as automation and also because there are different competitors in streaming platforms. And this has also meant that it's been a rather complicated and challenging year. And we try to be rigorous in terms of the application of our strategy in terms of audience and the market and our products. It's been once again a very successful year. We have been leaders in audience far ahead of our competitors in the field of audiovisuals, TV and digital audiovisuals. I apologize, but we are receiving continual interruptions in the audio. We can give you the following data. In TV, we had a market share of 26.1%. And as we will see, not just in terms of global -- in overall global market share of 28.15% with the premium markets, 22.6 million monthly, which is the leading platform in this country. And in radio, it's been an excellent year with more than 3 million listeners per day, which is the best figure since 2015. And we can -- this confirms the strength of our brands. In terms of markets, -- in terms of the advertising market, it's grown at approximately 1%. And in the 2 sectors where there's been -- for example, in terms of revenue, there's been a downturn in TV of 4.4%. And in radio, it's increased by 2.6%. This has resulted in total revenues of over EUR 1 billithey're, which is slightly lower than last year. And there's been -- well, audiovisual has also fallen by 2% in total revenues and radios by plus 4%. This has given us a pro forma EBITDA. Well, as you know, we carried out an incentive redundancy plan, early redundancy plan. The EBITDA is EUR 133 million. In terms of dividends paid in 2025, EUR 146 million. And we also have to take into account the impact year-on-year. The pro forma EBITDA is EUR 146 million and a net EUR 133 million and net profit, EUR 96 million. The financial position at the end of the year gives us a good net cash position, a very high cash conversion rate of 0.9. And it's been an exceptional year in terms of dividends. We've paid EUR 146 million in dividends at a ratio of EUR 0.64 per share, which is the highest since 2017. I think that the year 2025 has been an excellent year for our shareholders. And if we take into account share revaluation, and also high profitability, the total shareholder return for 2025 was plus 26%. But now I'd like to analyze the different pillars of Spanish advertising market of Atresmedia. The total market has fallen by 4.4% in TV, and radio plus 12.6%. Outdoor has increased by 6.7%, which is above the average for the sector. And you have to remember that this is a sector which is going to complement our results. And that shows you the performance of the advertising market in the outdoor segment in the last year. And you can see that the growth is not that high, but it's been constant since 2020. As always, we try to ensure that this drop in the market doesn't have an impact on our prices. We'll look at this later on, and we compare this with digital products in our offer to our 360 offer to our clients over the year. And the figures remain fairly solid in this respect. As regards audience share by groups, we have to see that it's been an excellent year. For 5 years, we are leading audience share, increasing the gap between ourselves and our next competitor. And that's important. In reality, we compete with Mediaset because it's the only commercial competitor that's access to the publicity market, the advertising market. There you can see also the curve for TV, which is the Spanish national broadcasting company, TVE, and that continues to be an important player within the advertising market. So it's been an excellent year in terms of audience share in terms of total audience share and also the total day and also in prime time. And this all gives us an advantage with respect to our main competitor, which is Mediaset Spain. As regards to audiovisual main milestones, we can highlight the following. Again, 2025, we've been the absolute Spanish leader. Atresmedia is the first, let's say, you can see we have 4 consecutive leading in total individual and prime time audiences and contents are of significant quality. And the audience appreciates that quality. Furthermore, we've consolidated our position as a stable channel with stable channels. We're stable in the mornings with our newest channels and both during -- at bid day and also in prime time. We are practically leaders in the majority of these slots during the day, and that's allowed us to achieve stable results. And the forecast is that we will continue to achieve good results in the coming years in audience figures and also in terms of the revenues we obtained from our business. As regards Atresmedia Digital, again, it's another year in which we're leaders in these different platforms among users in AVOD and SVOD. In AVOD, we have 2.5 million users, monthly video users and 18 million registered users and more than 750,000 subscribers as of December '25 and 20 million hours of video consumed with a local platform that's able to offer quality content and achieve a large number of subscribers. As regards Atresmedia Webs, of all of the products that we develop, which is not within AtresPlayer, we have the audiovisual group with the #1 audiovisual group and the seventh overall in terms of most visited sites with 22.6 million average for -- and then also in others in the digital sphere under influence marketing H2H, which is above -- growing at above market average and Smartclip, which has had a complicated time. It's suffered a lot, but it's maintaining its position as a company, maintaining its profitability, but it's been a complicated time in digital advertising. So I think that they've achieved excellent results and good penetration in that particular segment. And we'd like to focus a little bit more on Atresmedia audiovisual content. We increased by 10% year-on-year with 750,000 subscribers. And again, we've tried to adapt the prices for all of our subscribers, which has offered a good return. That hasn't affected our audience figures too much, and the results have been pretty good. Apart from that, the platform has been very successful, thanks to strategic mix of content. Disney+, for example, it's important to value quality and Disney+ values the quality and also the market position of our platform. Another important point as part of our 360 platform, -- and something which we'd also like to focus on at the end is the agreements that we've reached, the agreements with the main streaming platforms in the country such as Prime, Movistar, et cetera. And that's another important part of our business because this also allows us, thanks to the flow of content sales to develop products of quality, more expensive products and with a very loyal audience. And also in terms of international TV, we're also the leader in -- we've got 32% of the Spanish film box office in Atres Cine or Atres Films with 14 films in distribution. And in international, well, we have 58 million households, which is plus 7.3% year-on-year. It's part of our strategic plan. Well, we continue to maintain 58 million households, and that is also a way of generating additional revenues apart from those that we achieve in other segments. And in the middle of the year, we acquired the company, Last Lap. Last Lap is an events company, which focuses fundamentally on sports and also experiential marketing. And I have to be honest that the incorporation has gone very, very well. The second half of the year was much better than the year -- previous year in the same period. And additionally, we are going to merge this with the events part of Atresmedia. So this will give rise to a company with a turnover of approximately EUR 50 million. We're talking about an average of 3 events per day, and that will make us one of the leading events companies in the Spanish market. So this market is fairly fragmented, I have to say. And I'd like to talk a little bit about Atresmedia Radio. As I said before, our radio is working very well. the audience figures, approximately 3 million listeners and that is the best data since 2021 and the best data since 2015. So that's the figure for Onda Cero is the best figure since 2015, and Access Radio has achieved the best figure since 2021. Our prime time radio programs with Carlos Alsina has achieved historic audience figures achieving more than 1.7 million listeners per day. But apart from that, I think it's also the program with most credibility and the most rigor in terms of its journalism, let's say, in the field of radio in Spain. So we're extremely happy with the results that have been achieved with that program in 2025. And as regards the revenues for the entire year, well, there you have the figures slightly lower than the figures that we achieved in 2024, EUR 1,002.3 million compared with EUR 1,017.9 million. And there you can see the breakdown. OpEx pro forma that's ex post the incentive redundancy plan is EUR 86.9 million -- EUR 868.9 million, which is plus 3.4% compared with last year. To a like-for-like comparison, then the OpEx is -- would probably have declined if it wasn't for that. And in cost terms, we are very, very committed. The pro forma EBITDA, EUR 133.3 million, which gives us a net profit on a pro forma basis of EUR 96.3 million compared with EUR 120.3 million in the previous year. The entire pro forma results, well, EUR 45 million, which corresponded to the redundancy plan, which have been provisioned accordingly, but the impact on cash flow is something that is felt during the entire period. So it doesn't reduce in any way the cash flow structure of the group and the financial structure that we have. We analyze now revenues by segment. And we can see how this EUR 1 billion has been distributed. There you can see the figures for compared with financial year 2024. And fundamentally, well, the main decrease has this been downturn of EUR 49 million in audiovisual. We are going to -- we've managed to offset this with improvements in content production and distribution of EUR 1 million and others in perimeter, EUR 29 million. That's a total of EUR 30 million. In contrast, radio has performed much better with an increase of plus EUR 3 million, increasing from EUR 83 million to EUR 86 million. Therefore, we're trying to ensure that the weakness displayed by the audiovisual sector this year is bolstered and led by the incorporation of companies that are leaders in other sectors, which will allow us to achieve greater stability. In terms of OpEx by sentence, by segment, there you can see EUR 869 million in the total group compared with EUR 840 million last year. If we consider the contributions of new perimeter companies, then OpEx by segment would be more or less flat line or possibly negative in some instances. So we continue with the idea of adjusting in cost terms with a view to maintaining our quality and our competitive quality because that is something that will allow us to generate income, revenues and based on a pricing policy that ensures that we are clearly the group that offers better prices compared with the competitors in the rest of the sector. As regards to EBITDA, well, -- the EBITDA in 2024 was EUR 178 million, which has dropped to EUR 133 million. Most of that decrease corresponds to the group's audiovisual segment for the reasons I explained before. The performance has been much worse than we expected compared in the publicity market. Some sectors have virtually disappeared such as the mobile banking sector, publicity. And that is largely due -- and also there's also not mobile phone, it's the automobile sector. And there's also a lot of uncertainty regarding the impact of electric vehicles. And we're also observing that the automobile market -- publicity market is actually increasing this year. As regards Atresmedia cash flow, well, there you have the figures there. In 2024, plus EUR 140 million, operating cash flow, EUR 126 million. And again, we've had EUR 146 million for the payment of dividends, M&A, EUR 22 million. Therefore, we end with a net financial position of plus EUR 58 million, high -- a strong financial stability. Okay. Let's move on to our strategic overview. Well, we've tried to -- you have to highlight the cost discipline that we managed to maintain and also maintaining a leading position. We've also tried to incorporate in our perimeter companies that are in sectors that have great growth capacity in the future, such as Last Lap and [ Cera ] and the companies I mentioned earlier. In terms of Atresmedia strategic overview, -- we would like to highlight 7 pillars or levers on which we have based our strategic plan. Although the strategic plan has to change and adapt to the changing environment, we believe that these are the different areas that we really have to focus on. First of all, consolidating leadership in audiovisual radio. We must be leaders in audiovisuals and radio. That's fundamental. It's essential that we continue to produce good content. Digital is core. It continues to be in the new segment because that's the only way that we can really offer a product to the market, which is of interest to our listeners and to our viewers. So that is a challenge that we consider to be essential. And we will fight to maintain our leading position. We've been leaders now for 5 years. It may seem easy. But whenever the actual -- the market changes, we have to adapt as well. And it's essential that we -- our contents and products are accepted by our users, and these are things that are often outside our control. We continue with the idea of maximizing content exploitation cycle and becoming increasingly efficient in these areas. Our aim is to ensure that leadership in audiovisual production is something that we have to extend very, very clearly throughout the whole of our perimeter. Apart from being leaders, it's essential that we have new products. And these new products will allow us to ask higher prices from our users in the market. We ended the year with a gap with respect to Mediaset of approximately 27%. So clearly, we are perhaps in the high pricing slot the gap compared with 2008. And in the case of radio, well, you have to consider the different revenues that are generated per listener in the industry. We have the highest revenues per listener in the industry. We want to continue being leaders in audience share in commercial products, and we want to maintain our premium pricing because we want to try to ensure that we can offer content that offer greater quality for -- and also are much more profitable for our advertisers. Some time again -- well, some time ago, we developed our audiovisual platform, AtresPlayer. And this is an essential element in our roster of services. We've not just incorporated traditional audiovisuals, but also our AtresPlayer platform with the AVOD and SVOD options. The idea here is to ensure that we're able to optimize our inventories and to try to get the most out of the product. We want to continue with our pricing policy review and also explore new distribution agreements and also empower our international SVOD platform or payment platform. So the idea is to explore digital as an essential element as part of the pack, which also is accompanied by special prices because, as you know, some of the low prices are not that interesting for us. We want to occupy the premium audiovisual market with prices of approximately EUR 13 or EUR 14 per, which is almost 7x more than the EUR 2.5 of traditional television. That's just for comparison purposes. We've also demonstrated that our commitment to content and the ability to actually develop all of the spheres in which we operate is a strategy that clearly yields successful results and generating revenues from every single element, no matter how small it is within that package is essential. And I think that the operation has been exceptional in the last year. In the case of Netflix, well, there was a good operation there. And we've also achieved the leading Spanish-speaking series on Netflix last year. Another example, we can also see how in each of the different segments in which we operate, this is something that we're really exploiting. So I think that we're really exploiting all of our products and trying to get the most value-added and revenues from those products. That is a strategy that we've seen has worked very well, and we have to continue developing this. We have to continue to support and reinforce that because through that strategy, we've been able to maintain stable and significant revenue. In the area of content production, we have decided that if we want to become leaders, we need to be leaders in quality and also leaders in content production. Approximately EUR 400 million each year in content production. This means that we are leaders by a long shot. And we've increased our production in Spanish producers because apart from giving good financial results, it also allows us to establish a very close relationship with the content producers. And that is something that we want to maintain as part of our strategy. We continue to be leaders in fiction and cinema. And the aim is to continue the trend that we maintained in previous years. We would like to improve production processes by incorporating AI. Many production processes are done now almost exclusively with AI. So we're incorporating AI in our, let's say, way of working. And we've always said that we believe that AI-based processes can control quality. And this is fundamental, particularly in the case of news programs and current affairs programs. We want to be responsible producers. We want to ensure that everything is controlled. We don't want to have problems for young viewers caused to -- due to errors committed on the part of our teams. We don't want to just base our production process on AI. We need the human element as well. But we always have to incorporate this vision into our production processes. What else have we done? Well, I have to mention Last Lap, as I highlighted earlier. It's been one of the most active years in the history of Atresmedia in terms of corporate operations with EUR 17 million in Last Lap, and they achieved better results than last year. In terms of the synergies with Atresmedia events, this will give us a combined revenue potential of EUR 50 million. And we believe that since they have a presence in Portugal, this has enormous opportunities for organic and inorganic growth because it's a very dispersed sector. And we believe that we can consolidate our position there. As regards to Clear Channel, the price of the agreement is EUR 115 million to acquire 100% of Clear Channel Spain. It's a strategic operation in the outdoor advertising segment. We are in the process of achieve -- we're awaiting approval by the CNMC. It's expected in the first quarter of 2026, but this is something that we don't control. So we expect that by the end of the first semester of this year or if not the first quarter of this year, then we should receive approval from the CNMC. We have high hopes with this acquisition. We believe it's a digital component that will give us a greater variety and possibility to digitalize other areas, and this will generate more value. And apart from offering a higher quality offer, it's something that we have great hopes for. And as always, we are really focused on improving our efficiency. We've developed this voluntary redundancy plan. And also, we've also tried to work on a restructuring process and action plan for rapid implementation. And the aim of this plan, it's 136 people that will be affected by this voluntary redundancy plan. And it's part of this objective of becoming more efficient. And I think that the corporate climate in Atresmedia is enviable for many of our competitors. And we aim to improve all of our internal and commercial processes to become more efficient and more cost efficient as well. So in the area -- again, we want to incorporate AI in our commercial processes, but it's also important to highlight that year after year, our commercial area is one of the most innovative commercial areas and which is capable of offering more innovative products. This year has been key. And it's one of the reasons why we are key players in our premium segment. And we hope to generate better returns, and that will continue to be the case. And every year, well, that area has done their job very, very well, and it will continue to do so. So we expect that we will see in 2026 continuing in this process of corporate efficiency as a priority. Yes. And to summarize the year, I think it's important to highlight our efforts to maximize shareholder returns with a total shareholder return of 26% dividends paid of EUR 146 million with a dividend yield of 13%. It's an estimated operating cash flow ratio with respect to EBITDA of 0.9. And in M&A, we would like to explore markets which we believe can actually add something of value to our group. And these are part of the targets that we have set. and which will fundamentally support the audiovisual area. So it's been a complicated year from the market perspective, but we performed relatively well. And for shareholders, it's probably been the best year in the history of Atresmedia. What do we expect for 2026? Well, we expect a difficult year, a difficult year. It's clear that the geopolitical and economic uncertainty and shocks don't cease, they continue. So it seems as if we're always living on knife's edge. Because of what's happening in the States, the markets are going up and down. Nobody ever knows what's going to happen with Iran, for example. So the macroeconomic situation is rather complex, rather complicated. As regards Atresmedia, we expect following the poor performance of the audiovisual advertising market last year and largely due to the uncertainty. Part of this may have been resolved, but we're not sure if any other additional uncertainties will occur. We expect the audiovisual market to more or less be flat. The radio segment will increase slightly at approximately 2%, 3% growth is what we estimate. But in outdoor, we really believe that we will achieve midrange growth, much in line with this year, like 5% or 6%. Therefore, total revenue for Atresmedia will be more or less stable at constant perimeter. And we would have to add the revenues generated by -- Last Lap in the first half of the year because we integrated Last Lap last year and also Clear Channel. We expect an EBITDA margin of somewhere in the region of 15%. And we also expect to end the year provided we -- these forecasts are fulfilled with a net financial position of minus EUR 25 million because you have to take into account that we've included the payment of dividends, the payment for the acquisition of Clear Channel and also we're pending a cash-in in the region of EUR 45 million from the tax authorities following the decision of the Supreme Court, which certain rulings that were issued before against us. So we hope that, that is something that will be concluded in the first semester of the year. The Board at its meeting yesterday, and this was supported by the general shareholder meeting, a complementary dividend of EUR 47 million, EUR 0.21 per share, which is the same amount that was -- or the same ratio as in the interim dividend. And so -- we have the feeling that there's a great deal of uncertainty in the market. We have to maintain our clear strategy, a strategy that is reasonable, but is also yielding results. We consider that it's important to maintain market prices. And to do so, we have to be creative and innovative, offering new products in the audiovisual digital sector. And we are optimistic because we believe that the contribution of the companies that we've onboarded in our perimeter will be very significant for our group. So that is how we see the year 2026. Thank you. David Baquero: Thank you. We now have a Q&A session, and we would like -- we would be delighted to answer any questions that you may have. Operator: [Operator Instructions] And the first question is from [indiscernible] from Bestinver Securities. Unknown Analyst: I have 3 questions regarding audiovisuals and one about Clear Channel. As regards audiovisual, the first question is last year, we saw a significant deterioration in the relative performance of TV compared with other platforms or media. I would like to know beyond the trends that you've highlighted in the sector, I would like to know what you consider the reason for this deceleration in the relative performance of TV is. Do you believe it's due to, on the one hand, the increase in audience of TVE, which has been promoted by strong public spending. And I know that you don't compete there in publicity, but you do an audience share? Or do you believe it's due to the eruption or the sudden appearance of many of these strong streaming platforms? What are the reasons do you consider for this different performance compared with other media? And secondly, a clarification because it's possible that I didn't read the slides properly. But in the presentation, you referred to publicity performance that's flatlined in audiovisuals, but the results that you presented indicate that you expect that audiovisual investment will improve with respect to last year. So I just would like to understand if you're referring exclusively to television or if it includes TV and digital. It's just to obtain a better clarification about what that concept includes and a better explanation about that flatline growth and the type of performance that you're beginning to see this year in the different segments. And the final question regarding Clear Channel. The question is if the delays in the decision of the CNMC is causing any impediments in this process. And with the integration of this company, what would be your management priorities in the short term? Pricing? Or what do you consider to be the main objectives there? And I apologize for the long questions as a gentleman. Unknown Executive: Thank you. I'll begin with the final question, Clear Channel. Well, Clear Channel surprised us a lot because we thought that it was going to be an operation that wouldn't have arouse too much doubt in the minds of the CNMC. In fact, it's also a interest in the market. We didn't expect this lead to such an in-depth analysis and these delays as is occurring. We haven't received any latest information from the CNMC regarding the process. So we've got no idea what the result will be. And whether it's an operation that they will approve without any further queries or whether we'll have to do anything more. And why is it good for the company? Well, the company has got a problem. I'm not sure if you know. All Clear Channel operations in Europe, I think it's only Spain remains. And there's also been a purchase by the parent company in the United States. We apologize, but the quality of the audio is extremely poor from the main room. And I think that they're also considering the impact this will have on their shareholders. So the situation is not good for Clear Channel either. I believe that Clear Channel as well as the majority of outdoor platforms or media have a certain process of digitalization to undergo. We have to consider the role of digital media, and we consider the contribution will be significant because at the end of the day, that's also a way of generating audiovisual products that many people can see on digital platforms. So we believe that the future is very positive. And what do we consider to be the reasons for the decrease or the decline in the audiovisual market? Well, in part, it's due to the situation of uncertainty in many sectors. So they are holding back on their investments. And for example, one example is the automobile sector. And this is important in terms of volume and price. Our revenues comprise 2 main pillars, the subscribers who acquire premium products at premium prices. And at the end of the day, we've observed that -- there's been little change in some segments, but there's been an overweighting of household spending compared with added value. And this has led to a decrease in the value of the market. Again, we apologize, but the audio from the main room is extremely poor, and it's very difficult to translate. As I said, such as the automobile sector, this year, we hope that there will be a significant improvement. But that's one of the reasons why the market fell last year. Competition has hurt us because it was the first full year of streaming platforms. And and also the cultural sponsorship -- the sponsorship of cultural programs by TVE, which is the Spanish national broadcasting company has also hurt us. It's important to maintain strict cost control. We're able to produce quality products being efficient and highly dynamic and efficient in costs. As regards to the other question that you had regarding whether the market had flatlined, we were performing more or less the same as we did before. We expect our performance to be very similar to last year, as I explained in the strategic overview. So when we talk about an improvement of the market, we expect it to improve with respect to last year. In the first 2 months of the year, in January and February this year, the performance has been negative, but better than we expected because as I said, we've managed to recover in certain areas. And we'll have to see exactly how the year evolves. But at the moment, we are actually better than we initially expected. And we'll have to see how the year evolves. And I think that I've answered all the questions there. Operator: The next question comes from Fernando Cordero, Banco Santander. Fernando Cordero: The first question concerns the comment that you made. about the importance of audience share leadership and also with respect to your main competitor in 2025, that audience leadership, when we also look at the evolution of the public television channel, it's the question about the difference in market share. I would like to know what the difference is due to and whether you believe that it's something that the market will end up reflecting. Do you believe that that's a relative performance on your part? And secondly, as regards your diversification policy, with Last Lap and Clear Channels in corporations, where do you think that you would have to grow in the medium and long term? Unknown Executive: As regards to audience share leadership, it's important to remember that our main focus is on leading audience with respect to Mediaset, which is our commercial competitor, although we would like to be the global leaders, which we are, but we would always like to try to be the audience share leaders with respect to our main competitor, not the public channel. If you were to -- although there's been a decrease in market share, if you look at the evolution of market share or audience share, there's been a certain degree of flexibility evident. -- the market share that we obtained between both of us is very high. In the first 2 months of this year, based on the data we have, we are actually improving our share. We have seen that there is a certain degree of structural stability in audience shares in the market between Mediaset and ourselves. In terms of diversification, well, everything related to publicity, the advertising market and all of the variables you have to consider, whether it's marketing, new media or platforms or highly digitalized platforms or media. You have to remember that we are actually working very strongly on the digital segment of the market, which is one of our main lines of action. And in the area of content, we believe that it makes sense to commit to that area significantly. But these will continue to be minority participations in, let's say, a producers. Perhaps economically speaking, they may not be performing as well compared with the in-house production, let's say. So we're analyzing different opportunities. executive opportunities, and we're also looking at opportunities for new markets where the prices are attractive. and where the markets are mature. And we're focusing on that at the moment. But at present, we don't have any operations in the pipeline, any other operations in the pipeline. We will have to see how Last Lap evolves and also Clear Channel once that agreement has been confirmed because these have been the 2 most important acquisitions that we have made since the creation of the company. And then we have to consider the net financial position of EUR 25 million -- minus EUR 25 million. We have to consider our participation in cyber and what could happen with cyber between now and the future because the value there is important. Fernando Cordero: Just one follow-up question regarding the first reflection regarding audience leadership. And I'm very grateful for your comments that you've seen that the market is -- has a structural distribution. Given that scenario, how would you reflect on reflecting that market situation where cost evolution is less flexible and extrapolate that to your investment in content for Open TV? Unknown Executive: I would say that the audiovisual market which is related to more traditional TV is where things are more stable, where there's an important difference in share is in digital with respect to our main competitor. I have to say that the digital market is still developing, still evolving. So we've got still quite a lot to discover. In terms of our aim to maintain leadership at other times in the life of the company, we've always focused on trying to maintain that leadership. And this also allows us to maintain a premium pricing, which is very important for the company. It's true that there's not much flexibility in the audience share, but there has been some variation. And we've noticed that we have increased our market share, our audience share with respect to our nearest competitor. But given the wide range of products and offer, it's not easy to achieve changes in audience share. We don't expect major improvements in revenues. I'm referring to old style TV. But in terms of our capacity, let's say, our vision for the universe by that, I refer to all of the different segments, whether it's AVOD, SVOD, content production, et cetera, that is where we can achieve better revenues. In short, it's true that traditional audiovisuals is in the period of maturity. And we believe that content production in the digital universes where we can achieve better results and better revenues. The work we've done there has been very good, but we still think there's still a lot to be done. And Fernando, let me just add one more thing. It's true that the audience shares or the audience share figures have been very similar with respect to last year. And -- but I think that a difference of 2% in audience share compared to the nearest competitor is quite a lot. It's approximately EUR 30 million or EUR 15 million, the gentleman corrects himself. So that has a big impact on results. that percentage difference in audience share is not so important, but rather the value of the content that allow us to be leaders in all of our different windows or slots. I don't think we could separate from our traditional TV lines. We couldn't separate that differential product compared with television, which may be 10x better if we didn't have those types of contents with those -- with the audience. Operator: [Operator Instructions] And the next question comes from Inigo Egusquiza from Kepler. Íñigo Egusquiza: I have 3 questions, very quick questions. Firstly, Silvio, a follow-up on something that you mentioned regarding publicity in January and February on television this year. If you could quantify a little more from things that I've discussed with other people in the sector. I understand that January and February, there hadn't been as significant decreases in October and November, but there had been increases in publicity indeed. I'd like to have -- ask if you could give me a little bit more detail about those figures. And secondly, the OpEx figure for 2025, you mentioned various times that if we were to exclude the new companies that have been integrated in the perimeter, it would have [ outlined ]. Could you explain that OpEx figure a little more? Because from the figures that I have in mind, -- Last Lap had a higher OpEx, but I think that you've only consolidated H2H. So I'm a little surprised that, that increase in OpEx in 2025. Could you clarify those figures a little more? And the third question is more about the guidance that you've given for 2026. You referred to the EBITDA margin and returning to 15%. In 2025, I think it was in the region of 13%. Could you explain a little given your revenue plan, I understand that this has been due to improvements in your OpEx figures. Could you explain the impacts and also explain the savings in the voluntary redundancy plan, which I understand is going to be rolled out gradually, but perhaps you could specify and give us more details about those figures. Unknown Executive: As regards to your comments about flatline OpEx, it's important to remember that Last Lap -- the acquisition of Last Lap took place at the end of last year. And that means that if you were to exclude the OpEx of Last Lap and a company that we incorporated called the equality or something, this would mean that the OpEx growth like-to-like would be approximately 7%. That's the explanation regarding OpEx. Secondly, as regards to the period of January to February, the publicity or the advertising market is seeing a decrease of approximately 5%. In our annual plan, we expected that to be greater. So we're more or less in line with what was actually forecast. But that was the performance in January and February. And the final question, the third question was, well, our challenge there is to be more efficient. We would like to reduce costs in relation to each of our products. That's a challenge. And obviously, when you start to embark on new areas of business, it's difficult to obtain higher margins. In the case of Clear Channel, the margin was 18%, and it could probably increase. So we're now thinking about the effect that this could have for Atresmedia. That's the idea there. Operator: There are no more questions at this moment in time. So I would like to hand the floor to the speakers. David Baquero: I would like to thank everyone for your questions. If you have any doubts or questions following this presentation, we will be delighted to answer. Thank you very much for your attention, for your participation, and we wish you all a very good afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]