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Rutger Relker: Good morning, everybody. Welcome at our full year 2025 results presentation. It's good to see so many of you joining today's webcast. I'm happy to introduce to you our CEO, Stephane Simonetta; and our CFO, Frans den Houter. Stephane will kick off the presentation with some business highlights, followed by Frans, who will give an update on our financial developments. Stephane will then share some insights on strategy in action and provide an outlook for the year 2026. After the presentation, we will give you the opportunity to engage directly with us via the Q&A session. Later today, we will make both the presentation and the recording of today's webcast available via our website. Please welcome Stephane to start the presentation. Stephane Simonetta: Thank you, Rutger, and good morning, everyone. Let's start this presentation with a few key messages about our 2025 results. First of all, it is no secret that our performance has been impacted by the continuous short-term end market softness. And during the year, we have been focusing at Aalberts in what is within our control where we could still take action, and we did some good progress in our operational excellence initiative in order to protect our margin. Very good progress in free cash flow improvement with lower inventory, lower CapEx. Very good progress. This is for me one of the key highlights in '25 with our portfolio optimization with great acquisitions and also progress in our divestment. But '25 was also the first year of the deployment of our Thrive 2030 strategy, a foundation for future growth. So in a year when on one hand, we celebrated our 50th anniversary at Aalberts, we took a lot of action to strengthen our portfolio, improve our position and navigate through the end market challenges. The results going into the numbers, and Frans will give you a more details in the financial development. So EUR 3.1 billion revenue with a negative organic growth of 2.5%, EUR 410 million EBITDA equivalent to 13.2% of revenue and sustaining good added value margin of 63%, more than EUR 360 million free cash flow, CapEx at EUR 189 million and as a consequence, an earnings per share at EUR 2.61. In terms of shareholder returns, we are proposing a stable return with a stable dividend at EUR 1.15 and starting a new share buyback program of EUR 75 million. Many of you know us. Let me just remind you the value proposition in our 3 segment. In our building, we are engineering solutions in heating, in cooling, in sanitary system, mostly in residential and commercial building. In industry, we are providing services to all the global industrial OEM in Europe, in U.S.A. with heat treatment, with surface treatment, and we are helping our customers to improve their energy consumption. And on semicon, offering system solution to all the global OEM, not only in the front-end, but now also on the backend side of the value chain. So definitely, we want to continue to engineer mission-critical technologies, enabling a clean, smart and responsible future. And when we look at the long term, why Aalberts is still very well positioned for the long-term growth driver because we are very well exposed to 4 global trends. These 4 global tailwinds, which are urbanization, technology acceleration, reshoring and decarbonization. Long-term value creation is still very well promising. Now let's go to our operational development in 2025. How did we do in building? How did we do in industry? How did we do in segment? Starting with the global revenue. The breakdown of our revenue by segment, by end market, by geography and by SDG goal. So on the geographical side, no major change compared to last year, same on the SDG exposure. And you can see that building is still 50% of our revenue, industry 35% and semicon 15%. I'll come back to the exposure by end market during the next slide. Our strategy is the same. We want to have leadership position, and we want to be aligned with attractive end market. And so where we are investing is definitely aligned with some of these megatrends. Our performance by segment, a mixed picture. We will not repeat again what I said earlier, but we are back to growth on building with 1.3%, still a moderate organic growth. But of course, the margin has been challenging with 11.7%. Industry, better organic growth than last year, but still minus 2.8%. And this is where also we sustain very solid margin at 17.2%. And in semicon, as you remember, it started in the last quarter of 2024, and we have seen quarter after quarter still the destocking ongoing from our customers. Now it is coming to an end, but '24 was still -- '25 was still minus 13.8%. And our margin as a consequence, down to 11.9%, but also with a conscious decision for us to sustain our capability for the long term and not go too low in our cost optimization. Now let me go through each segment and tell you some of the highlights and some of the low light. So in building, on the good side, on the market, continued growth in commercial building in our key prioritized verticals like data center, like hospitalization, like district energies, and this is where we continue to optimize. Very good solid growth also in the U.S.A., in our overall segment and more challenge in France and Germany, more challenge in our connection system, some of the highlight on the market side. And on the performance side, we continue to optimize our footprint, continue to drive operational efficiency and are now also accelerating purchasing initiative to get back to a more robust margin in the coming years. Looking at the market trend, you see what we face in '25 and what is our view about 2026. So more stable trend on 2026 in residential building more positive on commercial building and also on infrastructure industry and utility building. So we continue to have very good position in residential building, but we don't expect major growth on the market side, and we actually see many growth opportunity where we are also pushing organic growth initiative in commercial building and in infrastructure. That's our view about the 2026 market. Now if I go to the other segment with industry. So -- where did we do well in '25 with a good growth with good organic growth in aerospace, in defense, in power generation and where we face the most challenge has been definitely in automotive, in the machine build and that's also what we continue to see in '26. Solid margin, we continue to drive operational efficiency, further footprint optimization and have the success to continue to deliver such a good performance. And the market trend, a bit similar to 2025. Actually, we see automotive now coming to a plateau with a flattish organic growth. Same for machine being and other industrials, but more positive, and we continue to see more order, more positive growth on aerospace, power gen and defense, where our order book in some part of the business is really increasing. So positive momentum, some more stable. And semicon, I mentioned it already, challenging on the front-end with the destocking from our customers, but we start to enjoy the growth of backend only two months since the acquisition of GVT. Very good also progress in defense in this segment where we have some of our technologies, some of our factories also supplying a major OEM in the defense area. And as you can see now in our breakdown by technologies, you have a new segment called system build and qualification, which is actually what we do in GVT. I'll come back later about our backend exposure and why we are so excited about the future growth opportunity. And here for '26, it's actually more positive, right? We see growth in the front-end, even higher growth, growth in the backend and growth in other industries. So more positive based on what we see on the market trend, based on what we see on our customer order book and all the requests we are getting. So a positive momentum going forward. And to conclude the 2025 operational performance, very pleased, very happy to report that we are still on track with our sustainable commitments, still with more than 70% of our revenue linked to sustainable development goal. We are reporting 71%. And year after year, continuing to reduce our CO2 emission in Scope 1 and Scope 2 absolute emission also based on the portfolio, acquiring company, divesting companies. So good progress, aligned with our targets. So pleased with the performance on the environmental side. And that's what I wanted to share for our 2025 operational performance. Let me now hand it over to Frans that will give you an update about the financial development of the year. Frans den Houter: Thank you, Stephane, and good morning, everybody. And indeed, let me talk you through the financial developments of 2025. First of all, on the revenue, you see on the left here, the challenging market circumstances resulted in a negative organic growth of minus 2.5% and the year ended with a total of EUR 3.09 billion. On that revenue, we delivered 13.2% EBITA margin, which is 1.8% lower than 2024 and translates into EUR 410 million of EBITDA. The net profit landed at EUR 284 million. We have been focusing on finding the right CapEx balance, and we aim to be below EUR 200 million by year-end, and we landed the number for CapEx on EUR 189 million, still investing in the future of the company in organic expansions, in innovation, but also being mindful of the cash impact. As such, free cash flow number is really strong, EUR 361 million, 64% conversion, really a good number, of course, reflecting the CapEx that I just discussed, but also inventory, net working capital, and I will come back on that in a bit more detail in a slide to come. So 30.2% margin as a conclusion in a challenging market for the year 2025. Let me give you a breakdown of our revenue impact. And first of all, corrections for the M&A. In the acquisitions, you see EUR 105 million plus, basically driven by the acquisition of SGP in 2024, and we did 3 acquisitions that we completed in 2025. Geo-Flo, Paulo and GVT were added to the portfolio and delivered, as I said, EUR 105 million. On the divestment side, in 2024, we divested EPC and December '25, we announced divestment of Metalis and also confirmed that we have reduced our shareholding in KAN to 45%. With that, that company is now accounted for as an associate and no longer fully consolidated in our books. EUR 59.6 million minus on the divestment in terms of revenue. ForEx did not work in our favor in the revenue side, specifically the U.S. dollar, minus EUR 26 million. And the organic decline translation of the minus 2.5% total EUR 77 million, bringing it to EUR 3.09 billion on the revenue. If we then go to the EBITDA breakdown, again, of course, the M&A impact, and you see for the acquisitions that we've done, really a good contribution to the EBITA margin, EUR 18.7 million in the first year of integration. And on the divestment side, as we have progressed our portfolio also there, the minus EUR 4 million is the impact on the EBITDA. Of course, also a small currency effect, minus EUR 3 million, basically also predominantly the U.S. dollar. And then the organic decline on EBITDA is EUR 73 million. And that requires a bit of context because there are a few elements in there, I would like to highlight. First of all, minus EUR 20 million on inventory, a noncash one-off correction as we have revised the group accounting policy for inventories to make it more robust and aligned throughout the company. That again, resulted in a minus EUR 20 million noncash correction. On holding elimination, we see a year-on-year deterioration of EUR 10 million. I will come back on that in the next slide. And then the remainder is really the drop-through of the lower revenue that we saw in the previous slide. Also, please bear in mind that on semicon, we have been careful in flexing our costs as we see and want to be prepared for the growth in this segment in the short future. Totaling EUR 409 million, 30.2%, basically most important driver, the lower organic decline. Coming to free cash flow. I already mentioned we're very happy with this number, EUR 361 million. That's a healthy free cash flow. We have a 64% conversion, which is 10% higher than the previous year. And we -- in the waterfall, you see, first of all, of course, the negative impact of the lower performance, almost EUR 60 million of EBITDA impact on the cash flow in a negative way and that we knew to compensate with CapEx and net working capital. In the line item other, there's a cash out on the provisions that explains this item. On a earnings per share bridge, yes, you, of course, see here the translation of the lower organic performance also in the EPS impact, EUR 0.3 the biggest one in this list, but also be very mindful of the financing costs that have gone up with EUR 0.13 as we have increased our debt level in the company with EUR 300 million to support the acquisitions that we have done. Yes, acquisitions and nice to see also that the acquisitions contributed positively and were value accretive from an earnings per share point of view. Small impact positive from the share buyback and then totaling the earnings per share on EUR 2.61 for 2025. On the segment reporting, yes, Stephane already showed the revenue and the profitability, but here, you see also the CapEx that we added. If you look in the building segment, be very mindful in the 11.7% EBITDA margin, there's also the impact of the one-off noncash inventory correction of EUR 20 million that I just explained. But also please be mindful of the CapEx, where you see really almost 50% reduction. As we have been investing also in '24, in preparing for growth, you see this year that is more a modest number. In industry and in semicon, CapEx numbers are in both segments comparable with the previous year. Well, in industry, we keep investing, of course, in our footprint and in expansion and also good to see 17.2% EBITDA margin in a challenging market. I think still earmarks a resilient performance in that segment. In semicon, markets have been tough, but still, we are fully confident in the long term. We have invested in an acquisition in a nice company called GVT, but also you see here that the CapEx is still of a high level, EUR 53 million. As we also invest in our new factory in Dronten, which will come into operation early 2027. So you see still there a lot of assets that we are having under construction in this segment. As I said, holding elimination in the last column requires a bit of context. We see a minus EUR 4 million in 2024 as a comparable number. Please be mindful that there was an insurance claim proceed in that number. So that number was really lower than it normally is. For this year, 2025, minus EUR 14.8 million, which basically translates the normal run rate of holding cost. We earmarked that between EUR 10 million and EUR 50 million, and that number is in this range and comparable with last year. On top, the movements in '25, there were significant additional M&A costs. You already saw some of that in the first half, but we have been able to compensate that with the book profits on the divestments that we have done. So that netted out. That was circa EUR 30 million of book result compensating the additional M&A costs and bringing this to basically reflecting the normal run rate on holding cost. In the tech line, you see at the bottom here, low profitability due to challenging end markets. I think that summarizes from a P&L point of view. If we go to the balance sheet, on the left top, net debt increased with EUR 300 million, I already mentioned, which translates into a leverage ratio of 1.8. Yes, we target always to be below 2.5, and we're comfortably below that number. We already deleveraged a little bit, of course, additional year-end because of the proceeds from the divestments that we have done. And then with that, a leverage of 1.8x. On the equity side, we see, of course, the impact of the lower result, but also, again, the dividend that has been paid and the share buyback had impact and yes, a small step down in solvency, but still 56.1% earmarks a resilient company and also has the balance sheet to support the Thrive 2030 agenda in the coming years. The capital employed and the ROCE at the left bottom, yes, ROCE has come down with 2% to 12.7%, partly because of the majority is explained by the lower profit from the P&L. And the other part is because of the increased capital employed, which is driven by the higher debt that we also just touched on. A bit more context on net working capital because there, yes, we see really an important step from 80 to 71 days, EUR 563 million net working capital, reflecting lower inventories. We improved our inventory position with 12 days to 82 days DIO which is a good number. We had a three day improvement on accounts receivable and a six day lower accounts payable, which then compensates the other two parts because the lower payable position is a cash out, of course. And with that, on balance, a nine day improvement. If we go into a deep dive a little bit on the 12 improvement days on the inventories, there are a few elements to mention. Roughly half of it is really hard work by many people in the organization, managing our stocks, managing our supply chain and really understanding well what the forecast requires from our inventories. That is half of the progress. The other part, we were also supported with some tailwinds. Two days of ForEx, for example, in our favor. The whole M&A mix and the impact on inventory was also another two days, and the inventory item, the noncash EUR 20 million correction that I've discussed earlier translated in a two working day improvement. So six days of one-offs and the rest is really because of progress on inventory management, which was absolutely in a good step in 2025. Then let's go to the exceptional costs. Three items in there totaling EUR 84 million. First of all, operational excellence, EUR 40.8 million. Yes, we keep making our -- progressing on our efficiency programs and drive operational excellence into the organization. And with this EUR 40.8 million, we target a yearly reduction of EUR 50 million as a benefit. Then EUR 28.9 million as an impact from the write-off on investments. The majority of this is explained by semicon innovation where we have been investing money. But yes, we do not see the perspective on how to commercialize this. So it's a nice technology, but we have no -- not sufficient confidence and perspective on commercialization, resulting in a write-off of EUR 28.9 million. In 2024, the company has already decided to exit Russia, which is a lengthy and complex process. Again, in 2025, we made progress on this and EUR 14.5 million as a result in the exceptional cost for, yes, the Russian exit that we are working on. And with that, let's also take a little bit of a wider perspective into capital allocation. And you can see in this slide, we keep, of course, investing in our company. In CapEx we just discussed how it was for 2025. In M&A, we also touched on this and here you see over the past five years, how we have been investing in the profitable growth agenda. Next to that, we value shareholder returns, and we think it's important. And you see here a perspective on the past five years, where we allocated almost EUR 700 million to the shareholders, normally in dividends, but in 2025, also complemented by a share buyback program. And that is a nice bridge to the proposed shareholder return for this year. As my last slide, and as Stephane already mentioned, we proposed a dividend of EUR 1.15 over the year, and we announced a share buyback program that will start tomorrow of again, EUR 75 million. And with that, 2025, we deliver a stable return to our shareholders. And with that, I would like to hand over back to Stephane to update you on our strategy. Stephane Simonetta: So let's talk now how did we do progress in our Thrive 2030 strategy. First of all, let me say that while I'm not satisfied with the performance and the lack of organic growth in '25, I'm actually quite pleased with the progress we did deploying our four strategic action. And you know our Thrive 2030 strategy. I mentioned already, we still see positive long-term trend with the four global tailwind, and we still have the same four priorities. So let me now just give you an update for these four strategic actions on profitable growth, on leadership position, the Aalberts way and sustainable commitment. And let's start with growth. And you see that we are not pleased with the progress. On one hand, we continue to see good traction on many end market, on many -- of our initiatives. But on the other hand, we are still reporting negative organic growth because of many of our end markets, which have not been growing. I already mentioned it, exposure to residential, exposure to automotive and destocking in the semicon. So we need to do better on profitable growth. Leadership position, very good progress. I'm really pleased about the shaping of our portfolio, making 3 acquisitions, making 3 transaction in our divestment program, aligned with our strategy, right, progressing in the U.S., entering backend and Southeast Asia in semicon and making a divestment program, mostly in our European footprint for industry and building segment. So good progress for the first year of our strategy. The Aalberts way, a lot of progress in all our functional excellence, driving synergy across our businesses, but also making progress on productivities and synergies. I will show you a few examples later today because I think we've start to see the impact either in our balance sheet or in our P&L. And on sustainable commitment, another year where we made progress, so well aligned with our 2030 and 2050 target. Let me now go through one by one and give you a few highlight about the progress in this four strategic action. So organic growth, this is where we are investing. There was limited impact in '25, but we are more positive about '26 and '27. In building, going from component to system to solution, working on to be able to offer also digital offering linked to connectivity. And this is where the One Aalberts building segment portfolio makes sense. When you put everything we do in our connection system, in our valve, in our prefab solution, in our boiler room technology, we have a unique proposition. Industry, it's continued our geographical expansion. Like Frans mentioned, our greenfield are coming to an end. We have now additional capacity in East Europe, additional capacity in Europe and the U.S. also to support the growth of aerospace. We have also entered Mexico, so all ready to capture the growth. And semicon I mentioned already front-end, we see now potential recovery later on and now also we are exposed to the backend. So global footprint, synergy between all the technologies that we have unique value proposition for our customers. And one example of data center, which is still today quite small when you look at the numbers, only 2% of our building segment revenue is exposed to data center, but it's a $1.5 billion addressable market. And this is where we see double-digit organic growth in the coming years. It's about offering cooling solution. It's about reliability, it's about connectivity. And this is where, as I mentioned before, offering all solution together in term of valve, in term of system, in term of engineering system, prefab solutions, our packing and connection system, we have a unique proposition. And we are working with the big data center OEM, helping them to drive energy efficiency or helping them to have better cooling solutions. So more to come. We will be reporting in our half year result the progress we are making. Of course, the organic growth, it's not only with the geographical expansion, it's not only with capacity expansion, it's also with innovation. And I'm quite pleased actually that we have delivered another year with 20% of our revenue coming from innovation done during the last four years. So at the end, delivering what we call innovation rate at 20%. Even if, as you know, innovating in building, innovating in industry or innovating in semicon is actually quite different. And that's what we continue to do. So good traction also, good progress here. Of course, this is more long term. And once again, we have now to do better on this strategic action to get back to positive organic growth. Portfolio, I mentioned it. We started in '24, fantastic progress in '25 and committed to do more progress in '26 and 2030. So our strategy is the same, our three priority is the same, Good progress in industry with the acquisition of Paulo, and now we want to make further progress in '26 and '27 in aerospace in the U.S.A. Good progress in semicon with the acquisition of GVT. So of course, now the full prioritization is on the integration, on the driving synergies. Good progress in building in the U.S. with the acquisition of Geo-Flo, but this is where we need to accelerate. And this is, of course, top of our mind to continue to drive growth in what we call the source to emitter scope in the U.S.A. We have also water treatment as a key focus area. So this is where we are prioritizing and to do further progress in our building segment in terms of inorganic growth. And divestment, fantastic progress. We are basically halfway with our 2030 target. So still some opportunity to make further progress in our divestment program, especially in our building and industry segment. And just as a nutshell, why I'm so positive, why I'm so excited by the transformation acquisition we did with GVT. Not only we are entering a new part of the semicon value chain, but also we are now entering a new geographical area, and we have now a global footprint between our footprint in Europe, our footprint in Southeast Asia. Having both technology altogether, we are able to provide to all the global OEM exposed in front-end and backend, a unique value proposition. And as you can see in front, in back and also now being exposed to life science with some of the technology, so not only in lithography, but also in advanced packaging, in measuring, in metering and in other key equipment, we are ready for the growth. We have seen already positive momentum in '25 with GVT in only two months, and we are excited by the further progress in 2026. If I go to the third priority, operational excellence, a lot of effort deploying all the lean toolbox, implementing our Aalberts production system, but I'm pleased that we start to see the impact, and it is just the beginning, continuing to optimize our footprint, four site were closed in 2025, and we will continue to optimize major progress in inventory, like Frans mentioned, driving lower days on hand, especially in our building segment. This is where we have the further opportunities. And driving operational productivity to align our capacity, to align our cost based on the customer demand. So a lot of initiatives to reduce fixed cost, secure our added value margin and do better job to do sometimes the same with less or to be ready to do more with the same cost and at the end, support our margin expansion. That's very high for our building segment, industry doing quite well and some opportunities in semicon. And to conclude, on the last strategic action, delivering our sustainable commitment, good progress on Scope 1 and Scope 2, as you can see with our CO2 intensity reduction, where here we have a baseline compared to 2018. And now also doing further progress on Scope 3, where on one hand, we continue to make progress on the purchasing good CO2 intensity. So going down, but also making progress in reporting on the waste, but also here, not so pleased because we have actually an increase in our waste, and this is where also we need to do better, mostly linked to portfolio change, but also because now we have better reporting, so more transparency, which give us opportunity to improve. So well aligned with our 2030 target and definitely on track still to reach our long-term 2050 to be net zero or earlier. That was the update about 2025. You have seen how did we do on operational side. You have seen how did we do on the financial side. So let me tell you how do we see 2026. I mentioned some of the market trend, but let me repeat some of the element segment by segment. It's actually a mixed picture. On building, we continue to see the same trend in 2026. Expect commercial building to continue to grow, expect to continue to see positive momentum in the U.S., but also not yet expecting a recovery in residential and French and Germany market. Still a lot of uncertainty about the U.S. trade, that's what we see for '26 on the building market. In industry, a bit continuation as '25, positive aerospace, power generation, defense, more flattish market trend in automotive and also in the French and German industrial and many uncertainty again in the U.S. But in semicon, it's now very clear. We see growth. We see our order book increasing. We see the customer destocking coming to an end. So backend has been growing very well and I think the growth is not an issue. But now also front-end, we really see an opportunity to have a recovery in the second half of '26. So being more positive. Long term was never an issue in semicon, but now we do see an opportunity to have a recovery in the second half. So based on this market trend, our outlook is actually quite simple, is to improve organic growth and improve EBITDA margin in 2026, improve organic growth, improve EBITDA margin. And on the other hand, continue to deploy our four strategic actions. So in a summary, 2026, we have a key priority is to get back to growth, driving organic growth in our attractive end market with our business development, geographical expansion and innovation. Like I mentioned earlier, you can count on us to continue to drive operational excellence, to improve margins, and should the market increase and improve better than we expect, it will automatically drive even better margins. On the other hand, continue to manage the short-term dynamics. So something I think we have done quite well in '25 is to manage both low case and high case, and we will continue to do that in '26. Be ready for a potential higher growth, but also be ready in case the growth is not that high. Continue to do a good job on free cash flow. After such a good year and always optimize our working capital. And at the end, continue to do what we did very well in '25 to optimize our portfolio, rebalancing between Europe and U.S., rebalancing the end market and divesting when we believe we are not the best owner. So in a nutshell, continuing to strive for the long term, but also now perform and perform for us is what we put in our outlook, better growth and better margins. That's the end of the presentation. Now let's open the Q&A session. Rutger Relker: [Operator Instructions] And I would now like to give the word to David Kerstens from Jefferies. David Kerstens: I've got three questions, please. Maybe first question on semicon. Organic revenues were down 13.8% last year. Yes, the slide shows much more positive outlook for 2026. But did I hear you say you only expect a recovery in the second half of the year? And how should we see that recovery in the light of the much better-than-expected order intake and guidance from your largest customer, ASML? Stephane Simonetta: Yes. Thank you, David. You're absolutely right that we are more positive for 2026 because during the last three, four months, our order book have been increasing month after month. Also, we are getting a lot of requests for additional capacity simulation. So you should expect better numbers also in the first half. But talking about recovery, we see it more in the second half. Also in the second half, we will also have the further organic growth coming from GVT in the backend. So better number in the first half, but the major impact will be more in the second half because it simply take times for the order to go through a customer order book to their customers and then finally to us. So Q1, you should expect, I think, a moderate improvement. Q2 a bit better and definitely second half much positive. David Kerstens: All right. That's clear. That sounds good. And then second question on the margin. I mean, a lot of moving parts in impacting the margin this year with last year's acquisitions of Paulo and GVT and GVT towards the end of the year and then all the divestments announced in December. How will that portfolio optimization impact your EBITDA margin this year? Frans den Houter: Frans here. Yes, we haven't given specific guidance on an EBITDA margin impact for the year '26. But obviously, also visible in the waterfalls that we just showed that these are at the lower margin end of the range, but also the revenue impact totaling EUR 400 million. That was the number that we gave year-on-year with already then the first EUR 60 million in the waterfall you saw in the presentation. So no specific guidance on the exact margin impact, but we did give some numbers there. David Kerstens: Yes. Okay. And maybe finally, on the one-offs in EBITDA before exceptionals. You highlighted the EUR 20 million inventory write-down and a EUR 30 million book gain. Were those all booked in the fourth quarter? Frans den Houter: Yes. Both items were booked. So the EUR 30 million book gain following the divestments we've completed in December, and the inventory correction also a Q4 event in the closing process. Rutger Relker: Thank you, David. Now I'd like to give the word to Chase -- Chase Coughlan from Van Lanschot Kempen. Chase Coughlan: My first question, just regarding the guidance, and I suppose it's more to do with semantics. But when you say you expect improving organic growth, is that an improvement versus what we saw in 2025? Or is that really implying actual organic revenue growth? Stephane Simonetta: It's actually improving compared to what we saw in 2025, and we also mean it for our 3 segment. So we expect better organic growth in our 3 segment compared to 2025. Chase Coughlan: Okay. Yes, that's clear. And I wanted to ask a little bit about your raw material prices. So copper obviously inflated quite a bit alongside some other metals. And I understand you're planning to protect your gross margin and pass that through. What do you think will be the net effect on volumes or the competitive positioning of Aalberts products throughout the course of 2026? Stephane Simonetta: We see a continuation. I think -- 2025 is the best evidence about how well did we manage the situation with our price increase and the added value margin that we sustained at a high level. So we are confident to do it again in 2026. We see definitely an opportunity to have price increase in 2026 and without having an impact to our margin. So monitoring very closely, but we have a good, I think, operator model to manage that and sometimes it gives actually an additional opportunity to improve margin based on the good work we are doing on the purchasing side on the raw material. Rutger Relker: I'd like to give the word to Tijs Hollestelle, ING. Tijs Hollestelle: My first question is about the semicon business that there was an organic decline of about 10% in the fourth quarter and quite a substantial impact already from the Grand Venture Technology acquisition. What is the annual expected euro number from the Grand Venture Technology business in 2026? And is there any seasonality in that business? That's the first question. Stephane Simonetta: You are right that Q4 was around 9%, 10% negative organic growth. But let me remind you that when we report organic growth percentage, it is still excluding GVT, right? So you will see the impact of GVT in our revenue top line increase and I can tell you it's going to be very good in 2026. But the organic growth of GVT, you will see only the impact in Q4 2026 when we have own GVT a full year. So just to manage that. So the number you see in Q4 are pure with the former scope of advanced mechatronics. Tijs Hollestelle: Yes. And let me rephrase it. I understand that the acquisition is not in the organic growth number, but it seems that the Grand Venture Technology already generated almost EUR 30 million of turnover in the fourth quarter based on two months. Is that a fair assumption that it includes the December month, which in my view, a light one. Frans den Houter: So maybe Tijs, the number we put out there, SGD 160 million equaling more than SGD 120 million annual revenue in GVT and it was in our books in the fourth quarter. And then Stephane already mentioned that we see good growth in this company. So that also helps already in Q4, in the top line. But you don't see that, of course, as Stephane explained, in the organic revenue number as a percentage until Q4 next year. Does that clarify? Tijs Hollestelle: Yes. Stephane Simonetta: And coming back to the seasonality to make sure we answer your question. We see more seasonality actually in the front-end with a better second half than first half, like I explained earlier, compared to GVT in the backend, which is actually quite more balanced. Tijs Hollestelle: Okay. Yes. And then I appreciate your additional comments you just made on the recovery in the second half of the semi business. But can you give us a bit more feel for the, let's say, the potential magnitude? What kind of scenarios can we expect there because we have seen massive, let's say, organic declines in some of the quarters earlier in 2025. Is that something we can also expect for, let's say, that recovery? It is not impossible that, for instance, in the third or fourth quarter, organically, the business is coming up by 20%? Or would you say it's more moderate? Stephane Simonetta: I can only repeat what I said that we see second half will be much better than in the first half. And we have decided not to give a specific organic growth outlook by segment. But you are right that Q3, Q4 should be much better because we also see much higher number in 2027. We just need to have more time to see all the orders coming in the value chain, but we don't disclose number by segment. Tijs Hollestelle: Okay. No, that's fine for now. And then if I may, I also have a question about the building division. I was also -- I mean, I think you mentioned back to organic growth, but that was indeed on the full year basis. So there's also a small organic decline again in the fourth quarter. I think underscoring that market conditions remain very volatile, difficult to predict. But what was the impact of the write-downs because I saw a EUR 3.4 million write-down somewhere in the press release. And if I, let's say, apply that to the fourth quarter EBITDA of the building business, it explains, let's say, a more normal margin. But you also mentioned EUR 20 million. So where is the EUR 20 million showing up throughout the year in the building business? Frans den Houter: Yes, that's reported in the inventory line item in the balance sheet and then taken as a cost in our margin. So you don't see it as a separate line item, not as a write-off, Tijs. It's an inventory revaluation. Tijs Hollestelle: But the EUR 38.1 million EBITDA in the building division seems to be very low. Is that -- these write-downs or not? Frans den Houter: Tijs, could you repeat your last question because the line was bad. Tijs Hollestelle: Is the -- let's say, the EUR 38.1 million EBITDA in the building division in the fourth quarter, is that negatively impacted by some inventory write-downs and how much? Frans den Houter: Yes, the EUR 20 million is in there. Yes. Sorry, Tijs, I misunderstood your question -- The EUR 20 million inventory correction is impacting the 11.7% margin in building and has been taken in the fourth quarter. I thought you were asking where -- fully, yes. I thought you were asking where to pinpoint it in the press release, but you don't see it in the numbers on the P&L as a separate line item, of course, I thought that was your question. But it's in the books, in Q4 impacting the building performance. So EUR 20 million one-off noncash if you do your calculations. Tijs Hollestelle: And then the [indiscernible] the 15.5% EBITDA margin, is that kind of the level we should take into account going into 2026? Frans den Houter: Again, sorry, Tijs, the first part is you are -- we lost you and that probably was the most important part of the question. Can you repeat? Tijs Hollestelle: I asked that the fourth quarter, 15.5% margin then adjusted for that, is that also the margin underlying to take with us going into 2026? Frans den Houter: Yes. So that's -- we don't give guidance per quarter per segment, but -- and I think you have to see this in the light of the whole year. There are always quarterly swings, pluses and minuses. But yes, there's no denying that the fourth quarter for building was really strong if you take this one-off out. But I think you should look over the overall picture, 11.7% and put the EUR 20 million as a one-off correction in doing your numbers. Rutger Relker: I'm happy to give the word to Kristof Samoy from KBC in Belgium. Kristof Samoy: Just I want to come back again on semicon and you're quite firm in terms of the anticipated recovery in the second year half. But if you look at the numbers of your largest front-end customer, ASML, from a high-level perspective, you see that their new system sales drop, yes? So they're selling more expensive products. How -- in such an environment, how can this have positive volume impact for a subcontractor such as Aalberts? This is the first question. And then on the portfolio review, you have been very active in the strategy execution in terms of disposals and acquisitions. Can we assume that for 2026, management has enough on its hands and focus will be on post-merger integration, and we should not expect major transformational M&A this year? Stephane Simonetta: Thank you, Kristof. Two great questions. The first one, I would like to say that, first of all, we are not a subcontractor, right? We are a strategic partner of ASML. We are a strategic partner in the whole semicon ecosystem, so much more than a subcontractor, right, just to clarify this point. And you're absolutely right. I think you have a very good point looking at the numbers. That's what also we have been explained in 2025, the link between the number of system shipped and the link to what we produce, right? And then you have, of course, the inventory in the middle. But where we see the highest growth is definitely all the growth expected by our key customers and what they see from their customer on the EUV. And on the EUV, we have unique positioning. This is where also we have the capacity ready. And this is where the AI push would require more and more of this technology. And we will benefit from this growth, and that's why we expect it in the second half, not in the first half because the whole value chain need to ramp up. So we're actually quite bullish for 2027. And like I mentioned earlier, that's what we expect every quarter to improve so that the whole value chain ramp up. So that's why we see it. Even when you look at the last quarter, you are right, there was a mix change between what they ship on high value, between what they do in terms also of services and refurbishment, where we are not exposed, but EUV is definitely more promising in 2026. And on the second point, I will say, definitely, yes, on semicon, you are right that our top priority is post-merger integration, right? Now utilizing our global footprint that we have between Europe and Southeast Asia, now the broadening portfolio that we have with all the technologies that we have from our advanced mechatronic and now from GVT and supporting the customers in their technology road map with this full offering. But on the industry, we still see opportunity to continue to make bolt-on acquisition, especially in aerospace and in the U.S.A. So we have a strong funnel, and we are still active in this segment. And in building, this is where also we see opportunity to make further progress either in our water treatment source to emitter and also in the U.S.A. So you should expect us to be more active in building and industry, but less active in semicon. Rutger Relker: [Operator Instructions] I would like to now already touch two questions which have been sent in via the Q&A form. And the first one is for you, Frans. That's about guidance for CapEx for the year 2026. Could you give us a bit of a comment there? Frans den Houter: Yes. But before I do that, maybe a small correction. I just mentioned for GVT, the Singapore dollar revenue, SGD 160 million, which is correct. The exchange rate would translate into SGD 207 million of revenue, just to make sure that number is accurate out there. Maybe on CapEx, so EUR 189 million this year, which is a good number. I already mentioned in the -- when discussing the slides, assets under construction is quite high, EUR 226 million. And also there, you see a bit of a step-up versus our depreciation, which is EUR 170 million. As we are investing in our business in organic growth in -- also in the new company, GVT that we acquired. So you need to correct, of course, for M&A. If you do all that, based on the current portfolio for the coming year, we are still -- will be around the same level that we spent this year. So circa EUR 190 million as a first number for 2026. Rutger Relker: Okay. Thank you. There's another question I want to -- is coming in now, which I think it's a relevant one for I think for you, Stephane, about the write-off on the semiconductor innovation part of the exceptional. Perhaps you could give a bit of a color on that topic. Stephane Simonetta: Yes. So let me remind you that, first of all, I see the question. It has nothing to do with GVT, right? It's really something we started four, five years ago, right? And when you start to innovate, when you start a new technology, so it was linked to a deposition technology, which was very promising at that time with a lot of opportunity to further commercialize. But after four, five years, we came to the conclusion that there is still not a path to commercialize, and that's why we are putting this cost as an exceptional cost. So not linked with our current business and not linked with GVT. Rutger Relker: Okay. Thank you. I'd like to -- it's a very long question. I can see whether I can summarize it a little bit. Yes, there's a question on the data centers. I think you already gave quite a bit of a color on what we do there. So I think that -- I think that answer -- that question has been answered. Then I find another question on CapEx for you, Stephane, whether you could give a bit of color where you spend the CapEx? Would it be mostly growth, innovation, ESG, capacity? Well, you have a lot of options, I see. If you can give a bit of color there. Stephane Simonetta: Absolutely. I think you have seen in the number that Frans presented, first of all, that our CapEx intensity is quite different by segment due to the nature of the industry, right? Definitely, in semicon, this is where we have been investing a lot for capacity for the long-term growth. So most of the investment we have been doing of the CapEx we have been doing in semicon, it's for capacity, it's for technology. When you look at industry, a big part of the CapEx we do is for repair, it's for maintenance, but also for geographical expansion with new footprints because it's a very local and -- local and local-for-local business. So we follow our customers when there is a need. So a lot of capacity expansion, repair and maintenance. And when you look at building, this is more for efficiency. This is more for productivities because we already have the good footprint, and this is also where we are driving more automation in order to improve the utilization of our assets. And then across the three segment, we continue to invest for our people, working condition, sustainable environment. So quite balanced overall at Aalberts between ESG, between capacity, between operational efficiency and also now more and more on innovation. As I mentioned, I think, already last year, our weight linked to new building and capacity expansion is coming to an end. So we are going to spend more on R&D and on innovation. Rutger Relker: Thank you very much, Stephane. I see also that somebody has joined the queue, which is Philippe Lorrain from Bernstein. Philippe Lorrain: I'm quite new to the case, but I wanted just to ask a question on earnings adjustments. Because I see in the press release and also from what you say that there's a bunch of things that you flagged in the text, which are actually not adjusted from the earnings, i.e., this inventory write-down in Q4 and also the insurance proceeds. But at the same time, you have many different adjustments that you flagged at the back of the press release. So what's your policy on that? And what should we expect going forward? Frans den Houter: Yes. So thank you for the question. Yes, be very clear. So there are -- indeed, there are three items that we earmark as exceptionals. And those we report in a separate section in the press release and also in a separate slide in my presentation. Basically, all the numbers that we see are excluding the impact of the exceptionals. So with that, we want to make sure that the numbers of the company are well comparable year-on-year. So you can do also the underlying performance evaluation in a better way. And that's why we put them in a separate bucket, if you like. We label them exceptionals. And of course, we explained very well what's in there. And then -- there's an operational excellence element in there. There is the innovation in semicon that Stephane just discussed, and we're in an exit of our Russian businesses, yes, which are three very specific one-off items that we label as exceptionals -- And they are not reflected in all the other numbers that you've seen. Is that clear? Philippe Lorrain: Okay. Perfect. Yes, that's clear on that front. And just to follow up on that. So the write-down in innovation in semicon, is it related actually to fixed assets like in terms of PP&E? Or is it more intangible assets? Frans den Houter: It's a combination. So it's intangibles because there's absolutely also development and innovation, intellectual property in there, but also, yes, some other balance sheet items. So it's a combination. We didn't give the breakdown, the total impact. There are also some other elements in there, we said the majority is the semicon items and the total that we disclosed is EUR 28.9 million. Rutger Relker: Then I think there's a follow-up question from Chase coming in. Chase Coughlan: I just wanted to come back quickly on the guidance, particularly to do with the margin. I think it was asked a little bit earlier as well, but I'm trying to understand sort of a large portion of this margin improvement you expect in '26 is probably a result of the divestments, of course. Could you also talk a little bit about what you expect sort of from an organic standpoint as well from a margin level? Stephane Simonetta: Yes. I understand, I think, the question. So we actually see four enabler and why we are confident to say we will improve margins. So let me go through the four points, which we believe will help to have a better margin. First of all, we are planning to get better organic growth. And automatically, that will generate better margin because where we are growing also, this is where we have been investing and all the key verticals we are growing have also better margin profile on commercial building, in aerospace, power generation, defense and semicon. So first, organic growth. Second, you will have indeed the benefit of all the operational excellence program that we did in the previous year of footprint optimization so that you will have the benefit -- the in-year benefit in '25. Third, you have definitely the impact of the divestment that we did, right? So that also will help us to improve the margin. So some -- three elements that will definitely help us. And then -- the last one is that we don't expect another one-off in our building segment. The one we took in Q4, like Frans mentioned, the EUR 20 million, that also will not happen in 2026. So these 4 elements give us confidence that we will improve our EBITDA margin in 2026. Rutger Relker: And then I think the last question of this today Q&A, I'd like to give to Tijs again, also a follow-up. Tijs Hollestelle: Yes. Stephane, I was thinking about what you said on the semi recovery. And I think you also mentioned visibility for 2027. So is it fair to assume that you are very busy with the current planning of the shipment schedules of your clients, and that makes it difficult for you to pinpoint, let's say, an exact recovery trajectory, but you have the orders and you have the client activity. Is that a fair assumption? Stephane Simonetta: Yes and no because I -- we already have some good orders, and that's why we are confident it will be better, but we expect even more order to come, right? So I think '26 looks very promising. Now the question is how will be the ramp-up? I think we have always said over the last year that long term, the growth was never an issue. The only question was when it will be coming. And now we see definitely coming in '27. We are actually quite exciting by 2027. And the question is how much will be already happening in the second half of the year. So we are, of course, now very confident based on the current order book. So we know '26 will be better. We are not getting a lot of capacity simulation request, and that we don't know yet how much of this simulation will become a real order or not. And that's why answering your question, we cannot confirm yet because there are different scenario. But in all scenario, it's a growth scenario. Tijs Hollestelle: Yes. And the current existing capacity of Aalberts is sufficient that you can handle much higher revenue levels? Stephane Simonetta: Again, that's why it's such a good news because it just confirms the strategic investment we did. Our factory in Dronten in the Netherlands has always been there for the growth of EUV. So we see now very good utilization potentially in '27. So perfectly in line. Of course, we will have hoped to have it earlier. But now '27, it will be there. So the question is how big will be the utilization, but we have invested capacity, if you remember, for the '27 2032 growth. So we have -- we are ready for the growth. And now on top of that, you have the backend growth and our footprint in Southeast Asia, so we can also support our current customer, we have also access to all the new customers we didn't have before. And now we can also do load balancing depending on their need. Do they want deliveries in Europe or do they want us to supply from Southeast Asia, we are ready to support them. Rutger Relker: Thank you, Stephane and Frans, for the answers. Yes. As we conclude today's webcast, I would like to thank everybody to join us today. And also please remind that both the presentation and today's recording will be available on the website later today. Thank you.
Robyn Grew: Good morning, everyone, and thank you for joining us today. I'm Robyn Grew, the CEO of Man Group, and I'm joined by our CFO, Antoine Forterre. I'll begin with a high-level overview of our investment performance and client engagement in 2025. Antoine will then walk you through the financial results, after which I'll update you on our multiyear priorities now 2 years on from when we first announced our strategy before providing longer-term context on the evolution and positioning of our business. 2025 was a year of pronounced peaks and troughs for markets where periods of volatility tested investor resolve before conditions eventually stabilized. We navigated shifting sentiment, and at times, unprecedented reversals, absorbing shocks from DeepSeek in January, tariff announcements in April, ongoing geopolitical tensions and debate over the sustainability of fiscal spending and AI infrastructure investment. Markets demonstrated a remarkable capacity to withstand stress, though the path was far from smooth. Given this environment, I'm pleased to report a set of results that shows just how resilient Man Group is. Antoine will go into more detail later, but I'll start with some headlines. Firstly, I'm delighted that we ended the year with AUM of $228 billion, driven by $21.4 billion of positive investment performance and $28.7 billion of net inflows. Through continued cost and capital discipline, we generated core earnings per share of $0.276. Along with this, we also executed against our strategic priorities, completing the Bardin Hill acquisition, simplifying our operating model and positioning the firm for long-term growth. These results underscore the continued demand for our differentiated offering, the depth of our client relationships, and crucially, the value of the diversified business we have built. On the topic of diversification, the benefits of having a diversified range of investment content were highlighted clearly in 2025. The first half of the year was undoubtedly testing for trend following strategies, continuing the run of underwhelming performance that began in Q2 of 2024. The reversal of the Trump trade in Q1, combined with the administration stop-start approach to tariffs, created whipsawing market conditions where sustained trends were incredibly hard to find. However, investor sentiment moved on from the lows of early April, and August proved to be the inflection point. As risk on sentiment took hold, several trends finally began to emerge and persist. Our strategy has adjusted positioning to capture these moves, delivering strong gains into year-end. In that context, it was great to see AHL Alpha and AHL Evolution finish the year up around 5%. The strength we saw across our strategic priorities enabled the firm as a whole to successfully navigate the significant period of stress for trend following. The results from a numeric range were particularly impressive. Over the past 3 years, these strategies have delivered returns averaging 4% over their respective benchmarks. Our liquid credit strategies also continued their strong run of outperformance, while our multistrat Man 1783 once again delivered outstanding returns. By dynamically allocating across our full range of uncorrelated strategies, it has delivered consistent, high-quality performance since launch in 2020. On an asset-weighted basis, relative investment performance was positive overall in 2025, driven primarily by our long-only strategies. Within alternatives, the overall relative underperformance was largely attributable to AHL Evolution's performance earlier in the year, which trades harder to access markets and differs significantly from the traditional trend followers in the index. Turning to clients. We prioritized being present with our clients in 2025, holding over 16,000 meetings to understand their evolving needs and help them navigate a complex environment. That focus drove exceptional client-led growth during the year. We delivered record gross and net inflows, nearly 20% ahead of the industry. We've taken market share for the sixth consecutive year, a very strong outcome in the context of a challenging fundraising environment. As you can see from the chart on the left, the strength was broad-based. It is well known that large allocators are seeking to do more with fewer managers, consolidating relationships around true strategic partnerships. That trend plays to our strengths, and the numbers reflect that. It was also a record year for new client additions with 36% of gross sales coming from relationships entirely new to the firm, while our top 50 clients remain invested in more than 4 strategies on average. Whether I'm speaking with a pension fund in North America or a sovereign wealth fund in the Middle East, the feedback I receive is clear. Our clients face increasingly complex challenges that require tailored solutions. With a broad range of uncorrelated strategies delivered through a technology-powered platform, we have the capability and the scale to meet that demand. From customized risk levels and access to new asset classes to the launch of new product structures, we are adapting to how our clients want to work with us. That agility is a competitive advantage. And now I'll hand over to Antoine, who will take you through the numbers. Antoine Hubert Joseph Forterre: Thank you, Robyn, and good morning, everyone. I'll begin with last year's financial highlights before providing further details on our AUM, P&L and balance sheet. As Robyn mentioned, we ended the year with AUM of $227.6 billion, up nearly $60 billion since the end of 2024. The increase was driven by positive investment performance of $21.4 billion and record net flows of $28.7 billion. On a relative basis, our net flows remained ahead of the industry for the sixth consecutive year with our sustained growth in market share further validating the relevance of our offering to clients. In 2025, we recorded net revenue of almost $1.4 billion, including performance fees of $281 million, mostly from non-AHL strategies. This demonstrates the progress we have made in diversifying our mix of revenue and performance fee generation in particular. We also recorded $38 million in investment gains. Fixed cash costs of $430 million reflect the actions we took earlier in the year to maintain cost discipline and to better align resources towards our strategic priorities. At 48%, the compensation ratio was within our guided range, reflecting lower net revenues in the year. As a result, core profit before tax was $407 million with $294 million of core management fee profit before tax, which equates to $0.196 of core management fee EPS. Lastly, we are proposing a final dividend of $0.115 per share, taking the total dividend for the year to $0.172 in line with 2024. We continue to maintain a strong and liquid balance sheet with net tangible assets of $723 million as at the end of December, supporting our disciplined capital allocation policy. Our overall asset-weighted relative investment outperformance was 1.3% compared to 1% in 2024. Investment performance was positive across all product categories with long-only strategies delivering particularly strong results. Our long-only offering contributed $34.5 billion in net flows, serving as a powerful endorsement of our differentiated proposition in this space. While alternative strategies faced some headwinds due to the poor performance from trend following strategies in the first half, engagement on liquid alternative, and crisis Sapphire remains robust as we head into 2026, reinforcing the continued relevance of our uncorrelated content. Other movements were $8.9 billion. This includes $6.7 billion of FX tailwinds owing to a weaker U.S. dollar as a significant proportion of our AUM is denominated in other currencies and $2.7 billion from the acquisition of Bardin Hill. Finally, in addition to fee-paying AUM, we also ended the year with $4.9 billion of uncalled committed capital, which provides a strong foundation for future AUM growth across our private markets business. Before moving on from AUM, I wanted to spend a moment on the new reporting categories we're introducing this year. This updated categorization, which you can see on the slide, reflects the growth and evolution of our business, provides greater transparency on our strategic priorities, such as credit, and aligns more closely with market practice to improve comparability with peers. As you'd expect, there is no material change at the long-only and alternative category level. We have simply reclassified the subcategories to make them easier to understand. More details, including information on fee margins, can be found in the investor data pack on our website. We will continue to provide the previous categorization in our materials up to Q3 of this year to ensure a smooth transition. And of course, we are available to answer any questions you might have. Our run-rate net management fees, which represent a point-in-time snapshot of the firm's management fee earning potential increased to $1.182 billion at end of December 2025 from $1.058 billion at the end of 2024. This was driven by the significantly higher AUM at the end of the year and the strong recovery in trend-following performance in the second half. This is the highest level in more than 10 years. The run-rate net management fee margin decreased from 63 basis points at the end of 2024 to 52 basis points at the end of '25, reflecting the shift in underlying AUM towards long-only strategies during the year. As I have emphasized many times before, we did not target a particular net management fee margin, but instead prioritized driving profitable growth across all our product categories. Moving on to performance fees. In a year where trend-following strategies struggled before recovering in the second half, core performance fees were $281 million compared with $310 million in 2024. This is a strong reflection of the progress we have made in diversifying our business and its performance fee earnings potential. It underscores our ability to deliver strong outcomes for our shareholders even in years of below average contribution from trend following. At the end of December 2025, we had $59.6 billion of performance fee eligible AUM, of which $36.6 billion was at high watermark compared to $21.1 billion at the beginning of the year. A further $17.4 billion was within 5%. An often overlooked feature of our business is a $13 billion of AUM from the long-only category is performance fee eligible, increasing our performance fee earning potential while providing valuable diversification. This slide provides further insight into how performance fee earnings potential has changed over time. If you have followed us for a while, you might recall a similar slide at our Investor Day in 2022. The dark blue line plots the distribution of a Monte Carlo simulation of the next 12 months' performance fee outcomes based on distances from our watermark, expected returns and volatility assumptions for our key performance fee-paying funds as at December 2025. The median simulated performance fee outcome for 2026 is $471 million. This is a 35% increase from $349 million at the end of December '21 and nearly 3x what we expected in December 2016. This improvement predominantly reflects the growth in performance fee eligible AUM and the progress we have made diversifying the underlying range of strategies that contribute to our performance fee earnings. As of the 20th of this month, we had accrued approximately $350 million of performance fees due to crystallize in 2026. As always, this figure is not a forecast or guidance, but rather the position at a specific point in time. The amounts that crystallize will fluctuate increasing or decreasing based on investment performance up to crystallization dates. Moving on to costs. Fixed cash costs of $430 million were 5% higher compared with 2024. This includes a $16 million impact due to the strengthening of sterling against the U.S. dollar and another $4 million from the Bardin Hill acquisition. These increases were partially offset by the cost control actions we took earlier in the year, as reflected in the decrease in headcount. The overall compensation ratio increased marginally to 48%, reflecting the decrease in management and performance fee revenue during the year. However, the recovery in trend-following performance in the second half meant that we were able to remain below the upper end of our guided range. From 2026, we will be changing the modeling framework, moving away from the fixed cash costs and comp ratio guidance to a core PBT margin range. Our previous guidance was established in 2013 during a period of significant restructuring when the business looked materially different. This approach, which focuses on a few specific line items within our P&L without allowing for fungibility of spend, is no longer fit for purpose. Our operating model has evolved and technology is ever more central to our business. Going forward, we will manage the business to a core PBT margin, typically between 30% and 40%, varying based on the quantum and mix of revenue. It may be outside this range in years with particularly high or low core performance fees as it has been in recent past in both directions. This range is calibrated around the average realized core PBT margin of 35% between 2020 and 2025. This change provides greater operational flexibility, which is critical to remaining agile given the pace of change. It should not change the way you think about and model the overall profitability of the business. Importantly, it also does not alter our commitment to cost and capital discipline or remove the ability to benefit from significant operating leverage in exceptional performance fee years. Core net management fee earnings per share were $0.196, 9% lower than 2024, while performance fee earnings per share decreased to $0.08, down from $0.106 in 2024. Total core earnings per share were $0.276. In summary, despite the challenging market conditions for trend following in the first half, 2025 was another year of resilient earnings for the firm. We continue to maintain a strong and liquid balance sheet, which gives us optionality and flexibility to pursue our long-term growth ambitions and return capital to shareholders. At the end of December, we had $723 million of net tangible assets, including $173 million in cash and cash equivalents. Our seed capital program continues to play an integral role in supporting the growth of our business. In 2025, we seeded 12 new strategies, including new private credit strategies and active ETFs in line with our strategic priorities. Gross seed investments at the end of December were $603 million. The portfolio remains well diversified across strategies and markets. This brings me to capital allocation. Our policy remains disciplined and intends to support the future growth of the business while delivering attractive returns to shareholders. It follows a clear waterfall with 4 categories. First, we aim to increase the annual dividend per share progressively over time, reflecting the firm's underlying earnings growth and free cash flow generation. In 2025, dividends to shareholders totaled approximately $200 million. Second, we deploy capital to support product development and technological innovation. We continue to actively manage our seed book considering the opportunities available. And in 2025, we redeployed $400 million of seed capital. We also continue to invest heavily in technology to ensure we remain at the forefront. Third, we evaluate M&A opportunities that align with our strategic priorities. In 2025, we completed the acquisition of Bardin Hill, bolting on opportunistic credit and performing loans capabilities to our credit business. Finally, any remaining available capital is returned over time through share buybacks. Last year, we repurchased $100 million of our share capital at an average price of 182p. Including the proposed final dividend and the $100 million share buyback I just mentioned, we returned approximately $300 million to shareholders in the year. Over the past 5 years, the total capital returned to shareholders via dividends and buybacks is $1.8 billion, over 50% of our market cap as of the end of December. Shareholders now receive an additional 23% of every dollar of earnings when compared with 2021. On that note, I'll hand over to Robyn to take you through the next section of the presentation. Robyn Grew: Thanks, Antoine. 2025 tested us at times, but we navigated the challenges to emerge stronger and finished the year with real momentum. That is a powerful validation of our strategy. We were able to deliver a resilient set of results because the diversification we have built over recent years is delivering. In a year where trend-following faced significant headwinds, it was the strength in quant equity, liquid credit and solutions on the investment side, combined with strong growth across client channels and geographies that delivered for us. That is our strategy working as intended. The benefits of diversification are clear, and this slide illustrates why. The capabilities we have scaled have near 0 or even negative correlation with trend following. The more high-quality uncorrelated content we offer, the more relevant and valuable we are as a strategic partner to clients. That relevance drives growth. And as you can see on the chart in the middle of the slide, the business today looks very different from just 4 years ago, both in terms of scale and business mix. That shift also matters for earnings. Not only does it grow and strengthen our management fee stream, but as Antoine mentioned earlier, it also improves our performance fee earnings potential. Non-AHL performance fees have grown significantly from $116 million in 2021 to $225 million in 2025. Diversification has reduced our reliance on any single investment strategy and has increased the stability of our overall earnings, providing new options for growth that ultimately drive value creation for shareholders. The strategy we outlined 2 years ago will enable us to continue to deliver this diversification. As many of you will recall, we outlined 3 priorities at our full-year results 2 years ago. They were to diversify our investment capabilities, to extend our reach with clients around the globe and to leverage our strength in talent and technology, all while continuing to invest in the core of our business. We set ambitious goals to drive the next chapter of growth for Man Group. Now, more than ever, we have conviction that we are targeting the right areas. Although not every initiative moves at the same pace, the prevailing trends in our industry remain largely unchanged. Client engagement is the strongest it's ever been, and we have good momentum across several pillars of our strategy. Let me take you through the progress we've made in more detail. Starting with our investment capabilities. Our credit platform continues to go from strength to strength. We now manage $53.1 billion across the liquid and private credit spectrum, up from $28.3 billion just 2 years ago. Organic growth in liquid credit has been exceptional with strong client demand for our high-yield and investment-grade strategies in particular. We also completed the acquisition of Bardin Hill in October, which adds opportunistic credit to our existing private credit offering and strengthens our CLO capabilities. I'm very pleased with where we stand. We are now a broad-based partner across the credit space. On quant equity, it was pleasing to see our long-only strategies had an exceptional year, growing AUM by 97% and continuing our track record of alpha generation. Alongside strong performance, it is the ability to offer a high degree of customization at scale that is also proving hugely valuable to clients. Mid-frequency is a complex space that requires significant investment in research and infrastructure, and there's a lot of work going on behind the scenes. We've developed 2 distinct strategies that take different approaches to idiosyncratic alpha generation, factor exposure, geographical focus and holding periods. Notably, our quant alpha capability delivered 21.3% net performance in 2025, which offers clear evidence of our progress in this high potential space. We continue to deliver complex solutions to help our clients solve their most significant challenges. That remains a real differentiator for us. More recently, our advisory offering in partnership with the Oxford-Man Institute has been in strong demand as we partner with clients to deliver thought leadership that helps them to navigate issues they face across their portfolios. A great example of this is the work we've done on timing the market in collaboration with one of our Nordic clients. The agility we have shown in adapting to client needs has served us well, and that will not change. Finally, I spoke about Man 1783 earlier today. After another strong year in 2025, we've delivered 10.5% net annualized performance over the last 3 years for our clients. That is a track record that puts us up there with the best in this space. We are continuously improving our investment processes, knowing that innovation is not just about launching the next flagship product, it's about making everything we do better every single day. We've also made strong progress extending our client reach, targeting the regions and channels where we are underweight relative to the size of the opportunity. North America is a great example of that. I'm delighted that we have nearly doubled annual gross flows from North America in 2 years, from $10 billion to nearly $20 billion. Growing our presence in the institutional channel has been a particular highlight with a 24% increase in North American pension plan clients. Given the sheer scale of that market, we see a significant runway for growth. In Wealth, we've seen a similar trajectory. We are bringing institutional quality liquid products to one of the fastest-growing segments in asset management, and the opportunity here is large. To strengthen our offering, we launched 4 active ETFs across discretionary and systematic styles in equity and public credit last year. Our strategic partnerships continue to deliver strong growth. The Asteria joint venture is a great example of that, where appetite for our credit products has been particularly strong. Finally, on insurance, I'm sure many of you are aware that this is a complex area that requires careful groundwork. We have laid those foundations globally, and our strategic partnership with Meiji Yasuda is an encouraging early step. Discussions with prospects continue, though it remains contingent on the ongoing build-out of our overall credit capabilities. Our third priority is to continue leveraging our strengths in talent and technology, both of which are underpinned by the culture of constant improvement that runs through our DNA. We're always looking ahead, positioning the business for future growth. A good example of this is the change we made last year in Systematic, bringing AHL and Numeric together under one division to drive innovation, product co-development and research collaboration. We approach technology with the same mindset. And as a result, we're not just keeping pace with change, we're leading it. We made significant advances in AI during the year, developing over 100 plug-ins across the firm using a range of AI platforms. For us, this isn't a peripheral initiative. It is truly embedded across our entire organization. And it's one of the reasons Anthropic has chosen to partner with us on the design and application of AI in investment management. I think that tells you something about where we stand. Our ambition is clear to become an AI-powered asset manager. We have the heritage, the expertise and the data to make that a reality. So across all 3 pillars, investment capabilities, client reach and talent and technology, we have made meaningful progress. The strategy is delivering, and the results speak for themselves. We entered this year in great shape and with good momentum. Our $87 billion liquid alternative business gives us a platform with an exceptional long-term track record of delivering for clients and shareholders. In an environment where clients are increasingly focused on uncorrelated returns, liquidity and crisis alpha, the relevance of that platform has never been greater. Alongside that, we now manage $17 billion in private credit with teams focused on underwriting discipline and the ability to capture dislocation when it arises. Our long-only business has scale, a clearly differentiated proposition and a proven ability to generate alpha. And finally, we've aligned resources with our strategic priorities, ensured cost and capital discipline and position the business for long-term success. The result is a firm with its highest run rate net management fees in over a decade and near record performance fee optionality. I feel very good about how we have started the year and our ability to capture the opportunities that lie ahead. It is not just our business that is well positioned, the market environment is supportive, too. After a decade defined by U.S. exceptionalism, we are seeing a more complex, dispersed landscape emerge. That is exactly the environment in which active management thrives and allocators are responding. The chart in the middle shows their plans for 2026, which favor many of the strategies where we have strength, hedge funds, portable alpha, active extension. Our ability to help clients navigate this environment with a broad range of alpha-focused strategies has never been more relevant. At the same time, demand for customization continues to grow. Capital allocated via customized structures has increased 61% since 2023, reflecting a clear shift towards strategic partnerships and tailored solutions. You've heard me talking about our strengths in that space time and time again. It is where we have a clear competitive advantage. So to close, 2025 tested us and our strategy delivered. Record inflows, AUM at all-time highs and a resilient set of earnings in a year that was far from straightforward. The diversification we have built proved its worth. I'm incredibly proud of what this team has achieved. None of this is possible without the exceptional talent across our firm. Their energy and commitment are what set us apart. We enter 2026 as a more diversified, structurally stronger business that is well positioned for growth. The landscape is shifting in our favor. Markets are more dispersed, allocators are demanding more from fewer partners and the value of our offering has rarely been clearer. We have the investment content, we have the client relationships and the technology platform to capture that opportunity. And I have absolute conviction that our strategy will deliver long-term value for our clients and our shareholders. With that, we'll open up for analyst Q&A. Robyn Grew: As a reminder, to ask a question, you need to have joined the presentation via the Webex link. Press the Raise Hand button and please unmute yourself when we can call your name. Thank you. Antoine Hubert Joseph Forterre: Thank you, Robyn. And we'll start with Nicholas. I'm going to send a request, and you should be able to unmute. Unknown Analyst: Can you hear me? Antoine Hubert Joseph Forterre: Yes, Nicholas. Unknown Analyst: Three questions from my side, if I may, please. One on AI one on absolute return and one on capital return. So on AI, I think the Anthropic partnership is super interesting. I appreciate it's early days, but do you have any ambitions or key milestones you can share with us from that partnership? And I guess just more broadly, if we think beyond yourselves, how do you expect AI to impact competition and alpha generation in the markets in which you operate? And which markets do you think could see the most significant impact, please? So that's the first one. On absolute returns, I appreciate the strong delivery in diversifying the business for sure. But if I focus on absolute return, could you just give us a sense of investor sentiment and engagement there given the shift from underperformance to recovery, but there's still a negative relative performance? And are there any further redemptions in the pipeline we should be aware of? And then finally, on capital return, I guess, following the repayment of the RCF, you have significant available net cash and equivalents. What was the rationale to keep the dividend stable and not declare any additional capital return? And should we see this as an indication of your M&A pipeline? Robyn Grew: Right. Do you want to... Antoine Hubert Joseph Forterre: I will go ahead and start with the last one. Robyn Grew: Yes. Antoine Hubert Joseph Forterre: Which is -- I'll start with the last one. So we have a clear, unchanged capital allocation policy, dividend first, which we aim to grow in line with earnings over the cycle. And if you look at earnings year-on-year, they were down, hence, keeping the dividend flat. Now, if you look over the last 5 years, we've increased the dividend, I think, to the tune of 10% per annum over that period. So we've delivered the growth over the cycle as intended with our policy. And then, we aim to invest in the business, both organically and inorganically. If you look at last year, we deployed investments in technology, but also did an acquisition. And then after that, we look at returning capital by way of buyback, which we executed last year to the tune of $100 million, so we returned $300 million to shareholders last year in addition to doing an acquisition, a bolt-on acquisition in a year that didn't see us generate huge amount of capital given the slightly softer performance fees. So very much in line with our policy, we're keeping dividend flat. Do not read anything into future M&A. The Board in due course will consider options and might return capital to shareholders as and when it sees fit. I can take the absolute return one going reverse order if you want and you can do AI. Robyn Grew: Yes, for sure. Yes. Antoine Hubert Joseph Forterre: So I would differentiate between trending following and the rest of offering. Trend following has indeed a soft -- let's be clear, a poor first half and then a tremendous recovery that extends into 2026. The rest of absolute return category, which I think is best represented by our Fund 73 performed well throughout. 73 was up in the first half and up in the second half to finish the year last year at 14%. In terms of investor sentiment, the outflows we saw last year were prominently driven by the trend following category as well as some of the risk parity category. Both have had a strong second half and start of the year. And eventually, performance is what leads to flow. We don't comment on future flow, as you know. So I'm not going to give you specific comments, but I think you can read in the confidence that we have, the way that we think of ourselves starting '26 in a strong position and the belief that we have in our client relationship. AI? Robyn Grew: AI. Fair to say we're excited about the opportunity set. No specific milestones that we've set with Anthropic, but this is a partnership where we believe we can add to their understanding of what the needs are, but also drive the solutions that we can put in play across the organization, be they at the front end and the research capability that we can look at and develop more or indeed through the entirety of the AI capabilities you see for efficiencies and effectiveness through the rest of the organization. For us, we've spent 35, 40 years being at the cutting edge of technology. This is no different. We believe we are in a terrific place to benefit from use, utilize and lead with some of the strongest players on the street, this extraordinary technology capability. So tremendously excited, no real milestones, but we think this partnership will help us, along with everything else we do, take full advantage of the full suite of technology. Antoine Hubert Joseph Forterre: With that, I'm going to go to Arnaud. Arnaud, you should get a request to unmute. Arnaud Giblat: I've got 3 quick questions, please. Firstly, going back to the buyback. So historically, when you tend to come back into performance fee territory and in a good position, usually, that does correlate with buybacks. I'm just wondering, why there hasn't been -- and particularly, if I'm looking at the cash flow statement, I noticed a big outflow in terms of working capital. So maybe if you could give us a bit more color there and what your thinking is in terms of the buyback. I mean, the net financial assets did improve. So I would have expected some nonetheless. Second question is on St. James's Place. There was some news flow around St. James reallocating mandate. I'm just wondering what was the quantum that might impact our flows and when that comes through? And my third question is on management fee margins. The run rate management fee margin looking forward has reduced. Clearly, there's a bit of a mix shift between categories, and I understand that. I understand that you don't manage the business given management fee margin and all business is good. But I'm just wondering, if I isolate each category, are we seeing -- at constant mix, are we seeing dilution margins, is my question? Robyn Grew: Yours, I think. Antoine Hubert Joseph Forterre: Yes, I'll take them in order, and thank you for the questions. Expand a bit on the buyback, performance fees is, obviously, one source of capital generation, and therefore, a correlation between performance fees and capital returns because it sort of follows a waterfall we outlined. I go back to what I mentioned earlier. Last year, we deployed $300 million of capital returning to shareholders plus an acquisition in a year where cash flow generation was still more subdued. There's a timing of cash flow point as well, and we start the year in a strong position. Do not read anything in that signal. We have not changed our capital policy. But at this point, the Board has not decided to announce a buyback. St. James's Place, we don't comment on future flows. We have had in the past commented on very large flows in and out when we felt it was relevant, but we're not commenting on future flows. The outlook remains the one that you can read, and we've outlined. And then, on management fee margin, we are seeing a mix shift both between categories and within categories. Between categories, we -- if you look at the year, we finished the year with a majority of our AUM on the long-only side, which is traditionally lower margin. I think 60% of our AUM is long-only. And that explains the overall the shift. Within categories, you're also seeing the same thing. If I pause on the absolute return category, what we saw last year was a slight relative underperformance evolution, and then, worse flows in the evolution because of higher-margin product than the other content within that category. And that explains why within that category, you also saw margin erosion. We are not seeing any kind of fee pressure that we call out here. So it is really a mix effect at the category level and within the category level. I'll go to David McCann. David McCann: Hope you can hear me. Antoine Hubert Joseph Forterre: Yes. David McCann: A couple of my questions have already been answered. So I've got just 2 left. The first one, on the new 30% to 40% PBT margin guidance, I mean, I guess reading into your comments, it sounds like there's some fresh investment that's going to go into things, including AI. But presumably, the reason you can keep the margin roughly where it has been is because you're intending to get some kind of efficiency and/or productivity savings from that. But maybe you could sort of give some color on that sort of those 2 forces, and how you're thinking about them in that mix? And then, I guess, delving a little bit deeper into sort of one of the previous questions, yes, clearly, you've had some strong recovery, as you've touched on as well in a number of your funds in the second half of last year and continuing into this year, which is good. I appreciate you're not giving color on flows as such. But, yes, historically, when you have seen sort of some recovery following a period of weakness, you have sometimes seen investors, I guess, take money out at that point. They kept during the period of underperformance, but then came out when it did recover. So are you seeing any signs of that happening? That would be the second question. Antoine Hubert Joseph Forterre: I will start with this one. No, I mean, nothing again that we call out that's already in the numbers. And you're right, performance and flows do correlate, although it's not like it's a sort of immediately identifiable correlation. It usually comes first on the wealth channels and then institute tend to have a kind of a longer horizon, and hence, the sort of lumpiness in flows that we often refer to. The PBT margin is really about, as I said, giving us more flexibility across the various lines compared to what we have. It is not intended to kind of change the profitability for shareholders. That's an important point I want to repeat. When it comes to AI and technology, we're not doing this because of specific efficiency that we've identified. This is not a way to kind of capture the efficiencies. This is about us being able to continue to invest in the business, benefit from those kind of very significant advances in technology and the strength that we have. So we continue to deliver growth. Key point, as I said, is this does not change anything to the ongoing profitability of the business. David McCann: Okay. It's more about the alpha that -- potential alpha that the strategy can develop rather than anything... Robyn Grew: Correct. Antoine Hubert Joseph Forterre: I will then go to Hubert. Hubert, you should be able to unmute. He says, hopefully. Hubert Lam: Yes. Hubert Lam from Bank of America. I've got 3 questions. Firstly, obviously, there's been a lot of focus recently on private credit. Can you talk about your software exposure within your U.S. private credit business, and any commentary about credit quality within that line? Second question is also on credit. Can you just also talk about the deployment within Varagon? How that's coming along? How much dry powder you have there currently? And last question is on 1783, another strong year of performance. Can you just talk about what you can do to scale up that product given that, that seems like a pretty big opportunity that you can exploit there just given the strong performance? Antoine Hubert Joseph Forterre: Thank you, Hubert. Which one you want to take? Robyn Grew: Well, why don't I start with 1783? Let's start there, and we'll split it up between us. Really pleased with the performance. You're right. Thank you for calling that out. I'm glad you're enjoying the performance as much as we are in that space. It's -- we continue to see and have really excellent conversations with clients. We have a strong belief in this product and its track record. And so this is about making sure that we can convert some of those conversations into investment. But we feel very good about it. The performance is robust. We continue to see strong engagement on it. And so that's -- the scale is there. We have the capability, and it has the capacity to operate. I'll take the, I am sure it is, private credit piece, just on our exposure. Let me do it slightly differently. We have very limited -- let me say it at the start, we have very limited exposure to software and technology across both of our direct lending and opportunistic credit books. For background, direct lending, software and tech exposure is sort of somewhere sub-6%. Think about it like that. But also think about it in a slightly different way. This is a middle market business where also it's been run with high discipline in underwriting and risk management. So this piece that we talked about through last year about being slower in deployment, because we valued the risk management approach and proper underwriting quality, was what we continue to believe is the right thing to do. Our exposure is far less than any of our peers, but also we're not facing retail markets. This is an institutional-facing business. So we also don't suffer or have to worry about liquidity mismatch, for example. So we believe this is a good strategy. Middle market provides good opportunity. We run our business with high discipline and high-risk focus. We're not exposed to the sector in the way that you might have been seeing others have been. We don't have liquidity mismatch issues, and we continue to have strong belief that this is an area for development. In terms of dry powder? Antoine Hubert Joseph Forterre: Still $4.9 billion is a number we mentioned. And underlying in the AUM categorization, and the direct lending category has deployed a bit more capital, so you don't see it, but it's the underlying AUM has actually increased. It's obviously increased more because of the acquisition of Bardin Hil we have made in the year. Before I go back to the screen, we still have a couple of questions, I'm going to read a question from Mike Werner, who seems to have issues probably dialing in Webex. We saw a significant increase in long-only performance fee-eligible AUM in 2025. Was this due to a large mandate? Or is this a trend we should expect to continue going forward? If you go to Slide 10 of our presentation, you see that at the end of '25, we have $13 billion of long-only AUM that was performance fee eligible. That's increased from $5.8 billion as of the end of 2024. That is a series of mandate. It is not a single mandate. Obviously, there are entity mandates, so they tend to be sizable by construction, but it's not just one, it's a series of mandates. And that in part explains why we generated $100 million of performance fees in long-only in 2025. Second question from Mike, is it possible to get a breakdown of seed capital between public and private markets given the delta in equity in those strategies? The answer is yes, you have it in Slide 14 at the bottom, liquid markets account for 79% of our seed investments and private markets 21% of our seed investments on a gross basis. I will then go to Isobel. Isobel, you should get the request to unmute. Isobel Hettrick: Can you hear me okay? Robyn Grew: Yes. We can. Antoine Hubert Joseph Forterre: Go ahead, Isobel. Isobel Hettrick: I just have one, please. So if you take a step back and look at the Man platform, holistically, where do you think there are potential capabilities you're missing or need to enhance inorganically going forward? Robyn Grew: Thanks, Isobel. I'll take that question. We have always been very clear we will always look for capabilities that are uncorrelated to that, that we have today, but still rhyme with the verbs announced that we understand. But let's be clear, that doesn't -- that comes from organic growth. We can demonstrate that as you think about, for example, the high-yield and investment-grade credit business we've built here organically. That is -- that speaks to the capability we have already to grow that capability. It's not just about M&A. We added 5 new teams into the discretionary space. So we're interested in capability that comes, again, in an uncorrelated content from that space. So we're not focused on a specific area. You know the strategy that we're trying to follow. We feel like we're making great strides in that space. But right now, we are very, very focused on the book of business we have in front of us, and we'll continue to look for capabilities that we don't currently have. But right now, we're feeling quite good. Antoine Hubert Joseph Forterre: And then we have 1 last question from -- or questions from Jacques-Henri. Jacques-Henri, I'm going to request you to unmute. We haven't had the chance to get acquainted. So if you could tell us which firm you're from as well. That would be great. Thank you. Jacques-Henri Gaulard: Can you hear me? Robyn Grew: Yes. Antoine Hubert Joseph Forterre: Yes. Jacques-Henri Gaulard: I'm Jacques-Henri Gaulard, Kepler Cheuvreux. I had 2 related to the updating model framework on the PBT. Getting the 30% to 40% now, is it a bit a reflection of the fact that 2025 was really, really tough, despite that, you more or less made it? And it's like if we can make it in that type of condition, then we'll definitely make it whatever happens almost, sorry about that. And the second question would be your non-core costs is actually a little bit lumpy, and the definition is effectively quite range. Would you consider probably reducing the range of those core costs to actually include some of them into the pretax margin definition? Some of your peers, for example, include the restructuring costs in there. That's it for me. Congrats for this morning. Antoine Hubert Joseph Forterre: Thank you, Jacques-Henri, for the questions. So the range is really a reflection of the evolution of the business over the last now 13 years. When the previous framework was put in place, the business was going through heavier restructuring with a very focused approach on costs, fixed costs in particular. And that's why previous management focused on kind of single-line item targets across the P&L. As we evolve the business, as we invest for growth, as we invest in technology, but also grow our teams, we feel that having the ability to use the cost P&L line more fungibly makes more sense with that importantly taking away from shareholders. So do not read anything into it. The second question is on non-core costs. You're right that last year, we had an increase in the non-core costs for really 3 specific reasons. Most of them really related to 2025. The first one is the court case, which is ongoing. That went to trial in March of last year. The trial will conclude in March of this year. So we incurred some legal costs. This relates to allegations made from the 1990s. So firmly not sort of related to the current core business, which is why they sit in non-core. The second was the kind of restructuring charge we took around the middle of last year, as we addressed difficult first half and realigned resources across the business. That's another around $30 million, of which $10 million is noncash, $20 million is cash. And then the third element in the non-core line, which is more in keeping with what you usually see is the noncash impact of reevaluation of liability in relation to Asteria partnership. Asteria, you might recall, is a joint venture that we have focusing on wealth in Italy in particular and continent in general. It's going very well. As a result, the implied valuation of the liability that we have remaining on our balance sheet has increased and also flows through the non-core. We're not proposing any change to our definition. Importantly, what you saw last year is not on the basis of a change either. It's just the same definition, in a year that's a bit exceptional. With that, I don't believe we have any more questions. So we'll finish here. Thank you all very much for your time. Robyn Grew: Thank you very much.
Operator: Good morning, ladies and gentlemen, and welcome to the Chord Energy Corporation fourth quarter 2025 earnings conference call. Following the presentation, we will conduct a question-and-answer session. At this time, all lines are in a listen-only mode. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on Thursday, February 26, 2026. I would now like to turn the conference over to Bob Bakanauskas, Vice President of Investor Relations. Please go ahead. Bob Bakanauskas: Thanks, Josh, and good morning, everyone. This is Bob Bakanauskas. Today, we are reporting fourth quarter 2025 financial and operational results. And we are delighted to have you on the call. I am joined today by Danny Brown, our CEO; Michael H. Lou, our Chief Strategy Officer and Chief Commercial Officer; Darrin J. Henke, our COO; Richard N. Robuck, our CFO; as well as other members of the team. Please be advised that our remarks, including the answers to your questions, include statements we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our earnings releases and conference calls. Those risks include, among others, matters that we have described in our earnings releases, as well as in our filings with the Securities and Exchange Commission, including our annual report on Form 10-Ks and our quarterly reports on Form 10-Q. We disclaim any obligation to update these forward-looking statements. During the conference call, we will make reference to non-GAAP measures and reconciliations to the applicable GAAP measures can be found in our earnings releases and on our website. We may also reference our current investor presentation, which you can find on our website. I will now turn the call over to our CEO, Danny Brown. Thanks, Bob. Good morning, everyone, and thanks for joining our call. Danny Brown: Last night, we issued our fourth quarter and year-end results and our updated investor presentation. The materials cover key strategic, operational, and financial details, along with our 2026 outlook. I plan on highlighting a few key points, then we will open it up for Q&A. So, looking back at 2025, in summary, it was an exceptional year for Chord Energy Corporation. We continued to improve the business, evolving our development program, driving efficiencies, and enhancing free cash flow. Chord Energy Corporation consistently delivered results that exceeded expectations, while improving the quality and depth of our inventory and enhancing profit margins, yielding significant incremental free cash flow. Looking specifically at volumes and capital, through their commitment and dedication, the team was able to deliver higher production while capital came in below our expectations. My sincere thank you to all of our employees who have positioned us for continued success. 2025 oil volumes exceeded original guidance by more than 1,000 barrels per day, while capital came in approximately $60,000,000 lower. Since combining with Enerplus in 2024, Chord Energy Corporation has lowered its capital spending nearly $100,000,000 while delivering 6,000 barrels per day more oil production. Slide eight shows Chord Energy Corporation drove $160,000,000 of free cash flow improvement in 2025 from controllable items, including less capital, lower LOE, lower production taxes, lower G&A, and improved marketing costs. Importantly, the $160,000,000 of run-rate improvements represent 23% of our estimated free cash flow in 2026, and we anticipate making meaningful further progress. Since the pandemic, Chord Energy Corporation has been laser focused on disciplined capital allocation and delivering strong return on capital. We believe making good investments, whether in organic well activity, lease acquisition, or large-scale M&A, is foundational to building a strong and resilient organization, and in delivering robust return of capital. And this shows in our results. Slide six shows that since 2021, Chord Energy Corporation has returned $6.7 billion of capital to shareholders, which is particularly impressive given it is higher than our current market cap. Importantly, we accomplished all of this while significantly growing the business on both an absolute and per-share basis, and while keeping our leverage well below that of our peers. Stated differently, Chord Energy Corporation has firmly positioned itself as a leader in the Williston Basin, leveraging its scale and operational capability to grow volumes in a capital-efficient way, leading to strong, sustainable free cash flow generation and substantial shareholder returns. Turning to the fourth quarter briefly, Chord Energy Corporation delivered another consecutive quarter of solid operating performance. Oil volumes were at the high end of guidance, capital was below the low end of guidance, and both were accomplished with strong cost control. Accordingly, adjusted free cash flow for the fourth quarter was $175,000,000, substantially exceeding expectations, and we returned approximately 50% of this amount to shareholders. After our base dividend of $0.30 per share, all incremental capital return was utilized for share repurchases. As we look forward to 2026, Chord Energy Corporation’s plan builds upon last year's success and remains focused on optimizing capital allocation, generating strong returns, and improving continuously. Last year, Chord Energy Corporation set a goal of converting 80% of its inventory to long laterals. I am happy to report that we achieved that goal by year-end 2025, which was earlier than expected. Chord Energy Corporation’s operational improvements and move to longer laterals have significantly lowered our cost of supply. Slide 15 highlights Chord Energy Corporation’s inventory improvement in 2025, replacing our low breakeven inventory mostly through improvement of the organic portfolio but also through select M&A. As you can see, we had tremendous success, including conversion to four-mile laterals, while also driving capital and operating costs lower, and it is a testament to the hard work and dedication of our team. In addition, Chord Energy Corporation lowered the weighted average breakeven of its inventory by more than 10% through several efforts, and we have attempted to highlight the benefit of a shift to longer laterals on slide 10 of our investor presentation. Through long laterals and improved execution, Chord Energy Corporation has driven per-foot drilling and completion cost to a very attractive level, and this is demonstrated with program-level capital efficiency improving year over year. If you look at volumes delivered relative to capital spent—essentially, the inverse of an F&D calculation—you can see the 2026 program is more efficient than 2025. Additionally, Chord Energy Corporation’s future F&D cost on a company level has trended 22% lower over the past few years, clearly demonstrating that things are going in a positive direction. And speaking of 2026, despite some severe weather we have seen in North Dakota to begin the year, Chord Energy Corporation’s 2026 plan is in line with the preliminary outlook we issued in November. As a reminder, we intend to run a low to no oil growth program, yielding average volumes of 157,000 to 161,000 barrels of oil per day, with capital of $1,400,000,000. From an activity standpoint, we are currently running five rigs, split fairly evenly between three- and four-mile wells, and one full-time frac crew, with the spot crew scheduled to drop around the end of the summer. We expect approximately 80% of TILs will be longer laterals. At benchmark prices of $64 per barrel of oil and $3.75 per MMBtu of natural gas, we expect to generate approximately $700,000,000 of free cash flow in 2026. So in closing, Chord Energy Corporation remains committed to delivering affordable and reliable energy in a sustainable and responsible manner, and we have a compelling history of disciplined capital allocation, consistent execution, and high shareholder returns. We are proud of what we have built: a scaled and resilient organization with low decline, significant low-cost inventory, and very attractive exposure to the next crude upcycle, while generating strong free cash flow and shareholder returns in the current commodity price environment. And with that, I will hand the call over to the operator for questions. Operator: If you are using a speakerphone, please lift the handset before pressing any keys. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you wish to decline from the polling process, please press the star button followed by the number two. You will hear a prompt that your hand has been raised. One moment for your first question. First question comes from Neal Dingmann of William Blair. Please go ahead. Neal Dingmann: My question is just on the long-term plan. It is really interesting. You guys were early putting this out, I think, if I recall back in early 2024, and since then, oil has diverged between $55 and $87. Your plan has remained as consistent as ever. So I guess my question is, is there much that would cause that to change in any direction, whether it is prices or something else that caused you to diverge from that long-term plan? Danny Brown: Hey, Neal. Thanks for the question. We are really happy with the quarter and the outlook for the organization. I would say as we think about our activity levels, the great thing is we have built a really resilient company, and because of that, we think we are able to weather through some of these commodity price cycles and still generate really meaningful free cash flow and shareholder returns. And so I think the volatility of our activity program may be a little muted relative to others because of that resiliency we have in the organization. From a capital allocation decision-making standpoint, if we saw really significantly lower oil prices, clearly we would go back and look at the plan to say, does this make the most sense from a capital allocation perspective? And so you could see a movement in the program, but with where we are at now and down to levels far lower than where we are trading currently, we feel really happy with the plan, the free cash flow generation, and the shareholder returns that we have got. Neal Dingmann: Great point. And then just my second on fixed cost specifically. You and I have always talked about, I know Bakken generally having a bit more fixed cost than other areas of the Permian. But it is definitely notable when you look at your breakeven cost. Those continue to come down. Could you talk about things that you all are doing? Is it to mitigate these costs? Is it things you are doing to lower the fixed cost, or are you just focused on what you can more of the variable? Or how are you able to continue to decrease breakevens, as the Bakken still has some of the fixed cost it does? Danny Brown: Neal, I would say it is an organization-wide effort to drive our cost structure as low as we can responsibly get to. That includes capital efficiency improvements. That includes operating expense improvements. That includes what we do from a marketing and midstream, so a GP&T side. So it is really everyone focused on driving improvement through the business. We just think it is absolutely critical. And when you produce a commodity, you have to make sure that you are focused on your margins, and we are very keenly focused on our margins. The great thing is that we have, I think, built organizationally tremendous momentum around this, and we have seen success through a combination of multiple efforts, so not just the capital side, but also from an operating expense and really all elements of our cost structure as an organization. And then we highlight in our investor presentation the $160,000,000 of run-rate free cash flow improvement we saw in 2025, which is really covering on the capital side in our F&D, and we are very focused on continuing to improve. These are run-rate type numbers that will carry with us into 2026, and we expect to see improvement on this as we move forward. So there is a lot of excitement in the organization around it, and I think we have got more that we can deliver as we move forward. Neal Dingmann: Well said. Thank you, Bob. Danny Brown: Thanks, Neal. Operator: Next question comes from Oliver Huang of TPH. Please go ahead. Oliver Huang: Good morning, Danny and team, and thanks for taking the time. Wanted to start on organic inventory. As we kind of think about the adds highlighted in the material here last night, any sort of color on which parts of the basin you all are seeing this come from? How much more running room is there beyond what has been highlighted if this year's four-mile program goes according to plan? Danny Brown: Oliver, what I will say is that it is really across the basin that we are seeing this improvement. So it is not like it is one specific area, but really as you think about the 1,300,000 acre position we have, it is really extensive. And as we have lowered our cost structure, we have just really been able to continue to work to really refine and improve our inventory position, materially improving the breakeven on our inventory and the geometry of our development program as well as incorporating some new assets we have got into the development program. So some things that we always thought were inventory are just now better inventory than we had before, and then some things before that would not have made sense for us to drill now have really compelling returns as we look at the cost structure we are able to apply against it. So it is across the basin. As we continue to improve the business as we move forward, I have no doubt that we will continue to see organic inventory flow into the system. We think about this largely on the upfront side, and I think it is common to think about this from your upfront capital costs, which is important, and we have seen a lot of improvement around that, but it is also about how we operate the wells. And so as we are able to have these wells flow longer over time, have higher production delivery over time, it also has a benefit to us there because we are seeing more production from the base wells and the inventory to replace production as we move forward, which will have lower cutoff rates as we move forward and just have us rethink the whole inventory. We are really working all aspects of it to get more from the wells that we have got, more from future wells, both from a capital and the OpEx and a productivity side, and it just has a really bright outlook for our overall inventory position. Oliver Huang: Okay. That makes sense. Thanks for that detail. And maybe for my follow-up question, we noticed in the 2026 outlook, the oil cut is showing an improvement from both Q4 and 2025 levels. Just how much of this is driven by leaning more into the western acreage where wells carry a lower GOR profile? And also any sort of color on how you all are thinking about GOR trends through the 2030 timeframe for your portfolio? Danny Brown: Yes. It is a great observation, Oliver. So you are right. As we think about the 2026 program, broadly, it is activity around the basin. We are not concentrated in a single area, but it has got a little bit more of a weighting over to the western side of the portfolio. As we move more out of the historic core of the basin, we do see a lowering GOR, and that is reflected a little bit in what you saw for us in 2026. As you would expect, we are always monitoring the performance of our wells. We are monitoring where our specific development activity is anticipated to be. There are nuances around shrinking yields that we get from various processes, plates we get, and how we account for that in our three-stream production modeling. Broadly speaking, as we look at the wells in the core of the basin, we expect their GORs to continue to increase, but they will be increasing on a declining base. As our new production comes online, that will come in with a little bit of a lower GOR relative to the production. We are trying to balance all that in the projections that we put out there. Oliver Huang: Perfect. That makes sense. So as we are kind of thinking through the next few years, maybe just very minimal increases to the oil cut is probably a good starting point. Danny Brown: Yes. I would say that is a great way to frame it. We do not anticipate seeing an increase in our gas cut, and it may be that our oil weighting increases, but it will be very slight. Operator: Next question comes from Derrick Lee Whitfield of Texas Capital. Please go ahead. Derrick Lee Whitfield: Good morning, all. Great update today. Wanted to lean in on Neal’s earlier question with my first question. You guys have done a remarkable job of lowering your breakevens and increasing free cash flow per share. Referencing slide eight, where do you see the greatest levers to further improve the business on the D&C and base production front over the last several years? Danny Brown: Hey, Derrick. Really appreciate the question. I really like slide eight of our deck because it just demonstrates the sort of tangible results we have got from a lot of the efforts we have going on in the organization. I would say I am not focused on any one particular area of this. We think we have got opportunity really across every one of these buckets, and we are seeing progress on every one of these buckets, whether it be production operations, opportunities from our base wells, opportunities to lower not just where we see optimization opportunities from the base production, but we have got workovers that would be included in this, and the continued opportunity to see our cost structure fall as more longer laterals flow into the system in our development plans. One of the things I know about drilling and completions is as we get more of these under our belt, our performance on them will get better. We have just seen that time and time again. So I really have a lot of optimism for each one of these buckets and expect us to continue to deliver improvements over what you see on slide eight in every one of them. Derrick Lee Whitfield: That is great, Danny. And thinking about the use of surfactants in new well completions and for workover operations. Billy, one of the larger operators in the basin in Chevron is acknowledging surfactants in prepared remarks today. How are you guys thinking about the use of surfactants in boats? Darrin J. Henke: Yeah. Great question, Derek. It is very top of mind. We are focused heavily on the production side relative to the chemicals and surfactants at this point, but we are also looking at adding them on the completions as well, studying that. We have pumped 19 chemical and surfactant treatments already, and we are evaluating those results. As we get additional results throughout the year, we will, of course, report back on those. We are constantly studying our competitors, be it in the basin or other basins as well. If we are not the first company to be trialing some of these treatments, then we are going to be early adopters as we see that the results merit additional pumping. So in a nutshell, we have pumped a number of jobs already. We are studying the results of those jobs, and of course, look forward to success with those. There will be more of those down the road. We have thousands of wells that we could do that on potentially, nearly 5,000 wells PDP based. Danny Brown: Hey, Derek. I will just add on to that a little bit too. We are talking specifically about surfactants here, but I would say maybe as a broad comment, if you see or read something that someone else is out there trialing, you should assume that we are doing the same thing in here. Either we are already doing it or we are quickly picking up that same information and looking to trial it internally. We are doing that as a matter of course, but we also know we are doing other things as well that we are excited about and think can drive potential improvement for us as we move forward. But we have generally been an organization that likes to put up some results first to be able to come out and talk about that specifically. So we will continue to work these things, and as we see results and have news to share, we will absolutely be doing that. Derrick Lee Whitfield: Alright. Fair enough. Great update to you guys. Operator: Next question comes from Paul Michael Diamond of Citi. Please go ahead. Paul Michael Diamond: Thank you. Good morning. I was wondering a bit more on slide eight. And let us talk about $30,000,000 to $50,000,000 in annual run-rate savings given new negotiations in marketing. Can you talk a bit about the specifics there and, I guess, the opportunity set you see going forward? Michael H. Lou: Hey, Paul. Thanks for the question. This is Michael. The team has done a great job on the marketing midstream side, and some of the things that we have seen is this basin has a maturity to its midstream infrastructure throughout the basin. Contracts have been long-term contracts, but they have been around for a while. So a lot of those contracts have come up or are coming up. As those contracts near their term, we are able to get in new contracts that are at lower cost points, which is fantastic. The teams are continuing to look at that, and I think we still have additional opportunity on that side. It really spans across oil, gas, and water, and really throughout the basin across many, many contracts. Keep watching. I think, as Danny mentioned, each of these buckets have room to move. The marketing and midstream side is no different. You can hear the excitement from the team on this. Really, it is corporate-wide, and what I love about it is it really shows the commerciality that our whole teams are looking at in terms of not only reducing costs, but really just getting better and more efficient across the organization as a whole. Some of that is coming with production improvements, some of that is coming through cost reductions, but overall, just raising the free cash flow profile of the company not only on a short-term basis, but on a long-term basis. Paul Michael Diamond: Got it. Appreciate the clarity. And then just a quick follow-up. Talking to slide 15, you added 300-odd last year through a combination of organic acquisitions and then the ground game. In guidance, you guys plan on TILing about 150 locations in 2026. I guess how do we think about you breaking down organic versus M&A? Should we think about that breakdown being somewhat similar? Is that a reasonable trend? Or was that an outlier year? Danny Brown: Paul, clearly, this is something we are going to be really focused on. And I think, for any one year, it may look different. M&A, as you have seen, we have been very disciplined on this over time. We are going to pick our spots. When we see something that makes sense for us to do from an M&A perspective, when we think we will be a better organization on the back end of it, you may see us do something like that, and that would obviously impact this chart. Then the efforts we have got internally should be continuing to drive organic inventory replacement. So I think the buckets will be the same. The percentage of any buckets may differ a little year over year, and it is just going to depend upon the opportunities we are able to identify as we move forward. Operator: Next question comes from Noah B. Hungness of Bank of America. Please go ahead. Noah B. Hungness: Good morning. I wanted to maybe lean on the 2026 decline rate. You guys have given us a bit of detail on the production shaping, but I guess I was curious if you could give any color maybe on what the 2026 exit decline rate looks like versus maybe the 2025 decline rate. Danny Brown: Yes. I think the decline rates year over year broadly look similar on an annual basis, and really that is how we think about things. I do not think there is a whole lot of changes we incorporate. As we have said, on a longer-term basis, we may see a little bit of moderation in decline, assuming we continue to run a maintenance-level program, as longer laterals have a larger and larger portion of our overall production base. We expect to see a modest shallowing of our corporate decline rate, but again, it will be small—very small single-digit percentages in that, but helpful from a reinvestment rate perspective. It is a tailwind that we have got but not a huge tailwind, at least not right now. Noah B. Hungness: And then for my second question, could you maybe talk about was any of your capital activities affected by Winter Storm Fern in 1Q? And if so, what does that mean for the timing of capital spend through the year? Darrin J. Henke: Yeah. Great question. No. I would say it is winter in North Dakota, and the program looks pretty similar to what our expectations were last fall. Our teams did a fabulous job getting production back online where we did go offline on production and getting activity back out. We are definitely one of the best in the basin when it comes to recovering from a winter event. Noah B. Hungness: Well said, Darren. No. That is helpful color. Thank you. Operator: Next question comes from Carlos Escalante from Wolfe Research. Carlos Escalante: Hey, good morning team. This is Carlos on for John. Thank you for having us. First question, I would like to lean on what you are doing with the longer laterals. It seems to us that as you drill in 2026 and spud a lot of those, but you do not TIL the same amount in 2027, meaning capital, there is a carryover effect in your capital efficiency in 2027. Obviously, you are not guiding to 2027. But can you perhaps give us a sense of capital efficiency as a whole? On order of magnitude, how would you guide to 2027? Danny Brown: Yep. Broadly speaking, Carlos, I appreciate the question. Again, and I will reiterate your comment that we are not guiding to 2027 at this point. We are just now coming out with 2026. From a capital efficiency perspective, the sort of roll-in of the TILs from the capital deployed in 2026, all of which we think will be helpful to a 2027 program. We are really pleased with what we are seeing in 2025. We feel very good about what we accomplished for 2026. We have got some nice tailwinds with our development program, which we think will be helpful to the 2027 program. Carlos Escalante: Operators have tried out for type oil development optionality. I mean, obviously, it is a fundamentally different play than the Permian Basin with less stack optionality. But just wondering if there is anything that you can highlight to us, remind us what the optionality is, and also acknowledging that you do not need this today because you have a healthy inventory as you do right now. Danny Brown: Thanks for the question, Carlos. I will start with the last comment. The great thing about our program is we think we have got a lot of really good inventory in front of us. It is a very repeatable Middle Bakken program. The Bakken delivery from a well has the lowest standard deviation of delivery from any Lower 48 basin out there, and so it is very repeatable development. Our spacing is conservative, with no need to put an adjective around that. It is conservative-spaced Middle Bakken program, and we have got a ton of it. We have a great inventory picture for the organization. Obviously, we are aware of the full column that sits underneath our acreage position there. We are watching what others do. We watch what folks do in and out of basin, and we will respond as would be appropriate. But the great thing is we have a really deep inventory set with what we have got currently and feel great about our plan. Operator: Next question comes from Nicholas Pope of Roth Capital. Please go ahead. Nicholas Pope: Good morning. There are several comments on an uptick on spend in the midstream in 2026, mostly focused on water disposal. In the market optimization line item, water disposal optimization, curious if there is anything that has changed with the water production out of the wells, or if this is just kind of further what you comment on the late stage of the development of Bakken and some of the contracts that are in place there? Or if anything has materially changed with the field-level production of water out there. Michael H. Lou: Hey, Nick. Good question. This is Michael. So just thinking about the midstream, and I like the way you kind of characterize that. We talked a little bit earlier that as we move into areas that have lower GORs, those areas also have slightly higher water. I would say the water systems overall are more mature, but there are not quite as many of those as oil and gas side. As we talked about midstream deals earlier, oil and gas side has kind of more mature systems overall, especially on the oil and gas. The water systems, we are talking about a lot of call flattening in the basin. There are some areas that we are looking at whether or not it makes sense for us to invest some in the water side, really to juice our E&P returns overall. These are good projects that will boost our E&P productivity and return. So incrementally, it is not a lot of capital overall, but it is very productive capital for us to spend. Nicholas Pope: Got it. And so, total disposal capacity across the basin—you did a nice job of highlighting the movement of oil and where things are across the basin—but for capacity for water, are you all comfortable with the total capacity in the near term? They have been able to handle all the water that this basin is going to produce? Michael H. Lou: Yes. The disposal capacity is totally fine. Just recognize that disposal capacity is also a little bit more localized than maybe oil export or gas export capacities. Overall, that is baked into all of our economics and our thoughts. There is a need to try to get water disposal a bit closer to your wellbores overall, and so that is why there is some ongoing capital spend on the water side. I do not think it really changes things as we move forward. Nicholas Pope: Hi. Good morning. Thank you. In your 2025 reserves, I was wondering, did the full impact of your lateral length extensions get captured in your reserves? Darrin J. Henke: As you are probably noting, the three-mile wells that we have delivered, we have captured that in our reserves. But as you probably know, we had actually just recently TILed the four-mile wells. So that is probably on the early side. Obviously, there might be one or two wells on that front, but it is not really fully captured when we think about the full PUD development. But it is pretty straightforward from the standpoint that what we saw in the three-mile results resulted in the type of uplift that we talked about. Nicholas Pope: Great. Thanks. I was just curious about how the timing of that worked out. And just a little while ago, you were mentioning that we can consider the inventory to be conservatively spaced. And at least for me, so much of the focus on the longer laterals, I know, raises the tier of maybe outer parts of the footprint to make locations viable that would not have been with shorter laterals. Are there implications for infill drilling in the more mature parts of the footprint, especially given the cost structure improvement that four-milers can introduce into the mix? Danny Brown: No. It is a great question, and I think the answer is yes. There probably are beneficial implications as we get better at drilling these longer laterals. I think also, we do not talk about it very much because it is not a meaningful part of our program—it is a more meaningful part of some other operators’ programs—in these alternative shaped wells. We like it as a tool in the toolkit, but we are fortunate that we have got such a great and extensive acreage position that we do not need to drill a lot of alternative shaped wells. We can drill long straight wells, which we like better. But the combination of longer wells and alternative shaped wells, I do think, has some implications to infill drilling. The important thing is we think as these costs get down, we are effectively draining the reservoir. We have got good reservoir contact area. We think we are effectively draining the reservoir with what we have got now. But where these longer laterals and, maybe more importantly, the alternative shape wells can come with the infill drilling, it may allow us to go back in and capture some reserves that have not been really effectively drained. If you do not have the ability to drill these alternative shaped wells, you may not be able to access that very well. The combination of longer laterals and alternatives, I think, has a beneficial implication to infill development programs. We really have not quantified that yet, so I would say that is going to be a lot of upside to what we think about now. As our cost structure on these gets lower, as our ability to execute them gets larger, it probably just gets better from there. But quantifying that, it would be a small piece of our overall inventory as we think about it today, but certainly a nice potential incremental opportunity for us to evaluate and continue to add in. Operator: There are no further questions at this time. I would now like to turn the call back over to CEO, Danny Brown, for final closing comments. Danny Brown: Thanks, Josh. To close out, I want to thank all of our employees for their continued hard work and dedication. We feel great about our competitive position and have a lot of low-decline, high oil cut production base paired with a deep inventory of highly economic, conservatively spaced oil-weighted locations. Our strategic actions and continuous improvement have created what we believe is a valuable and increasingly rare asset in our ability to deliver going forward. With that, I appreciate everyone's interest, and thanks for joining our call. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.
Operator: Good morning, and welcome to the investor and analyst call for LSEG's 2025 Full Year Results. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to David Schwimmer, Chief Executive Officer, to open the presentation. Please go ahead. David Schwimmer: Good morning and welcome to our 2025 full year results. I'm joined by our CFO, MAP; and our Head of IR, Peregrine Riviere. We have delivered another year of strong performance and rapid strategic transformation for the group. Revenues grew 7.6% with all businesses contributing positively and Data & Analytics accelerating. Our focus on driving efficient and scalable growth delivered 210 basis points of margin expansion, a little over half of that organic, taking full year EBITDA margins north of 50% for the first time. Adjusted EPS grew 16%, reflecting our disciplined execution throughout the P&L. We continue to invest in future growth with the Post Trade Solutions transaction in Q4. We continue to deliver strong cash conversion with GBP 2.8 billion of dividends and buybacks in the year. And today, we've announced our plan to execute a further GBP 3 billion of buybacks over the next 12 months. We see a great opportunity to invest in our own shares during this market dislocation. This strong performance is a direct result of the strong execution of our long-term strategy and the rapid transformation we're driving across our business. November's Innovation Forum provided insight into how we are innovating across LSEG as we deliver on our AI strategy. We are already seeing the fruits of that innovation. Our LSEG Everywhere AI data strategy is embedding our trusted data into the AI tooling of financial services. It's only been a few months since we launched our MCP server, but early demand has been very strong. I'll give you some numbers on that later. We're also innovating to capitalize on the accelerating pace of change in capital markets, building new platforms for growth in digital assets. We launched our digital markets platform last year and, at the start of this year, successfully piloted tokenized cash settlement via our new Digital Settlement House. The strategic partnership with 11 leading banks we announced at our Q3 results is accelerating growth and helping us unlock the multiyear opportunity in Post Trade Solutions, a great example of our strong customer relationships and partnership-led approach, creating unique opportunities for growth. Let's take a step back and look at our 2025 performance in the context of the multiyear delivery of our strategy. We have achieved a lot over the last 5 years. Financial performance has been very strong with organic growth [Technical Difficulty] improving significantly. [Technical Difficulty] all of our businesses. Across the whole group, we've driven significant revenue and cost synergies, built better products and better infrastructure, integrated the operations and unified the brand and culture. This is all still work in progress. And every day, we discover new ways to transform our business. But right now, I can see more growth opportunity in front of us [Technical Difficulty] trading, settlement and depository have huge potential for future growth. But let me take a step back. Right now, the market seems to be taking a view on the impact of AI on our business. We do not agree with it, and all fact-based evidence would indicate the negative market narrative is wrong. We feel as confident today about our products, our partnerships and our prospects as we ever have. [Technical Difficulty] entering into enterprise agreements, run some of the most rigorous procurement, risk and technology processes in any industry. They understand exactly what our products do, they know how their own workflow needs are evolving with AI, and they know the role of our data, analytics and infrastructure in their operations. [Technical Difficulty] heavily regulated and risk-averse customers are going to rely on outputs compiled from the public Internet. That is how much you should be worried about. But more importantly, let's look at the 98% of group revenues that are not from public data. I'll cover the rest of D&A in detail later. But in a nutshell, these revenues are derived from [Technical Difficulty] that are proprietary, used in regulated environments [Technical Difficulty] intelligence and particularly World-Check is an industry leader. Two things that are not well understood about this business. First, its value goes far beyond the thousands of official sources. Our customers make 200 billion checks a year across 700 million of their own end customers. And once anonymized and aggregated, we can use the decision data to improve our own detection and matching capabilities in a huge and constantly evolving content set. World-Check is the leading product in this space and we are able to continue to improve the product to extend that lead through what is in effect a massive and constant flow of customer contributions. Second, history is important. Customers need to justify decisions they made about counterparties going back decades, for example, in high-profile tax or fraud cases. We have all that history with the information that was available at the time. AI cannot create that past record for customers. And moving to Markets, 40% of our business. AI is a tailwind here, too, as more data consumption drives more insights, leading to more trading volumes and ever-growing demand for risk management. So our positioning is strong, and our strategy is working. I'll say more in a moment about our strong commercial and strategic progress and the opportunities we are seeing with AI. But first, I'll hand over to MAP to discuss our financial performance in more detail. Michel-Alain Proch: Thank you, David, and good morning, everyone. It has been a very strong year of financial execution for LSEG. So first, some headlines, and then I will unpack this all in more detail. Organic growth was 7.1%, slightly above the midpoint of our guidance and another year of organic growth above 7%. EBITDA margin improved by 110 basis points underlying plus another 100 from the Post Trade Solutions transaction. We delivered this performance through a significant improvement in our labor cost ratio. And this strong growth, combined with operational leverage, translated into EPS growth of over 15%. So that was the P&L. Now moving on to cash and capital allocation headlines. Capital intensity continues to trend down, as guided, but do note that we are still investing in our business at least twice the rate of our peers. The dividend is increasing by 15%, in line with EPS, and we doubled the rate of share buybacks in 2025. With the growth in cash flow and the reduction in share count, this translates into 14% growth in free cash flow per share, which is actually 60% over the last 2 years. In summary, we are growing our business strongly. We are investing in our future growth, we are generating significant free cash flow, and we are being very decisive and agile in our capital allocation. So let's cover revenue over the next few slides. On this slide, you can see that our growth is very broad-based with Risk Intelligence continuing its double-digit momentum and Markets growing high single digits against a huge year in 2024. FTSE Russell continues its revenue trajectory and D&A accelerated on 2024. As you know, I like to look at our subscription businesses as a whole, and here, we have achieved 6% of growth for the year, as we guided to. We will start with D&A in more detail on the next slide. We achieved good growth across all lines in D&A. In Workflows, we completed the migration from Eikon, the largest ever of its kind in financial markets. As a result, clients are using the platform more frequently, and we continue to innovate and improve it. In Data & Feeds, we maintain our strong momentum. We are adding significant new data sets, particularly in private markets, and we have launched our LSEG Everywhere strategy for AI-ready data. As David will cover, the initial uptake here is very strong. Our Analytics business is well advanced on its acceleration journey. In partnership with Microsoft, we have driven a strong acceleration through the Analytics API and have just launched the Model-as-a-Service platform with our first partner bank, Societe Generale, onboarding its own models. Overall, D&A is posting a 5% organic growth, accelerating versus 2024, as communicated during our half year results. Turning to the other subscription businesses, we continue to see strong momentum and healthy demand. In FTSE Russell, we have seen balanced growth between subscription and asset-based fees, and we expect the growth rate to improve again in 2026. Risk Intelligence had another very strong year. World-Check, which represent the bulk of its revenue, continues to innovate from its position as market leader, launching World-Check On Demand for real-time updates. This platform is increasingly deeply embedded in customers' regulated workflow. Our Digital Identity & Fraud business accelerated in 2025 with transaction volumes up 16%, and the launch of our global account verification platform. I will spend a little longer on this slide to talk about some new KPIs we are introducing for 2026, there will be an addition to ASV. And from 2027, we will report only these new KPIs and we will be retiring ASV. We are doing this to give investors more insight into our commercial progress and with measures that are less volatile than ASV. But let's come back to ASV. As you remember, I previously guided to 5.8% growth at the end of Q4, and we achieved a bit better than this at 5.9%. This reflects a very strong end to the year, which set up well for 2026. And now on the new measures. Before beginning, I shall tell you that they cover exclusively our 3 subscription businesses: D&A, FTSE and Risk Intelligence. We have given you the baseline here. Gross sales represents the annualized total amount of new business over the last 12 months, so not contract value but more annual recurring revenue across our subscription businesses. We performed strongly in H2 2025 with a rolling figure increasing around 11% over H1. On revenue retention, we already mentioned that this typically sits in the low to mid-90s depending on the product. We are formalizing that today at 92.4% on a consolidated basis, you can see that it's pretty much stable on H1. And finally, we are introducing a KPI that measures the level of innovation or newness in our product set, the new product vitality index, or NPVI. This measures the proportion of revenue from products that are new or enhanced in the last 5 years, giving you insight into how our investment into product is translating into revenues. Taken across our subscription businesses, this figure sits at a very healthy 24%, growing strongly against 2024 and H1 2025. A significant proportion of this relates to Workspace, as you would expect, and reflects the substantial enhancements to the customer experience that the new product gives to customer. In other business lines, this index sits more in the mid- to high single-digit range, which we expect to increase over time. Finally, we plan to give these KPIs, including ASV for 2026, twice a year as we see little benefit in reporting them quarter-to-quarter. Turning now to our Markets businesses. These are incredible strong franchise, which I believe do not get the attention they deserve, and they continue to deliver exceptional performance year in, year out. In Fixed Income, as I have already reported, Tradeweb had another very strong year with continued high levels of activity across all main asset classes backed up by great execution. And in Foreign Exchange, we recorded our best performance in recent years with 7.5% growth. In OTC Derivatives, our Post Trade businesses went from strength to strength, and David will detail them in a few minutes. Finally, and for ease of presentation, we have shown Equities on this slide with some other lines from Post Trade. Our Equities business had a solid year with revenue up 5.1%. We launched our Private Securities Markets with the first transaction taking place right now, and we also went live with our Digital Markets Infrastructure, built in partnership with Microsoft. So now on to EBITDA and the rest of the income statement. We translated the 7.1% organic top line growth into 11.8% growth in adjusted EBITDA, 14.3% growth in AOP and, finally, 15.7% growth in EPS. And as you can see from the main table, EPS growth was 19.4% on a constant currency basis. This is truly operating leverage at work, plus very good control in financing, tax and our share count. Let's take each of those levers to improve earnings in turn. Number one is cost control with total OpEx up only 3.5%, half the rate of revenue growth. Within this, you can see that we have really managed third-party services very effectively, down 11.6% year-on-year. This is a core part of our labor strategy. Total headcount is roughly stable, a small decrease of 700, with ratio of internal employees rising to 75%, driven mostly by engineering. As previously mentioned, this is not just about cost. We have seen significant upskilling and improvements to productivity as we build a true engineering culture. As usual, we show the margin improvement graphically on this slide. Once you adjust for FX at either end, the improvement year-on-year is 210 bps. 100 of this relates to the SwapClear revenue surplus agreement, and that leaves 110 bps of underlying. Actually, the real underlying improvement was 140 bps, taking into account the minus 30 bps of the disposal of our Euroclear stake and its related dividend income stream that ceased. On net financial expense, we saw a slight reduction year-on-year. The underlying position was broadly similar. But as reported at H1, the numbers include a GBP 23 million credit from the bond tender offer we completed in March and a one-off gain of GBP 12 million following the discontinuance of a U.S. dollar net investment hedge. We currently expect net financial expense to be in the GBP 260 million to GBP 270 million range for 2026, reflecting the effect of refinancing existing low coupon debt in 2025 by higher rates in 2026 and, obviously, the new buybacks announced today. On the next slide. Our tax rate came in at the lower end of our guidance range, and we expect the same range for 2026. So if you take all of those lines together, this is giving 15.7% growth in AEPS for the year, more than double the rate of organic revenue growth. Over the last 4 years, we smoothed out some FX impacts along the way. That's a steady compound growth rate of 11.5%. And as I said last year, we expected nonunderlying costs to come down in 2025, and they did. Integration costs fell by 41% as we came to the end of the formal Refinitiv process, and we expect them to come down again in 2026 as the other areas of restructuring continue to reduce. Now turning to cash flow. This continues to be another highlight of the business model. We posted a record free cash flow of GBP 2.45 billion. As I'm sure you remember, we guided at, at least GBP 2.4 billion at constant rates. And we beat that at current rates, absorbing the current weakness of the dollar. We are posting this very strong result despite a negative variation of working capital of GBP 400 million. There are three main reasons for that. First, a reduction of around GBP 90 million of the pay accrual for our SwapClear partners following the reduction of the revenue share; second, an GBP 80 million reduction in creditors related to the net treasury income, reflecting lower balances and interest rates; and third, we triggered around GBP 150 million of payments that we've made earlier than usual to suppliers to crystallize better procurement conditions before year-end. Anyhow, going forward, typically a working capital outflow of GBP 100 million to GBP 150 million is a safe assumption to model. Given the ongoing buybacks, this 12% growth in free cash flow translates into 13.6% growth in free cash flow per share. Turning now to capital allocation on the next slide. Against the GBP 2.4 billion of free cash flow, we deployed GBP 3.5 billion across shareholder returns and M&A activity. Total dividends were just over GBP 700 million, and we are proposing a final dividend of 103p today, up 15.7%, in line with our EPS growth. We have deployed a net GBP 700 million on the Post Trade Solutions transaction that I already mentioned. And finally, we have had a record year for share buybacks with GBP 2.1 billion completed in the year. This demonstrates our very active approach to capital allocation and reflects our strong view of the deep value inherent in our own shares. Even with this very active year, we ended 2025 with leverage at 1.8x net debt-to-EBITDA, still slightly below the midpoint of our target range. So now let's look forward to 2026 and beyond. We are very well positioned as we enter 2026 with a record fourth quarter for gross sales in our subscription businesses and very healthy volume growth already at Tradeweb and our Post Trade businesses. We are guiding to organic revenue growth of 6.5% to 7.5%, the same as in 2025, but importantly, with a steady acceleration in our subscription businesses as I have mentioned before. Within this, we also expect our D&A business to accelerate. On margin, we expect 80 to 100 bps of improvement on a constant currency basis. So if you take the midpoint, 90 bps, you will find 60 bps to complete the 250 bps improvement that we committed to for '24, '25, '26 and an extra 30 bps, which comes from the further decrease in revenue surplus share terms at SwapClear. For CapEx, the steady downward trajectory in intensity will continue, and we are targeting around 9.5% for 2026. And finally, we see this all translating into at least GBP 2.7 billion of free cash flow. And as I mentioned earlier, the tax guidance remains unchanged at 24% to 25%. On this slide, I want to take a slightly longer-term view on how our cash generation and capital allocation has developed over the last 4 years and into 2026. The most important message here is how purposeful and consistent we have been in deploying capital to build a better business. We have maintained high levels of capital intensity to invest organically in the business. We have grown the dividend strongly. We have done regular bolt-on M&A to strengthen our offering to customers. And then, when appropriate, we have returned surplus capital through share buybacks. This approach has supported strong top line growth, more innovation, improving margin and strong shareholder returns. Our plan for 2026 continue that consistency. CapEx will be pretty consistent as an amount, but reducing to around 9.5% of revenue in terms of intensity. Free cash flow will grow strongly to at least GBP 2.7 billion. Dividends will continue to go up in line with earnings. And we remain active in our search for good M&A targets depending on fit and value. And then today, we announced a further GBP 3 billion buyback over the next 12 months. So you can assume, given we have already done over GBP 400 million this year, that there will be a total of around GBP 3 billion in 2026, and then we will complete the new commitment in early 2027. And finally, we are updating our medium-term guidance today, so I mean from 2027 to 2029, after several years of strong growth and margin delivery. On revenue, we are confident of mid- to high single-digit growth, including acceleration in our subscription businesses. So after the 6% reported in 2025, you can think of it at around 6.5% for 2026, heading to 7% for 2027, as I mentioned last year. On EBITDA margin, we will carry on improving our productivity, and we are now guiding to a cumulative improvement of circa 150 bps over the period 2027 to 2029. We will drive this through continued strong revenue growth, investment in technology and other ongoing operational efficiencies, but while allowing room to reinvest in future sustained growth. On CapEx, we expect intensity to come down to circa 8% in 2029. So think of that as the absolute CapEx figure staying relatively steady at GBP 900 million, GBP 950 million while revenue continues to grow. And then finally, on cash flow, we are moving to a free cash flow per share metric, and we are guiding to double-digit compound annual growth in this important figure for the years to come. And now I will hand over to David to take you through our strong strategic progress. David Schwimmer: Thank you, MAP. Let's start with the obvious topic, AI. As we discussed at the Q3 results and the Innovation Forum, we're benefiting from our unique position at the forefront of AI-driven change, and we are excited about what that means for our customers, our people and our future growth. You've seen these three pillars before: trusted data, transformative products and intelligent enterprise. Over the next few slides, I'll update you on how we're bringing this to life today for our customers and our organization. We have a great starting point, and everything we are doing is only making us stronger. As a reminder, roughly 90% of our Data & Feeds revenues come from proprietary data and solutions. Our customers are using this data to power business-critical activities in highly regulated environments where accurate, timely, trusted data is nonnegotiable. It is often deeply embedded in transactional workflows. Our breadth and depth are unmatched. Alongside proprietary data sources and exclusive licenses, we also have a network of more than 40,000 contributors proactively contributing data, continuing to enhance the value of our products through strong network effects. The result is comprehensive industry standard data that we are constantly updating. That puts us in pole position to take share and drive growth as customers are able to interrogate and analyze more data at speed using AI. As I said at the beginning of the call, our customers can see that our solutions are more valuable in an AI world. In the fourth quarter of last year, global investment banks and asset managers, all highly sophisticated institutions like Citi, Bank of America and Standard Chartered, signed GBP 1.9 billion of long-term data agreements with LSEG. These organizations are securing their access to our data for up to 7 years invariably in contracts that step up in value over time. And they span a range of different segments: global investment banks, commercial banks, alternative investment firms. We meet their needs and they are confident we will continue to do so across Workflows, Data & Feeds, Risk Intelligence and FTSE Russell. Only LSEG has this breadth of offering. It is a perfect demonstration of why these businesses are so valuable together. The demand for and consumption of data is accelerating, and we are facilitating that growth. The history of data consumption growth is the history of technological advancement, the Internet, fiber networks, mobile, the cloud and now AI. The chart on the left-hand side shows how the amount of data or messages coming through our real-time data feed continues to grow at pace, exceeding 15 million new data points a second in December. This represents a 4x increase in real-time data over our network in the past 10 years, a trend that we expect to continue. With our direct connection to nearly 600 exchanges and venues, and our ongoing investment in technology and capacity, we are strengthening our market leadership. I often call this business the market infrastructure for all market infrastructure. It is live data delivered over our own infrastructure. AI does not and cannot replicate or replace this. If anything, it creates more demand for this data. On the right, you can see the demand for our Tick History data, an evolving data set currently spanning 100 million instruments over 30 years. It's proprietary data that links today's price moves with those of the past. This is a critical point that people often don't get. This data is valuable because it ties 30 years of market moves to the present day. And with hundreds of billions of new data points added each day, without constant updating, this Tick History becomes less and less useful. We have the past, and we have the present. That is what creates the value. No one else has the past like us, and we are the leading provider of the present. Customers find this combination highly valuable with over 5 million customer requests a month. I'll say it again, AI does not and cannot replicate or replace this. It will just drive more demand, customer demand for data that is accurate, up-to-date and comprehensive, verified and auditable is significant. That is where LSEG sets the standard. And by making it easier for customers to access and consume this data through new cloud distribution channels or AI partnerships, we're likely to sell much more of it. And we are only at the beginning of that journey. Increasingly, customers want to use our data in AI applications, opening up a new distribution channel. We're embracing that through our LSEG Everywhere strategy, delivering AI-ready data to any environment in which our customers want to work. Since we last showed you this slide, we've added a new partnership with OpenAI, becoming the first financial data provider to enable customers to access their data through ChatGPT. You should expect us to enter into further partnerships in 2026 and beyond where there is customer demand and strategic logic. These channels have only recently become available, and we are seeing very strong customer interest and engagement. Over 60 financial institutions have connected to our MCP servers directly or via one of our AI partners, connecting hundreds of users. And we have a strong pipeline of customers awaiting connection. Many of these users are new users at existing customers, by which I mean the bank or asset manager already had an LSEG data license, but these particular teams or individuals were not users of our data, proof that our AI partnerships are increasing reach within existing customers. Our AI partnerships are also expanding our distribution footprint, attracting new customers through the accessibility and ease of natural language. Already hundreds of prospective customers have attempted to access our data via our AI partners. Since no one can access our data without an LSEG license, this is creating valuable sales leads. Once connected, customers are engaging with our data and content on an ongoing basis, driving rapid growth in data consumption through our AI partnerships. This is a great start to what we expect to be an important distribution channel for our data and also a natural mechanism for cross-selling. As we make more of our data available via MCP, the user, whether that is a human, a model or an agent, will naturally discover the full breadth and depth of our data across Data & Analytics, Markets, FTSE Russell and Risk Intelligence. We're moving quickly down this path, investing in our AI-ready data and making more of it available through MCP connectors and multi-cloud environments. We have a large pipeline of data coming to MCP, as you can see on the left. We're also supporting customers in their migration to cloud-based alternatives, and that is driving meaningful new sales and displacements. Platforms like Databricks and Snowflake are helping us close big new contracts and drive increased sales of some of our most popular products like DataScope. And we keep investing in expanding the data we offer, whether that's in low latency feeds, ETF data or private markets. Turning to the second pillar of our AI strategy, transformative products. The success of the migration to Workspace means our customers are now in a modern, modular, customizable platform where we enhance functionality week in and week out. That gives us a strong foundation from which to launch transformative AI-enabled products that bring speed, accuracy and conviction to customers' workflows. As a reminder, 70% of Workflows revenue comes from trader licenses and activity. These users, humans today, maybe agents tomorrow, need real-time data, a network community and integration with a range of pre- and post-trade tools. This is regulated workflow with transactional features embedded. And to address a question that comes up from time to time, what if the number of human traders is significantly reduced by AI, could that hurt our Workflows business? We don't see that happening. But also remember that over many years, our Workflows business has been moving away from a per seat model towards one focused more on data consumption or enterprise agreements. And also if the scenario is that human traders are replaced by AI agents, then each agent will effectively be a licensed LSEG customer. In an AI world of agent-driven workflows, we will have more users consuming more data. Workspace is getting better and better with hundreds of updates every year. To name a few recent enhancements, we extended trading capabilities through the expansion of Advanced Dealing. We streamlined banker workflows with the integration of DealWatch. And we enhanced our leadership in news with a dedicated app for Wall Street Journal and Dow Jones News. This is driving real, measurable improvements in engagement. As you can see on the right-hand side, investment management and trading users are accessing roughly 25% more applications than a year ago. Let's turn now to the Microsoft partnership. We made a lot of progress in 2025, and that pace of delivery continues to accelerate. On Workflows, to continue from the previous slide, our Teams-based collaboration tool, Open Directory, is live with accounts across 3 customer communities: FX, commodities and execution. And we have more than 50 accounts in our onboarding pipeline. We're also piloting natural language functionality in Workspace interoperable with Teams and other Microsoft products. And Workspace Deep Research provides extensive AI-driven research and analysis, leveraging the full power of Workspace data. We expect to roll out both AI tools in the first half. In Analytics, we've seen great traction and revenue growth since launching the API with over 50 customers adopting the platform. And just a few days ago, we launched Model-as-a-Service with Societe Generale as the launch partner distributing its own models through our API. We're seeing great progress in Data-as-a-Service or DaaS. We are accelerating the migration of data into the new integrated architecture and expect to have almost all data sets onboarded by the end of the year. This is increasing our speed to market for new products and driving significant customer demand to access these data sets, whether via Fabric or other platforms like Snowflake and Databricks. And last point, we have launched our Digital Markets Infrastructure powered by Microsoft Azure, another growth opportunity as tokenization takes off. Turning now to the final pillar of our AI strategy, deploying AI across our own business, accelerating innovation and improving customer outcomes. I've mentioned before that we are resolving customer queries much more quickly and efficiently through our adoption of an AI-powered question-and-answer application. In December, we made that tool available directly to customers and has had significant traction already, and it will only get better. Adoption of AI-powered workflows is also driving improvements in efficiency, quality and timeliness of data ingestion. We spoke about this at November's Innovation Forum, 9x faster content extraction, 52% reduction in data quality issues and 11% increase in productivity of our engineering teams. This all contributes to the ongoing margin expansion that MAP highlighted earlier. I'm going to turn now to our Markets businesses. You've heard me say this before, but the whole premise of LSEG is this. In financial markets, data has become infrastructure. Access to data is just as essential as access to trading infrastructure. That's why these businesses belong together. Electronification of markets, growth in data-driven decision-making and more sophisticated risk management are all blurring the lines between markets and data activities, deepening their interdependency. This is driving multiyear structural growth in our transactional businesses, delivering a 5-year CAGR of over 13%. The Markets business delivered further strong growth in 2025 with double-digit growth in clearing revenues across interest rate swaps, FX, CDS and repos. Tradeweb also extended its leadership in trading of interest rate swaps, increasing its share by 180 basis points. Our FX venues saw their strongest volumes ever. There's sometimes a misconception that growth across our Markets platforms just happens. Nothing could be further from the truth. The growth we're delivering today is the result of innovation and customer partnership going back years, often decades. We build solutions that solve customer pain points and meet their critical needs, and we become deeply embedded in their core businesses. In that vein of innovation and customer partnership, we're innovating rapidly in digital markets, building the transaction and settlement infrastructure our customers will need as they increasingly adopt digital assets and tokenize traditional asset classes. As you can see in the lower right quadrant of the slide, we are doing a lot in this space. But it is a big topic, so we will tell you more about it later in the year. Another good example of our innovation and partnership in Markets is our success in the clearing of OTC products. The growth in this business over the last 15 years is extraordinary, a threefold increase in member banks, a 200-fold increase in clients and tenfold growth in notional value cleared each year to roughly $2,000 trillion. We have become the global clearing destination of choice for interest rate swaps, FX and CDS. Now in partnership with 11 global banks, we're going after the opportunity in uncleared derivatives, which is roughly the same size as the cleared space. Our members and clients want to manage their whole book in one place, bringing efficiency to their capital and margin requirements and materially simplifying and standardizing processes. We are uniquely placed to do that given the assets we have built and brought together under one roof, and we're entering 2026 with really good momentum. Revenue in Post Trade Solutions is growing double digits, we're adding new customers and the network is expanding. We're driving strong growth and building platforms for the future across our business. We've also integrated our products and platforms for our customers' benefit. This dynamic exists clearly in our data flywheel. The data we generate from our own markets infrastructure feeds into our D&A business. helping customers make better informed decisions when they trade, therefore, creating more data. Second, Workspace is becoming the fully integrated workflow through which customers can access many of our services, not only for all D&A data but now also for FTSE Russell tools, FX trading, LCH data and, in the next few months, Tradeweb. And we've established a powerful end-to-end ecosystem in FX, providing a front end in Workspace linking to the execution venues and straight through to our clearing business with FX hedging capability for Tradeweb and our data and benchmarking content adding incremental value along that trade life cycle. We have similar connectivity in swaps given the customer trust in the Tradeweb and SwapClear franchises. I spoke earlier about the strong demand we've seen for our multiyear data access arrangements. Those integrate services from across our business, from Data & Feeds, Workflows, FTSE Russell, Risk Intelligence and Analytics. And they demonstrate the competitive advantage provided by our full-service business model. As we've said before, big, sophisticated institutions want to do more with fewer partners. You can see that in the success of our LDA agreements. Through our unique model, we've positioned our business to have deep moats and highly recurring revenues in areas of growth. Our diversification across products, customers and geographies gives our business model an attractive combination of growth and stability that performs well in environments like this. Despite big swings in capital markets and the global economy in 2025, we continue to deliver strong and consistent growth, and we expect more of the same in 2026. So to wrap up, we have achieved another year of very strong financial performance, driving continued top line growth through significant investment in our products and a consistent focus on partnership with our customers. LSEG Everywhere and other innovations like Open Directory, Post Trade Solutions and our Digital Settlement House are establishing platforms for future growth. Through the transformation of our systems and the use of AI and other technologies across LSEG, we continue to deliver material operating leverage. And we are allocating capital in a thoughtful way to grow the business, drive innovation and return surplus capital to shareholders. We're very excited about the opportunities ahead of us. With our leading trusted data, ongoing investment in product and the strength of our customer relationships, we are very well positioned for continued growth. And with that, I'll pass to Peregrine for Q&A. Peregrine Riviere: Thank you, David. Before we start the Q&A, can I please ask you to restrict yourself to one question. We plan to wrap up at about 11:30. Hopefully, we'll get through them all. But if we don't, please follow up directly with me or Chris later today. Thanks. Operator: [Operator Instructions] And your first question comes from the line of Tom Mills from Jefferies. Thomas Mills: Thanks for the helpful new disclosures, and that's my question. At a recent conference, the CEO of S&P said of the AI LLM platform, I'd say that our clients are getting additional value by being able to use our data in more ways, more ways they use it, the more value it creates and the better opportunity for value-based conversation at renewal. And we talk to those customers. We've also seen really nice uptick in demand for add-ons and that's something that's helped with net new revenue. I think that ties in well with the content you provided on Slides 31, 32. But I'd be curious to hear, you touched on the point about improving the opportunity for value-based discussions at renewal. And any uptick in demand for add-ons that you're seeing via the partnership so far? David Schwimmer: Sure, Tom. Thanks. So for now, as you would expect, we are focused on adoption and just seeing the customers sign up and get access to this and seeing the usage grow. And that, as we mentioned on that Page 31, is growing very quickly, and we're really seeing a pretty significant and intense engagement there and, frankly, kind of day by day. So I think, over time, the really significant opportunity here is in the context of consumption-based pricing and really charging the customers over time for usage. And for now, we're continuing to focus on our, I'll say, traditional subscription model. But as we move over the course of the next year plus to more of a hybrid model, which is keeping the subscription, we think the subscription model is very attractive and very important, but incorporating into that the consumption-based pricing as well, that will be a very attractive way of capturing that kind of dynamic. And I mentioned this earlier in my prepared remarks, but the fact that you have a combination of humans, models and agents consuming this data, it's, I think, pretty intuitive for you all to recognize that when an agent or a model is consuming the data, they tend to consume a lot more of that data than a human might. And we've said in the past that humans barely scratch the surface of the amount of data that we have. So that's another angle here just in terms of as usage shifts to more AI-driven consumption, as we shift our model to more consumption-based pricing, we see that as a very, very attractive trajectory. Maybe actually just... Peregrine Riviere: Sorry, hold on a second. David Schwimmer: Just one other point I want to add, and I touched on this earlier, but I think it also answers your question, kind of captures this dynamic, which is I've described the AI models combined with the MCP server as a very effective cross-selling machine. And the model is not asking for data from a particular data set. The model is asking for answers to a question. And if that question can be answered by extracting data from multiple different data sets that we are making available through the MCP server, that is a great angle as well just for additional access, additional sales of additional data sets that the customer might not have originally known that we even had. So that's another aspect of this. Now on to the next question. Thank you. Operator: And your next question comes from the line of Hubert Lam of Bank of America. Hubert Lam: I just got one of them. So how should we think about pricing and ability to keep your customers? Will we expect more competition in the future from MCP? I assume MCP makes it easier for users to switch between different data providers. So would it be harder to raise pricing in the future? And would there be more risk on bundling data contracts now that users have more choice, more flexibility as to who they want to consume with? David Schwimmer: Hubert, so we see a very consistent pricing environment this year relative to last year. And I think it's about the quality of the data. If you think about the new AI channels and MCP as just another way of accessing the data, that's great for us. That doesn't mean that it is an environment where we're seeing incremental pressure on the pricing. The quality of the data remains the same. The, in some cases, proprietary nature of the data means that no one else has access to it. And so we see this as a way of accessing more users within existing customers and accessing new customers as well. And as I mentioned, from a pricing perspective, we're seeing a very consistent dynamic this year as we have seen last year and the year before. Operator: And your next question comes from the line of Arnaud Giblat of BNP Paribas. Arnaud Giblat: So my question is on capital returns. So you've announced a GBP 3 billion buyback. That pushes up your leverage ratio perhaps towards the end of the year towards 2.0x, 2.1x net debt to EBITDA. So how should we read into this? Are you still -- I suppose you are leaving yourself the opportunity to step in and do further bolt-on acquisitions. My question is just how are you seeing any potential dislocation in valuations in private markets? We've seen some significant shifts in public markets with data and software companies coming up quite a lot. Are we seeing the same thing in private markets? And perhaps does that create opportunities for you to step in, in the near term and add some more content inorganically to your platform? David Schwimmer: Thanks, Arnaud. Maybe MAP will touch on the first part of your question. I'm happy to take the second part. Michel-Alain Proch: Yes, sure. On the buyback, you're absolutely right. We have coined GBP 3 billion in order to do two things. First, having a true increase into the return to our shareholders on the basis of the inherent value that we see in our share. Remember, 2 years ago, we did GBP 1 billion; 2025, GBP 2.1 billion. And here, we're talking about GBP 3 billion. And by doing this GBP 3 billion, and you've made the calculation right, taking into account the dividend and the second part of the Post Trade Solutions, okay, altogether, this will bring us to 2x net debt-to-EBITDA by the end of 2026, so which will allow us to keep firepower for M&A that fit in terms of strategic alignment, obviously, and value. David Schwimmer: And Arnaud, to your question about sort of the state of the markets. Yes, there's obviously been some dislocation. There's clearly some stress amongst some of the private equity holders out there. And you should expect us to always be evaluating opportunities. And nothing to talk about near term, but as MAP mentioned, we are always evaluating opportunities that could make sense in terms of our both strategic fit and then attractive financial returns. And I think the buyback balances that appropriately in terms of an appropriate return to our shareholders while landing at that 2x net debt to EBITDA and maintaining the right kind of flexibility going forward. Operator: [Operator Instructions] And your next question comes from the line of Enrico Bolzoni of JPMorgan. Enrico Bolzoni: I had one on EBITDA margin, please. So it looks like you're clearly doing more than what you initially thought. I remember from calls 1 year ago or so saying that, at some point, EBITDA margin would reach a ceiling because, clearly, there's a need to reinvest in the business. And here we are with a new set of targets that actually guides us towards further improvement. So I was keen to hear your thoughts on whether you think this is just driven by the operating leverage and revenue accelerating, or you found more ways to cut cost. And perhaps, does this new target include any meaningful benefit from the deployment of AI within the organization? David Schwimmer: Thanks, Enrico. I don't think we've ever said that we were planning to hit a ceiling, but I'll let MAP address that. Michel-Alain Proch: No, no, but I understand what Enrico is saying. So just a reminder for everybody, we committed ourselves in November 2023 of an increase of margin of 250 bps. 2026 is the third year of this plan. We are delivering the 250 bps. And on top of that, we have 130 coming from our Post Trade Solutions. So 380 that we will have delivered for the period '24 to '26. Now what we've said is, going forward, because there was some question about what about after '26, that going forward, due to the operating leverage that the group has, I mean, building once and distributing many, obviously, this operating leverage, we can crystallize it into the margin or having a balance between the margin and reinvesting into future growth. And what you see, Enrico, is 150 bps by 2029 is exactly that. It's the balance between operational efficiencies that we are harvesting, our natural operating leverage, so plus-plus, okay, and the investment we make into talent and technology for future growth. And to answer the second part of your question, the answer is yes, you're right. We will crystallize in this 150 bps, you have indeed the financial consequences of what we do with AI within the company, particularly on our backbone and our -- and the ingestion of data. Operator: Your next question comes from the line of Andrew Lowe of Citi. Andrew Lowe: I have one on Tradeweb, please. Would you be willing to give an indication of how much the Tradeweb-generated data sets account for your Data & Feeds revenues? And then whether any of those data sets are exclusively distributed by LSE? David Schwimmer: Andrew, I don't think we have broken out and I don't think we intend to break out the amount of the Data & Feeds revenue that comes from Tradeweb. I can tell you that some of it is exclusive and some of it is nonexclusive. But I would also mention that, that is one of several different areas across the group, where we have very strong linkages between Tradeweb and the rest of LSEG. We've talked in the past about the benefits both to Tradeweb and to FTSE Russell from the usage in FTSE Russell indices of Tradeweb pricing, and that flows both ways. We've used -- I'm not sure we've talked about this in the past, but Tradeweb has benefited from some of our middle and back office functionality in India and in other places. We, of course, have the straight-through processing, if you will, from the Tradeweb swap execution facility into SwapClear. We've got the FX execution into Tradeweb. So a number of different areas. And then maybe the last thing I should just touch on is that over the course of the next few months, we will be plugging Tradeweb access into Workspace, which is yet another significant opportunity that should be particularly attractive for Tradeweb users. Operator: Your next question comes from the line of Ben Bathurst of RBC Capital Markets. Benjamin Bathurst: My question is on the new medium-term guidance where you're pointing to subscription business acceleration, which I think is like perimeter change versus the D&A revenue growth acceleration you've previously called out and are, in fact, restating again for FY '26. I just wondered, could you elaborate a bit on the decision to make that change and perhaps make a comment on expectations for D&A growth contribution to that total subscription business acceleration you're talking about? Michel-Alain Proch: Sure. So I mean, the reason why we're looking at the subscription business altogether is mainly for 2 main reasons. The first one is it's the same subscription model, okay, which are governing the 3 divisions. And the second, as it was presented in the slide, they are more and more intertwined. And we have true synergies in between the 3. LDA that David was mentioning at the beginning of the call is the obvious example. So now on the medium-term guidance and for the subscription business, I hope you got it from my remarks. What we expect in there is we posted 6% in '25, circa 6.5% in '26, going to 7% in 2027. And on this, obviously, D&A will be accelerating, too. I mean, just to be clear, due to the size of it, it's the main lever for this acceleration, for sure. And if I may just add one more thing, which is you see this slide, I don't remember it was 31 or 32, with this adoption of MCP. So you see that it's extremely strong and we are concentrating of usage. So for sure, AI can be an accelerator of this trajectory that I just mentioned. You see what I mean. But I mean, it is still the early days. We just switched on the MCP just before Christmas. So you see it's not a long time ago. So it's a bit early to size it. But for sure, it's in the plus category, if you want. Operator: Your next question comes from the line of Julian Dobtovolschi of ABN AMRO. Julian Dobrovolschi: You've mentioned that a large portion of your data sets are already available now via the LLMs such as Anthropic, Databricks and OpenAI and a bunch of others. I was just curious to know, what percentage of LSEG's total data universe will ultimately be available through the AI-native channels? And if there is a view to keep some of this fully in-house for various reasons? David Schwimmer: So I would expect that we are going to be making, and we've got a slide in here that touches on this, I would expect that we're going to be making as much of our data as possible available through these distribution channels and through MCP. And just to be really clear, the implication of your question is that we might keep some away to somehow protect it. But again, to be really clear, providing access to a model through MCP does not mean that the model then can get that data and never need it again. And so we can provide access through to MCP to a model and continue to protect and maintain the value and the integrity and the proprietary nature of that data. This seems to be kind of a common misunderstanding that people have. So we view this as a great channel to distribute our data, whether that's proprietary data, whether that's a linkage of multiple different data sets. And the fact that we are making it available through MCP, think of it as a very structured, disciplined gateway, and we can actually put our usage meter on top of that as well. So again, I understand your question, but I just want to make sure that I'm clarifying. There should be no misinterpretation of making data available to a model through MCP as somehow vitiating the value of that data or the proprietary nature of that data. Operator: Your next question comes from the line of Benjamin Goy of Deutsche Bank. Benjamin Goy: One question, please, on your LSEG data access agreements. You mentioned almost GBP 2 billion signed in Q4. But can you give a bit more qualitative color on these agreements, whether it was Q4 or more recently signed? Do you see any change in customer dynamics? Do you see put options or breakup clauses in those contracts now or basically same contracts as you had a year or 2 years ago? David Schwimmer: Yes. No sort of structural changes in these. We've talked in the past about how they can take a couple of years to put in place because of the way that we and our customers set them up. It takes some real top-down focus in organization and coordination and planning. But no, we view this as an increasing recognition by our big important customers of the value of the integrated offering that we are providing. They do have a line of sight not only into what we are providing today, but what we are building for them in the next couple of months and in the next couple of years. They are multiyear in nature. And I believe the ones that we have announced most recently tend to be out to 7 years. They all have extensions built into them as well. So I think it's just what you see is what you're getting here in terms of our customers really understanding the quality of our offerings and wanting to commit to that for many, many years to come. And I think just it's worth reiterating this. I understand some people might have had a little trouble hearing at the very beginning of the call. We have the most sophisticated financial institutions on the planet who have very rigorous risk management processes, very rigorous analysis of what their technology needs are, very clear understanding of their requirements. And they, after extensive work -- and I said, in some cases, these take up to 2 years. After extensive work, they are making decisions to, I used this phrase earlier, they're voting with their wallets to commit to consuming our data through our channels for the next, in many cases, up to 7 years. And so we think that is a pretty clear indication that these highly sophisticated institutions recognize the value of the content, the data, the workflow that we provide and recognize that, that is increasing in an AI world as opposed to decreasing. Operator: Your next question is from the line of Oliver Carruthers of Goldman Sachs. Oliver Carruthers: Oliver Carruthers from Goldman Sachs. Thanks for the very detailed presentation and the incremental disclosure. Very helpful. I think Slide 31 is really interesting around the growth in customers you're highlighting. In terms of those customers connecting to your MCP server, so that 67 number, I appreciate it's moving a lot, but can you give us a flavor of the types of institutions, investment banks, hedge funds, asset managers, who is using this? And any steer on the use cases would be really, really helpful. David Schwimmer: Sure. So it's lots of different kinds of institutions. Typically, we see smaller institutions moving more quickly. But in this case, we're seeing smaller institutions and large institutions. I'll give you one example. There's one very large institution that is using this service to evaluate, I'm not going to go into specific names, but to evaluate one AI functionality against another AI functionality. And the constant they are using is our data because they know the quality of our data and they know what to expect from us. So they are using us as the baseline and they are using that to make a decision as to which of the AI distribution channels they want to actually use. But that's just one example. And Oliver, as you mentioned, this is changing literally day by day. And we're kind of getting a running commentary from the team on how this is growing and how we're seeing increasing and expanding desire to access through this as well as incremental sales leads. Oliver Carruthers: As a very quick follow-up. You still own these customer relationships, even when it's not your own MCP, but even when it's a third party? This is a query tool they come to you, but you still own these customer relationships. Is that the correct way to think about it? David Schwimmer: Yes, it is. Thank you for asking that question. Let me be really, really clear about this. The way this works is that if you have a license with LSEG, you can then turn on access to LSEG via, for example, Claude or via ChatGPT. There's a little connector button when you pull up a certain window in these. And you have to flick that on to get access to LSEG data. You can only do that if you have a license with LSEG directly. And therefore, we maintain the ownership of the customer relationship we're contracting with the customers. Now when we talk on that Page 31 about over 300 prospective users, what we mean by that is that there are a number of prospective users who are using these channels to try to get access to our data. They're effectively knocking on our door through MCP. And they don't have an existing license. But the way this is designed is that we are informed of their interest. And so it's a great origination channel, it's a great sales channel for us. We then take those leads. Our sales team directly receives those leads and we follow up with those customers. Does that help? Oliver Carruthers: Yes. Very helpful. Operator: Your next question is from the line of Marina Massuti of Morgan Stanley. Marina Massuti: I have a question on the AI adoption given some of your peers have given numbers around the efficiency opportunity from internal AI implementation. Can you also provide a bit more color or be a bit more specific on how much of the current and future AI deployments contributes towards the 150 basis points margin expansion targeted in the medium-term guidance? David Schwimmer: Yes. Thanks, Marina. So we haven't put any specific guidance out there in terms of the efficiencies that we're seeing from AI. I did mention in my remarks, and on Page 36 you can see some of the stats, we are seeing meaningful improvement in productivity, in efficiency. We're seeing this in customer service. And then we are also seeing improved efficiency in terms of our engineers and our software development. We've seen up to this point, and this number is going up pretty regularly, but we've seen at this point, I think I can comfortably say, 11% efficiency in our engineers. So I would bake that into the numbers that MAP was referring to earlier in terms of continuing margin improvement in the business. But we haven't given anything specific around that. Operator: Your next question is from the line of Michael Werner of UBS. Michael Werner: Thank you for the long-term targets in particular. A question on LDAs. I was just wondering with regards to, a, the step-ups that you mentioned in terms of pricing, are they contingent upon certain deliverables? And ultimately, are these step-ups typically higher than what you see in kind of the base rate? And then also, how does MCP servers fit into those enterprise agreements? Is that already included? Or is that potential upside from a revenue generation or a client wallet share perspective going forward? David Schwimmer: Thanks, Michael. So every LDA is a little bit different. And some of the step-ups are a little bit higher than what the regular price rises would be. Some of the step-ups might be a little bit lower. They are all typically in the same general range unless there are, for example, commitments that we have made to add a specific new product or new capability. Or sometimes in these LDAs, the customer may be locked into another competitor product for a year or 2, and it takes them a year or 2 to get out of those and migrate on to ours. And there may be a step-up associated with that kind of migration. So everyone is a little bit different, but that gives you a sense of some of the different variables. To your second question, there is a defined perimeter around the LDA agreements in terms of effectively focusing on existing product, and it's well defined perimeter. And in the context of these MCP capabilities and this distribution and AI model consumption, that is, I think I can say with certainly, not included in the data access agreements that we have struck at this point. Michel-Alain Proch: Yes, yes. For none of them. David Schwimmer: Yes. So that is all incremental usage that's coming through these channels, that is upside. Operator: And this concludes questions on the conference line. I will now hand the presentation back to David Schwimmer, Chief Executive Officer, for closing remarks. David Schwimmer: Well, thank you all for your questions. Thanks for spending time with us this morning. I know it's a little bit longer than usual in terms of the presentation. We did feel there was a lot to get through. And to the extent you have any additional questions, please do not hesitate to get in touch with Peregrine or Chris. Thanks again.
Monica Webb: Welcome to Tucows' question-and-answer dialogue for Q4 2025. David Woroch, President and Chief Executive Officer of Tucows and Tucows Domains, will be responding to your questions. For your convenience, this audio file is also available as a transcript in the Investors section of our website, along with our Q4 2025 financial results and updated reports. I would also like to remind investors that if you would like to receive our quarterly results and Q&A via e-mail, please make the request to ir@tucows.com. Please note that the following discussion may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. These risk factors are described in detail in the company's documents filed with the SEC, specifically the most recent reports on the Forms 10-Q and 10-K. The company urges you to read its security filings for a full description of the risk factors applicable to its business. Today's commentary includes responses to questions submitted to us following the prerecorded management remarks regarding the quarter and outlook for the company. We are grouping similar questions into categories that we feel are addressing common queries. If your questions reach a certain threshold or volume, we may ask to schedule a call instead to ensure we can address the full scope of your questions. And if you feel that the recorded questions and/or any direct e-mail you may receive do not address the full body of your questions, please let us know. Go ahead, Dave. David Woroch: Thank you, Monica, and welcome to our Q&A for our fourth quarter financial results. This quarter, we received 3 questions from investors, which we'll address here. We recognize that many of you are taking a wait-and-see approach regarding the Ting process, and we understand that perspective. The first question is, is there any update you can provide on the sale of Ting assets? Has the process been delayed as the price of such assets begins to fall with the broad market sell-off? The Ting process has not been delayed. It is ongoing, and we do not believe that external volatility has a direct impact on the time line. We continue to work closely with our financial advisers to determine the optimal path forward. Based on our experience with acquisitions and domains, transactions of this nature require a thorough diligence and coordination among multiple stakeholders, and time lines are driven by the specifics of the asset and the availability of information. We remain deeply engaged in the process and focused on achieving the best outcome. The next question is, why is the adjusted EBITDA margin on Wavelo expected to be down year-over-year as per 2026 guidance? As noted in the management remarks with our Q4 release, there are Ting Fiber and mobile customers on the Wavelo platform. Based on different potential outcomes for the Ting process, this could result in a reduction of fees for Wavelo. There is a range here, and we are conservatively forecasting that possibility in Wavelo's adjusted EBITDA guidance. Additionally, we layered in some investments midway through 2025 that are now fully annualized costs in 2026, and we're continuing to invest to grow Wavelo's top line while still remaining below the cost structure of our competitors. And lastly, we had a question on the announced stock buyback program stating, "I know you always renew this. What is the company's access to liquidity? I also assume that the window is closed until the conclusion of the fiber divestiture." As a reminder to investors, the annual buyback authorization provides flexibility, not a commitment to buy back stock, and any deployment will be evaluated against return thresholds and liquidity considerations. Liquidity and balance sheet strength remain priorities. As discussed in recent quarters, continued deleveraging of the Tucows' syndicated debt and completion of the Ting divestiture process are central to further strengthening our liquidity profile. The syndicated debt paydown is ongoing, and each dollar repaid increases available borrowing capacity up to the committed limit. A successful Ting divestiture would further enhance liquidity by improving our consolidated free cash flow and adjusted EBITDA profile, supporting greater borrowing capacity and overall financial flexibility. Capital allocation remains conservative and deliberate. We are developing a formal framework to guide the appropriate balance between continued deleveraging, reinvestment in the business, potential acquisition opportunities and share repurchases. Currently, our liquidity, excluding Ting, consists of approximately $20.9 million of unrestricted cash. Liquidity remains sound, and our immediate focus is consistent free cash flow generation and further balance sheet strengthening. Thank you for listening to our Q&A. And a reminder that if you feel that the recorded answers or any direct e-mail you receive do not address your question, please follow up with us at ir@tucows.com.
Amelia Lee: Good morning, everyone. Thank you for joining us at Seatrium's Full Year 2025 Results Briefing. My name is Amelia, and I take care of Investor Relations for Seatrium. This morning, we have with us our CEO, Mr. Chris Ong; CFO, Dr. Stephen Lu. Chris and Stephen will bring us through a short presentation before we open the floor to questions. Chris, please? Leng Yeow Ong: Thank you, Amelia. Good morning, and thank you for joining us today at Seatrium's Full Year 2025 Results Briefing. Before I start, I'd like to wish everybody a very happy and a healthy Lunar New Year, good year ahead. I'm pleased to report a strong set of results in our second full year since merger with robust revenue growth driven by strong project progress and doubled the net profit that is an undeniable reflection of our laser-sharp focus on driving margin efficiencies and execution. For the first time, we have recorded a positive 1-year total shareholder return of 5.2% as we strive to continue driving lasting value for all shareholders on strengthened fundamentals. Our strong performance also comes on the back of heightened geopolitical and macroeconomic uncertainties that companies around the world had to grapple with. Despite some delays in investment decisions in several markets in the first half of 2025, we still secured over $4 billion of new orders in FY 2025. This replenished our net order book that stands strongly at $17.8 billion as at 31st of December 2025. Meanwhile, we are actively pursuing more than $32 billion in pipeline deals, which reflects sustained investments by our customers to meet growing energy demand that is fueled by technological advancements, including AI. Third, we are today stronger and leaner than before. We have spent the last few years transforming our business and cost model, the way we work and the way we do business. 95% of our net order book today is made up of Series-Build projects that offer lower execution risk for both ourselves and our customers. Non-FPSO legacy projects, which are relatively lower margin and higher risk compared to post-merger contracts now constitute just over 1% of our net order book. We have also achieved our synergy and cost saving targets, accelerated noncore divestment to reduce overheads and importantly, brought closure to Operation Car Wash in FY 2025. This allowed us to move forward with greater clarity and step forward with larger strides as we leave legacy issues behind us. Today, these achievements reflect the merits of our strategy and that we are ready to build real sustainable momentum for the future. Turning to our financial performance. We delivered a second consecutive year of strong top line growth with revenue growing 24% to $11.5 billion from $9.2 billion a year ago. This reflects the strength of our order book and the disciplined execution that continues to drive reliable delivery to our customers. Net profit came in at $324 million, more than double of $157 million in FY 2024, outpacing revenue growth and underscoring the strong progress that we are making in expanding margins, which Stephen will talk about in greater detail. Our progress is best reflected in how we execute for our customers. Let me now highlight 2 projects that showcase the power of our One Seatrium global delivery model. First, FPSO P-78. We have achieved first oil in record time on 31st of December 2025, and first gas is expected in first Q 2026. Being built across our yards in Brazil, China and integrated in Singapore, this accelerated progress is a strong testament of our One Seatrium global delivery model and also showcases the expansion of our end-to-end delivery capabilities from engineering to offshore commissioning. P-78 is the first of 6 advanced greener P-Series FPSOs and it sets a strong benchmark for subsequent units. Next, on Empire Wind. The project is now over 97% complete and is situated on site in U.S., on track for delivery this year. Once operational, it will deliver 810 megawatts of clean energy to New York, enough power to power more than 500,000 homes. Both the topsides and jacket were built across our Singapore and Batam yards, demonstrating our integrated delivery capability. The remaining exposure in our net order book to the U.S. offshore wind has reduced to less than $10 million with Empire Wind and offshore substation for [indiscernible] very close to completion. The WTIV for Maersk Offshore targeted to complete end of the month. In fact, we are in discussion to deliver her within the next few days. Our future is taking shape with clarity, strong order book today for near-term earnings visibility and a resilient pipeline that sets us up for sustained growth tomorrow. We have been disciplined in ensuring we win high-quality contracts with world-class customers, with mid-teens risk-adjusted project margins and progressive milestone payments. Our ability to win these projects reflect the strong trust customers place in us across conventional energy and renewables. Amidst a tough macro environment, we secured over $4 billion of new orders, supported by returning customers and new partnerships. This include our first collaboration with Penta Ocean Construction, marking our entry into Japanese offshore wind market and DolWin 5, our fourth 2-gigawatt HVDC project with TenneT and our first for Germany under the 2-gigawatt program. Next, our net order book of over $17 billion is equivalent to over 1.5x of our very strong FY 2025 revenue. 6 P-Series FPSOs, 3 U.S.-bound FPUs and major HVDC and HVAC platforms are all progressing well, demonstrating the strength and depth of global delivery model. We have been transparent about the challenges we face from non-FPSO legacy projects, which now constitute just over 1% of our net order book. In the same spirit of transparency, we also like to share that the delivery of Naval project NApAnt has been delayed to 2027 instead of the original 2026 schedule. We are working closely with the customer to navigate this specialized shipbuilding project to manage execution risk. With a declining proportion of lower-margin non-FPSO legacy projects, we expect an improving mix of higher-margin post-merger contracts and a reducing trend of provisions moving ahead. Moving ahead, we still see ample market opportunities as we actively pursue $32 billion in the pipeline deals. Despite the lower oil price environment, it is widely established that the breakeven price of deepwater fields remain well below prevailing oil prices. Alongside strong demand for energy, the ongoing energy transition and the need for energy security, especially in Europe, where we are seeing some favorable wind developments for offshore wind, this gives us a long runway to capture high-value work across the full energy spectrum. We have been asked how are we positioned competitively to capture a good share of these pipeline opportunities. Despite being just formed 3 years ago during the merger, we have under our belt 60 years of proven track record and a unique ability to deliver projects with consistent safety standards and quality across a large global manufacturing footprint that presents scalability, geopolitical diversity and some cost arbitrage opportunities. These are not competitive levers that many players around the world have, but we do not ever stop evolving. We have been in business for over 60 years. We are not new to change. We are still standing strong today because we have successfully evolved alongside the industry, which is essentially critical now as the whole world is in transition towards cleaner energy sources. This is only possible with robust capabilities in technology development, where we take a practical market-led approach to innovation, to stay ahead and maintain our long-term competitive edge. Today, we own proprietary designs such as FlexHull that we are already using in active FPSO tenders to sharpen our competitive edge where proposed designs are evaluated as part of the bid. We also developed our own designs for FLNG and offshore substation, which has recently attained AIP. Longer term, we are also developing solutions for floating wind and other emerging energies to ensure we remain ahead of the curve. Our Series-Build approach, design once do many reduces execution risk, short-term schedules and improve margins, ensuring projects are delivered safely, on time, on quality and within budget. Today, about 95% of our net order book comprises Series-Build projects, underscoring the strength and scalability of this approach. On top of the existing franchises in gray, where we established the Series-Build strategy, we're expanding this to powerships where we see strong potential as well as applying the same principle to FSU FSRU conversion, especially since we already done 90% of the world's FSU FSRU conversion, which is an unparalleled track record worldwide. Last August, we signed an LOI with a long-term partner, Karpowership for the integration of 4 new generation powerships plus the option for 2 more, a strong endorsement of our capability and scalability in this adjacent segment. Integration works will start 1Q 2027. The LOI also includes conversion, life extension and repairs of 3 LNG carriers into FSRUs. These are examples of higher value work that we are refocusing our repair and upgrade business on. These capabilities and high-value franchises will position us well for the next wave of opportunities. Our $32 billion opportunity pipeline over the next 24 months is diversified across segments, geography and asset types, some of which offer distinct market cycles for business resilience. Many of these opportunities are also aligned to our Series-Build franchises. Over the next 24 months, we are pursuing $23 billion in oil and gas opportunities, driven mainly by Americas region. We still see strong opportunities in Brazil where our long-term customer has disclosed its pipeline for the next 5 years. This is also where we have strong leadership for local content through our 3 established yards. We are also well positioned in Guyana for high-value integration work and topside fabrication, where we have participated in all of the FPSO work for the Stabroek Block so far. Apart from the usual opportunities that the market expects, we are also pursuing opportunities in FLNGs and fixed platform in the Middle East and Africa region, and to a smaller extent in Europe and Asia Pacific. For offshore wind, Europe remains the largest and the most developed market, driven by its energy security needs. TenneT continues to be an important customer for us as we pursue opportunities in both Netherlands and Germany. With the award of DolWin 5, it demonstrates TenneT's confidence in our ability to deliver, and we are ready to scale up and take on more HVDC projects when the opportunity arises. Meanwhile, we will also continue to pursue opportunities from other European TSOs as well as HVAC deals in Asia. We have also identified $2 billion in conversion opportunities such as those with Karpowership that I mentioned earlier. All in all, we are well positioned and confident in our ability to capture a healthy share of these pipeline opportunities that will fuel our ability to deliver consistent performance. I shall now hand over to Stephen to bring you through the financial review. Hsueh-Jeng Lu: Thanks, Chris. Next, I will dive deeper into our financial performance for FY 2025 and highlight the progress that we have made to shape a stronger, leaner and more competitive Seatrium. We delivered a set of solid numbers for 2025. The 25% rise in revenue was driven by a steadfast execution of a healthy, well-diversified order book, which provides strong visibility and resilience amid the evolving market conditions. Our gross margin, which I think is a reflection of the true operational performance has more than doubled to 7.4% in FY 2025 from 3.1% last year. We've continued to make significant progress in streamlining G&A expenses and lowering finance costs. As a result, net profit has also doubled to $324 million in FY 2025, up from $157 million in FY 2024. We also saw operating cash flow grow by about 4.5x to $440 million from $97 million, excluding one-off payments relating to legacy issues. And on the same basis, FCF doubled to $443 million. After taking into account these one-off payments, we still generated almost 46% more cash from operations year-on-year of $142 million from $97 million a year ago. We have also taken decisive steps to streamline our asset base by divesting noncore assets. This disciplined approach sharpens our focus, enhances operational and cost efficiencies. Diving straight into the key revenue growth drivers. The 24% growth year-on-year was mainly driven by a strong progress registered by both the offshore wind -- the oil and gas and offshore wind segments. Revenue from Oil & Gas Solutions grew 24% to $8.1 billion, underpinned by steady execution, progressive revenue recognition of the 6 new build Petrobras FPSOs. Notably, P-84 and P-85, which commenced work in the second half of '24. Offshore Wind Solutions also increased its revenue to $2.1 billion, driven by our 3 TenneT 2-gigawatt HVDC platform projects. The repairs and upgrade business registered lower volume and revenue due mainly to trade-related uncertainties and weaknesses in the LNGC market. We are, however, continuing to focus the business towards higher value projects, such as FSRU conversions and the integration of powerships that Chris mentioned earlier. In the meantime, our 23 long-standing strategic partnerships with large global customers continue to provide a steady baseload revenue of a more recurring nature. In the other segments, increased contributions from specialized shipbuilding, chartering as well as rig kit sales and MRO projects delivered through Seatrium offshore technology or SOT led to a 55% jump in revenue. While this business is small today, SOT capitalizes on our unparalleled track record and rigs expertise to monetize proven design IPs. It delivers a healthy margin, and we see growth potential ahead. Next, let's take a look at gross margin. Year-on-year, gross profit increased to $848 million in FY 2025 from $291 million, and gross margin increased sharply by 430 bps to 7.4%, driven by an improved mix of higher-margin projects, higher asset utilization, improved productivity as well as cost discipline. This was partially offset by provisions to the U.S. projects, where the final project was delivered subsequent to year-end and a little bit from a NApAnt, which Chris mentioned earlier. Other operating income was lower in FY 2025, mainly due to a one-off provision relating to the Admiralty Yard restoration before its return to authorities in 2028, net FX movement, lower scrap sales and a nonrecurring settlement gains that was recognized in 2024. G&A expenses as a percentage of revenue declined by 50 basis points to 3% compared to 3.5% in FY 2024 as we benefited from the continued cost optimization activities. Net finance costs also dropped by 18%, driven by debt repayment and lower financing costs, offset by a decreased interest and dividend income from equity investments such as the Golar Hilli, which we divested in 2024. Overall, net profit more than doubled to $324 million in FY 2025 from $157 million in FY 2024, underscoring the significant uplift in our core performance powered by revenue growth, stronger margins, sustained cost optimization and disciplined execution. As mentioned, we also reported much stronger cash flows in FY 2025, which is the reflection of the discipline that goes into ensuring that all our projects on our progressive milestone payment terms and robust project cash flow management throughout each project. Consequently, operating cash flow increased to $142 million in FY 2025 from $97 million. Excluding the effect of one-off legacy payments, operating cash flow rose 4.5x to $440 million, reflecting the level of cash generation that we expect moving forward. Investing cash flow was largely neutral with $122 million of project and safety-related CapEx, such as that for Batam yard to prepare for the 2-gigawatt HVDC projects, balanced by asset divestment proceeds. We will continue to be measured in our capital expenditure, which is mostly focused on investments that will enable growth. All in all, we generated $443 million in free cash flow excluding one-off legacy payments. This is more than double that of FY 2024. And we are confident in the execution and the cash flow of our post-merger contracts. Moving on to capital structure. We continue to adopt a prudent and disciplined approach to enhance resilience and afford us the financial agility to position for growth. Our gross debt decreased 5% year-on-year to $2.5 billion as at end December 2025. And through active refinancing, our cost of debt has declined from 4.9% at end December 2024 to 3.4% at end December 2025, driven both by lower base rates and tighter margins. We continue to broaden our funding sources and leverage our improved credit profile to secure favorable refinancing outcomes. Our liquidity position remains strong with $3.1 billion in cash and undrawn committed facilities, giving us ample headroom to support operations, pursue growth opportunities and other capital allocation requirements. In summary, our balance sheet remains robust with a low net leverage ratio of 0.8x and a net gearing of 0.1x as at 31st December 2025. With the FY 2025 performance covered, I'd like to touch on the efforts that we've been taking to transform our cost and margin profiles that will have lasting impact into the future. If we take a step back in FY 2023, when both companies first came together, Seatrium have focused on integration and harmonization. And so the new company can start on a clean slate. In FY 2024, our full financial year since merger, we quantified the benefits and scale of coming together, providing market guidance on 2 targets, $300 million on synergies, on cost savings and $200 million in procurement savings. These targets reflect the efforts that started from the moment the 2 companies came together. We looked at our cost items line by line removing what we didn't need and leveraging our combined scale for economic benefits. These changes have fundamentally reduced our cost levels and will continue to have a lasting impact moving forward. We are today in year 3, and we are pleased to share that we have exceeded those targets and the proof is in the numbers. Gross margins has turned from negative 2.9% at FY 2023 to 7.4% in FY 2025, alongside an improved mix of higher-margin Series-Build projects. G&A expenses as a percentage of revenue has also declined from 5% in FY 2023 to 3% in FY 2025. And as mentioned earlier, the cost of debt has also significantly declined from 5.7% to 3.4%. And we are not done yet. Initiatives implemented late last year have not seen its benefits fully baked into our financial numbers yet, and we also continue to drive greater cost discipline and internal efficiencies by embedding digitalization, AI and machine learning meaningfully into the way we work across our global business. We believe this will greatly improve visibility, control, risk management and operational efficiencies that will reflect in our margins and financial performance in the time to come. As I've alluded earlier, gross margin is an indication of our operational performance. And we are starting to see the fruits of our labor in FY 2025, and our reported gross margin of 7.4% is a vast improvement from where we started. But it is a reflection of what Seatrium is capable of. We are just getting started. As we continue to streamline operations and tighten overheads, we see accelerated pathways to further expansion through our ongoing divestments of noncore assets. This is an important lever to really reshape our cost structure to unlock efficiencies that will strengthen our long-term resilience and competitiveness. Since 2023, we started divesting assets on our books that are not really required for our global operations. And these assets are broadly categorized into yards and other assets such as vessels and floating cranes. We've accelerated the pace of these divestments in FY 2025, including Amfels and Karimun yards, GNL, our PSV vessel fleet of tugboats, floating docks and the Crescent yard that is expected to complete very soon. The sale of the Amfels yard and GNL vessels have already been completed and the rest are expected to complete by first half 2026. These transactions will deliver more than $50 million in annualized cost savings. These assets would have otherwise laid idle on our books are also expected to unlock more than $230 million in gross gains and over $330 million in cash proceeds, of which $110 million was received in FY 2025. We plan to do more, having identified more than $200 million additional noncore assets to divest by 2028, alongside the scheduled return of Admiralty Yard. Together, the transactions already -- with the transactions already announced, we expected the cumulative to generate cost savings over $100 million by FY 2028. As our business needs evolve, we will continue to review and evaluate opportunities to drive greater efficiencies. These structural improvements will enable us to reduce overheads and drive operating efficiencies, which will, in turn, bring us closer to our target margins, enhancing our business resilience and offering stronger fundamentals, which will deliver sustainable long-term returns. With that, let me now pass back the time back to Chris. Leng Yeow Ong: Thanks, Stephen. To reiterate, Seatrium is at an inflection point today, and we are now ready to commit to creating tangible lasting value for our customers, shareholders and other stakeholders. This year, we are proposing to double the dividend to $0.03 per share, in line with doubling of our net profit in FY 2025. We also plan to continue our share buyback under our existing $100 million program, reflecting our confidence in the business and in the momentum ahead. You can clearly see the fruits of our labor. Total shareholder returns have turned positive at 5.2% and ROE has nearly doubled to 4.9% in FY 2025. These are early signs of the value we are unlocking as our strategy takes hold and we believe that there's further room for growth. Most importantly, we are balancing reinvestment for growth with consistent capital returns. This is how we will drive long-term durable value creation for our shareholders. Let me close by bringing this all together. Our strategy has always been clear and consistent from driving organic growth to executing strongly and transforming our cost structure for margin expansion, ongoing financial discipline and allocating capital prudently to enable sustainable long-term returns. Our value creation framework captures all of this, aligning everything we do from the way we deliver projects for our customers to how we manage costs to how we plan to deploy capital for sustainable return. On capital allocation, our priorities are disciplined and focused, investing for growth in areas where we have clear competitive advantage, optimizing our balance sheet, ensuring the right debt structure to support long-term value creation, returning capital through dividends on share buyback as we grow and exploring strategic M&As that strengthen our long-term position and business resilience. This framework keeps us focused with clear progression towards our FY 2028 steady-state financial targets, we are on the right trajectory to building a stronger Seatrium designed to outperform for the longer term. Thank you. Amelia Lee: Thank you, Chris. We'll now open the floor to questions. For those of you in the room with us, please raise your hand to ask a question. Zhiwei please. Zhiwei Foo: Zhiwei from Macquarie. Congrats on a wonderful set of results. Two questions from me. The first one is regarding your order book, right? I think you're roughly about $17 billion of order book and you have a revenue run rate of about $11 billion this year. So how do we think about your revenue run rate and your order replacement rate? Because from the looks of it you'll run down this by if you don't have a similar amount of order intake? The second question is more on your margins. Now your gross margin is what -- I think you reported 7.4%. And then if you were to just look at second half and net out the provision on onerous contracts to get to about 9%. Then assuming you execute on all your cost savings, that's another $100 million. And then if I'm generous, that adds another 1% of gross margin, which takes us to 10%. So assuming that your cost saving programs work through, you don't -- have no recurrence of provisions. Does that mean that we can start to anchor our thinking of 10% gross margins going forward? Leng Yeow Ong: I think I'll take the order book question. I think you asked the same question the last half, I remember. And I think that the key thing is about getting close to the customers and home running the opportunities that are out there. This is order book business. And the key thing is about how do we take a look at getting quality -- balance between quality projects that we can get and get it in. The $11 billion, I will say that it will roughly be around there moving forward. This shows that the capacity -- our capacity management has been very sharp because I believe that about 2 years ago, the question from all of you was that, are you sure you can consistently produce $10 billion. So that's out of question. But it will basically hover around there. We think that the capacity would allow us to do that. And if you look at the burn rate, it's not linear. The $17 billion doesn't burn down just like that. So technically, it's also a mix of building up to the order book. And as mentioned last year, even as a very challenging year, we're almost half a year or more than that, that are quiet because of obvious reasons. We still manage the home run quite a bit towards the end of the year. So technically, there are good pipelines in the market. And again, I always said I can't control the FID timing. But we are quite confident that based on the diverse product line that we have now and the franchises that we have seen, we will continue to be the go-to person for some of these more complex projects. So it is a zero-sum game. You have mentioned that we are confident that we are able to maintain that resilience when the projects -- I guess the real answer is that when the projects come into the order book. Hsueh-Jeng Lu: So on the second question, let me take this. I think if you look at FY 2025, your calculation is correct, right? But I think the bigger picture is this. There are a few factors that we are -- that move in our favor, right? One is you would have seen the legacy projects, the proportion of that is coming down. The contracts that we secured post merger with risk-adjusted mid-teen returns are becoming more important, two. Three, the cost and productivity measures, I think you talked about with the divestment of the yards and all that, that will take out costs directly from overheads. I think the other factor that you have to consider is as projects move along. I think we mentioned this before, when you hit critical milestones, the contingencies that we -- which are costs that we've set aside for certain risks that we anticipated, if they don't materialize, then that will also be released. So I think the margins will continue to improve from where we have achieved today. I think it will -- we've guided towards a project margin of mid-teens. But as you know, there are some overheads in production side, which is related to basically underutilized capacity. So there will -- the number will move towards 15%, but it won't hit 15%. So I think that's the -- that's where we're looking at right now. Leng Yeow Ong: And just to touch -- come back to the point on order book. At $17 billion, if we've taken a look back in history, it is still one of the highest for the last 10 to 12 years, both combined. But what is different today is that I think you all will appreciate that it's not based on one product. And it is based on milestone payment that it basically is a high-quality order book right now for us to execute. The other thing -- the other point is that we have also been sharing that getting on to the franchise when we signed the very first or the second FPSO or HVDC, there were also a lot of doubts and question whether is it -- are we capable to build on that? I think today, that should put it to rest. What we are -- what I hope everybody sees that the ability to actually deliver a very complex product straight to Brazil field and start operating in 2 months, that actually builds on the reputation and our ability to get the customers on the table in a very short time. Zhiwei Foo: If I have 2 follow-up questions. You mentioned the contingencies. I understand that they are significant. Could you share some color about how big it may be so that we can appreciate what that actual underlying margin is? Otherwise, the second question is, what would your underlying gross margin be if we were to just look at your project and take out all your other inefficiencies right now? Hsueh-Jeng Lu: Contingency is commercially sensitive, because -- but there are risks. So each contingency item is tagged to amount, right? And so when the risk goes away, it will be released. Amelia Lee: Next question from Mayank, please. Mayank Maheshwari: Yes. Chris, a question -- more subjective question here. There has been a lot of commentary by your largest customer around how they are tightening their screws at their end. Like in terms of conversations you had and considering you were showing the order book being a large part still sitting in LatAm. How do you think about the path going forward? And what are the kind of conversations you're having with them around their objectives and how you are aligning to it? So that was the first question. And the second one, to the CFO, I think congratulations on reducing the interest cost quite a bit. But if you think about it, your interest cost and the finance cost still has a reasonable gap. I think there are lease liabilities and a few other things in there, which are still quite chunky. Can you just give us a bit of an outlook of how you're kind of tightening your screws there? Leng Yeow Ong: I will take the part on customer conversations. I think tightening of screw whether it is a challenging environment, my customers always tell them that their screws are very tight with us. The key thing is about how then do we sit across the table and determine the work value because it's a balance for them also. There's no lack of competitors and especially after we have proven that our formula worked and we are able to deliver a functioning FPSO directly to the field and startup, and that's a very powerful signal. If you talk about LatAm, obviously, you're talking about mainly Brazil. Of course, they have various different formula now. One is the build, operate and transfer. And it is now mixed with eventual EPC projects coming online. The key thing is about it has different risks, it has different approach. But the fundamental is the ability to execute because all these projects takes many years to execute. And you can see that from their ambition, they have printed out the 5 years of ambition. To be very honest, one of the biggest questions that they had to ask themselves is that can I expect the FPSO to arrive because right now, especially so when you talked about the challenges of the market is very unpredictable and oil prices it can fluctuate and volatility is quite high. But they have their investment case all set up. So I think that you will come online. But the key question is that when will the cash flow be realized, and that is really around the assets that's going to flow there. So I think we have proven ourselves that we are able to execute right on time and able to deliver compared to our competitors deliver something that operates directly with them. The key right now is of course strategy around who we partner up for BOT, the strategy around how can we also make sure that it's seamless. And then for EPC, of course, it's all about cost and price. So I think that, that part itself, I'm happy that we are not starting from ground zero. I think that we have now a very clear database and the organization is very clear on how to execute these type projects. So that is the type of conversations. And even with or out of LatAm, it's the same conversation with majors like Exxon, for Guyana, even new prospects in Africa is basically down to certainty, the ability to provide solution because mega projects, you will have excitement of technology hiccups and all this, how do you then help them to overcome that and still be able to maintain the predictability at the end of the day. That, I think, is a huge value. Hsueh-Jeng Lu: Mayank, on the second question, look, I think if you look at our finance costs, the largest component is still interest costs, right, to banks and et cetera. I think the key focus for us here is actually around deleveraging. I think we've done a substantial amount of refinancing with the support of our banking partners, but we have to delever. I think you would have seen the operating cash flow significantly improve so then we had to think about where we can allocate capital. Do we use that for growth because we're returning capital to shareholders, but it's also important to delever over time because I think the leverage on a gross level is still relatively high. Amelia Lee: Next question from Pei Hwa. Pei Hwa Ho: This is Pei Hwa from DBS. Congrats on the strong results. Just 2 questions from me. One is for Stephen, it's on the provision for your onerous contracts, this is amounted to $96.5 million. Could you give us a bit more color on the breakdown of all this, especially for legacy contracts, it was so close to completion that we didn't expect to have this much. I think second is on the project pipeline, especially from Petrobras and TenneT. Maybe you could give us a bit more color and how based on a conversation with our customer is TenneT on track? Or they still as per plan, will continue to award some contract this year? And also maybe some -- also, I mean, in general, how we think about your order pipeline and the conversion from the $32 billion pipeline to this year? Hsueh-Jeng Lu: Chris, maybe I'll take the first question first. I think the provisions of our $96 million that relates principally to 3 projects. That's the 2 U.S. projects, which we have since delivered. So you can think of that risk as have gone away, right? I think the reason for additional provisions is because the project took a little bit longer than we wanted, and so there were additional costs associated with that. On the third project, which I mentioned in my speech earlier, was around NApAnt, which was a legacy specialized ship building project that we're delivering in Brazil. And so there were -- the project has delayed and so there are some provisions relating to that. But it's a relatively small project. I think its our initial contract value was about $200 million. And so we're working very closely with the customer to sort of manage that risk going forward. Pei Hwa Ho: When is this project going to be delivered? Hsueh-Jeng Lu: 2027. So initially, it was supposed to be end 2026. Now it looks like 2027. Leng Yeow Ong: I guess for Petrobras, TenneT, and you mentioned about conversion pipeline I wouldn't repeat what I said for Petrobras. I think that's very clear on their development plan and what's going to come online. For TenneT, your question was around whether they are still on track. And the short answer is that as far as we know, yes, because as promised they have gone through the same allocation and competition end of last year. We're quite happy that we are able to land DolWin 5 for -- that's the first Germany unit that we are getting. So that also sets up our potential and production line for both the Netherlands projects and the Germany projects. This year, if my memory serves me correct, and please check and don't quote me because there will be projects coming online for tender in Germany and also followed by Netherlands. When they were FID that when they will start engaging us, that depends on when they are ready. But those projects are real through our conversation. Now on conversion pipeline. As mentioned, the team has worked very hard to deliver value to the customer. We have proven that when we said that we will deliver this way and when we have proven to the customer as One Seatrium, we are able to do that. Customers are also seeing that they are able to assess the different capabilities of different facilities and different teams within the group. So in a very short time within 3 years, we have come together and delivered very differentiating value in terms of being able to provide solutions to the customer. And that's not all talk, and we have delivered that to them. The key thing around conversion of cost is also the -- because of this ability to prove that we are able to do this. There are many people that are trying to come online as competition. So that segment actually is -- but as mentioned in my speech, there are certain segments that we have a very commanding track record. Again, there's no difference from the new build because it's complex, because it requires capability, it requires safety, basically practices within and quality, ability to deliver quality products. We think that this is an exciting area every year. As mentioned, Powership, if you take a look at this segment, why we highlight that, if we believe that the world is starved of power and also digital, AI, the growth of it, I think the floating assets is something that is very sound. The concept is sound. We just have to make sure that our customers are able to take a look at the financial ability around the economics around that. There's also a floating data center. There's many things that in the market that may be too premature for us to say. But all this $2 billion of conversion prospects, I think it ties into the whole energy type of products. And why conversion is because the speed to market is very important. So again, the ability to execute, the ability to engineer on the go and deliver them safely with quality is our hallmark and customers know why they come to Seatrium and why we're able to build on that will be then a track record in the convergence space. Amelia Lee: Thanks, Chris. Pei Hwa, I hope that answers your question. Next, we will take a question from online. Luis from Citi. Luis Hilado: Congrats on the good set of results. I just had -- most of everything has been asked. Just 2 housekeeping questions, please. Just to clarify on the $50 million annualized cost savings. Since most of the -- it will conclude in the first half. So it's essentially $25 million savings in the second half. So -- at least in the second half. Is that the way to look at it? And the second question is just I know it's difficult to discuss arbitration cases in terms of timing, but we have a feel for amongst those, which ones can resolve sooner, not when, but which would resolve sooner? And are your legal fees material at all on an annual basis? Hsueh-Jeng Lu: Luis, you had 2 questions, right? Okay. On the first question on -- sorry, what was that? Leng Yeow Ong: $50 million. Hsueh-Jeng Lu: $50 million. Yes, $50 million. A part of that divestments were completed towards the end of '25, right? So that -- a portion of that will be fully baked in from the 1st of January. The MFLs you would have seen we completed in January, and so that will be another component. So I think if you're looking at it over the full year period, it's probably -- if we can complete everything this month, it will be closer to the $50 million than the $25 million. Leng Yeow Ong: Arbitration, depends, but if you want to ask for which one would probably be settled first. It is all basically time based, right? P-52 will probably be the first one. that will be settled, and we hope that we will have a conclusion this year. You asked whether the legal fees is material? It depends on material against what. But it's never -- of course, that's not always the first avenue that we will go for. But I just want to impress upon that. Actually, arbitration is a professional way of basically settling differences. And usually in this industry, we are able to differentiate what we need to settle while we professionally advance on our both interests on ongoing projects. So yes, P-52 will probably be the first one that we are targeting. Amelia Lee: Thanks, Luis. Next question, also online from Amanda. Amanda Battersby: Yes, I'm here. Great. Amanda Battersby from Upstream. Thank you very much for the frank results, statements and sharing as always, Chris and Stephen. A couple of questions, if I may, please. You mentioned that the potential for BOT FPSO contracts, specifically in Latin America and one would think with Petrobras. Are you actively bidding for any BOT work for floaters? And if so, would you be looking for a partner on a project-by-project basis or perhaps a more formal arrangement to allow you to tender to go forwards, please? And the other 2 shorter questions, if I may, do you foresee any more sort of legacy arbitration contracts lurking in the wood work after sometimes more than a decade? And thirdly, please any more plans to rightsize the headcount as some of your projects come to completion? Leng Yeow Ong: Well, I'll take those questions. Thanks, Amanda. We are missing you here. Well, for BOT contracts, we will definitely need to have a partner and bidding strategy. Whether you'll be project-by-project basis or whether there is a long-term type of tie-up, we have both strategies in place. And it depends on time and space also, right? We have to look at -- I guess the fundamental is that we are in for the bid, and our focus is to win. So it's likewise for partners. Our operating partner would also have the same driver. So it will depend because timing of the tender and potential on both sides on the tender really decides how we choose our partners. Whether we will partner somebody for long term and across all projects, it depends whether the interests align at a point where we are signing up. So I can't have a clear answer, but we are in on the BOT bid for the BOT projects and definitely with an operating partner. On arbitration legacy, I think what I can promise you is transparency. As of now, as mentioned, we do not see that there are any that are lurking. But like what we mentioned, when there are any disagreement that we need to settle is always professionally been elevated to settle an arbitration if we cannot come to terms. So it's very hard for us to actually forecast. But all I can say is as of now, we don't see any. Now about rightsizing I would actually approach the rightsizing question as less of a manpower issue than I think more on the operational excellence angle. I think we have always mentioned about what is our strategy going forward. And I remember 3 years ago, when we talked about integration topic and we talked about how we optimize and during the first year, we did not even remove any headcount. And I think that all of that has basically actually worked out. Our first stance is always to make sure that we take care of our people. When projects are completed or when we get more efficient and our processes get more efficient, retraining has always been the first one, all right? So we are not approaching from a headcount and hire fire approach. But of course, when we look at our yards and our future footprint, which we have always been very transparent in sharing, that is strategic, right? That's strategic. And it's about trimming down the noncore, building on the core and, of course, have an eye of capability building, depending on what products that we are looking at. As we have mentioned, we further invested in the Batam yard to make sure that we have lines ready for offloading -- building and offloading 30,000 tonnes of topsides, which is mainly our HVDC today. We expect to eagerly contest to build a more stronger pipeline behind each of them. So there are a lot of ways that we are looking at rightsizing. The other thing is that one of the actions that we are taking, of course, is in the national news that Admiralty Yard is going to be redeveloped. And we knew that even way before Seatrium was formed. So we are taking that proactive step to actually rechannel resources. And that's the strength of the One Seatrium delivery model. We actually rechannel resources not only to Tuas Boulevard, but also a lot of our high ports and young managers are now in Batam, helping to build up the capabilities over there. So there's many dimensions to that. But I guess the main driver of this question is, I guess, about cost efficiency. And I think that has been the top line strategy that we have always said. We are very sensitive to cost but we are also very sensitive to capabilities, retaining capabilities, retraining capabilities and getting ahead of the curve to be able to service our customers. I think that will differentiate us very strongly. Amelia Lee: Next question, Siew Khee, please? Lim Siew Khee: Can I just follow up on the onerous contracts? So given that the U.S. projects have been delivered, can we expect a significant drop in the overall provision for onerous contract? Hsueh-Jeng Lu: Yes. Lim Siew Khee: Will it be lower than 2024 because 2023 was high and in 2024, it was not? Hsueh-Jeng Lu: As I explained earlier, I think there were 3 projects, right? So the remaining risk around NApAnt, but as far as we can see today, there is no need for additional provisions. Lim Siew Khee: Okay. So within your order book, there's nothing that is looking that you think could delay? So therefore, that would actually help to pave the way for better margins as you execute. Leng Yeow Ong: Yes. So as I explained earlier, right, I think the key risk was always around the premerger contracts, I think that portion has come down significantly. Lim Siew Khee: Okay. And just wanted to just check, you mentioned that you hope to all settle the arbitration. Is there a need for any provisions if it's concluded this year? Leng Yeow Ong: No. Lim Siew Khee: Is there any need for provisions for any other litigation that you might see be in negotiation? Leng Yeow Ong: No. Usually, when we talk about provisions, it's about legal opinion on the chances, right? So as of now, whatever that we reported that there's no need for further provision. Lim Siew Khee: And then just on your order pipeline target. Why did you raise from $30 billion to $32 billion so specific? What's that $2 billion? Leng Yeow Ong: Well, the other pipeline depends on what projects come into the market. We didn't raise it. It's a customer wanting in the market to basically look at development. These are real projects that are out there. Lim Siew Khee: Is there anything significantly different or new from compared to when you told us vessels of $30 billion now arriving to $32 billion. So what is the optimism coming from? Hsueh-Jeng Lu: Maybe I'll take that. So in that... Leng Yeow Ong: Hang on. It's not optimism. Again, I say that it is the projects that are out there and the real targets that we are going after. So when you talk about what are there any difference, of course, there is no secret that there are a lot more production assets, contracts that are foreseeable in the market and that is basically public. The other point that we are trying to make is, of course, there are also conversion projects. As we mentioned, they are out there in the market. So as we get knowledge and those are the projects that we are going after, we actually actively put it in the pipeline and say that, okay, these are all the go get, but that's to convert into order book. Hsueh-Jeng Lu: If I may add, the number there is we have an internal pipeline that we track and our commercial teams update very regularly. And so we just summed up that total and then gave that to the market. So these are all actual projects that we are chasing, right? So I think if you were talking about the change, I think, between the $30 billion and the $32 billion, there were some projects that we won, DolWin and then the BP project. And then those were replaced by other projects that customers have now inquired with us on, we want you to submit a bid or we're in bilateral negotiations with them. So it's our actual projects that we are chasing and not managed up, that's what we were trying to say earlier. Lim Siew Khee: Okay. Just last 2 questions, just on housekeeping wise. So the $50 million cost savings you mentioned, where can we actually see it more significantly, in G&A or of sales? Hsueh-Jeng Lu: It is in a different -- some of it will be in cost of sales, some of it will be in G&A and some of it will be other operating income. So it's actually in different areas. Lim Siew Khee: Is there any -- is there one that is like maybe higher, perhaps in cost of sales? Hsueh-Jeng Lu: It's mostly in the cost of sales because if it's relating to the yard, all of that goes into the COGS line. Lim Siew Khee: And my last question is, so the divestment gain that you actually guided. $160 million, if it is completed in 2026 will be recognized in 2026, is that right? Hsueh-Jeng Lu: $150 million. Lim Siew Khee: $150 milliion will be recognized in 2026. Hsueh-Jeng Lu: Yes. So $70 million was recognized in FY 2025, another 50 -- and $150 million in 2026. Amelia Lee: Thanks, Siew Khee. With that, we've come to the end of the briefing. Unfortunately, we've run out of time. For the 2 questions that we received online, we will reach out to you directly on e-mail. For further questions, if you require any further clarifications, please feel free to contact us at our Investor Relations e-mail address. Thank you very much for joining us this morning, and we wish you a very pleasant day ahead. Thank you. Bye.
Operator: Welcome to the Ardagh Metal Packaging S.A. Quarterly Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Stephen Lyons, Head of Investor Relations. Please go ahead. Stephen Lyons: Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's Fourth Quarter 2025 Earnings Call, which follows the earlier publication of AMP's earnings release for the fourth quarter and the full year. I'm joined today by Oliver Graham, AMP's Chief Executive Officer; and Stefan Schellinger, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the fourth quarter can be found on AMP's website at ardaghmetalpackaging.com/investors. Remarks today will include certain forward-looking statements and include use of non-IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward-looking statements disclaimer and reconciliation of non-IFRS financial measures to IFRS financial measures in AMP's earnings release. I will now turn the call over to Oliver Graham. Oliver Graham: Thanks, Stephen. 2025 was another year of strong performance for AMP, underpinned by shipments growth of over 3%, a favorable product mix and solid operational delivery. Our performance drove year-over-year adjusted EBITDA growth of 10%, which significantly exceeded our initial guidance. Our tight focus on cost control generated meaningful operational and overhead cost savings in the year. Our teams navigated the complexity of evolving demand patterns, both in terms of category mix and can sizes to position our capacity to support our customers' growth. From a balance sheet perspective, we ended the year in a robust position with nearly $1 billion of liquidity. In the fourth quarter, we successfully raised $1.3 billion of green bonds, which Stefan will talk about in further detail later. Our strong performance in the Americas was driven by significant growth in North America volumes of 6% for the full year and favorable mix through the high-growth energy drinks category, which more than offset the impact of softness in the Brazilian beer industry. In terms of European performance, operations and overhead cost savings as well as shipment growth in carbonated soft drinks and other growing categories offset the anticipated metal input cost headwind. In each of our regions, the beverage can continues to take share from other packaging substrates, advantaged by the cans convenience, branding potential, total cost of ownership and sustainability credentials. This supports a continued positive outlook for global industry growth. Turning to AMP's Q4 results by segment. In Europe, fourth quarter revenue decreased by 1% to $539 million or by 6% on a constant currency basis compared with the same period in 2024, principally due to the impact of a negative IFRS 15 contract asset, partly offset by favorable volume mix effects and the pass-through of higher input cost to customers. Shipments grew by 1% for the quarter with good growth in carbonated soft drinks and across our diverse range of growing categories as well as in the energy category. This was offset by a decline in beer shipments, which reflected a weaker industry backdrop as well as strong shipments in the prior year. For the full year, Europe shipments grew by 2% with growth in nonalcoholic beverages offsetting a flat performance in beer shipments. Indeed, the broad-based gains across growing categories such as ready-to-drink teas and coffees, canned wines, water and juices is testament to the ongoing innovation in the European beverage can market and to AMP's success in supporting this growth. We expect this growth to continue, helping to further diversify AMP's portfolio. Fourth quarter adjusted EBITDA in Europe increased by 14% versus the prior year to $64 million, ahead of expectations. On a constant currency basis, adjusted EBITDA increased by 8%, principally due to higher input cost recovery, which included a positive benefit from metal timing effects and favorable volume mix, partly offset by higher operations and overhead costs. Full year adjusted EBITDA of $272 million further underlines the region's improving profitability. In 2026, we expect to grow volumes by around 3% in Europe, broadly in line with industry growth. Capacity remains tight in the region, and we are therefore optimizing our network to better serve higher demand can sizes for faster-growing category. We continue to review opportunities to support our customer growth, and we are progressing plans to add additional capacity in the attractive markets of Spain and the U.K. on a measured basis over the coming years. Both projects will add capacity into existing facilities with the related moderate increase in capital expenditure to be spread across financial years. These projects are underpinned by our favorable market positions and our confidence in Europe's growth outlook, supported by the cans low penetration rate, its attractive sustainability credentials and the previously mentioned innovation trends. Beverage packaging scanner data across each of the markets in which we operate highlighted several percentage points of share gain in 2025 for the beverage can versus glass in the beer category and versus plastic in carbonated soft drink. In the Americas, revenue in the fourth quarter increased by 24% to $807 million, which reflected the pass-through of higher input cost to customers, including the impact of the higher Midwest premium in North America as well as shipments growth. Americas adjusted EBITDA for the quarter was ahead of expectations with a 6% decrease versus the prior year to $102 million due to higher operations and overhead costs and lower input cost recovery, partly offset by favorable volume mix effects. In North America, shipments increased by 9% for the quarter despite the company having to navigate some supply chain disruption. For the full year, AMP shipments grew by 6%. AMP's strong growth and outperformance in the year versus the market reflects our favorable customer and category portfolio mix weighted towards nonalcoholic beverages and in particular, our exposure to the high-growth energy category that represented 16% of our North America sales last year. Sparkling water is another notable category that performed well, which represented 11% of our portfolio. By contrast, beer represented only a mid-single-digit percentage of our portfolio. Looking into 2026, we expect industry growth of a low single-digit percentage. As previously indicated on our third quarter results conference call, we expect some softness in North America for AMP following some contract resets largely related to specific footprint situations. We anticipate 2026 being a transition year with a small volume decline before we expect to return to growth in 2027, at least in line with the industry on the back of additional contracted filling locations and our attractive portfolio. Retail scanner data so far this year is encouraging for continued beverage can industry growth into 2026. We would note that during the first quarter, some of AMPs in our customers' operations were negatively impacted by extreme adverse weather, which we assume we recover during the quarter. We also continue to manage a tight metal supply situation after disruptions in one of our major suppliers' rolling mill facilities. This is causing operational challenges, and we incurred additional costs in Q4, which we anticipate will persist through the first half of the year, ahead of the restoration of capacity as well as the ramp-up of new domestic supply. In Brazil, fourth quarter beverage can shipments decreased by 4%, which represented a sequential improvement versus the third quarter but lagged the improvement in industry performance due to customer mix. Full year shipments declined by 2%, in line with the weak overall industry volume, reflecting consumer weakness and adverse weather during the winter months. Encouragingly, industry data confirms that the beverage can gained an additional couple of percentage points of share in the beer packaging mix in 2025, in line with long-term trends. Looking into 2026, we expect industry growth of a low to mid-single-digit percentage and for AMP's volumes to broadly track the market. I'll hand over now to Stefan to talk you through our financial position for the quarter before finishing with some concluding remarks. Stefan Schellinger: Thanks, Ollie. We ended the year with a robust liquidity position of $964 million and net leverage of 5.3x net debt to adjusted EBITDA. The expected increase in the net leverage metric reflects the impact of the successful $1.3 billion equivalent green bond financing, which we closed in December. As a reminder, the proceeds of the financing were used to repay $600 million of notes due in June 2027, to repay the senior secured term loan of EUR 269 million and to redeem the preferred shares of EUR 250 million. The headline leverage metric has increased as a result of the financing and the redemption of the preferred shares with debt. This refinancing has provided several benefits, including the lengthening of AMP's debt maturities with no bonds now maturing before September 2028, simplification of the capital structure, and an annual cash savings of approximately $10 million as the higher annual cash interest is more than offset by savings related to the previous annual preferred share dividend payments of approximately $25 million. We generated adjusted free cash flow for 2025 of $172 million, which was ahead of our guidance. During the quarter, both S&P and Fitch took positive credit rating action, which reflects AMP's strong operation and financial performance. In terms of 2026, we approximately expect the following for the various components of free cash flow. total CapEx of slightly above $200 million, including growth investments, lease principal repayments of approximately $150 million, cash interest of circa $220 million, cash tax of a little bit over $30 million and a small outflow in working capital. Finally, today, we have announced our unchanged quarterly ordinary dividend of $0.10 per share. With that, I'll hand it back to Ollie. Oliver Graham: Thanks, Stefan. Just before moving to take your questions, I'll just recap on AMP's performance and some key messages. So firstly, adjusted EBITDA of $166 million in the fourth quarter exceeded our guidance range of $147 million to $162 million, with both segments performing ahead of expectations. Secondly, full year adjusted EBITDA of $739 million was significantly ahead of our initially projected $675 million to $695 million range, and this was largely driven by strong volume performance and favorable customer mix in North America as well as favorable currency movements. And finally, the beverage can continues to outperform other soft drinks in our customers' packaging mix, supporting our growth. For 2026, we are guiding adjusted EBITDA in a range of $750 million to $775 million. Adjusted EBITDA growth is expected to be driven by operational efficiencies and cost savings, shipments growth in line with industry growth in Europe and Brazil and improved category mix. We view 2026 as a transition year in North America for volumes ahead of an expected return to growth, at least in line with the industry in 2027. In terms of guidance for the first quarter, adjusted EBITDA is expected to be in the range of $160 million to $170 million, ahead of the prior year quarter of $160 million on a constant currency basis. Having made these opening remarks, we'll now proceed to take any questions that you may have. Operator: [Operator Instructions] We'll take our first question from Matt Roberts with Raymond James. Matthew Roberts: Ollie, Stefan, the first question, maybe on the 1Q guide, can you just talk about some of the volume trends by region that underpin that, what you've seen in the first 2 months of the year? Any impacts you've seen from weather in the U.S., either in regard to facility outages or natural gas effects or volume impacts at customers? Oliver Graham: Sure. Matt. So yes, we take it region by region. I think North America has had a very good start to the year in our portfolio with some key customers. But it is true that January suffered, particularly in the last week with the weather effects in the south of the country where we saw some of our facilities and some of our customer facilities unable to ship product. So we did see some reduction in what we expected for January. February and March are looking like they're tracking in line or even slightly better, though we are, as we mentioned, navigating this quite challenging metal supply chain situation. So I think we're in line and scanner trends look good. The energy category is still very strong, and we're certainly seeing that in our portfolio. So that's obviously very beneficial for mix, again, within our profit performance. Brazil, the market started in good shape. So I think 2% to 3% in January for the industry. That followed a 4% Q4 performance for the industry. So a good recovery actually as we came into the summer season after the weakness in the middle of last year. And we're currently tracking ahead of that with some good customer mix. So yes, we're very positive about Q1 performance in Brazil. And then Europe is exactly where we saw it. So I think the industry is growing broadly where we saw it. We're in line with our forecast. We had a very strong Q1 last year. So we see our growth being a bit second half weighted in Europe this year. But again, we see the industry exactly where we expected it. And if you take that all in the round, I think some very positive trends. We see no negative signs of the higher aluminum costs at the moment, which I know has been commented on quite broadly, but we certainly don't see that in our numbers or in the industry numbers at the moment. So all very positive from our point of view. Matthew Roberts: I appreciate that. Maybe on the capacity as you discussed in Europe, I seem like Spain, I think we previously discussed that last call, it seemed like U.K. might be incremental. But any additional color you could provide on the timing of when that capacity is expected to start to ramp? Any start-up costs and the related CapEx expected in '26 or '27, pending the timing there? And in Europe more broadly, I mean, some others seem to be adding in similar regions. So it seems like demand is still humming along there, but how does all the capacity inform your supply-demand, [ Oliver ? ] Oliver Graham: Yes. Look, it feels very tight. The market at the moment. I think we think it's running potentially even in the high 90s utilization as an industry. You've seen our peers' volume performance at the back end of last year and for the full year. And we also had a decent year despite some weakness in our beer portfolio. So I think that the industry backdrop is highly constructive and you're talking about a market now of nearly 100 billion cans. So if it grows 3% to 5%, it's a couple of can plants a year that are needed. And we certainly see shortages on specific sizes right across the continent and in certain regional pockets. So I think the backdrop is very constructive. We have a strong position. We particularly have strong positions in those markets, and we have customers who are looking to grow and who need our support. So I think it's broadly in line with our share position that we're adding this kind of capacity with a line in each of those facilities. It's over the next 2 years or so, some possibly into the third year with the CapEx spread across that period. And I think we signaled a moderate increase to our overall capital guide for this year. So you can think of that as around 10% as an increase. So not very material, to be honest, as we already have some of the growth CapEx in this year. So yes, we regard these as very good projects in a very constructive market environment. Operator: We'll go next to Josh Spector with UBS. Anojja Shah: It's Anojja Shah speaking in for Josh, that you reported some pretty good pickup in Brazil there. What are you thinking around World Cup for this year? And what kind of pickup, if any, and when exactly you think it might hit? Oliver Graham: Yes. I mean I think once we're in a low to mid guide, then I think we see that as broadly incorporating the World Cup effect and maybe it pushes more towards the mid. Obviously, Brazil can move very fast across the growth trajectory. We've seen it over the last few years. And so obviously, if Brazil go deep into the tournament and the weather is reasonable, then we could see some pickup. But I think we're comfortable with the sort of 3% to 5% guide for the market and that we're in line with that. But I think that should be constructive in -- obviously, in the winter season, which is helpful. So we should see some good comps versus what was a pretty weak winter season last year. And then when you get it, yes, you get it in the months running into the tournament. So obviously, there'll be some inventory build, and then we'd expect to see some sell-through as the tournament goes. So you'd expect to see it in Q2 pretty much. Anojja Shah: Right. Okay. And then you also -- in North America, I think you did have a comment in the press release about lower input cost recovery in North America. What is that exactly? Is it stuff besides aluminum and tariffs and things that are an immediate pass-through like is it a PPI sort of index where it's a once a year pass-through? And any outlook on that... Stefan Schellinger: Yes. So I think we referred to some supply chain challenges and operational challenges relative to the metal situation. So that then triggers some operational actions. We need to do shorter runs. We need to move volume within our manufacturing network. Some of the freight lanes get suboptimal. So it's a little bit of nonrecovered freight and a little bit of nonrecovered costs associated with those -- so let's say, a knock-on effect of those supply chain metal disruption causing operational disruption. Anojja Shah: So it does sound like that might persist through the first half then of this year. Is that right? Stefan Schellinger: Yes. I think that's a fair assumption. Operator: We'll go next to Stefan Diaz with Morgan Stanley. Stefan Diaz: Maybe just piggybacking off that last question. At the same time, you also noted in the release some operational efficiencies and other savings that you expect in 2026. Can you just give some details on the potential sizing and benefits and whether these improvements are in any specific regions or if these improvements are just maybe some of these operational challenges kind of just falling off? Oliver Graham: No, I think that every year, we obviously make operational improvements and savings right across our network, all regions. So the normal things lightweighting the can, improving -- reducing spoilage, implementing our production system across our plants to drive best practice and lean activity. So I think we're just citing the fact that those savings are being delivered. We have set some challenging targets this year, but we expect to be able to deliver them. And obviously, that offsets some of the slight volume weakness we have in the North American business. So I think it's more a general comment right across the business. Stefan Diaz: Okay. Great. That's helpful. And then it's been a few months since the Ardagh Group restructuring. Do you have any updates for us there? I know in the release, you said no changes to capital allocation, but any potential changes in strategy just given that? Oliver Graham: No, absolutely not. I think AMP has got a good strategy. It's been working. You've seen the delivery in 2024 and '25 and the guidance we're giving for '26. And you've seen our outperformance in various markets and the drop-through into our profitability last year relative to our volume growth. So I certainly don't think anyone wants us to change strategy. And at the minute, as we've signaled in our capital allocation policy not changing either. So I don't think there's anything to see here in terms of changes since the restructuring transaction. Operator: We'll go next to Anthony Pettinari with Citi. Bryan Burgmeier: This is actually Bryan Burgmeier filling in for Anthony. I appreciate the detail on Slide 8 on the share gain in Europe that the can has realized over the last year. Are you able to maybe provide a sense of how penetrated the can is in Europe and maybe beer and soft drinks relative to North America just as we kind of think about kind of the room to run for future share gain in Europe? Oliver Graham: Yes, much less penetrated, right? So I mean, I think that's one of the arguments why there is a long way to run. I think we think the can is 40%, 50% penetrated in North America. U.K. is the most penetrated European market sort of approaches those levels a bit less. But Germany is 1/4 of that. So we've got a long way to run. The German situation was very specific with a very poor poorly designed deposit scheme implemented in 2003 with no return path for the can. Can was essentially delisted out of retail overnight and has been on a long recovery ever since. And the German can market can grow 10% in the year. And for example, last year, there was a 20% growth number for German soft drinks in cans. So pretty dramatic numbers for a staple packaging product. So yes, we see the U.K. very strong last year, showing many of the similar trends as the U.S. with a lot of innovation going into the can and pretty strong antiplastic sentiment. And obviously, glasses had difficulties in the last few years with the high energy costs. And then the can also really demonstrating a lot of sustainability credentials with very high recycling rates, high recycled content and a pathway to a significant decarbonization through the measures the industry is taking right through the value chain. So I think you add all those things together and you get a strong set of prospects and the penetration rate just illustrates one of them. And then I think if you look at the growth rates, we and our peers have posted for the last few years and the projections we're all giving, it's clearly a very constructive backdrop for the European can market. Bryan Burgmeier: Yes. Got it. Appreciate that. And then just last question for me, and I can turn it over is I'm not sure if we're expecting any more kind of incremental headwinds in Europe from the aluminum conversion costs or maybe any PPI pass-throughs. And if we are, can you maybe provide a little detail if those are going to be better or worse on a year-over-year basis compared to last year? Stefan Schellinger: Yes. No, I think we are through that. I think that was really predominantly a 2025 issue though we don't expect a material headwind in that regard. Operator: We'll go next to Mike Roxland with Truist Securities. Michael Roxland: Ollie, you mentioned a couple of times, this is a transition year for the company, especially in North America. It seems like you lost a little bit of share to peers, but then you're gaining some new filling locations in 2027. To the extent you can comment on this form, what end markets are those new filling locations occurring in? Are they with existing customers? Are they with new customers? And how -- can you give us a sense also how you're contracted roughly for 2028? Oliver Graham: Sure. Yes, Mike. So look, I think those filling locations are broadly aligned with our portfolio. So weighted more towards the soft drink side of the house like our portfolio. So those are principally those. There is some in beer, but then in specialty sizes, which I think is obviously where we want to be. And yes, entirely with existing customers. So these are very long-term relationships where the quality of the customer service and the relationship is driving those gains. So -- and I think it is only a transition year really in North America. I think Europe and Brazil pretty straightforwardly, just tracking alongside the market. Michael Roxland: Got it. And then just for 2028, any early read just in terms of what you think from items? Oliver Graham: Yes. So I think, I mean, we and our peers have commented on this, but we went through sort of significant contractual events in some of the big customers in '24, '25. So we're very heavily contracted now through the next few years into the end of the decade. And I think that's been commonly commented on in the industry. Michael Roxland: Got it. That's very helpful. And then just one more quick one. Last quarter, and you may have mentioned this before, if you did, I apologize. But last quarter, you mentioned being tight in certain specialty sizes in Europe, close to some growth last year. You started doing some -- you intend to do some projects 4Q into 1Q that give you additional capabilities for specialty. So where do those projects stand right now? And do you know that where does the project stand? And can you remind us what capital is involved in doing that? And are you in a position where you're not going to lose additional share because you have the functionality now in specialty to meet your customer needs? Oliver Graham: Thanks, Mike. Yes, good question. So yes, the projects in our plant in France has gone very well, ramping up again ahead of expectations, giving us more specialty capability and different specialty capability and more regional -- better regional alignment of supply to also reduce freight, reduce out-of-pattern freight. So I think that's going well. And yes, we'd be hopeful that, that positions us well for the coming season. It's clear those trends are continuing in Europe, a bit like North America with the specialty sizes growing. So we think, yes, that puts us in a better position for this year for sure. Michael Roxland: Good luck in '26. Oliver Graham: Thanks a lot. Operator: We'll go next to Arun Viswanathan with RBC Capital Markets. Arun Viswanathan: Congrats on a strong '25 and an outlook for '26. So I guess just on the outlook. So it sounds like there are some customer mix issues that would maybe push you to the lower end versus industry growth. And also, would you highlight anything else there? Are you pretty much sold out as well as maybe some of your competitors are? And then I guess also -- I'll start with that. Oliver Graham: Yes. No, if we managed to convey that message, that's a misunderstanding. We definitely have no mix issues. We have mix gains, I think it's only North America, but I think we signaled it at the Q3 call that there were some contract resets that meant we have an overall volume reduction, actually not really in specialty sizes, mostly, largely linked to some footprint changes in the market. That's footprint on the side of our customers who were rationalizing filling locations, but also footprint as a result of new can plants that were built post-COVID and also footprint from contracts that we had entered into in the expectation of building additional capacity that when the growth came off in 2022, '23, we didn't build. So when you added all that up, there were some logical resets in terms of facilities that were closer to the new customer footprint. So that was an overall volume effect, only North America, nothing to do with Europe or Brazil. And I think what we were trying to signal in the remarks and in the release is that we see positive mix effects in '26 to offset some of that. Arun Viswanathan: Okay. And then just a question on the metal side. So obviously, the Midwest premium is up significantly. Do you see that as potentially impacting can demand? I know there's been some substrate shift away from other substrates, including glass, as you noted. But is there -- are we approaching maybe a ceiling on that, just given some of this increase in the Midwest premium? And do you see that kind of changing or maybe even reversing at any time in the future given volatile tariff dynamics? Oliver Graham: Yes. We certainly hope it changes because it's very extreme and it doesn't make any sense in terms of obviously, the aluminum supply chain. But -- so yes, we certainly hope that it comes back into normal ranges at some point in the future. Yes, I mean, I think that I mentioned it at the top of the call, we're not seeing any change at this point. And obviously, customers and ourselves have hedges. So we don't know exactly when people entered into hedges and when they roll off. So we wouldn't be able to sensibly rule out any impact from this. But at the minute, we don't see it. And again, there are some strong trends that are driving the growth in terms of the way innovation has gone into the can, the sort of retail shelf sets that have been put in place to accommodate that, the consumer reaction to cans versus plastics, some of the energy cost issues that we see and the overall cost issues we see on the glass side. So I think there's some big trends behind the growth of the can as well. And obviously, there may be some headwind at some point from the high aluminum costs, but we're not seeing it in the data. We're not seeing it in the market data, and we're not seeing it in our sales at this point. Arun Viswanathan: And if I can just ask on Europe. You mentioned growing your capacity in the U.K. and Spain. What's kind of the time line? And what kind of impact should we expect that, that could contribute to your overall growth? Oliver Graham: Yes. I mean we said, look, over the next few years, we'll -- like we always do, those projects tend to cross a couple of calendar years and so does the CapEx. And look, we're very tight. So all we're really doing there is giving ourselves the capability to grow with the market or maybe a tick ahead but broadly with the market. So again, I think you've heard pretty consistent commentary that the European market broadly is in a 3% to 4%. I think some of our peers would say 3% to 5%. It depends a bit on geographic mix, category mix. But if you're in that sort of range, and we expect to be, then we need to be adding this kind of capacity on a reasonably regular basis. Operator: [Operator Instructions] we'll go next to Gabe Hajde with Wells Fargo Securities. Gabe Hajde: I may have misheard you, Ollie and I apologize. Did you mention Q4 EBITDA in Europe was, in fact, better than planned on metal timing effects. And again, if I misheard you, I apologize. Does any of that carry over into the first half? And then the supply disruptions, just to be clear, it's basically isolated to some of the rolling mill issues that we're having. And if you're willing to quantify maybe the hit that you had in Q4 '25, what you're embedding in for the first half of '26, by our math, it would be maybe $5 million to $8 in the first half of '26? And then a couple of follow-ons. Oliver Graham: Yes. I mean, Gabe, I'll let Stefan comment too, but I think that's reasonable and the lower end of that range is sort of broadly where we saw Q4, I think. So that's fair, I think. And obviously, we've given guidance, including these sorts of thinking. Yes. And then Europe, I think it was an aspect of Q4. But again, I'll let Stefan comment on that one on the metal timing. Stefan Schellinger: Yes, I think that's exactly right. We would benefit from it, but it was not the entire EBITDA growth that was a result of metal timing. Oliver Graham: And I don't think it's a particular impact in H1 this year, right, which is the other Gabe question. Stefan Schellinger: Yes, I think it is. Yes. Oliver Graham: Yes. Gabe Hajde: Okay. So no carryover effect from metal timing in Europe that was just isolated to Q4? Stefan Schellinger: There's no material expectation. Oliver Graham: Yes, I mean it does depend, Gabe, as you know, a bit on what happens with LME and Midwest. So obviously, we can't be absolutely certain because it depends a bit what happens, but there's nothing material in the plan. Gabe Hajde: Okay. And then I guess maybe to put a finer point, I mean, it sounds like we're talking about two additional lines, one in each plant in U.K., Spain and traditional yield out of those is still something 1 billion to 1.2 billion units? Oliver Graham: Yes. I think -- I mean, we may start slightly shy of that as first phase. But again, you know the lines are pretty modular now. So you can go up in a couple of steps from slightly below 1 billion. But yes, these are the kinds of ranges we'll be in. Gabe Hajde: Okay. And then one clarification or a point on cash flow. Stefan, I think you mentioned lease principal payments 150 this year. I think that's up pretty materially from $111 million in 2025. Is that sort of at a steady state at this point? Or does that go up again maybe in '26, '27? Stefan Schellinger: So no, to be clear, I said $115 million, $115 million, so apologies if that wasn't clear, but it's $115 million. So it's a $5 million higher than what we've seen in 2025. And that should be a number that should be relatively steady going forward. Operator: At this time, there are no further questions. I will now turn the call back to Oliver Graham for additional or closing remarks. Oliver Graham: Thanks, [ Jennifer. ] So just to recap, in 2025, we reported global shipments growth of over 3% and adjusted EBITDA growth of 10%. We finished the year strongly as fourth quarter adjusted EBITDA exceeded our guidance with both segments performing ahead of our expectations. We're looking forward to a good performance again in 2026 and are guiding for adjusted EBITDA in the range of $750 million to $775 million. Thanks for your time today, and we look forward to talking to you again at our Q1 results. Operator: This does conclude today's conference. We thank you for your participation.
Operator: Good morning, everyone, and thank you for participating in today's conference call to discuss Climb Global Solutions' financial results for the fourth quarter and full year ended December 31, 2025. Joining us today are Climb's CEO, Mr. Dale Foster; the company's CFO, Mr. Matthew Sullivan; and the company's Investor Relations adviser, Mr. Sean Mansouri with Elevate IR. By now, everyone should have access to the fourth quarter and full year 2025 earnings press release, which was issued yesterday afternoon and approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of Climb Global Solutions' website at www.climbglobalsolutions.com. This call will also be available for webcast replay on the company's website. [Operator Instructions] I'd now like to turn the call over to Mr. Mansouri for introductory comments. Sean Mansouri: Thank you. Before I introduce Dale, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. Our presentation also includes certain key operational metrics and non-GAAP financial measures, including gross billings, adjusted EBITDA, adjusted net income and EPS and effective margin as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures, in accordance with SEC rules. I'd now like to turn the call over to Climb's CEO, Dale Foster. Dale Foster: Thank you, Sean, and good morning, everyone. 2025 was another exceptional year for Climb as we generated record results across all key financial metrics. These achievements reflect the continued execution of our teams that are driving organic growth by strengthening relationships with existing vendors and customers, selectively adding innovative technologies to our line card and while driving and delivering operational efficiencies throughout our business. In the fourth quarter alone, we evaluated nearly 100 potential vendor relationships and signed agreements with only 2 of them. Notably, in December, we launched our partnership with Fortinet, a global leader in cybersecurity and securing secure network solutions serving enterprises. They also serve service providers, government customers worldwide. Fortinet is quickly becoming a primary onboarding focus, and we expect to ramp them up quickly, and we'll become a meaningful contributor to both their business and client business. We look forward to building a long-term mutual beneficial relationship with Fortinet and their channel while delivering incremental value to our reseller network. While we focused most of our efforts in Q4 on onboarding Fortinet, there were other positive achievements from the alliance perspective. The fourth quarter of 2025 was only the second full quarter since we kicked off our relationship with Darktrace. As a reminder, Darktrace is a cybersecurity company that uses self-learning AI to detect, investigate and respond to cyber threats in real time across the entire organization's digital infrastructure. In Q4, Climb had 70 partners transact over $13 million in Darktrace product offerings with significantly more quoted pipeline ahead of us. We continue to work closely with the Darktrace team to expand partner enablement and drive broader adoption across our channel, positioning the relationship for sustained long-term growth. In addition to strengthening our vendor portfolio, earlier this week, we announced the acquisition of interworks.cloud, a Greece-based specialist cloud distributor serving the Southeastern Europe reseller market, including Greece, Malta, Cyprus and Bulgaria and more. Interworks brings an established regional platform with over 600 cloud resellers and managed service providers, along with a curated vendor portfolio that includes Acronis, Google Workspace, AnyDesk, Blackwall and most notably, Microsoft. I've had the pleasure of working alongside the Interworks team for nearly a decade now. And over that time, we've developed a strong alignment in our culture, strategy and partner focus. They bring an experienced management team, a well-established Microsoft CSP business and a multi-country footprint and deep expertise in cloud marketplace and MSP-focused distribution. Together, these capabilities enhance our ability to drive cross-sell opportunities, deepen our engagement with our vendors and reseller partners and further position Climb as a distributor of choice across the Southeastern Europe region. A critical component of this transaction is that we are bringing the full Interworks organization into Climb, and this team will become part of our overall EMEA go-to-market structure. Maintaining the strength of their local leadership and partner relationships was a priority for us, and we believe continuity at the operational level will be essential in sustaining momentum in the region. At the same time, by integrating Interworks into our broader infrastructure, we can provide additional resources, scale, strategic investment to accelerate their growth. We expect the transaction to be immediately accretive to our earnings and adjusted EBITDA and look forward to the unlocking synergies and cross-selling opportunities as we integrate Interworks into our global platform in the coming months. Looking ahead, we remain focused on accelerating organic growth. And at the same time, we have our internal development team building generative AI solutions to make our entire team more efficient. We will also continue to pursue accretive M&A opportunities that can strengthen our vendor portfolio and expand our geographic footprint. We believe these initiatives, coupled with our disciplined execution and strong balance sheet, will enable us to deliver on our organic and inorganic growth objectives in 2026. With that, I will turn the call over to our CFO, Matt Sullivan, and he will take you through the financial results. Matt? Matthew Sullivan: Thank you, Dale, and good morning, everyone. A quick reminder as we review the financial results for our fourth quarter, all comparisons and variance commentary refer to the prior year quarter unless otherwise specified. As reported in our earnings press release, gross billings increased 3% to $625.4 million compared to $605 million in the year ago quarter. Distribution segment gross billings increased 4% to $602.3 million, and Solutions segment gross billings remained flat at $23.1 million. Net sales in the fourth quarter of 2025 increased 20% to $193.8 million compared to $161.8 million, which primarily reflects organic growth from new and existing vendors. As we've mentioned in the past, the calculation of net sales is influenced by product mix and the respective adjustment to convert gross billings to net sales for financial reporting purposes under U.S. GAAP. In the fourth quarter, we had an increase in sales of products that were recognized on a gross basis and therefore, leads to a smaller adjustment from gross billings to net sales. Gross profit in the fourth quarter was $29.8 million compared to $31.2 million. The decrease was primarily driven by a large vendor transaction in the year-ago period that carried a higher-than-average margin profile. Selling, general and administrative expenses in the fourth quarter of 2025 were $18.2 million compared to $17.1 million in the year-ago period. SG&A as a percentage of gross billings was 2.9% for the fourth quarter of 2025 compared to 2.8% in the year-ago period. Net income in the fourth quarter of 2025 remained flat at $7 million or $1.52 per diluted share compared to the prior year period. Adjusted net income was $7 million or $1.53 per diluted share compared to $10.3 million or $2.26 per diluted share for the year-ago period. Adjusted EBITDA in the fourth quarter of 2025 was $13 million compared to $16.1 million for the same period in 2024. The decrease was primarily driven by a large vendor transaction in the year-ago period that carried a higher flow-through to adjusted EBITDA as sales compensation expense related to this transaction was paid through a contingent earn-out. And that was included in the change in fair value of acquisition contingent consideration add back with an adjusted EBITDA in the year-ago period. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, was 43.6% compared to 51.5% for the same period in 2024. Turning to our balance sheet. Cash and cash equivalents were $36.6 million as of December 31, 2025 compared to $29.8 million on December 31, 2024, while working capital increased by $27.7 million during this period. The increase was primarily attributed to the timing of receivable collections and payables. As of December 31, we had $200,000 of outstanding debt with no borrowings outstanding under our $50 million revolving credit facility. Consistent with our capital allocation priorities, the Board has determined to suspend our quarterly cash dividend beginning in the first quarter of 2026. This decision allows us to retain additional capital to support organic growth initiatives and strategic acquisitions while further strengthening our financial flexibility. Based on the company's strong return on equity, the company plans to reinvest the capital for higher growth initiatives. Looking ahead, our strong liquidity position provides us with the flexibility to pursue both organic and inorganic growth opportunities while expanding our relationships with vendors and customers worldwide. We will continue to be active on the M&A front as we evaluate accretive targets that can strengthen our vendor profile and expand our geographic footprint. With a disciplined approach to expansion and a continued focus on execution, we believe we are well positioned to deliver another year of growth and enhance profitability in 2026. Dale, back to you. Dale Foster: Yes. Thanks, Matt. And before we open this up for questions, I'd like to address a couple of points on -- some of them that just come up over the last couple of days when everybody has seen some of the AI disruption in the market. First, on the dividend, a thoughtful decision made by our Board and one that I fully support. As we evaluate the opportunities in front of us, we believe the best way to drive long-term shareholder value at this stage is through disciplined capital allocation and strategic reinvestments in the business. We operate in an ecosystem where many of our customers and vendors are backed by private equity firms, which has provided us kind of a unique perspective on how successful operators deploy capital and accelerate growth and also enhance the returns with their portfolio companies. We intend to take a similar tactic at Climb. And candidly, we've already begun to do so in the way of our now 6 acquisitions in the last 6 years with the addition of interworks.cloud. With a strong balance sheet and liquidity position, our priority is to allocate capital toward initiatives that improve operational efficiency and strengthen our competitive position. That includes continuing to streamline processes, leveraging AI and automation tools where appropriate, utilizing prudent leverage when enhances our returns and pursuing strategic acquisitions in our ecosystem that align with our go-to-market strategy. And we believe all this will create long-term shareholder value for our shareholders. The second point, which is over the last couple of days on the AI disruption, these are disruption of AI engines and large language models, large language models or LLMs that has come into our market and more specific, how they going to interface with or take out SaaS vendors we currently are carrying or prospecting. So I've been around a long time in this business and remember a similar talk track about around the cloud. I had to do a look up. AWS announced in 2006 that cloud was open for business. That was 20 years ago. And just 20 years later, and it was just last year that cloud workloads that were workloads and storage in the cloud just passed the 50% threshold versus on-prem or private clouds or private on-prem environments. So the real-world environment today for cloud is really a hybrid one. Do I believe or yes, that AI will move much faster than 20 years for an adoption rate? For sure, that's going to happen. But we still believe it's going to be more of a hybrid environment, just like cloud is. I think it's 90% hybrid right now. So the AI environment will be a hybrid one. While we are very small and we're a very nimble company in our market, we are still connecting technology builders with users. We can pivot quickly, as we have done over these last 8 years. As the market moves, we will move and move at that same speed. And whether we have a stand-alone AI systems, AI agents, hybrid SaaS that's out there or Platform-as-a-Service, we will be selling emerging technology products that solve real-world problems. And regardless of the computing environment, we believe we will have a place as that connector of technology. And this concludes our remarks, and we'll take it to the operator for questions. Operator: [Operator Instructions] And we'll take our first question from Keith Housum with Northcoast Research. Keith Housum: Congratulations on the acquisition here. Just looking at that large acquisition that happened in the prior year, can you guys just give any scope in terms of how big that was in terms of we want to kind of think about what the year-over-year performance was without that? Any way that we can kind of scale it out? Matthew Sullivan: Yes. So we talked a bit about it last quarter. And thanks, Keith, for joining and calling and dialing in. When you remove that large transaction in Q4 of last year, our recurring and organic growth still was in the high teens for Q4 compared to Q4 of last year. Keith Housum: Great. And that's both on a gross billings as well as EBITDA basis? Matthew Sullivan: Correct. Yes. Keith Housum: Great. Appreciate that. And then you guys, I think it was early last year, announced the departure of Citrix. And can you talk a little bit about the impact that had in the quarter? Have you guys been able to completely offset that loss with other vendors? Dale Foster: Yes, I'll take that quickly. So we still had input from Citrix, and we still have it through 2029. It's some residual stuff because of the nature of some of the agreements that go out with our customers that's a year-over-year recurring. But -- so we had impact -- not as impactful in Q1 of 2025. But then the rest of the year, we looked at it as a $50 million to $60 million hole. And if you -- I was at our SKO over in the U.K., and our team still with that big hole, grew at 3%. So they made that entire $60 million up in the last 3 quarters, which is a testament to, number one, picking up new vendors. They picked up vendors that we have on the U.S. side, like I said. And we've continued to say that we're signing global contracts now. So it's the choice of the sales teams in their regions of what they want to sell. And some of them are pushed on them, other ones are that they're prospecting on their own. So the team did an incredible job. I mean, we kept -- and like I love to say, Keith, is that we're salespeople, we'll take the next product and take it out to market. And they filled that pretty quickly and expanded some relationships with vendors that actually compete with Citrix, and we took some of that over back that we lost. Keith Housum: Great. Impressive. I appreciate that. Turning over to the Interworks acquisition here, the 86% growth in EBITDA year-over-year. How should we think about going forward, like the go-forward run rate or the starting point. I mean, was there anything unique in that 86%? Or is that roughly $1 million in EBITDA a good starting point for those guys? Dale Foster: Yes. That's a good starting point for them. But it's -- there's a couple of things that we didn't get into detail on the call. But -- so Microsoft came up and said, "Hey, we're going to consolidate our distribution worldwide," and they set a threshold. So there was a lot of scrambling over the last 14 months that said, if you don't meet this threshold, you'll lose your distribution agreement with Microsoft. And both us and interworks.cloud were in that same position on our client side. And we want to keep that relationship because we believe Microsoft is a Tier 1, but it's also where people want to go. And so there's 2 reasons. Number one, we were to combine as a company, we get to that $30 million threshold with Microsoft. Number two, we are moving into a cloud environment, and we've talked about it for a while. And I'm going to have our CPC event with all of our top customers and vendors next week. But I'm going to have a slide just on our failures. And one of the failures we've had is we haven't been able to get to our 2.0 of expedition of our cloud marketplace or platform. Well, Interworks is already there. They're transacting in a very eloquent way with their customers, almost like a self-service. And they do a lot with MSPs, hybrid VARs that we do this as well, but not as quickly as they do. So it's going to be a learning curve in the DNA transfer between the 2 companies. Their parent company that we acquired them from is called Infiterra, which is the platform that we both use. And actually, all of our locations use that platform. So we see more and more of our vendors going on to the platform and marketplace. And the Greek team will help us and educate our teams on the U.S. side and the Europe side. Keith Housum: Great. I appreciate that. And then I guess final question for me before I turn it over. The working capital increase and the timing of collections, has that already been worked through? Or how should we think about that going forward? Matthew Sullivan: Yes. So that's a normal -- it's a usual timing difference. So with the large transaction at the end of last year, those receivables and payables have already been collected during 2025, and then it's been worked through here in early 2026. Operator: We'll take our next question from Vincent Colicchio with Barrington Research. Vincent Colicchio: Yes, Dale, congrats on beating the expectations this quarter. Was your growth broad-based across your top 20 on an organic basis? And were there any lumpy deals in the quarter? Dale Foster: So thanks, Vince. Good to talk to you. So no lumpy deals in the quarter like we had before 2024 and Q4, but it was across our vendors. The ones I talked about, Darktrace continues to rise up. We talked about our top 2 vendors, Sophos and SolarWinds. SolarWinds, I think we talked about in the last release, they were acquired by Turn Capital or Turn/River. And so there was some disruption as they went through their pricing model changes, but we actually finished really strong with SolarWinds as they've gotten through some of their pricing structure and their go-to-market. But other than that, it's the top 20 make that biggest impact, and it's been very stable. Vincent Colicchio: And has the revenue momentum that you've seen in the quarter carried through in '26? Dale Foster: You're always going to see Q4, and it's always been this way is always our biggest quarter because people going back to -- we have our reoccurring revenue with our annual subscription. So Q4 has always been large, so it will continue to be large because that's when the renewals come up. We do the Douglas Stewart acquisition, and you'll see a rebranding kick off next week for all the Climb stuff on the [ SLED ] and education side. But they typically have a down quarter in Q1 that we experienced last year because it's just flat and then all the buying picks up for that. But other than that, it's pretty cyclical like it has been for the last 5, 6 years. Vincent Colicchio: On the AI side, have you identified use cases for internal use? Are you at that stage? Dale Foster: We have. So Vishal, our new CIO, has been on board now for 7, 8 months. He is the most popular person in our company because everybody is looking to him to solve efficiency issues, right? And we've -- he is front and center at our sales kickoffs. So we have a tech guy kicking off, and people are asking. And it becomes quite the entertainment, having our CIO be the center of attention, which is great because we're just solving so many internal things that we need to work on. We went live with our ERP almost 2 years ago. And now it's how to make that more efficient, what AI tools. And if you look at Vishal's background, right, so he came from WWT, which is a $30 billion reseller, one of our customers, one we have great relationships with. But he's already gone through a lot of this because of the they have the dollars to really spend on this and adopt it early. So he's really running kind of the same plan that he had at WWT. So he sees what needs to be done, and it's how fast we can implement it. So we've done a couple of things. We have a bigger implementation and development team inside of Climb. We have outsourced some of the smaller connector products, projects that we have, whether it's EDI or XML or APIs. So everything is moving faster. And he's identified so many different efficiencies because we still -- and what I'd like to say is we're the fastest of the turtles. So if you look at distribution has been done what we've been doing for 30 years. What we're doing is moving a license key from a vendor all the way to a user. And our goal is to do that much faster, but we're still doing things that we did 15, 20 years ago. So Vishal is saying, hey, we can do this much quicker and without the expense of the labor that we have right now. Vincent Colicchio: What is the time line for when Interworks can provide cross-selling synergies? Dale Foster: So our teams -- because we have the Microsoft distribution agreement already and Microsoft is well aware of ahead of time with confidentiality of the agreements, we have it for all the EU countries. So we are going to -- if you take a look at it just from just a mental geographic look, here we have the U.K. and Ireland that we're very strong in. And now we have Southeastern -- or Southwestern Europe, Southeastern Europe. And between those 2, we have 20 countries in between there that we're going to attack with that Microsoft agreement and then all of the cottage industry products that go with that. So Interworks, number one, will be onboarding vendors that they see as a great fit that we have because we have a big robust portfolio of vendors compared to them. And then on their side, they already have in the cloud on the marketplace vendors that are transacting that we will take advantage of. So you'll see those integrate very quickly. And the fact that we're already using the same platform, it's really getting those 2 interconnected so that the teams see it pretty seamless, and so do our customers. Vincent Colicchio: And last question for me. In your conversations with resellers, what is the pulse on the market in terms of the health of the market versus the prior quarter? Dale Foster: Yes, I would be better to answer that next week as we have an open session with our resellers. But as far as -- and I'll take this from the vendor standpoint first, and that is, Vince, there are so many vendors coming at us, right? We have to say no. We have to say no because there's that many, and we have to keep moving our threshold up as far as what can we do in the first 18 months. It used to be $2 million or $3 million. Now is it $15 million that we can do in the first 18 months before we even sign them? What is the real go-to market? Does it fit ours? So we're just asking a lot more questions because we know when Charles, our Chief Alliance Officer, says yes, that's when all the man hours kick in for us. So we want to make sure that we have a good base to start with before we say yes to that vendor to onboard them. On the reseller side, we haven't seen slowdown. We've seen some consolidation between companies buying each other up, which is a natural occurrence for us. But for us, we're typically transacting with both parties anyway. So it's just a timing thing. Operator: We'll take our next question from Bill Dezellem with Tieton Capital. William Dezellem: Would you please walk through the size of the Fortinet relationship and what the potential is for that to move the needle for Climb? Dale Foster: Yes. So Bill, thanks. So they're -- take a look at Fortinet, they're on the NASDAQ, right? A great company. We -- the relationship started from the top. It usually starts in the middle and then moves up, but this one started at the top with the C-level. They have some of the bigger distributors that are out there. They have 2 of the largest distributors in the world. So why do they need Climb? It's really for what we do for companies that are just getting into the market, and that is to fill in a lot of the gaps and being that high-touch distributor that's going into a wider market than just Tier 1 or Fortune 500 companies. So if you look at what their overall sales, and I think they break them down, the -- it's about a $2.5 billion addressable market in the U.S. that they're already selling into. And who are they competing against, right? If you look up the stack, they're competing with Palo Alto, Juniper and Cisco. That's their 3 big above them. They're considered #4. And then below them -- we carry some of those lines below them, but they said, wait a second, we have a targeted distributor. They have field sellers. And I think this would be the most important thing to take away, and that is when we're talking to their executives, they said, wait a second. You mean we can fly into a region because we have regional salespeople? And we can -- and your sales reps will take us into 3 new resellers that we've never met before. I'm like, that's what they do every day with vendors. They don't get that from Tier 1 or the top distributors because they can't take them in there when they're selling Cisco, Juniper and Palo Alto and those customers because they're like, hey, we're displacing one of our other vendors. We don't have that issue at all. We don't have a really cross-competing product with Fortinet. We have a bunch of smaller ones, but nothing that goes as wide as Fortinet goes. And if you look at what they do, I mean, they -- Fortinet goes all the way from firewall to cameras, right? I mean, they are such engineering-type company, so it's a good fit for us. And the acceptance -- so look at $2.5 billion, 10% of that is something that we're going after in the next 18 months, and we think we can get there. And I think Fortinet will be our top 3 vendor this time next year. William Dezellem: So Dale, if I do that math, 10% of $2.5 billion, are you saying that you're thinking that this could lead to $250 million of gross billings for you? And I guess it would be '27 if we look out a year from now? Dale Foster: Yes, I think so. I think it's 18 months that we'll get on that run rate for them. It's just a good relationship. The Fortinet teams -- the first thing that really happens -- and when I say this magic happens, it's when our field sellers get with their field sellers and go into new accounts and give their value pitch. It only takes a couple of times to do that, and then our teams take it from there, and they don't have to do a 4-legged call. It's them delivering the Fortinet pitch as they get familiar with it. So we're getting closer and closer to them. They've been just a great partner. They feel like a small company touch to us, which is refreshing. William Dezellem: That's helpful. And then -- and congratulations, by the way. That's a great win. Actually, let me take that one step further. Do you see other companies that are in a similar situation where all of a sudden, someone in their C-suite is saying the same thing that you heard from the Fortinet leaders? Dale Foster: I feel like you're reading my e-mail, but yes, we were getting many inbound from companies that are much, much larger. And I mean, I'll bring up CrowdStrike. We talked to them about 2 years ago, we were in a competitive with some of the other distributors. They decided to go a different direction based on some of the -- just some of the support that some of these logistics would give them or potentially say that they would give them. But if I go back 6 years, Bill, we were out there signing companies that would fog and mirror and just go after them because we needed to have more products for our sales teams to sell. Now the focus is curating the ones and the relationships that we currently have or almost ready to sign to make sure that they're really the right ones for us. But yes, are we getting larger companies and larger at bats with them without having to prospect them? For sure. There's some multi -- in the $500 million to $600 million range of companies we're talking to on a regular basis. And a lot of times, we say no because they're not ready for us or we're not ready for them. It could be a connection through systems that we don't think that we can -- we'll burn more cycles than it's worth, but we are getting a lot of those at bats. And the other thing is we say we have a limited line card, but it keeps sneaking up on us and then we push our vendors over to Climb Elevate just to transact. And I want to continue to limit our line card. We say it's 70. I want it to be 50, but really, it's 100 right now because we haven't pushed them over our Climb Elevate where we'll still transact, but we -- it just burn cycles, and we want to focus our sales and marketing and service cycles on our top 50. William Dezellem: And a couple more questions. Let me shift to Citrix. The implication of the way that, that change took place last year is that the comparison that you all are going to have in Q2, Q3 and Q4 of this year could lead to very strong comps given that you last year simply had to fill in that hole, and now you're going to be building off of that. Is that the right way to think about that? Dale Foster: It is. I guess it feels like it's already been done with us, Bill, because we've been there, done there, forgot about it, right? We have already filled it in with other vendors. We know what our run rates are. And that's the nice thing about this recurring revenue model is we know that 80% to 90% of what we sold last year, that as long as we're doing a good job and the vendor is still producing a good product and good updates, that we're going to get that renewal. I mean, the goal is to have the renewal rate over 100%, which means they're picking up more license and seats going forward. But yes, we don't -- we really haven't thought about it that way. We look at just what our run rate is, what is our piece with Citrix. We've already forgot about that. It's been in the news quite a bit just on the different [ tax ] that Citrix has made. Their last one was kind of funny that they said that they are truly a channel company, even though they cut a big chunk of the channel out a year ago. I think they thought people forgot about it. But we've replaced it with -- we have 2 or 3 different lines. We're getting ready to sign a line that goes back to our Citrix customers. We were replacing with some of the Microsoft business, which is a competitor to Citrix. And same thing with Parallels, which is another one of our vendors that we replaced that hole with. William Dezellem: Great. And then one final question, please. I think that yesterday, VAST and Supermicro signed or announced a deal. What are the implications, if any, for -- that with you all? Dale Foster: Yes. And so VAST Data, they have their user conference. We have people there in Salt Lake this week of our team members, both from the European side, which is a bigger number, and then from the U.S. side. And I think it's a good thing. I assume they'll use the conference to announce that. At. But if you -- I think it's only good, right? VAST says they're a software company, but there's still -- it's a big piece of hardware that goes in the distributors, or it's the OEMs like the Supermicro. And we have a relationship with Supermicro we've had for the last 10 years. It's a good thing because right now, a lot of their builds are being done by a company called Telrad that Arrow bought. So that's the build. So what does it do? It just makes it faster because right now, VAST is dependent on this hardware GPUs, who has the GPUs, who has the mettle to put their software on top of to run. So I think it will actually speed up the actual delivery cycle of all these big AI engines that need fast data storage because that's what VAST does. I mean, they are -- it's about how fast they can deliver data up to an AI engine. So I think it's only a good thing. And Supermicro has some of the best products out there. I mean, that's how most of the -- if everybody remembers the HCI, the compute space with Nutanix and Rubrik, that was all based on Supermicro for the longest time. So it's just a good alternative to what they currently had. So it's the #2, and I think it will be good. Operator: We'll take our next question from [ Howard Root ], who is a private investor. Howard, please check the mute function on your device. Unknown Attendee: Congratulations on a nice conclusion to the year. I'll try to be brief. I got two questions, one on M&A. It looks like the Interworks was kind of right within the middle of your playbook. It's a territory expansion. You've got synergies, you knew them very well. And then it's at 9.4x adjusted EBITDA. Is that -- how do you see that fitting in? Is that the way to look at it? Is that a little expensive? What do you see as the market out there for acquisitions going forward? Has it come down based on market turmoil? Where are you right now? Dale Foster: So Bill -- sorry, Bill. Sorry, Howard. So Howard, here's how we kind of think about it, and we go back to our early days of acquisitions when we were trading in that 7 to 9 range, and that's kind of where we look to start. And it depends on 4 or 5 different things. And with these guys, number one, we knew them for a long time. We know their parent company very well. So it's the comfort factor that way, plus the Microsoft piece of it as far as we want, like, why do you need really, any Microsoft. It's still just a great cornerstone to have in your platform marketplace and in your company because you can add so many products around that to support it. But the other piece of it is what is their margin profile? And their margin profile compared to us is double what we have in the U.S. So will we pay a little bit more than that 8? And I always -- I don't know why. I always say, hey, we're going to start at 8 and then what are the positives and negatives. If you look back to the DSS transaction, why was that a less multiple? Real simple. I mean, they were all focused on Adobe. So if you lose Adobe, there's just more risk involved in that. So that's how that negotiation happened. On this side, their margins are higher. They're in a territory that we are not in and not even selling into. And the nice thing about it, they're in a territory that's not that competitive that is starving for new vendors to get into. So that's how the negotiations went to get to that. But I'm still looking in that same range. We started at 8, and we'll go up or down from there. Unknown Attendee: So just kind of looking on that, following up on that. To me, the only reason to eliminate the dividend is really to grow a pile to do bigger acquisitions. This is relatively smaller compared to like, Douglas Stewart was bigger, and that was 18 months ago. I kind of look at -- is that a slow pace for you over these 18 months? I mean, it seems that you want to do at least 1 or 2 a year. And then is that the way you look at the dividend? Because to cut the dividend to spend money internally where you're generating plenty of cash for your internal projects, it has to be using that cash. And we hate to see it pile up in treasury, but really to apply it to buy synergistic targets, and you must be seeing plenty of them out there maybe larger than the Interworks deal? Dale Foster: Without giving you specifics, Howard, you're spot on. You're spot on. There's a lot of deals coming at us. We are going to use the capital. I mean, we talked that we are very CapEx-light, and we are going to accelerate our acquisition interfaces. I have -- if you look at my travel, I've been in Western Europe more than I have been before because there's that many targets, there's that many ones coming at us. The roll-up that we have talked about that happened in the U.S. from 2006 to 2017 is happening in Europe, and we want to be part of it. Here's the good thing for Climb. You have these 3 massive distributors we talk about all the time. They're $50 billion plus. The targets that we're looking at are so insignificant for them unless they were a real strategic reason. We're not competing with them. We're competing with other strategics that are similar in size, which is only 2 or 3 of them over there, or they're doing a roll-up between the 2 companies to get larger, to make more of a significant impact or could be a regional expansion. So right now, I can't tell you how many I've talked to, but how many that we're in discussions with is a lot more than a handful. So yes, the dividend will be going toward the M&A side of things that we think like we always say, is it going to be accretive to us? Is it going to be an expansion? Is it going to be a vendor acquisition that we can't get or it's going to take too long to get that vendor signed that we think we can take to other regions? But it's all those things lined up, it has not changed since we started this. Unknown Attendee: And the pace of acquisitions, you'd expect to do 1 or 2 in 2026? Dale Foster: I'm -- yes. Unknown Attendee: Okay. All right. Well, yes, I don't want to make you uncomfortable answering stuff on that. But it just seems that we had 18 months since the last one, and that was not because of lack of effort, but just -- it didn't come together. And maybe now this is the breaking, and you get 3 here in the next year instead of 0. Second question for me on profitability. And here, congratulations. You had a really tough comparable in Q4 and having to deal with that. So I'll kind of ignore that a little bit because of the large vendor transaction you had that affected billings and your gross profit. But if you look at it over a year, your gross billings were up 18%. Your gross profit was up a little bit less than that. Your margin on gross billings was -- slipped below 5%. And your SG&A, because of the Douglas Stewart, kind of up 20%. So your income from operations only went up about 4% for the year. And quarterly, your leverage is kind of slipping a little bit. And where -- can you give us a quick how that happened and where you see that go from here? And does the Fortinet and Darktrace additions change your profile? And it looks like Interworks kind of helps you a little bit on that financial profile as well. But do you see that reverting back up where your gross profit on gross billings is above 5% and your SG&A rises less than the increase in gross billings in the year? Dale Foster: So Howard, we're holding in that -- just look at that 5% range. And yes, we slipped it in a quarter. There are some other things in the background that have been happening that I won't get into some of that stuff. But I can tell you that the focus is -- and I wish I could share some of the slides I shared with our Board, but it's showing how much manual stuff that we talk -- we deal with in the company. And like I said on the earnings call, we're doing the same thing that we did 30 years ago in distribution. And Vishal is helping us change that mindset. The first thing when the Board agreed to go into a new ERP system was the first prime mover to get more efficient. The second one is taking that ERP system and the associate applications with connectors and taking just a lot of cost out of the business, right? We are touching way too many, and I'll just give you some inside baseball. We do 12 quotes and perform 12 quotes for about every order that we get. The first move we had about 4 years ago was when we moved our average sale price per order up from $200 to $1,500. So we're doing the same work. We're just seeing the quote size is 7x bigger. So that's number one. It's the efficiency that we think that we can get out of our systems to keep the same labor force that we have today and be 1.5x the size. And that is the real goal. And back to your -- Howard, that you love to point out, that [ 532 ]. And this is what I talked about our SKOs, both in the U.S. and Europe and then saying how can I move my 3 to 2.5 and my 2 to 2.5, right, so that I can split the profit and the cost of the SG&A to a 50-50, which I think is our goal and has been our goal for the last couple of years. But it is going to be about efficiencies. Of course, AI is heavy into our company right now doing that. But we look at it as a generative AI, which just makes everybody more efficient so we can expand and do more with our top vendors. Operator: At this time, there are no further questions in the queue. I will now turn the meeting back over to Mr. Dale Foster. Dale Foster: Thank you to our shareholders, Board and all the Climb team members. And I just want to welcome our new Greek team on board. We had our first kickoff and town hall yesterday with the team. Look forward to everybody being able to meet each other like I have over the last couple of years. And with that, we'll conclude the call. Thank you. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Good day, and welcome to the Integra LifeSciences Fourth Quarter 2025 Financial Results. [Operator Instructions] This call may be recorded. I would now like to turn the call over to Chris Ward, Senior Director of Investor Relations. Please go ahead. Christopher Ward: Good morning, and thank you for joining the Integra LifeSciences Fourth Quarter 2025 Earnings Conference Call. With me on the call are Mojdeh Poul, President and Chief Executive Officer; and Lea Knight, Chief Financial Officer. Earlier this morning, we issued a press release announcing our fourth quarter 2025 financial results. The release and corresponding earnings presentation, which we will reference during the call, are available at integralife.com under Investors, Events and Presentations in the following fourth quarter 2025 earnings call presentation. Before we begin, I want to remind you that many of the statements made during this call may be considered forward-looking. Factors that could cause actual results to differ materially are discussed in the company's Exchange Act reports that are filed with the SEC and in the release. Also in our prepared remarks, we will reference reported and organic revenue growth. Organic revenue growth excludes the effects of foreign currency, acquisitions and divestitures. Unless otherwise stated, all disaggregated and franchise level revenue growth rates are based on organic performance. Lastly, in our comments today, we will reference certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures can be found in today's press release, which is an exhibit to Integra's current report on Form 8-K filed today with the SEC. And with that, I will now turn the call over to Mojdeh. Mojdeh Poul: Good morning, everyone, and thank you for joining us for our Fourth Quarter 2025 Earnings Call. Before I review our 2025 performance and outline our priorities for 2026, I want to briefly acknowledge the recent Supreme Court decision and the administration's announcement regarding new Section 122 tariffs. While these are meaningful developments, there remains substantial uncertainty around the implementation and timing. As a result, our 2026 full year and first quarter guidance do not incorporate these tariff changes. We are actively monitoring the situation, and Lea will provide more details and context in her remarks. In the fourth quarter, we advanced our transformation, continued to deliver for our customers and patients and met our financial commitments with revenue of $435 million and adjusted earnings per share of $0.83, both above the midpoint of our guidance range. This performance builds on a year of meaningful operational and strategic progress. During the year, we further strengthened our quality management system, advanced our compliance master plan and progressed execution of our risk-based remediation plan while maintaining constructive engagement with the FDA on our warning letter commitments and routine inspections. We also improved supply reliability, enhanced our execution capabilities and delivered significant outcomes in key supply chain resiliency efforts. Additionally, we advanced our in China for China strategy, completing submission of our initial regulatory requirements. These accomplishments supported by our portfolio prioritization and disciplined capital allocation are reinforcing the foundation for future growth and innovation. I want to thank our employees for their significant contributions throughout 2025. Their efforts and steadfast focus on our purpose and our customers have been instrumental in solidifying our foundation and positioning us well for the opportunities ahead. Throughout 2025, we took several important steps to strengthen our company. We welcomed 6 new leaders to our executive leadership team, adding depth and capabilities that collectively represent decades of global med tech experience, supporting our focus on quality, execution and long-term growth. We improved our quality and manufacturing organizations and established operating mechanisms that are driving disciplined execution. We created a transformation and program management office that is focusing the organization on our most important priorities and driving greater accountability across the company. We also launched a supply chain control tower, providing daily visibility into key operational metrics and performance across our global network. These mechanisms are already translating into improved operational performance. Our manufacturing resiliency efforts are delivering meaningful yield and supply improvements in Integra Skin and in rebuilding safety stock across critical product lines. We also completed the early relaunch of PriMatrix and Durepair through a dual sourcing strategy with strong reception from our customers. In parallel, we continued our investment and progress in innovation and clinical evidence. We launched the MAYFIELD Ghost in the U.S. and received an expanded indication for CUSA Clarity in cardiac surgery. We also advanced key clinical evidence programs in support of our wound care portfolio growth and are seeing a meaningful early start in the AERA pediatric registry part of our ENT business. As part of the next phase of our transformation, we have put in place a new operating model to reduce complexity and improve efficiency, alignment and accountability. Some of the changes associated with the implementation of this new model have impacted our team members. We care deeply about our people and do not take these decisions lightly. These changes are necessary to deliver consistently for our customers and their patients while ensuring the long-term growth, profitability and success of our company. We remain disciplined in balancing the investments required to strengthen our foundation with improved profitability and cash flow, enabling us to reduce our balance sheet leverage in 2026. If you turn to Slide 5, you'll see how our long-term value creation model is defined by 2 parallel reinforcing horizons. As we look to 2026, we are focused on 4 strategic imperatives that guide our priorities, actions and resource allocation. These are delivering best-in-class quality, driving supply chain reliability, accelerating growth and igniting innovation. Delivering quality and supply chain reliability have been and will continue to be the focus of the first horizon of our transformation while accelerating growth and innovation define Horizon 2. Both horizons are critically important for our longer-term sustainable growth, profitability and value creation. Importantly, these 2 horizons are not binary. We are executing priority programs that support both horizons. While Horizon 1 remains focused on strengthening quality, supply chain reliability and execution discipline, we are also selectively investing in targeted growth and innovation initiatives that support our growth acceleration in Horizon 2. We will accelerate growth in Horizon 2 by innovating and expanding category leadership where we have clear differentiation and by investing in opportunities that are aligned with our portfolio prioritization. We will continue to build our new product pipeline, advance clinical evidence and pursue category expansion to drive sustainable growth into the future. A growth priority for us this year is to bring our key products back to the market. We remain on track to have the new Braintree manufacturing facility online by the end of June with equivalent qualification and validation progressing as planned. Once operational, Braintree will support the build-out of the inventory to enable the return of SurgiMend to the market in the fourth quarter of 2026. Further, upon receipt of PMA approvals for both SurgiMend and DuraSorb, we will have a compelling portfolio of biologic and synthetic products that can capture a meaningful share of the large and growing market for implant-based breast reconstruction. We have additional growth opportunities in outpatient wound care following the CMS reimbursement changes that went into effect on January 1 of this year. These changes have created a level and economically rational playing field in the outpatient setting. Our portfolio was already aligned to the new reimbursement levels and along with our strong clinical evidence and presence in hospital-based care, we are now uniquely well positioned to broaden our reach across all sites of care. Lastly, but importantly, impactful innovation and clinical evidence generation remains central to our growth strategy. We are strengthening R&D processes, program management and execution discipline. Portfolio prioritization is directing investments towards a focused set of high-growth, high-margin opportunities where we have a clear right to win. To accelerate innovation with greater focus, speed and impact, we recently added a Chief Technology Officer role to our executive leadership team. Teshtar Elavia joined Integra in February as the Chief Technology Officer and brings us more than 20 years of med tech R&D experience, most recently as Vice President of R&D at Becton Dickinson. Looking ahead, we see continued demand for our products and our future innovations. As we further strengthen our quality management system, supply reliability remains the main driver of performance predictability for us. The progress achieved in 2025 gives us confidence for the year ahead, and we are excited about Integra's long-term growth and value creation prospects. With that, I will now turn the call over to Lea. Lea Knight: Thanks, Mojdeh. We'll begin with our full year financial results, starting with Slide 6. Full year 2025 revenue was $1.635 billion, representing 1.5% growth on a reported basis and a 0.7% organic decline. The full year contribution from the Acclarent acquisition was a key contributor to reported growth while we manage quality remediation work and supply constraints that affected organic growth performance throughout the year. Despite these operational impacts, demand across the portfolio remains strong. For the full year 2025, we delivered double-digit growth in CereLink, MAYFIELD Capital, Aurora, DuraSorb programmable valves and 6 pressure valves. We also achieved above-market growth in DuraGen and Jarit instruments, demonstrating the meaningful value our technologies bring to customers and the effectiveness of our commercial teams. Full year gross margin was 61.9%, down 260 basis points year-over-year, reflecting tariffs, supply pressures and incremental costs associated with our compliance master plan. These same factors weighed on profitability with adjusted EBITDA margin of 19.4%, down 60 basis points and adjusted EPS of $2.23 compared to $2.56 in 2024. Disciplined cost management actions helped mitigate some of the impact on both adjusted EBITDA and adjusted EPS. Cash flow from operations for the full year was $50.4 million. Capital expenditures totaled $81.4 million. During the year, we invested in manufacturing infrastructure to improve supply reliability. We also continued funding 2 major initiatives, construction of the Braintree facility and supporting EU MDR compliance. These projects accounted for about $97 million in cash outlays. As investments in these programs wind down and we see improved working capital and adjusted EBITDA, we expect to see a meaningful improvement in free cash flow beginning in 2026. On Slide 7, I will cover our fourth quarter financial results. Our fourth quarter revenues were $435 million, representing a decrease of 1.7% on a reported basis and an organic decline of 2.5%, reflecting a particularly strong prior year comparison that was factored in our guidance. We saw a $33 million sequential increase in revenue from the third quarter due to improved supply and seasonality. Adjusted EPS for the quarter was $0.83 compared to $0.97 in the prior year, which benefited from lower net interest expense and absence of tariffs and a more favorable adjusted effective tax rate in Q4 2024. Gross margin for the quarter was 61.7%, down 350 basis points from the prior year, reflecting increased costs associated with remediation and our compliance master plan, tariffs and an unfavorable product mix. Adjusted EBITDA margin was 24%, up 30 basis points versus Q4 2024, with the above-name factors impacting gross margins being offset by disciplined cost management. Cash flows from operations totaled $11.8 million in the fourth quarter and capital expenditures were $17.2 million. Turning to Slide 8. We'll take a deeper dive into our CSS revenue highlights for the fourth quarter. Global Neurosurgery delivered 1.4% organic growth, supported by broad demand across the portfolio and strong performance in international. Growth was led by double-digit performance in CereLink, MAYFIELD Capital and Aurora with above-market contributions from BactiSeal, DuraGen and CUSA. Our capital business grew in the low double digits, benefiting from strong pipelines and disciplined commercial execution. Instruments posted low single-digit growth, consistent with market trends. In ENT, revenue grew 2.2%. AERA and TruDi navigated disposables experienced double-digit growth, while MicroFrance ENT instruments saw mid-single-digit gains. However, these positive results were partly offset by continued reimbursement headwinds affecting sinuplasty balloons. International markets remained a meaningful contributor to the CSS business with high single-digit growth led by double-digit performance in China and Canada. Overall demand indicators across our global markets remain strong. Moving to our Tissue Technologies segment on Slide 9. Tissue Technologies revenues were $111.6 million, down 12.8% on both a reported and organic basis compared to the prior year. Fourth quarter sales in our wound reconstruction franchise declined 21.4%, reflecting the previously communicated remediation efforts for MediHoney and a tough comparison with last year's record Integra Skin revenue, which benefited from significant backorder clearance in the fourth quarter of 2024. In private label, sales were up 20.1% year-over-year due in part to improved partner orders and timing. Finally, international sales in Tissue Technologies declined by low double digits, reflecting Integra Skin lapping its strongest revenue quarter last year following backorder clearance and the impact of MediHoney. If you turn to Slide 10, I will provide a brief update on our balance sheet, capital structure and cash flow. During the quarter, operating cash flow was $11.8 million, driven by restructuring costs and an increase in working capital due to revenue collection timing in the period. Free cash flow was negative $5.4 million and free cash flow conversion was minus 8.5% for the quarter. As of December 31, net debt was $1.6 billion, and our consolidated total leverage ratio was 4.5x within our current maximum allowable leverage of 5x. We expect to remain within our allowable leverage through 2026. We expect to see meaningful deleveraging, which will allow us to approach the upper end of our target leverage range of 2.5x to 3.5x by the end of 2026. The company had total liquidity of approximately $516 million, including approximately $264 million in cash and short-term investments, with the remainder available under our revolving credit facility. Turning to Slide 11. I will provide our consolidated revenue and adjusted earnings per share guidance for the first quarter and full year 2026. I will also provide perspective on the treatment of tariffs in our guidance considering the recent Supreme Court ruling and subsequent response from the administration. For the first quarter, we expect revenues to be in the range of $375 million to $390 million, representing reported growth of minus 2% to positive 1.9%. This includes an approximate 140 basis point tailwind from foreign exchange. We expect organic growth to range from minus 3.4% to positive 0.5%. First quarter revenue guidance reflects an approximate $10 million headwind, primarily due to MediHoney and order timing. Turning to the full year 2026. We expect revenues to be in the range of $1.66 billion to $1.7 billion, reflecting modest top line growth expectations. This equates to reported revenue growth of 1.6% to 4.1%, reflecting an approximate 80 basis point foreign exchange tailwind and organic growth of 0.8% to 3.3%. Regarding the quarterly revenue progression through 2026, the sequential step down from the fourth quarter into the first quarter reflects a quarterly cadence that is consistent with what we've experienced in recent years, particularly following a strong fourth quarter growth. We continue to see solid underlying demand across the portfolio, while organic growth is still impacted by supply. As the year progresses, we expect revenue to build supported by normal seasonality, continued share recapture and supply recovery. Turning to adjusted earnings per share and tariff treatment in our guidance. On Friday, the U.S. Supreme Court ruled that the tariffs imposed under the International Emergency Economic Powers Act, IEEPA, were unlawful. For context, the company paid approximately $20 million in tariffs in 2025, of which an estimated $16 million was imposed under IEEPA authority. Following the ruling, the administration announced that it is imposing a new global tariff under Section 122 of the Trade Act. Given the continued uncertainty regarding implementation details, potential exemptions and any subsequent trade actions, the ultimate impact of these measures remains unclear. Accordingly, the company's guidance continues to reflect the tariff assumptions in place prior to developments this past week and does not contemplate the recovery of any amounts paid prior to the Supreme Court ruling. We expect first quarter adjusted earnings per share of $0.37 to $0.45. This includes an approximate $0.07 impact from tariffs. Also worth noting that we expect the benefits of the operating model changes to materialize beginning in the second quarter. For the full year, we expect adjusted earnings per share in the range of $2.30 to $2.40. Full year earnings per share reflect an approximate $0.32 impact of tariffs, offset by the execution of our margin improvement initiatives and ongoing operational improvements, resulting in gross margins that are expected to be approximately flat with the prior year and EBITDA margin improvement of approximately 40 basis points. For your reference, we have included the key assumptions underlying our first quarter and full year guidance as well as key modeling inputs on Slide 12. With that, I will turn the call back to Mojdeh. Mojdeh Poul: Thank you, Lea. In closing, as we look ahead in 2026, our focus remains on continuing to strengthen the foundation of the business. We will continue to advance quality, improve supply reliability and drive consistent execution across the organization. At the same time, we are being deliberate in positioning the company for what comes next. As we return key products to the market, recapture share and sharpen our approach to innovation and portfolio prioritization, we are laying the groundwork to support accelerated growth over time. With strong positions in attractive end markets, our focus in 2026 will remain on delivering quarter-to-quarter consistency while building the foundation for sustainable growth and value creation. With that, operator, please open the lines for questions. Operator: [Operator Instructions] Our first question comes from Ravi Misra with Truist Securities. Ravi Misra: I guess 2 questions for me upfront. First, just on the free cash flow generation and improvement. It's a little bit weaker than I think we thought what we were looking for on kind of the prior expectations. Can you just help tease that out a little bit and what you're kind of contemplating in 2026? And then secondly, just on the Tissue Technologies business, a lot of stuff just going on, still lingering in the air here around CMS changes and how companies are reacting to that. Can you maybe talk about what you're seeing in the field here early on in the first quarter? Lea Knight: So I'll start, and thank you for the question, Ravi. In terms of free cash flow for the quarter, to your point, free cash flow was negative $5 million. A lot of that driven by timing of collections in the period. So that explains about 2/3 of that. The other 1/3 is driven by restructuring costs associated with the transformation and the model changes that Mojdeh referenced in her remarks. Perhaps more importantly, though, as we move into 2026, we do expect to see a much improved cash flow profile. We're going to experience reduced cash outlays associated with some of our key initiatives that I talked about, namely EU MDR compliance along with Braintree. And for reference, to put it in context, for 2026, we're expecting operating cash flow to be north of $200 million, which is about $150 million improvement over 2025 landed, about half of that $150 million is driven by EU MDR and Braintree cost reductions. And then the other half is driven by improved working capital profile, lower CapEx and better EBITDA for the year. Mojdeh Poul: Yes, Ravi, this is Mojdeh, and thanks for your question. To answer your second question, the changes, the reimbursement changes, yes, there are changes that are happening in the market and where they actually are going to land remains to be seen. We're continuing to monitor. But suffice it to say that, again, a reminder, our business is 90% in the acute care setting. And also one thing to keep in mind is the pricing that we have for our products are well within the new reimbursement range. So we do not expect to see any negative impact on our business as a result of the changes. One of the things that we're hearing though from the market, and we're seeing in the market is that the customers are really curious about better understanding the dynamics and the changes and our health economics teams are being asked by some of our major customers to actually sit down and educate them on what the changes are, which is a great opportunity for us because, if anything, the changes are very much aligned with the strategy that we've had for this product category, which is investment in clinical evidence, health economics as well as then being able to represent our full portfolio across the entire sites of care. So obviously, the anticipation is that this market is going to shrink because of the reimbursement pricing significantly being reduced. And who are the players that are going to remain in the market remains to be seen as to how much they can economically absorb because of this significant reduction in the reimbursement rate. Operator: Our next question comes from Robbie Marcus with JPMorgan. K. Gong: This is Allen on for Robbie. Just to start off, I wanted to ask on your assumptions behind growth for both CSS and Tissue Tech, both for the fourth quarter and for the full year, just how you're thinking about that in the context of the full company guide. Lea Knight: Yes, certainly. So from a Q4 standpoint, let me first start by saying how excited we are about the performance of the business in Q4. As I mentioned in my remarks, we delivered a sequential step-up of about $33 million versus Q3, which we believe is evidence of the strength of the underlying demand for our portfolio. Within that, as you look at CSS and Tissue, both delivered revenue that were largely in line with our expectations. CSS delivered a low single-digit growth, which is on top of a very tough comp from the prior year. If you recall, in Q3 of 2024, we experienced a supply interruption. Q4 benefited from strong backorder clearance. And so we were lapping that on that business. And despite that, we saw double-digit growth across parts of the CSS portfolio, namely CereLink, MAYFIELD Capital and Aurora and high single-digit growth in CUSA. So strong performance within and overall, given the comp that we saw versus 2024. In Tissue, similarly, we saw declines in that business in Q4, again, not unanticipated. Once again, we were facing a MediHoney remediation headwind for Q4 of 2025, coupled with Integra Skin facing a very strong comp again. So we saw a strong backorder clearance on Integra Skin in Q4 of 2024 and in '25, we comped that, which describes the performance for tissue. As we move into 2026, I think as we talk about kind of growth expectations across both of those businesses, I think it's important for me to kind of ground you in how we approach guidance for this year. We're very intentionally -- our guide intentionally reflects the demonstrated progress that we've made in terms of the remediation work that we've conducted all year long. It assumes a measured ramp for any products that -- as we return them back to market. And it assumes that supply from products not already in market will be layered in over time. And it, quite frankly, allows for prudence, right, as we continue to improve our capability, improve overall visibility. With that, the growth expectations for both CSS and Tissue are below market, but not driven by demand, definitely a reflection of supply. So for CSS, we're expecting a low -- flat to low single-digit growth on that business. And for Tissue Tech, we're expecting low to mid-single-digit growth during the course of 2026. K. Gong: Got it. And you kind of touched upon my follow-up question there, but just the health of the underlying markets and the demand you're seeing both from a procedure and capital standpoint just to kick off the year, has it remained relatively healthy? And what are you assuming for the balance of the year? Lea Knight: Yes. So to that end, exactly, the growth expectations aren't a reflection of demand. We do continue to see strong demand across both parts of the business as evidence of what we saw in our performance in Q4. And then even on Tissue Tech, as we exited Q4, we continue to see strong momentum on that business specific to Integra Skin that we expect to drive kind of the full year growth expectation that I articulated. Operator: [Operator Instructions] Our next question comes from Vik Chopra with Wells Fargo. Unknown Analyst: This is Namrata on for Vik. I have 2 questions. So first, with Braintree expected to resume mid-2026, and SurgiMend relaunching in Q4. What are some of the key milestones you're focused on to ensure a strong return to market? Lea Knight: Thank you for your question. We remain on track with the operationalization of the Braintree by the end of June of this year. And the milestones that are remaining is mainly process validations that are required before we get to the inventory build. So we remain on track for that. And those are going to continue until the plant is going to get operationalized. Unknown Analyst: That's helpful. I have one other question. So for PriMatrix and Durepair, these have been historically very solid contributors. So what's your outlook for the recovery and ramp in 2026? Lea Knight: So to your point, we relaunched Durepair and PriMatrix early, about 12 months ahead of plan. So we relaunched them in Q4 of 2025. Early read on both are -- they're performing really well in terms of customer reception as we're getting back into market. So we're looking at that and continuing to build on that as we move throughout the year. And as part of our guidance strategy, assuming kind of a measured ramp as we build back, but using the learnings coming from that relaunch as we plan for the SurgiMend relaunch that will happen in Q4 of this year. So excited about the early read and the opportunity to make both of those products a strong contributor to our overall performance this year. Operator: Our next question comes from Travis Steed with BofA Securities. Unknown Analyst: This is Ray on for Travis. Just a follow up on Allen's question. What is the status of the MediHoney remediation efforts? Is it still excluded from the guide? Or has it been baked in for Q1 and 2026? Mojdeh Poul: Yes. Thank you for your question. We do not have -- we haven't accounted for any revenues for MediHoney for this year in our numbers. We have been remediating that product. It's one of those products that the remediation has continued into 2026. We obviously love to have these things go a lot faster, but we're taking our time to do it right. We want to make sure when we bring the product back to the market, we have a safe and quality product for our customers. So we are diligently working on that. If we get to pull the time line up, that would be upside for us. But we don't have anything accounted for it in our guide at this point in 2026. Unknown Analyst: Makes sense. And then just one on the Tissue Technology organic growth. How much did the low double-digit decline internationally contribute to the decline there? I know you mentioned it's partly due to MediHoney, but is there any additional color you can give? Has there been any material change in international market dynamics? And how should we be thinking about China going forward? Lea Knight: Yes. So in terms of the international component of Tissue Tech, not as significant a driver. Our international business is primarily CSS. As you look within the Tissue Tech performance, the decline of 12.8%. Absent MediHoney, the decline would have been about 6%, and that's largely driven by Integra Skin. And again, that driver was the prior year comp, right, strong backorder clearance in Q4 of 2025. Going forward, right, as we exit Q4, we continue to see strong growth on Integra Skin, consistent with the expectations that we have for performance on the brand for the full year. So not concerned about that as we move forward. To your second question about, I think, China and as part of the international portfolio, we saw strong performance in double-digit performance in China and Canada for our international business, and we expect that to continue to be a strong growth contributor in 2026 and as we move forward. Operator: Thank you. That concludes the question-and-answer session, and you may now disconnect. Everyone, have a great day.
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.
Heli Jamsa: Good afternoon, and welcome to Qt Group's Q4 2025 Results Presentation. My name is Heli Jamsa, IR Lead. And with me today are our CEO, Juha Varelius; and Interim CFO, Ann Zetterberg, to present the results. After the presentations, we will have Q&A first in the room. And if there's time left, move on to the questions from the lines. Without further ado, please, Juha, the floor is yours. Juha Varelius: Thank you. Thank you. Good afternoon, everyone. And we have a same agenda, as always. I go a bit through what happened on Q4, and then Ann is going to go through the numbers in more detail. I'll talk a bit about the future outlook and then questions. So the Q4, we had a growth of 12.6% or 18.6% comparable currencies. And of course, IAR acquisition, which we completed -- contributed in this development. And IAR was EUR 8.1 million on Q4, and our organic growth was 6.1%. So it was a -- compared to the very difficult year we had last year, it was a decent quarter, and we were happy on that. Our EBITA margin was 35.6% and the EUR 27.5 million, and that's -- there is a decrease compared to last year, but we did have a one-off cost on the acquisition that were burdening that. I'm going to talk more about the overall market environment. But of course, the -- even the year changed, the market environment hasn't changed that much. So we had quite a bit challenges last year which affected our customers in a way that we had tariffs and whatnot uncertainties. So the selling developer licenses last year was slow, if put it on one word. So the -- on the whole year, we ended up on EUR 216.3 million, which is a increase of 6.6% on comparable currencies. So we went pretty much in the middle of our guidance. The distribution license revenue grew very well last year. There were a lot of new things coming into the market, new programs started, which ended up on the 26.4% growth. And of course, the main growth drivers, industries for distribution licenses is the automotive, medical and industrial manufacturing. The whole year EBITA was EUR 51.8 million, and there was a decrease. EBITA margin was 24%. Our personnel increased end of the year to 1,100 out of which 215 are IAR employees. So -- but we did continue our own hiring as well. The one-off costs for IAR acquisition, EUR 5.8 million. We're going to talk that also a bit later, but the -- of course, we all know that the IAR profitability has been less than the Qt. So that affects the overall profitability of the group going forward this year. We haven't disclosed the ARR before. And on the ARR we had a growth of 8.3%. And there on the small print is that the -- it is Qt and the QA developer license base and it does not include the IAR licenses and distribution licenses. So that ARR is the Qt and QA business. We plan to give that ARR number now in the future also in the half year sequence. So you can see that because one of the questions affecting our revenue has always been the shift from 1 to 3-year licenses. Of course, last year, we did see the cautiousness in our customers. So the -- it was slowness in sales, but it was also people shifting from 3 year to 1 year. So now presenting this ARR, we don't have to -- you don't have to worry about the shift from 1 -- 3 year to 1 year because we can follow the ARR. And our plan is to give that number now next time after second quarter and so on. Obviously, it's a number that doesn't change that much. We might even go on a quarterly basis if that's needed. But the -- like I said, it's much slower moving -- slower moving measurement. Well, here are some of the product-related things we did in 2025. There are always questions about AI. Is AI going to eat our lunch in a way that the -- you know that there are a lot of predictions on AI that the -- no developers are needed and AI is going to do all the code. Well, at least as of now, we don't see that development. We do see that there are a lot of AI assistants being used like we are offering them in Qt and our design studios and on Squish. So on writing test scripts, for example, you can use AI and then the Squish does the actual testing. So they help on that. But do we see that the -- specifically on embedded world that the AI would become and replace the developers, that kind of a development, we don't see as of yet. At the same time, of course, it's good to realize that I think that the U.S. companies are planning to invest EUR 500 billion, EUR 600 billion next year. So obviously, they are expecting to get something out of it. But I have -- I don't see that developers would be going away next year or even in the coming years in that sense. On the partnering side, we -- on Axivion, we do have partnerships with NVIDIA CUDA. So the -- when you're doing CUDA code, you can -- or using CUDA, you can use the Axivion. On the R&D, on the defense sector, we did have the FACE certifications and working with Infineon over there, on the AI consumer power devices. And then we are expanding our ecosystem through the Qt bridges, which will enable more languages over there basically. These are just some of the highlights that we are working on the product development. So in general, our product has -- all our products have always been very good. We get a very good feedback. So this is just to show a few examples that we do continue our R&D and we do -- we are on the forefront of product development all the time, making sure that all the Qt products are very competitive in the market, and that seems to be the case on all the customer surveys from our users. With this, Ann, please. Some numbers. Ann Zetterberg: Yes. I am Ann Zetterberg. I am -- I have been the CFO of IAR for -- I'm on my fifth year now. And with the acquisition of IAR, I had the opportunity then to step up and become the interim CFO for Qt. And I'm going to tell you a little about the numbers then for this quarterly report. So delighted to meet you all. There will be a bit of a P&L first, maybe a little repeat on what Juha just mentioned. But we had -- in Q4, we had a growth of 12.6% and after exchange rate impact, it was 18.6% at comparable currencies and the organic growth with removal of IAR revenue, which was EUR 8.1 million, that was EUR 6.1 million. And we -- in -- for 2025, the growth was 3.5%. Exchange rate impact has been pretty bad, both for Q4 and for the full year, especially the dollar has behaved very, very badly for us. And the growth there for 2025 at comparable currencies was 6.6% and the organic growth was 2.6%. But as Juha also said, we plan to show the ARR as that shows better the yearly underlying growth for the company. It doesn't -- it's not affected from which contract length the customers chooses. As we recognize 95% of the contracts upfront, it depends -- it matters a lot if they choose a 5-year contract or a 1-year contract for revenue, but ARR illustrates the underlying growth very stably, and that is growing good for us. It was 8.3% of growth for the Qt part, excluding IAR during the year. And then looking at expenses, the personnel and year-on-year grew by 267 individuals. That's a growth of 31%. But of course, a lot of that relates to the IAR acquisitions, 215 people worked at IAR at the acquisition. And -- so that increased the headcount to 1,136, both on average for the year, but also at the year-end. And IAR contributed EUR 4.8 million in staff costs in the P&L. Under other OpEx, the IAR acquisition had some extra costs then, EUR 4.1 million in Q4 and EUR 5.8 million during the year. And also, I wanted to highlight, even though it's a very small cost, the capitalized asset as IAR has interpreted IAS 38 a bit differently than Qt has and has capitalized R&D assets in the balance sheet. Presently, there is EUR 5.4 million of capitalized unfinished assets in the balance sheet of IAR and those are expected to be finished under 2026. But this means that we will have a small positive effect on the P&L from these capitalizations, removing costs and putting it into the balance sheet. I don't expect any large amounts from this, but it is still good to understand that this is what it looks like now. Over time, there will be some harmonization within the group, so all companies look at this in the same way. And then, of course, the profitability, like Juha just mentioned, has gone down. The EBITA margins are lower both for Q4 and for the year. IAR has a lower profitability. So that contributes to that and as does the acquisition costs. But of course, when you join 2 companies, there are also opportunities for integration, efficiencies and cost reductions, which we are going to work with on starting this year. And this means that the earnings per share has gone down to EUR 0.73 for the quarter and EUR 1.25 for 2025. So then moving on to the balance sheet. A lot has happened to the balance sheet, obviously, from the acquisition of IAR. The preliminary PPA added EUR 204 million in net assets to the balance sheet. Of that, goodwill was EUR 122 million. And then there were identified other intangible assets of almost EUR 90 million. Those were customer relations, technology and trademarks. And those will be written off over 15 years. So the amortization yearly net of tax would be EUR 4.8 million. And also the PPA added, or the acquisition added other net assets of EUR 11.2 million in IAR. Some of those assets on the asset side of the balance sheet and some on the debt side sort of spread over, but the net of them all are EUR 11.2 million. Some of those assets were trade receivables then, which increased the trade receivable balance to EUR 58.7 million in the balance sheet. And there are also other receivables, which could be good to know, one booking of EUR 5.1 million as we have booked the full value, 100% of the shares to the balance sheet, as there is arbitration going on, and we are obligated to buy the rest of the shares. We are not showing any minorities under equity and so because it's only a matter of time until we own 100% of the shares. But that can also be good to know. And then the ending cash balance was EUR 40 million -- EUR 40.1 million, a little lower than compared to last year as we have made this large acquisition. And as the balance sheet has expanded, the equity ratio has gone down from 81% to 50% and also the interest-bearing debt has increased. The interest-bearing debt is EUR 143.2 million. And of those, EUR 134.4 million are debt relating to the acquisition of IAR. So we have paid off some of the debt already. It was EUR 150 million from -- to begin with. And also on the deferred tax on the debt side relating to those intangible assets that were EUR 90 million on the other side, there is also deferred tax booked on the other side which is EUR 18.5 million. So good to understand that also how the PPA affects the balance sheet. And on the short-term liabilities, there is a debt of EUR 5.1 million, which is the amount we expect to pay for the remaining shares of IAR after the arbitration is finalized. And then I can just, as a final note, say that operating cash flow then had gone down a bit, but mainly because of the profitability going down. So nothing strange about that. And with that, I suppose I'm done with the financials, and we will take questions afterwards, but I will then leave to you, Juha, to take the next of the slides. Juha Varelius: Thank you. So 2026. Well, I think the first big thing is that the -- during the next 3 years, as you know, the IAR has been on a perpetual model. And our -- during the next 3 years, we are -- our target is to shift that into subscription model. That's roughly the -- by the way, the same plan we did have the -- early on with Qt when we did this a few years back. And if this goes as planned, the IAR revenue will be going down this year. So it's going to be decreasing this year. And then depending on how aggressively that goes down this year, then the swing back will be bigger next year. So -- but it's the early phases. So we've started the journey. We have now a couple of months behind us. So it's to make -- exact predictions at this point is there is a bit of a room for that estimate still. The -- well, the -- I think it's -- the market has been uncertain so long, that the uncertainty will definitely continue. As we know, there are a lot of global tensions going on as we speak, and that's what we're looking this year. Some of our customers are in a challenging environment. The -- like in automotive, the Chinese automotive manufacturers are putting a pressure on the European manufacturers. And at the same time, there are tariffs that's obviously going to continue all this year. And so on and so forth. So I think that on the industries, the automotive will be in challenge, Medical will not so, and the industry automation seems to be doing pretty well. Defense is doing really well. So in -- if I now look at the 2 of our biggest industries, they are actually medical and defense at this point of time. So they've grown quite substantially over there where they've been. The long-term growth prospects, well, like I said on the AI, this software really defines the value of the products. Each product will have software going forward and the new versions of it we don't see on embedded, that the AI would be eating all that market away far out from that. But we do see AI improving our own products on many respects, and that's what we are implementing. So before we've given our estimates that -- we've given you a range, but we gave up on that range. So now we're saying that the -- our full year net sales will increase at least 10%. So we're saying that, that's the floor, but we are not giving a range. So we're not giving the upper part guidance. So that's a bit different. And we're saying that our operating profit margin will be at least 15%. So again, we're saying that, that's the floor. We're not giving the upper range. So we've -- we're not giving those ranges anymore. Going forward, we're going to start after Q1 or after Q1, we're going to start giving you more info on the -- on how the -- well, we'll start sharing this ARR, which will give you a better understanding. You don't have to worry about the shift on the 3 to 1-year licenses. And then we're looking at the -- we're going to give you more on the revenue per product, so you get a better understanding on the -- how the licenses -- distribution licenses are coming. So we're looking to open up that a bit. I don't know if it's going to make your life any easier because there is a lot of fluctuations. But at least you can then see that fluctuation. So the -- we've been listening -- what you've been asking and -- so that's the -- but more to come on that later. I think the ARR actually will help you more than seeing the license -- distribution license sales and whatnot, but the -- more than that. So do you have any questions? Okay. Matti Riikonen: It's Matti Riikonen, DNB Carnegie. A couple of questions. They are very simple. Do you expect the legacy Qt business to decline in 2026? Juha Varelius: Simple answer, no. Matti Riikonen: Okay. Do you have a rough estimate of how much IAR's revenue would decline in '26 versus '25, if you give a broad range? You say it's going to decline and you say that you don't know yet, but roughly where is -- where are your thoughts at the moment? Juha Varelius: Well, double-digit. Matti Riikonen: All right. Juha Varelius: Low double-digit. Matti Riikonen: And third question before I give the mic to somebody else. How will IAR's fixed cost base develop in 2026? Juha Varelius: Simple question, longer answer. The -- well, I mean, we're not looking to increase the IAR cost base. So what you're going to see now is that the IAR -- the revenue decline really depends on the -- how well can we go on a subscription, and we try to go as aggressive as possible. So the -- if I say low double-digit revenue decline, somewhere there, right? I don't know yet, but somewhere there. And then 2027, I do expect to see a double-digit -- high double-digit growth on the -- maybe close to 20-something, to give you an idea how it's roughly good work, right? On a cost level, when we see costs, obviously, we're not going to be increasing costs because the prices are increasing, right? But the -- we do have some R&D-related initiatives over there where we think that we're going to be increasing cost, and they are related into the fact that the IAR is very much on a functional safety critical environment in automotives and whatnot. We are looking for a product development that we can broaden that segment roughly, to put on a broad perspective. And then we have few places where we're going to -- mainly on sales, we're going to increase sales costs, but we're talking very modest cost increases on the IAR side. So if you look at the old IAR, I know you have the numbers from there, we're looking very -- we're looking some cost increases, but fairly modest over there. But still, if you model that -- the revenue development on IAR numbers with that revenue dip, you're going to be seeing that the EBITA contribution for the whole group this year is going to be pretty much breakeven or even slightly negative. So we're not looking for -- first of all, on the guidance, we are -- those are the bottom lines. They are the floors. They are not the -- we see that, that's the bottom, bottom, right? So we do expect a bigger numbers. And then the IAR negative contribution will be on this year, but when it swings next year, we don't -- there is no need to increase costs for that because it's basically a price increase. So it will swing the IAR EBITA. Well, it's a license sales. So everything that the revenue will be increasing will go directly to bottom line. So that's the implication. On Qt Group, we are -- well, you call it legacy group. So the time changes. But -- so we'll figure out the better name than legacy. Anyway, the old Qt, we're not expecting organic decline, and we're not expecting that the -- what we saw last year, the bottom line, we're not expecting there to see a declining EBITA that we had last year. So the -- and that's the bottom performance, right? So we expect that the bottom performance be last year level and higher from there. So that's kind of the overall picture. So it's maybe not that gloomy than you were first thinking. I don't know how gloomy you were, but that's my educated guess. But thank you for the simple questions. Matti Riikonen: That's all from me so far. Jaakko Tyrväinen: Jaakko Tyrvainen from SEB. On distribution licenses, what happened in the sales in Q4 since I recall that the commentary after the first 9 months performance was rather moderate also in this revenue stream? So I'm curious whether there were some customers filling up their inventories in terms of distribution licenses? And how should we look at the revenue stream for '26? Juha Varelius: Yes. Thanks. So well, maybe later on the first Q when we open up a more broad distribution, you're going to see -- But the distribution licenses is really hard to predict because the -- it's not like this -- I mean, quarter-on-quarter like last year, it went like -- well, first quarter, second quarter boom and then up again, and that changes every year. So the quarters are not alike. So you can't expect that what was last year and second quarter is going to be the same. And that makes it difficult. And as you know, the distribution licenses go that -- some customers buy them afterwards, telling that how much they [ chipped ] and some people buy a chunk on prebuy. And that's why it's hard to predict. On a general level, we can always see that we know that the -- some big new products, productions are coming into the market, then we know on a yearly level, what's going to happen. So last year was on that sense, very good. So if you look last year numbers and distribution licenses for this year, I would take them slightly down. That's my expectation for this year given the market volatility, given the -- what's the customer demand in Europe and whatnot. So the -- I mean, at the end of the day, our distribution license revenue comes from product, what the consumers are buying, right? So the -- that's in a general terms, it follows. And we do have -- we are in 70 industries. We are both on commercial devices like industrial automation, robots and whatnot, stuff that goes into hospitals, stuff that goes into factories, but also on consumer goods like auto, cars and whatnot. So that's where the fluctuation really comes. So I would not put on my model same growth this year than we had last year. This is going to be substantially lower. So same number or a bit below. That would be my best guess. And -- that's a guess. Jaakko Tyrväinen: Understand very well. And just to confirm, Q4 was strong in distribution license? Juha Varelius: Yes, yes, yes, I was a good. So last year, on distribution licenses, Q2 was very good. Q3 was very weak. Q4 was good. Q2 was, if I remember correctly, the best on distribution licenses last year and does not mean that, that's going to replicate. It really goes like this. Jaakko Tyrväinen: Good. Then on the ARR, thanks for sharing that to us and the growth of 8% there. Could you give some color on how much of this was pricing and how much was coming from the effect that customers changed from 3 year to 1 year, which obviously should have kind of positive pricing impact on the ARR number -- annualized ARR number? Juha Varelius: That -- Very good and detailed question that I -- those numbers I don't have. We can come back later, but those I don't have out of my head. But the -- on general level, I can say that there was some shift from 3 year to 1 year, if I look on a whole year number, but it's slowing down. That shift is slowing down. But definitely, what we saw through all the year was the fact that on renewals, the -- what people used to do is that they had something and then they renewed older licenses. Nowadays, customers are counting that how many developers we really have, how many licenses we really need. And in general, money has been very tight. I mean our customers are very -- they're very tight on money. So they are looking all the costs. And on many R&D budgets are such now that the R&D budgets are not growing, but the -- so if they do something additional, they need to stop doing something old. Jaakko Tyrväinen: Good. And then my final one on the possible AI disruption also in the embedded side, I heard what you said. But could you give us for -- kind of for a dummy explanation why the embedded world, what are the barrier entries for AI native solutions to break in? Juha Varelius: Well, as of today, what we see, first of all, that you have lots of safety critical, you have lots of functional safety type of things like car brakes and whatnot, you need certificates and there are -- there is a very tight regulation what you need in order to have software. So you can't just ask AI that do me a car brake system, thank you and implement it, right? The second is that the -- on embedded, the software goes into products, right? And in products if you need to do a product recall, that is really, really expensive. So you have to be fairly certain that what you're doing. The third is that the embedded is fairly slow moving. There are huge companies building these cars and all these devices, medical devices and whatnot. So the time of the change and how secure they need to be that if I'm building this medical device, that nothing really goes wrong. So they change relatively slowly, right? Whereas if you think that on a website that I want to do a mobile application, I do a mobile application, if it works, great. If it doesn't work, it doesn't matter so much. So the -- it's kind of a different environment. And then if you think about coding, just building the software is -- it's one part of the process. You need to define what you want. You need to discuss with people that what are we building, what this product is doing and on and on and on. And AI is definitely not ready for that yet, right? So the -- where it's really going to end, we'll see, but that's what we see as of today. So there are -- we see AI as assistance and the -- like if you're designing something, you can use AI to give you creative ideas because as people, we tend to start looking one-way street. AI can open up your creativity and whatnot, but yet you're still using tools. So my prediction is that the next phase you're going to see on SaaS environment and the products like ours is yet another pricing change. We're doing this just to mess you up, right? So -- but yet another pricing change. And the pricing change is going to be that -- the pricing, I think, is going to go more towards from that the -- what has been built, how much the tool has been used rather than a deficit, right? So that's where I see the AI is going. And I had a -- one breakfast discussion and the person pointed out that the -- remember a couple of years back -- this person said to me that remember a couple of years back, everybody in Finland were talking that the -- even grandmas need to learn coding because software is in every device and everybody needs to learn how to code so that we can use these products, and they were all kind of coding school starts and whatnot. That was 2 years ago. Now everybody is talking that developers are -- nobody needs developers anymore. So there is a bit of a hype on the speed of the change. I mean, over time, of course, AI is going to -- 10 years from now, AI has changed a lot how we work, but -- and live our lives. But in the near future, I don't see much of effect. Then on the -- and this is the Qt development, right? On the IAR compiler business where you need all the certificates and whatnot, there is no way you can use the AI for a long time. And then on our testing tools, well, whatever you do with AI, you need to test. So I see that there's going to be more and more software that needs to be tested because you can't rely on AI. So the testing business is going to grow substantially as a market. Felix Henriksson: Felix Henriksson, Nordea. Three questions. Firstly, on Q4. The revenue growth organically accelerated a little bit, and we discussed about the distribution licenses being strong, but was there anything else that improved? For example, the lack of large deals that we saw in earlier quarters, did that -- did those sort of come back at all? Juha Varelius: No. no. If I look on the regions, the -- I would say that the -- we're doing well in APAC. We're doing okay in Europe. We have room for improvement in Europe in some markets. And then in general, we have lots of room to improve in the U.S. So the majority of our softness has been in U.S. And then we come to the point that the -- if we talk about the AI or if we talk about that the -- is there a competing product or is there a price change? What I see in the market is that we're doing fine in APAC, we're doing fine in Europe and the main softness we have is in U.S. and even in U.S., we have some teams that are doing okay, but then some teams are really suffering in that respect. So that's why I'm fairly confident that it's not about AI eating our market because if it would be, it would be eating our market everywhere globally, right? And this is more a local softness we are having. Same thing for prices and competition because we have same type of -- in APAC, we have the same industries and same type of customers we have elsewhere. So our softness basically has come last year that we've been a bit soft, been a U.S. related, right? And I'm very confident that we can fix that and get the efficiencies over there on a better shape. Felix Henriksson: Right. And then on the guidance, you mentioned that you're no longer giving those ranges, upper end. Can you expand on that a little bit? What's changed with your guidance philosophy in a way that triggered that change? Juha Varelius: Yes. I wasn't very good at that last year. Felix Henriksson: Okay. So maybe more conservatism in that way? Juha Varelius: Yes, yes, absolutely. Yes. Well, hey, we gave 2 profit warnings was not on my plan. Felix Henriksson: Fair enough. And lastly, on distribution licenses, I mean, we've started to see memory prices going up and there are some supply constraints emerging that potentially are impacting your customers, I presume. Do you think that's a sort of potential headwind when you look ahead and what are your customers saying when it comes to this? Juha Varelius: No, that's a downwind because the -- that's where Qt really signs. The fact that if you use Qt, you can do more with less memory. So that's the -- I mean, that's been the basic promise since the beginning. So the -- with Qt, you can have the same performance with the lower-end hardware, and that's the main selling point we are having as of today. And so higher price is better for us because at the end of the day, our customers will have to build those products anyway. So then it's a question of that how -- what kind of performance they want, what kind of end user experience they want. And that's where we sign. And that's where like Android doesn't sign, right? You use Android and you need a lot more hardware than using Qt and so on and so forth. Same goes with Unity. So most of our competitors, they may be in some use cases like Unity, Unreal, they might be able to do a better 3D visualization or it looks better, but it consumes so much hardware that if we go on a lower-end hardware, we can beat them. And you can get good enough, you can get a fairly good performance and a lot lower hardware using Qt. So that works for our benefit. Antti Luiro: It's Antti Luiro from Inderes. One question. We know that the last year's growth was quite sluggish and there is still uncertainty around this year. So is that affecting your own investment plans? Or are you just keep on going with all the growth investments that you have planned before? Juha Varelius: Yes. I mean, yes, we will continue our investments, yes, for sure. That's the -- no doubt about that. And we do have these few areas where we see the -- well, first of all, I think that we wouldn't be here in the first place if our products wouldn't be so competitive. So we need to keep them in that way. And then, of course, we are exploring the opportunities that the AI is opening up, and we need to do product development to have AI agents in our own products and so on and so forth. And you're going to hear product releases as we go forward this year. So yes, definitely, we're going to do that. Then at the same token, like the -- Ann was saying over here that we just merged 2 companies. And of course, we are going through all the processes, we're going through the -- that where can we be more efficient. So we've grown very fast. We are 1,200 people. And the -- so we do have also the efficiency programs, if you like. But it's -- so it's not all more, more, more. It's also efficiencies at the same time, and that's very much on and stable as well. Waltteri Rossi: Waltteri Rossi from Danske Bank. A few questions about AI. Did I hear correctly that you said that you might change your pricing model in the future due to AI? Juha Varelius: Yes. I said that, that's probably going to be the first change that we see on AI that the SaaS models pricings will start changing more from based on the consume of the tool rather than the deficit. I did not say that we're going to do that change, and I did not say that we're going to do that change this year, but I said that, that's what I see that the -- how AI is going to be affecting SaaS companies in general that the pricing will change going forward. I don't see that AI will be taking over the tools business per se. Waltteri Rossi: Yes. I understand, but no time line for that? Juha Varelius: No, no, no, no, no. Waltteri Rossi: Okay. But that would imply in a way that there is at least a big threat on your developer license sales? Juha Varelius: No. No, I don't see it that way. I see it that the -- that's going to be the effect that the SaaS business will go more towards that, that the people are charged at how much you use the tool rather than the per deficit. I see that development coming. But no time line, definitely not this year, next year or so. No. Waltteri Rossi: Okay. Well, next one is still on AI. What would you say is basically Qt's value proposition for the customers because there's the argument that AI will make developers' work more efficient. So that's kind of eating up your -- one of your value propositions. So what else do you basically offer for the customers? Juha Varelius: Well, we offer a tool that they can build their graphical user interface or applications. And as we are here today, AI is not capable of that. So you need the human and you need the tool. And then it's debatable that when will AI be able to do that, if ever. And then we see that if you need certifications, you need -- like on defense, like in automotive, on many industries, on medical, there's a long list certifications you need to meet. So who's going to train an AI that will meet those certifications and make sure that AI does the things every time in that particular manner and everything is met. I mean, that's years away, if ever. Waltteri Rossi: Yes, yes. I agree. But still on that, actually, a follow-up. We know that programmers are already today using AI assistance. But are you saying that you don't see your customers yet using them? Juha Varelius: No. And you see a lot of developers using AI on the web technologies. So if you want to do a simple mobile application, you can do that or you want to do web pages, you want to do your own homepage, you can use AI for that. But of course, they are so simple that you can -- if you want to do your own web pages, you can have -- they are on a web already. So what AI does is that it takes a web page and then it produces a new web page, right, that you can do. But on embedded building on products, no. Waltteri Rossi: One last on AI. So can you please elaborate how Qt is currently using AI in the framework? Or do you have add-on or something? Juha Varelius: Yes, you can have add-ons. You can have assistance over there that helps you getting started. For example, on the -- on testing, you can use AI, that it helps you doing the testing script and these type of things. So it helps you kind of where you can think that it helps you building a bit of a story or text, but yet still you have to read it and modify it. That's what we see as of today. Waltteri Rossi: All right. Then one last question on the usual 1 to 3-year licenses. So do you have a number on how much that shift from 3-year licenses to 1-year licenses impacted last years? Juha Varelius: No, but we're going to give you the ARR, so you can start following that. Matti Riikonen: Matti Riikonen, Carnegie, a couple of questions more. They are even more simple. First of all, you discussed the capital -- capitalized cost policy so that you would basically go towards Qt's policy, which I read that you would not any longer capitalize some costs that IAR has. Should we expect that there would be none whatsoever on the capitalized costs in '26? Ann Zetterberg: Because we have unfinished assets in the IAR balance sheet, and we need to continue capitalizing on those according to IAS 38. So there will be some capitalization of R&D assets during 2026. But we expect that those will be finished under 2026 assets that are not finished. And after that, we will harmonize between the companies so we can find a common application of IAS 38... Juha Varelius: Because -- I want to come over here, so we have you in the camera as well. Ann Zetterberg: Yes, sorry. I apologize. Yes, about the capitalization since Qt and IAR has handled the IAS 38 application very differently. So IAR has been capitalizing R&D assets into the balance sheet, which increases the profitability and then you write off the assets over time. And after the acquisitions, we kind of cleaned out the balance sheet. But the assets that are not finished, they are still there, and we will have to follow IAS 38. We will have to continue to capitalize on those until they are finished. Otherwise, we don't follow the bookkeeping rules correctly, and we don't want to break them. So that will happen. And in that time, we will evaluate and harmonize between the companies so we can have a common approach to this. And then I expect that we will not capitalize anymore, but I cannot 100% tell you that, that will happen. But we will have to have a common approach anyway within the group on how we handle this adjoiner [indiscernible]. Matti Riikonen: What kind of magnitude of capitalizations do you think there would be in '26? Ann Zetterberg: It will not be a lot. Those assets are almost finished. They're EUR 5.4 million there now. So I don't expect there to be any huge capitalizations. As you saw during Q4 on those assets, we capitalized EUR 200,000. So it wasn't a lot. So you can -- then -- it can go up and it kind of go down a little depending on how much work the R&D department puts into various projects. But I don't expect it to be -- I mean, anything that affects the profitability much, but it can be good for an analyst to understand that this is a difference from how Qt has handled it before. Matti Riikonen: Right. That's helpful. Then second question is about the annual recurring revenue disclosure that you plan, which is an excellent idea. How long into the history will you bring that? So is it possible that you would bring maybe a couple of years' history so that we could start to track it already from there and not just from here on because, of course, in the ARR pattern, the history is what counts and current day is less interesting if you don't know the history? Juha Varelius: We already gave the last year number, right? Matti Riikonen: That's not a very long history. Juha Varelius: Well, it's the last year. Well, we'll look into that. Yes, great question. We didn't think it that way, but we'll look into it. And on capitalization, it's like Ann said, that there are a few projects we need to continue. But of course, in general, going forward, on a longer term, we're not looking to capitalize. So we rather implement the Qt policy going forward and not capitalize the development. Yes. It's a better way. Jaakko Tyrväinen: Jaakko Tyrvainen, SEB. A brief follow-up on the profitability dynamics and IAR part of that. Let's say, the revenue is down double-digit something, like you said, Juha, would this imply that IAR as a stand-alone would be at breakeven or even red numbers in '26? Juha Varelius: Red. Ann Zetterberg: This is... Waltteri Rossi: Sorry, one last one from me. You said you are going to continue... Juha Varelius: You were? Waltteri Rossi: Waltteri Rossi, Danske Bank. You said that you are going to continue recruiting this year. So could you elaborate a bit on where exactly are you going to recruit? Or you said invest, but... Juha Varelius: Regionally or by function. Waltteri Rossi: Say again, I didn't... Juha Varelius: I mean regionally. Well, I mean, I think that the -- we do have a few markets where we're going to be increasing personnel, probably the U.K. is one, and these are small numbers, but then they add up for our Italian business. More or less in Japan, we're going to be increasing the personnel, the China probably. And the -- so in particular markets, I think in the U.S., we're pretty much on a headcount we like to be at this point of time. On R&D, there are these new technologies like the one that interests you a lot, which is the AI. So of course, on these new technology areas, we -- instead of trying to learn them ourselves, we are hiring people. So we do have some of these new technology areas. If I look in general on the R&D, the Qt is very well staffed. The QA business function itself, it's still on the investment mode. So over there, you're going to see pretty much on each and every function. So a bit of marketing, a bit of sales, a bit of product management, a bit of the R&D. On IAR, we are strengthening some of the R&D functions over there. So IAR, I would say that the most personnel additions will be on the product R&D side and then some on sales. But when you have so many different locations, you add up and then you get the personnel increase, that's basically what we're looking for. Heli Jamsa: Thank you so much. I believe that concludes all the questions from the room. And as we are running out of time, I give it back to Juha for closing remarks. Juha Varelius: Okay. That came quick. So thank you very much for being here today. And the -- as we go into this year, like I said, the -- one -- the very big item for us this year is going to be the subscription change on IAR. So going from perpetual to subscription, that's the one of the core things we're doing. And of course, integrating IAR into the Qt family. So we're going to be a bigger, happy family. We are also looking forward this year that, yes, it's going to be a challenging year. I'd like to emphasize that the guidance we gave was not a range. So we just gave a bottom line that what is the floor level where we expect to be this year. Of course, we are expecting to be better on those numbers. And the -- on the profitability side, we're not looking on Q2 decrease on profitability nor on sales, but the IAR subscription change will affect our profitability this year. And so that's why the lower guidance. Where it's going to end up then that how aggressive can we be, remains to be seen. In any case, the 2027 for IAR will be a revenue growth year and a profitability year, then the question is that how steep is that curve over there. It's still very early phases to see that how rapidly we can drive this subscription change. I think with these words, thank you very much.
Operator: Good morning, and welcome to Flowco Holdings Inc.'s fourth quarter and full year 2025 earnings call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Andrew Leonpacher, Vice President, Finance, Corporate Development, and Investor Relations at Flowco Holdings Inc. Thank you. You may begin. Andrew Leonpacher: Good morning, everyone, and thanks for joining us to discuss Flowco Holdings Inc.'s fourth quarter and full year results. Before we begin, we would like to remind you that this conference call may include forward-looking statements. These statements, which are subject to various risks, uncertainties, and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release, as well as our filings with the SEC, which can be found on our website at ir.flowco-inc.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial information. We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this morning's press release and in our SEC filings. Joining me on the call today is our President and Chief Executive Officer, Joe Bob Edwards, and our Chief Financial Officer, Jon Byers. Following our prepared remarks, we will open the call for your questions. With that, I will turn the call over to Joe Bob. Joe Bob Edwards: Thank you, Andrew. Good morning, everybody, and thank you for joining us today. I will begin today by reviewing our fourth quarter and full year performance, including operational details. Then provide an update on the Valiant acquisition we announced earlier this month. Jon will follow up with more details on our financials, capital allocation, and balance sheet, as well as the mechanics of the Valiant transaction. I will wrap up with our perspective on the current market environment, our outlook for next quarter, and key strategic priorities for the coming year before we open up the line for your questions. Flowco Holdings Inc. ended the year with a very strong fourth quarter, underscoring consistent execution and differentiated growth across both operating segments. In the quarter, we generated $83.5 million of Adjusted EBITDA, exceeding expectations. For the full year, Adjusted EBITDA grew 11% versus pro forma consolidated 2024, even after absorbing approximately $15 million of incremental public company cash costs. This performance demonstrates the strength and durability of our business model in a market environment that remained dynamic throughout the year. Importantly, in the fourth quarter, we maintained our industry-leading margins, driven by the continued strength of our resilient, high-margin rental business. We generated $63 million of free cash flow in the quarter, reducing leverage to levels below where we stood prior to the August acquisition of HPGL and VRU assets from Archrock. This reflects our disciplined approach to capital allocation and reinforces the strength and flexibility of our balance sheet. Turning to operational performance, our rental platform continued to build on strong momentum in the quarter. Rental revenues grew approximately 4% quarter-over-quarter, driven by steady demand for our HPGL and VRU solutions. Customers continue to value these technologies for the reliability and production uplift they deliver, as well as the attractive economics they generate across the life of the well. Importantly, our rental fleet generates contracted recurring revenue, adding durability and visibility to our overall business. We continue to see meaningful runway for these technologies as operators expand deployment across their asset bases, and we are already seeing incremental demand early in 2026 activities. Shifting to sales, we had a solid quarter of growth as anticipated. Within the Natural Gas Technologies segment, we saw healthy activity in vapor recovery sales, along with a notable rebound in natural gas systems. We were also pleased with the performance at downhole components, where we experienced less seasonality than expected. Particularly within conventional gas lift and plunger lift, operators remained focused on deploying these solutions to enhance existing production as they closed out the year, driving better-than-anticipated results and reinforcing the value of our differentiated offerings. Earlier this month, we announced our agreement to purchase Valiant Artificial Lift Solutions at an attractive valuation. Valiant is a leading pure-play provider of ESP systems with an established presence in the Permian Basin. This transaction expands our suite of artificial lift solutions, meaningfully broadens our addressable market, and allows us to support customers with both primary early life lift techniques deployed across the industry. Strategically, this combination strengthens our production optimization platform. Bringing ESP together with HPGL, conventional gas lift, and plunger lift creates meaningful cross-selling opportunities at key transition points over the life of the well, while enhancing our ability to deliver the right solution in each well, every time. We believe our expanded offering will enable us to deliver improved customer outcomes while generating attractive returns and durable free cash flow. The transaction remains subject to customary regulatory approvals, and we expect to close in the first week of March.... Our teams are actively preparing for integration with a focus on disciplined execution and maintaining continuity for customers and employees. Overall, I am very pleased with how the team executed in 2025. We expanded margins, generated robust free cash flow, reduced leverage, grew our rental platform, and laid the groundwork for a strategic step forward with Valiant. We believe Flowco Holdings Inc. is very well positioned for additional success as we move further into 2026. With that, I will turn it back over to Jon. Jon Byers: Thanks, Joe Bob. Before reviewing some of the key financial metrics and results for the fourth quarter, I would like to provide a reminder on our historical financial information, given the combination of Flowco Holdings Inc., Flogistix, and Estes in June of 2024. Note that any financial information presented prior to the June 20th, 2024 business combination, such as information contained within our full year 2024 performance, reflects only the historical performance for Estes. Financial information for the third and fourth quarters of 2025, as well as the fourth quarter of 2024, reflects the financials for the consolidated entities. Turning to our financials, fourth quarter performance exceeded expectations, reflecting continued growth in our rental fleet and strong performance and profitability across all our sales business units. We reported adjusted net income of $43 million on revenue of $197 million. Total revenue increased 11% sequentially, primarily driven by higher sales across both segments, with the largest contribution coming from Natural Gas Technologies. Supported by the sales growth and further underpinned by the continued expansion of our higher-margin rental portfolio, Adjusted EBITDA increased $6.7 million quarter-over-quarter. Notably, rental revenue, most of which is recurring, surpassed $110 million for the first time in the quarter. As Joe Bob mentioned, we maintained our industry-leading margins in the fourth quarter, achieving Adjusted EBITDA margins of 42.4%. That performance reflects strong operating leverage within our rental fleet, as well as the impact of the revenue mix shift as sales rebounded. In our Production Solutions segment, fourth quarter revenue increased 1.5% sequentially to $127 million, while Adjusted EBITDA increased 4% from the third quarter to $57 million. Adjusted EBITDA margins expanded 110 basis points quarter-over-quarter. Revenue growth was primarily driven by higher rental revenue at surface equipment and better than expected downhole components product sales, as the business unit outperformed typical seasonality. The improvement in Adjusted EBITDA and margin was largely attributable to increased high-margin surface equipment revenue, lower segment-level SG&A, and a more favorable revenue mix compared to the third quarter. In our Natural Gas Technologies segment, fourth quarter revenue increased 36% sequentially to $70 million, while Adjusted EBITDA increased 18.4% to $30 million. The growth was primarily driven by higher natural gas systems and vapor recovery sales during the quarter, along with strong vapor recovery rental performance. Adjusted segment EBITDA margin decreased 634 basis points, reflecting a revenue mix shift towards sales from rentals, particularly through an increase in sales of lower-margin natural gas systems. Turning briefly to corporate costs and SG&A, fourth quarter corporate expenses were roughly flat at $3.9 million. Looking to 2026, we expect annual corporate expenses of $18 million-$20 million associated with the consolidation of corporate functions and completion of the build-out of our public company capabilities. Consolidated fourth quarter Adjusted EBITDA was $83.5 million, as we delivered another quarter of profitable growth. In our first full year as a public company, we delivered 4% year-over-year revenue growth and increased Adjusted EBITDA by 11% versus pro forma consolidated 2024. This performance came despite a more challenging macro backdrop than when we entered the public markets, underscoring our ability to grow in a dynamic environment. This performance reflects the strength of our high-return investments, the scalability of our differentiated platform, and the value our solutions provide to our customers as they maximize recovery and generate cash flow from their existing production base. In the fourth quarter, we deployed $24 million of capital, bringing full-year CapEx, excluding M&A, to $127 million. With the majority of this capital allocated towards expanding our surface equipment and vapor recovery rental fleet to support sustained customer demand at attractive returns. Considering our CapEx investments in the context of return on capital employed, our annualized adjusted ROCE for the quarter was approximately 19%. The sequential increase reflects higher product sales, which more than offset incremental capital deployed for the asset acquisition completed in August. Looking ahead to 2026 and excluding any capital associated with Valiant or other M&A, we expect to invest total CapEx, including maintenance, of approximately $115 million, which should support higher free cash flow for the year. We will continue to assess market conditions and customer activity levels to calibrate the appropriate pace of capital deployment, prioritizing investments that support profitable growth and meet our return thresholds. With a typical investment lead time of approximately 6 months, combined with our vertically integrated manufacturing model, we retain meaningful flexibility to adjust capital investment as we monitor customer demand and broader market conditions. Earlier this month, we entered into a definitive agreement to acquire Valiant Artificial Lift Solutions for approximately $200 million in total consideration. The transaction represents an attractive valuation of approximately 3.9x projected 2026 Adjusted EBITDA, and does not consider any revenue or cost synergies. The purchase price consists of approximately $170 million in cash, and the issuance of roughly 1.5 million shares of Flowco Holdings Inc. Class A common stock, with the cash portion expected to be funded through our existing credit facility. Pro forma for the transaction, we expect leverage to remain conservative at below one turn, and we intend to utilize the combined business's meaningful free cash flow generation to further delever over the course of the year. We expect Valiant to generate approximately $52 million of Adjusted EBITDA for the full year of 2026. As Joe Bob mentioned, we expect the transaction to close in the first week of March, which would result in approximately 10 months of earnings contribution for Flowco Holdings Inc. As we move toward closing, we are focused on executing a disciplined integration plan designed to capture cross-selling opportunities and position the combined platform to drive incremental revenue synergies. Turning to our balance sheet, liquidity, and capital allocation, we ended the quarter in a strong financial position and have made continued progress into the start of the year. As of February 20th, 2026, we had $142 million of borrowings outstanding under our credit facility. With a borrowing base of $722 million, we had $580 million of available capacity. The improvement in liquidity was driven by strong free cash flow generation for the quarter, along with continued progress in net working capital efficiency. On January 30th, Flowco Holdings Inc. declared a quarterly dividend of $0.08 per share, payable on February 25th. The strength and consistency of our cash flow generation give us flexibility to invest in organic growth, execute on strategic opportunities, and return capital to shareholders, all while maintaining a conservative leverage profile. In summary, we delivered a strong fourth quarter, exceeding our Adjusted EBITDA guidance while delivering on the expected strength in sales. As we move into 2026, our rental fleet remains well-positioned to generate stable, predictable earnings, underpinned by durable demand and contracted revenue streams. Across our sales business, we expect continued operational resilience and meaningful free cash flow generation. As we integrate Valiant, we expect to further enhance our growth profile and deepen the advantages of our integrated platform. Supported by disciplined capital allocation and our differentiated operating model, we are confident in our ability to sustain performance and deliver attractive returns in the years ahead. Back to you, Joe Bob. Joe Bob Edwards: Thanks, Jon. Let us turn now to the market outlook. In 2025, U.S. oil production reached a new record of 13.9 million barrels per day, despite commodity price volatility and macro uncertainty. We believe this sustained production durability is not solely the result of consistent capital deployment, but increasingly reflects our customers' optimization of existing production and improvements in asset-level efficiency. That shift toward maximizing returns from existing production aligns directly with Flowco Holdings Inc.'s core strengths in production optimization, artificial lift, and emissions management and monetization, all of which are increasingly important for sustaining output. Against this backdrop, we are entering 2026 with continued momentum and expect a strong start to the year. For the first quarter, we anticipate Adjusted EBITDA of $82 million-$86 million. We expect continued incremental growth across our surface equipment and vapor recovery rental fleets, supported by strong utilization and contracted revenue visibility. Within Production Solutions, excluding Valiant, we anticipate segment revenue generally consistent with the fourth quarter of 2025. In Natural Gas Technologies, we expect sales activity to be similar to fourth quarter levels as well. As Jon described, we expect corporate expenses to increase modestly in the first quarter. This first quarter guidance also includes approximately one month of contribution from Valiant, assuming the transaction closes in line with our expectations in early March. Beyond the quarter, we remain focused on strengthening our business for sustained long-term value creation. The pending integration of Valiant represents an important next step in expanding our artificial lift capabilities, particularly in ESP, further enhancing the differentiation of our platform and increasing our addressable market in the lower 48 by approximately 70%. We are approaching integration with discipline and clear objectives: capture revenue synergies, leverage our combined expertise to better serve our customers, and build upon the solid operational foundation the Valiant team has built. During the first part of 2026, we are taking our first steps toward expanding our international presence. As we outlined on our investor call regarding Valiant, ESP represents a natural avenue for selective international growth, and we are fortunate to have leadership experience within both Valiant and Flowco Holdings Inc. that has successfully scaled artificial lift businesses globally. Separately, over the past few months, Flowco Holdings Inc. has signed two agreements with partners in the Middle East and Latin America, both of whom will enhance our ability to grow in these important markets. While we remain in the early innings of potential international expansion and will pursue it in a measured, capital-light manner, we are encouraged by the initial response from customers and excited about the long-term opportunity. Across the organization, we continue to advance operational initiatives to drive efficiency and margin expansion. Early applications of our internally developed machine learning capabilities are already improving maintenance planning, uptime, and profitability. Across rig and field footprint, we are identifying opportunities to streamline processes, enhance collaboration, and better leverage our full suite of solutions to serve customers over the life of the well. Looking ahead, we believe continued innovation, technology-enabled efficiency, disciplined capital deployment, and deeper customer partnerships will define the next phase of growth for Flowco Holdings Inc. As we integrate Valiant in 2026 and execute across our business segments, we are confident in our ability to drive incremental growth and long-term value while further advancing Flowco Holdings Inc.'s production optimization strategy. With that, I will turn it back over to the operator for Q&A. Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Arun Jayaram with JPMorgan. Please proceed with your question. Arun Jayaram: Good morning, gentlemen. Joe Bob Edwards: Good morning, Arun. Arun Jayaram: How are you doing, Joe Bob? Joe Bob Edwards: Doing great. Arun Jayaram: To see if you could just talk a little bit about the trends you are seeing between rentals and kind of product sales. It sounds like you hit $110 million in the quarter, how do you expect, you know, maybe just give us a sense of how that mix has been trending and maybe expectations as we think about, you know, 1Q and, you know, over the balance of the year? Joe Bob Edwards: No, happy to do it. Listen, we have been consistently investing in primarily our HPGL fleet and our VRU fleet, as you know, and that CapEx level, Arun, has driven our growth in rental revenue and rental EBITDA. It has led to a mix shift in the overall company. That is why you see margin improvements quarter-over-quarter, and we expect that to continue in 2026. Jon, we have invested growth CapEx in the $100 million per year range for the last several years. Jon Byers: That is right. That is right. Joe Bob Edwards: Arun, I think that is going to continue in 2026. You know, is it going to be at that level or slightly above, slightly below? Market conditions will dictate, but we see no reason to let our foot off the CapEx accelerator because these assets generate really attractive returns, customers like what they do for them, and we are going to continue to do that until there is no more market demand left to be had. Arun Jayaram: Understood. Joe Bob, you intrigued me on your commentary on pursuing some international growth initiatives. You know, the team and now with Valiant, maybe the product portfolio to do that. Can you maybe just give us a little bit more details on kind of the plans to scale globally? You mentioned two partners in the Middle East and LATAM, but maybe just talk a little bit about what the game plan is for 2026 as you pursue some of these international ambitions? Joe Bob Edwards: The international expansion is obviously very exciting, but to be clear, we are early, okay. I want everybody to know that it is something on our radar because our customers that we have so loyally supported in the U.S. are looking internationally to export their capability in unconventional development plays that look a lot like what we have experienced in the last 10, 15 years here in the States. We want to support that effort, and to do that, we are getting prepared to follow them, as well as to share with new customers, mainly national oil companies, who are importing U.S.-style innovation to help develop unconventional resource base. In the Middle East region, obviously, there are several very large national oil companies, as well as a handful of multinational independent oil companies, as well as, you know, some household names that are in the early stages of developing unconventional resource base. We want to be there to support them, and we feel like, in particular, with this Valiant acquisition, we have the capability to offer more than what we did before, and we want to set ourselves up for success there. The two agreements that we have signed are partnership agreements in various forms. They are companies that have deep experience in both of those geo markets. They have local service capability. As I said in the prepared remarks, we are going to take a capital-light approach to this first, make sure we have the right sort of local content, the right sort of balanced approach as we take steps into these two international markets. Arun Jayaram: Great. Thanks a lot, and well done. Joe Bob Edwards: Thank you. Operator: Thank you. Our next question comes from the line of Derek Podhaizer with Piper Sandler. Please proceed with your question. Derek Podhaizer: Hey, good morning, guys. Maybe just to keep going on the Valiant acquisition. It has been a few weeks now since you announced the deal. You are going to close here in a couple of weeks. As you acquired Valiant, even talking to your customers, what has been the initial reaction there now having the ability to fold in ESPs to your overall production optimization solution or toolkit? Just maybe some thoughts and comments around that initial reaction from your customers, you know, what gives you the excitement as you kind of step forward and being able to deliver, you know, all the artificial lift solutions at any time in the well? Joe Bob Edwards: Yeah, Derek, it has been very positive. As we talk to our customers as well as Valiant customers, and as you would assume, several of those are common. It has been a very welcomed collaboration. We now can truly deliver on what we say we want to do for customers, which is to offer the right solution in their well as they bring it online, right. Previously, we only had the ability to offer a high-pressure gas lift solution early in a well's life. There are wells in the U.S. that are clearly ESP wells. Now we have got both. We can quite credibly now say that we can be there for the life of the well, including both forms of early lift application. In addition to that, and what I said in the prepared remarks, this is a revenue synergy story, okay? The ESP application is only a first year or two or three application in the shale wells, where those systems make sense. What does that mean? Well, at the end of the life of the ESP, those wells go on something else, and they most commonly go on conventional gas lift. We are the market leader in conventional gas lift, so that is a natural sales pipeline for us to pick up as those ESPs get pulled and put on to the next form of lift. That is what we are most excited about, and that is what our commercial teams have been preparing for as we get into integration, when this business, hopefully, closes, early next week. Derek Podhaizer: Great. That, that is great color. The second question: the free cash flow really impressed this quarter, and conversion stepped up to 55% of EBITDA. Obviously, you have some assumption in there with Archrock acquisition pulling, you know, effectively pulling that CapEx forward. How should we think about the free cash flow conversion of the combined business now with the Valiant moving into 2026? You gave us the CapEx guide, you know, clearly, you had a significant step up. Just trying to work through the moving pieces and how we should think about pro forma, that free cash flow conversion, now with the Archrock assets and now with Valiant. Joe Bob Edwards: Yeah, Derek, yeah. The Valiant business has similar cash flow conversion characteristics to our business. You know, Q4 was a great quarter, obviously, in terms of cash flow conversion. As we finished our capital plan, we had the Archrock assets that allowed us to pull forward some of the CapEx, and our working capital came down mainly on the back of better DSOs than AR. You know, I do not expect to continue at that level in 2026. I think you see something more along the lines of what you saw over the course of the year in 2025. Derek Podhaizer: Got it. Very helpful. Appreciate it, guys. I will turn it back. Operator: Thank you. Our next question comes from the line of Phillip Jungwirth with BMO Capital Markets. Please proceed with your question. Phillip Jungwirth: Yeah, thanks. Good morning. We heard a lot from the E&Ps this quarter in the Permian about targeting deeper zones, just with Woodford Barnett across the Midland Basin in particular, higher pressure, higher GOR. Recognizing you now offer HPGL and ESP, just, how do you see the optimal lift solution for this type of development and opportunity for Flowco Holdings Inc. if we see more of this in the future? Joe Bob Edwards: Yeah, good question. Look, it is still early in those new zones. As our customers have pointed out, they are trying to figure out the right not only the right lifting technique, but the right completion technique, right? As one of our more prominent customers said, "Never bet against the American engineer," and that is the camp we sit in. We think that there is a lot of room to go in the additional formations in the Permian in particular. We are right there with them, helping them evaluate early production data as these wells get completed and turned on. You mentioned higher pressures and higher GORs. Look, both of those feed straight into our gas lift solutions. In particular, the high GORs, that is a tough application for ESPs, but it is early. The good news is we have got both, and we have got an active dialogue going with a lot of the folks that are targeting formations like the Barnett. Very exciting that they are making progress, and we are here to support them. Phillip Jungwirth: Okay, great. On the Valiant acquisition call, you did mention selling ESPs into non-Permian markets where they historically have not had a presence. Can you talk through how quickly you look to penetrate these markets? When you... Also, as somewhat of a new entrant, what are the things you look to do just to maintain comparable margins in these other basins to what Valiant has realized in the past? Joe Bob Edwards: The good news is, we have got a footprint that expands beyond the Permian to markets that are big ESP markets in the States. A lot of the work has, to an extent, already been done with local presence, with local infrastructure, and obviously, the customer day-to-day contacts and service that goes along with being in those markets. The natural markets are the Bakken and the MidCon, okay? These are two, you know, tried-and-true ESP markets. They are not nearly as large as the Permian, but these are areas where we have footprint, and we have active dialogue with customers to hopefully support them there. As for margin profile, I think time will tell. I think, we are expecting those markets to be pretty similar to the Permian from our past history. They are not as deep, but they are every bit as profitable for service companies compared to the Permian. Phillip Jungwirth: Great, thanks. Operator: Thank you. Our next question comes from the line of Keith Beckmann with Pickering Energy Partners. Please proceed with your question. Keith Beckmann: Hey, thanks for taking my question. I just wanted to ask another sort of M&A question around, you know, we had the Valiant acquisition that really broadened out the portfolio and opened up kind of the total TAM that you are going to be able to address here. Wanted to know if there is any other acquisition opportunities or products that you see you are missing at this point. You guys have a lot of other stuff, I expect it to be something smaller, but just wanted to get an idea, on if there is any other production optimization or elsewhere, holes in your portfolio you think that you could fill? Joe Bob Edwards: Yeah, Keith, we are always looking for the right opportunities, the right types of people, the right types of cultures to join our team. We do have a robust M&A pipeline, as you would expect. We have been very clear with investors that we want to round out the product portfolio, and we want to expand the geographies in which we operate, while always staying true to our production focus. Look, there are a handful of additional lift capabilities that we do not have in the toolkit. There are complementary services and technologies that go along with lift that we can either build or buy. As we said in the prepared remarks, there is a big international market out there that we can either go attack organically or via acquisition or both. All the above are on the table. I would say that we are going to stay true to what we have told investors and what we have told ourselves and our board, which is we are going to be disciplined. We are going to put every opportunity through the screen of returns and never lose sight of the fact that we are here to serve our customers in this production phase, which is what we feel like we do really well. Look, stay tuned, we are excited to get this transformative deal done hopefully early next week. Keith Beckmann: Awesome. That is really helpful. My second question was just kinda asking around CapEx lead times. If I remember right, I believe that you guys kinda have a 6-month investment lead time on customer projects was sort of the right way to think about it, I believe. I wanted to know if that changed at all, looking at the ESP market, has that changed at all? Excuse me. Is the ESP market different at all? Has the 6-month investment lead time changed at all here over the last year? Joe Bob Edwards: It is pretty consistent. The ESP business, the supply chain that supports the ESP business, not just for us, but for all of our competition, it is a slightly more complicated supply chain. You have got some international navigation you need to do. The 6-month lead time is pretty consistent. It is also not a build to order. It is a, you know, you are building inventory in advance of expected customer demand. This is the same thing we are doing in our other product lines. I think that the 6-month lead time is pretty accurate. Jon mentioned the cash flow conversion, the margin profile. It is all remarkably consistent with what we currently have. The only added complexity is the slightly more complicated supply chain, which we are very comfortable navigating. No, I think you are thinking about it the right way. Keith Beckmann: Okay, perfect. Thanks for taking my questions. I will turn it back. Joe Bob Edwards: You bet. Operator: Thank you. Ladies and gentlemen, as a reminder, if you would like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Jeff LeBlanc with TPH. Please proceed with your question. Jeff LeBlanc: Good morning, Joe Bob and team. Thank you for taking my question. Joe Bob Edwards: You bet. Hey, Jeff. Jeff LeBlanc: As operators are more vocal about developing secondary horizons and continuing to extend lateral lanes, have you observed any shifts on how your customers are approaching artificial lift across a well's life, whether it be assuming the primary form of artificial lift is in place for longer or preemptively mapping out their solutions for the various stages? Thank you. Joe Bob Edwards: Look, I would say that operators are just more pointedly, they are focused on production. They are focused on making do with less. They are looking to their existing reservoirs for longevity, for durability, and lift is part of that conversation. As it relates to us, Jeff, we are increasingly talking with operators proactively about the prospective changes in lift as a well matures, okay? As a production profile gets to a level where the existing lift solution becomes less effective, we are right there with them to propose changes, to propose modifications. We do this early in the well's life. We also do this prospectively. We host four artificial lift schools per year for free to our customers in kind of the usual places you would expect: Houston, Midland, Oklahoma City, Denver. We are always talking with customers about the tools that we can provide them to give them that look at preventative and proactive lift change-outs, okay. It is not just lift, it is other things too that are helping them make their production more durable. We are just pleased to be part of that conversation and to be proactive with each one of our customers. Jeff LeBlanc: Thank you for the color. I will hand the call back to the operator. Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I will turn the floor back to Mr. Edwards for final comments. Joe Bob Edwards: Well, thank you all for tuning in, and, everybody, have a great weekend and a great 2026. Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Operator: Welcome to GigaCloud Technology Inc.'s fourth quarter and full year 2025 earnings conference call. Joining us today from GigaCloud Technology Inc. are the company's Founder and Chief Executive Officer, Larry Wu, its President, Iman Schrock, and its Chief Financial Officer, Erica Wei. Larry will provide opening remarks, Iman will discuss the company's operational progress, and Erica will review financial results. After that, we will open the call to questions. As a reminder, this conference call contains statements about future events and expectations that are forward-looking in nature. Actual results may differ materially. Additionally, today's call will include a discussion of non-GAAP measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures, calculated and presented in accordance with GAAP, can be found in the press release issued today by GigaCloud Technology Inc., which is posted on the company's website. I would now like to turn the call over to Larry Wu. Please go ahead, sir. Larry Wu: Thank you, Operator, and good morning, everyone. 2025 marked a defining chapter for us: record revenue, record EPS, and a level of performance that underscores not only the strength of our model, but also our resilience and adaptability when facing challenges. In a year when the macro backdrop was anything but predictable, our agility and operational discipline powered strong double-digit growth and positioned us to accelerate even further. From the beginning, we understood the importance of building new growth vectors for sustainable long-term value creation; that strategy continues to pay off. We have expanded our geographic reach, scaled our marketplace, and strengthened our platform through targeted acquisitions. In doing so, we have built not just a thriving company, but an ecosystem designed to lead the next phase of growth. Our acquisition of Noble House is a great example of how we are building our growth vectors into businesses and how those vectors are already driving momentum. In under two years, we took a bankrupt company to a profitable and growing portfolio. Our work took discipline and patience. We broadened our product line, expanded our channel reach, and enhanced our operational efficiency. More importantly, we built a repeatable playbook for M&A integration that sets us up for long-term success. Now we are applying the same playbook to our new acquisition, New Classic Home Furnishing. This move positions us to serve every corner of our industry with even greater depth and capability. Iman and Erica will get into the details shortly, but the headline is simple: We are genuinely excited about the value New Classic unlocks for our marketplace, our partners, and our shareholders. Our success in Europe is another clear validation of this approach, and it reflects the value of long-term strategic positioning. With 68% revenue growth from 2024 to 2025, we expanded our presence in a measured, strategic way, extending the reach of our marketplace and giving our buyers and sellers around the world a more efficient way to transact. Our performance has also given us the financial flexibility to be disciplined with our capital. Investing in growth where we see the highest-conviction opportunities while continuing to return capital through ongoing share repurchases is a core part of how we create durable value. We feel confident in what we have built and where we are headed. We believe this is a business that can perform across cycles, supported by strong execution, a portfolio of durable growth vectors, and disciplined capital management. Now, I would like to turn the call over to Iman for a discussion of our continued progress. Iman Schrock: Thank you, Larry. Hello, everybody. Our marketplace continues to deliver impressive momentum, posting another period of substantial growth. Over the trailing 12 months ended December 31, 2025, marketplace GMV increased approximately 18%, reaching a record of nearly $1.6 billion. Sellers continue to join our marketplace at a strong pace, with our 3P seller base expanding 17% year-over-year on a trailing 12-month basis, reaching 1,299 as of December 31. More encouragingly, GMV from this base grew by 23% to $851 million, as our sellers continued to find success on the marketplace. We added nearly 2,800 new buyers in 2025 on a net basis, bringing our total buyer base to 12,089. By increasing efficiencies and lowering transaction risk, our marketplace is an even more compelling solution for participants looking to operate confidently in a volatile global environment. While global macro trends and policy shifts remain outside of our control, we can and do control the flexibility and responsiveness of our model. We operate with the expectation that conditions will change, and we are structured to adapt quickly. Europe is a clear example. Our focus on Europe as a key growth vector continues to deliver. By shifting more resources and focus to Europe, in light of softness in the U.S. market, we drove tangible results. Europe delivered 68% revenue growth on an annual basis, a key contributor to our double-digit global growth for the full year. This is exactly the kind of agility we built into our model: the ability to identify where growth is happening and redeploy resources accordingly. To build on this momentum, we strengthened our marketplace operations and expanded our infrastructure to seven facilities in Europe. We are building a truly global business. Europe proves that our model travels and that the growth vectors we planted years ago are now delivering. For us, that is the value of long-term strategic positioning: placing disciplined bets, giving them time, and letting the results speak. This is not just about geography. We are applying the same lens across the business, broadening our product offerings, and strengthening our distribution channels. With that in mind, I would like to share an update on Noble House and provide additional context on our more recent acquisition of New Classic. It has been two years since our acquisition of Noble House in Q4 of 2023, and I would like to take a moment to look back on how far we have come. We acquired Noble House out of bankruptcy, a business that was losing close to $40 million a year. We began leaning on GigaCloud Technology Inc.'s superior marketplace model and operational expertise to trim fat and streamline the business. From there, we executed a complete overhaul of Noble House's portfolio offerings, rationalizing SKUs to focus on what works. The process took patience and discipline, and the results speak for themselves. The Noble House portfolio turned to profitability during the earlier half of 2025 and returned to growth in the third quarter of this year. I am pleased to share that we have stabilized the portfolio as of Q4 2025, slightly ahead of our original goal of Q2 2026. Moving forward, we expect to continue refreshing the portfolio through a disciplined cadence of regular new SKU introductions and selective rationalizations, consistent with how a healthy portfolio evolves rather than the comprehensive overhaul we executed in 2025. As of today, all elements of operations for the Noble House portfolio have been fully integrated into GigaCloud Technology Inc. On a go-forward basis, legacy Noble House will be managed as part of GigaCloud Technology Inc.'s larger, growing portfolio. Given the completion of our integration efforts, we do not plan on providing portfolio-specific updates in future calls. The acquisition and integration of Noble House brought us new product capabilities, especially in the outdoor space, as well as wider and deeper distribution channels. It also reinforced what is possible when we apply patience, discipline, and the full weight of our operational expertise and the marketplace model, even in challenging conditions. With our acquisition of New Classic, we see a similar opportunity. On January 1 of this year, we completed the acquisition of New Classic, funded with $18 million cash on hand. The acquisition broadens our product offerings and strategically deepens our foothold in brick-and-mortar distribution, an area where we see meaningful growth potential. We are eager to get to work, apply the same disciplined approach, and capture the value we know is there. On the integration front, we are off to a strong start. The New Classic team brings deep expertise and relationships in the brick-and-mortar space, and we have been working closely to ensure a smooth transition. Similar to Noble House, New Classic will be integrated directly into GigaCloud Technology Inc. rather than being run as a distinct subsidiary. Our focus is on preserving New Classic's strong distribution channels and relationships while thoughtfully layering in GigaCloud Technology Inc.'s marketplace model and operational capabilities with a target integration period of six quarters. We are excited about the growth potential that will come from combining New Classic and GigaCloud Technology Inc. On the revenue side, we see two clear and immediate opportunities. First, we will leverage GigaCloud Technology Inc.'s vast nationwide fulfillment network to expand New Classic's geographic reach, moving beyond the constraints of its current two-facility footprint. Second, we plan to leverage GigaCloud Technology Inc.'s deep supply chain routes and new product development capabilities to widen New Classic's assortment, driving increased volume through its brick-and-mortar channels. We are energized by what lies ahead. Our team is focused on executing with patience and precision, and we believe we are well positioned for the future. With that, I will turn things over to Erica for a discussion of our fourth quarter financial results. Erica Wei: Thank you, Iman, and hello, everybody. A quick note before we get into our results: All figures I cover today are rounded, and unless otherwise noted, comparisons are against the same period last year. Now, let us take a look at our results. We delivered strong fourth quarter and full year results, breaking several records. Fourth quarter revenue was $363 million, up 23% against the prior-year quarter, and full year revenue rose 11% to $1.3 billion. Quarterly diluted EPS grew 37% on a quarterly basis to $1.04 per share, and full year diluted EPS increased 18% to $3.59 per share. Now, let us dig in a bit deeper, starting with service revenue. Service revenue increased 21% year-over-year to $129 million for the fourth quarter. Growth was driven by strong demand from our marketplace participants, including higher last-mile activity, along with higher packaging service revenue and commissions, reflecting larger transaction volumes and increased use of our fulfillment services. These gains were partially offset by a decline in ocean service revenue, resulting from ocean spot rates being meaningfully lower in Q4 2025 than they were in Q4 2024 due to softer overall demand for ocean shipping after Liberation Day across the broader economy. Q4 service margin declined by three percentage points sequentially to 6%, primarily due to cost increases related to peak-season ground fulfillment surcharges, as expected during the holiday season and similar to prior years. Service margin also saw modest sequential pressure from the lower ocean spot rates. Turning to product revenue, product revenue increased by 24% year-over-year in the fourth quarter to $234 million, driven by growth across all operational regions. Breaking that down further, U.S. product revenue totaled $121 million, up 3% year-over-year against a challenging backdrop. We continue to remain disciplined in the current volatile environment, prioritizing profitable revenue over empty volume that does not translate into earnings. Consistent with this approach, we had intentionally paced top-line revenue for the Noble House portfolio earlier this year as we rationalized SKUs to protect bottom-line integrity. I am pleased to share that our efforts are paying off. The Noble House portfolio saw over 40% year-over-year growth on a quarterly basis in Q4, driven by new products and SKUs introduced this year. We are encouraged by the results of our turnaround efforts and are optimistic about the portfolio's future. As Iman mentioned earlier, given the portfolio's full integration, this will be our last standalone update on the Noble House portfolio. Europe product revenue continued to be a strong contributor. Product revenue for the region increased by 64% year-over-year to $98 million total. Product margins increased 220 basis points sequentially to 32.1%. The expansion was driven by several factors, including targeted pricing actions aimed at capitalizing on strong fourth quarter demand, growth in off-platform sales, which typically carry higher gross margins to offset higher selling expenses, as well as benefits from lowered ocean shipping costs. While declining ocean spot rates can negatively impact service margins, they also translate to cost reduction on the product front, supporting product margin expansion. Combining the above, total gross margin for the quarter was 22.9%. Diving into our expense categories, sales and marketing costs for the fourth quarter totaled $29 million and represented 8% of total revenue, compared with 6% for last year's fourth quarter. The increase was due to higher channel-related advertising spend and staffing costs associated with our European expansion. G&A was $11 million, or 3% of total revenue, down from 6% last year due to increased warehouse utilization rates and lower stock-based compensation and administrative compensation compared with the prior-year quarter. Combined, net income margin for the fourth quarter was 10.6%, and net income was $38.5 million, a 24% increase from the prior-year quarter. Our net income growth was further amplified by share buybacks, translating to a 37% year-over-year increase in diluted quarterly EPS to $1.04. We generated $64 million in operating cash flows during Q4, ending the quarter and year with total liquidity, which includes cash equivalents, restricted cash, and short-term investments, of $417 million. We remain debt-free. Our capital allocation plans remain consistent as previously communicated: strategic M&A on an opportunistic basis and returning capital to shareholders through ongoing buybacks. On the buyback front, since the announcement of our latest $111 million share repurchase program in August of 2025, we have executed $33 million in share buybacks at a weighted average price of $31.60 per share, representing 30% of the approved plan. Finishing up with our first quarter outlook, revenue is expected to be between $330 million and $355 million. Operator, we are now ready to begin the Q&A session. Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw, please press star and then two. Our first question comes from Ryan Meyers with Lake Street Capital Markets. Please go ahead. Ryan Meyers: Hey, guys. Thanks for taking my questions, and congratulations on the strong results and the strong quarter. First question for me: thinking about where revenue ended up coming in well ahead of guidance that you previously gave, what were the sources of upside? How should we think about that as a potential lead-in for what you gave for the second quarter guidance and then the range that you gave there? Erica Wei: Hey, Ryan. Thanks for the question. This is Erica. Yes, in Q4, our strongest drivers of year-over-year growth were, A, Europe, which we have seen very strong performance from for the last several quarters, and looking forward, we expect that to continue in the near future. Now, I do want to be clear, we do not expect the region to indefinitely grow at close to 70%. A year from now, we should see some gradual slowing down. The other big grower was Noble House. I think we have talked about this on previous calls several times. There was actually a decline in the first half of 2025 because we were doing a complete overhaul of the SKUs in that portfolio. What that meant exactly was we had, at the time, taken out a lot of the SKUs that were not performing as well, not quite as profitable as we would like them to be, and replaced them with new SKUs. There was a period where revenue was down, and Q3 and Q4 were when the new SKUs that we introduced really started kicking in, or the efforts started paying off, and we saw really quite strong growth of over 40% in Q4 of this year. Looking ahead to Q1, I would also expect strong contribution from that portfolio and, down the line, that will tend to taper off slowly as we become more and more stable. Ryan Meyers: Okay, makes sense. Gross margin, I think you briefly had called it out. It came down a little bit from last quarter but was up year-over-year. What were the main drivers of that? How should we think about the gross margin in the first quarter here? Erica Wei: For overall margin, you really do have to look at product and service separately. If we look at service first, the main driver, if we are looking at year-over-year, the biggest one is for sure ocean, right? We all know what happened there. Ever since April, overall demand for ocean services globally has been down, and I am not talking about GigaCloud Technology Inc. or even the furniture industry. I am talking about the broader economy. Spot rates are a lot lower than what they were in 2024. We actually moved more containers this year than last year, but because of the lowered price per unit, overall revenue and margin from that piece are down. If we look at it sequentially, usually we do see a bit of compression coming out of Q4 because of last-mile surcharges that our vendors charge, and these tend to go away around mid-January. Product-wise, we did see very strong performance. Europe was for sure our strongest region. Then, for all of our geographical regions, we also saw stronger or higher off-platform channel sales. Usually, those have higher gross margins because of the higher sales and advertising expenses that come with them. Does that answer your question, Ryan? Ryan Meyers: Nope, that does. That makes sense. Thank you. Erica Wei: Thank you. Operator: The next question comes from Joseph Gonzalez with Roth Capital Partners. Please go ahead. Joseph Gonzalez: Good morning, guys, and congratulations on another good quarter. This was already asked, but approaching it from a different angle, as we look to your 1Q sales outlook, is there any way you can break out service versus product here in growth? Also, any color on New Classic contributions as we look into 1Q? Erica Wei: Yes, thank you for the question. We do not really have a breakdown specifically for product and service, but overall, we do expect the trend—or kind of that they were growing at similar speeds this quarter—to continue for the coming quarter, and the guidance that was given does indeed include New Classic. For Q1, we expect revenue from that portfolio to be in the probably mid-teens. Joseph Gonzalez: Got it. Okay. Again, just looking as we look into 1Q, thoughts on service gross margin recovery. It looks like services came in at roughly 6%. I know you just answered that it is mainly coming from ocean spot rates. Any color as we are heading into 1Q in 2026 on gross margin expansion on that front? Erica Wei: Sequentially, I do expect a bit of recovery, mainly because of the change in last-mile costs. Usually between November and mid-January, we see increased costs from our vendors because of the holiday season and the very high volume. Once that goes away, in Q1, usually last-mile margins recover a bit, and then on top of that, we have also been conducting a little bit of pricing increases in Q1. Joseph Gonzalez: Okay, got it. Thank you. If I could just squeeze one more in here, any preliminary thoughts on ocean freight? I know we have seen compression in 2025. I just want to see what your preliminary thoughts are on service gross margin this year and how it may be impacted. Erica Wei: Great question. Unfortunately, I am not able to really predict the future when it comes to ocean spot rates. I really wish I could. With that said, what we are seeing at the moment is things seem to be pretty stable, and they are at a point that I would consider fairly low if we look back at the last two years. Joseph Gonzalez: All right. Got it. We will go ahead and take the rest offline. Thank you again. Erica Wei: Thank you. Operator: This concludes our question-and-answer session. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab's Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. It's now my pleasure to turn the floor over to Christine Chiou, Senior Vice President of Investor Relations. Thank you. Please go ahead. Christine Chiou: Thank you, operator. Hello, and welcome, everyone. Today's earnings call will be led by Dr. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer; Dr. Rafael Amado, President and Head of Global Research and Development; and Dr. Yajing Chen, Chief Financial Officer. Dr. Shan He, our Chief Business Officer, will also be available to answer questions during the Q&A portion of the call. As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to adjusted loss from operations, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on February 26, 2026, for additional information on this non-GAAP financial measure. At this time, it is my pleasure to turn the call over to Dr. Samantha Du. Ying Du: Thanks, Christine. Good morning, and good evening, everyone. Thank you for joining us today. Zai Lab is at an important point in our evolution. We are building a company increasingly defined by global innovation, resting on a foundation supported by a commercially profitable China business and R&D infrastructure. Today, our global oncology, immunology pipeline is reaching a scale and maturity that fundamentally changes the profile of this company. We have multiple global programs advancing rapidly through the clinic and with zoci in pivotal stage. We see a clear path toward our first potential U.S. approval by 2028. Importantly, we advanced zoci from IND to global Phase III in less than 2 years, an industry-leading pace that reflects the strength of our integrated U.S. and China development model. This capability enables faster, more capital-efficient execution, is now being applied across our broader pipeline. Our China business continues to provide stability and leverage for our global R&D efforts. Despite a challenging macro and operating environment, full year revenue grew 15% year-on-year, and our commercial profitability continues to improve. Looking ahead to 2026, our priorities are very clear. This is a year focused on execution and preparation. We expect several meaningful pipeline catalysts, including clinical data for zoci in brain metastasis, neuroendocrine carcinoma and first-line small cell lung cancer as well as first-in-human data from our IL-13/IL-31 receptor bispecific program in atopic dermatitis. On the regional side, we have important pivotal data readouts for large opportunities such as povetacicept in IgAN and elegrobart in thyroid eye disease, both of which enhance the durability of our China growth engine. Business development remains an important lever for us. Our presence and capabilities in China provides access to one of the world's most important fast-evolving innovation ecosystems, creating opportunities that can meaningfully strengthen and prioritize both our global and regional pipeline. Ultimately, our objective is to build a company that can make a lasting difference for patients while creating substantial value for shareholders. With that, I'll now hand the call over to Rafael, who will walk you through the progress of our R&D pipeline. Rafael? Rafael Amado: Thank you, Samantha. 2025 was a year of significant progress for our R&D organization as we continue to build globally competitive pipeline. Over the course of the year, we initiated a pivotal trial in oncology, advanced one additional oncology program into the clinic and moved our lead immunology asset into clinical development. With that, I'd like to walk you through our progress, starting with zoci, our potential first and best-in-class DLL3-targeting ADC and a cornerstone of Zai Lab's global oncology portfolio. In second-line and third-line small cell lung cancer, we have initiated a global registrational Phase III study, which will enroll approximately 480 patients across second-line post-platinum and third-line post-tarlatamab settings with a control arm reflecting real-world global practice, including topotecan, lurbinectedin or amrubicin. Importantly, zoci has advanced at a rapid pace, significantly faster than is typically observed for programs in this space. Based on current time lines, we anticipate a potential accelerated approval submission in 2027 and our first global approval in 2028. Clinically, zoci has demonstrated encouraging efficacy in heavily pretreated extensive-stage small cell lung cancer, including an 80% objective response rate in 10 patients with untreated brain metastases. The ability to treat both intracranial and extracranial disease without treatment interruptions represent a meaningful potential advantage for patients, and we look forward to presenting this data in the coming months. Equally important, zoci continues to stand out for its favorable safety profile with low rates of severe treatment-related adverse events. We believe this profile supports zoci's potential role as a backbone ADC in first-line combination regimens, including those that reduce chemotherapy burden. We plan to initiate a first-line pivotal trial in small cell lung cancer and to advance zoci into additional novel combination regimens before year-end. Beyond small cell lung cancer, we see a compelling opportunity for zoci in neuroendocrine carcinomas or NECs, a large underserved population with no approved DLL3-targeted therapies. Enrollment in our global Phase Ib/II is progressing very well, and we plan to present initial data this year with the goal of initiating a registration-enabling study by the year-end. Taken together, we believe zoci's differentiated efficacy and safety profiles, including activity in brain metastases, positions it to address a significant unmet need across small cell lung cancer and neuroendocrine carcinomas where the total addressable global market is estimated to exceed $9 billion. Beyond zoci, our next wave of innovative global assets continues to advance rapidly. ZL-6201, our internally discovered LRRC15-targeting ADC, received U.S. IND clearance and the global Phase I study was quickly initiated thereafter. ZL-1222, our PD-1/IL-12 immunocytokine is progressing through IND-enabling studies and ZL-1311, a next-generation T-cell engager or TCE targeting MUC17, represents our first globally owned TCE with an IND planned by year-end. In immunology, ZL-1503 is our internally discovered IL-13/IL-31 receptor alpha bispecific antibody for atopic dermatitis and is designed to address both itch and inflammation with the potential for enhanced and faster onset of efficacy associated with less frequent dosing than current biologics. The global Phase I/Ib study is enrolling well, and we expect first-in-human data later this year. Now turning briefly to our key late-stage regional programs, starting with our immunology portfolio. Efgartigimod continues to expand across multiple autoimmune indications with ongoing development across a broad clinical program. Recent late-stage results support further label expansion and additional Phase III readouts are expected this year and next with China being a valuable contributor to global enrollment. Povetacicept remains on track with an interim analysis for the global RAINIER Phase III study for IgAN planned for the first half of 2026, and enrollment is ongoing in the global pivotal OLYMPUS Phase II/III study for primary membranous nephropathy. Lastly, for elegrobart, our partner, Viridian expects to report top line data for the global registrational REVEAL-1 study in active TED. This will be in the first quarter of 2026, followed by top line results from the global registrational REVEAL-2 study in chronic TED in the second quarter of 2026. Elegrobart has the potential to become the first subcutaneous IGF-1R therapy approved for TED in China. Turning to our local oncology portfolio. For TIVDAK, we expect approval in China in the first half of 2026, which will build naturally on our established ZEJULA commercial platform, further deepening our leadership in women's cancers. Finally, for Tumor Treating Fields, the FDA approval for Optune Pax in locally advanced pancreatic cancer earlier this month represents an important milestone in this disease, and we will work closely with China's NMPA under the innovative medical device pathway to support an expedited review. Together, these achievements reflect the depth and quality of our pipeline, one that is advancing with speed and efficiency. And with that, I'll hand it over to Josh. Joshua Smiley: Thank you, Rafael, and hello, everyone. Before getting into quarterly performance by product, I want to briefly frame how the business progressed more broadly in 2025. During the year, we made important progress across market access, portfolio optimization and business development. We successfully completed NRDL renewals for key products and achieved guideline updates supporting VYVGART in generalized myasthenia gravis and KarXT in schizophrenia, both of which strengthen the durability of our commercial portfolio over the long term. At the same time, we sharpened our focus by divesting noncore assets and regions, allowing us to reallocate resources toward higher priority growth opportunities and to improve operational efficiency. From a business development perspective, we maintained a highly selective and strategic approach. During the year, we entered targeted collaborations to explore novel combination strategies in first-line small cell lung cancer and strengthen our oncology platform with the addition of a MUC17/CD3 T-cell engager. Together, these actions reflect our disciplined approach to external innovation, complementing our internal pipeline while preserving financial flexibility. With that broader context, I'll now turn to our quarterly commercial performance. Fourth quarter revenues increased 17% year-over-year to $127 million, and full year revenues grew 15% to $460 million, reflecting steady progress across our commercial portfolio. Starting with VYVGART. Physician confidence remains strong and patient demand has been stable. Fourth quarter revenues, however, reflected channel dynamics related to NRDL renewal and hospital purchasing patterns. In 2026, we expect a more measured near-term growth profile influenced by pricing dynamics and evolving competition. The long-term trajectory of the franchise remains intact, supported by clinical guideline expansion, affordability initiatives and additional indications and formulations. Turning briefly to ZEJULA. We delivered a strong fourth quarter driven by first-line BRCA-positive new patient starts. While some variability is expected early in the year due to volume-based procurement dynamics for olaparib and seasonality, ZEJULA remains well positioned in the first-line setting. Looking ahead, KarXT represents a significant near-term growth opportunity. We expect to initiate the commercial launch in the second quarter of 2026 with a clear focus on disciplined execution, building disease awareness, establishing clinical confidence and laying the groundwork for broader adoption. Recent inclusion in a national expert consensus on negative symptom management builds on last year's inclusion in national treatment guidelines and reinforces growing recognition of KarXT's profile. In summary, 2026 is a year focused on maintaining the strength and stability of our existing business while preparing for multiple growth opportunities ahead. That includes continuing to build the VYVGART franchise, executing a high-quality launch for KarXT in schizophrenia and advancing key late-stage assets such as povetacicept in IgAN, elegrobart in TED and TTFields in pancreatic cancer. The investments we are making across commercial and R&D today are designed to support a multiyear growth trajectory extending well beyond 2026. And with that, I will now pass the call over to Yajing to take us through our financial results. Yajing? Yajing Chen: Thank you, Josh. Now I will discuss highlights from our fourth quarter and full year 2025 financial results compared to the prior year period. Fourth quarter total revenue grew 17% year-over-year to $127.6 million, driven by strong contributions from XACDURO and NUZYRA. XACDURO performance reflected strong patient demand and expanding hospital adoption, though supply constraints during the year limited the full realization of underlying demand. NUZYRA continued to benefit from broader market coverage and increased penetration. Total revenues for the full year were $460.2 million, representing 15% year-over-year growth. Turning now to our expenses. Our commitment to financial discipline is reflected in improved operating leverage with both R&D and SG&A declining as a percentage of revenue year-over-year. R&D expenses for the full year declined 6%, driven by lower personnel compensation costs and increased in the fourth quarter due to fast progression of global clinical trials. SG&A expenses decreased 12% and 7% year-over-year for the fourth quarter and full year, mainly due to the reduction in general and administrative expenses because of strategic resource optimization. As a result, loss from operations improved 19% for the full year to $229.4 million and improved 25% when adjusted to exclude noncash expenses, including depreciation, amortization and share-based compensation. We maintain a strong cash position, ending the quarter with $790 million. Looking to 2026, our focus remains on strengthening the foundation of our regional business, executing across our global pipeline and thoughtful capital deployment to support both near-term launches and the long-term growth drivers. With a strong balance sheet, we are well positioned to execute against these priorities. And with that, I would now like to turn the call back over to the operator to open up lines for questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Jonathan Chang of Leerink Partners. Jonathan Chang: First question, can you provide any color on how we should be thinking about revenues and expenses for 2026? And then second question on the global pipeline for zoci, can you remind us of the implications of the intracranial activity in patients with brain mets? And how does this impact the opportunity and positioning of the drug? Joshua Smiley: Thanks, Jonathan. It's Josh. I'll start with 2026, ask Yajing to make a comment, and then we'll hand it over to Rafael to talk about zoci. I think as we think about 2026, as we mentioned on the upfront comments, we see good growth opportunities for VYVGART. We're seeing good volume gains throughout the second half of the year. We expect that to continue in 2026. We're pleased with how we're -- how we ended the year with ZEJULA. And while we're facing a generic market now for Lynparza, we expect to continue to hold our position and in some cases, hopefully grow. XACDURO should be a good driver for us this year. And of course, then we've got a couple of important launches coming. COBENFY in the second quarter, we will begin our commercial launch and then TIVDAK later this year. So I think when you think about those things together, certainly, we're looking for good commercial performance and good growth on the top line for the year. For expenses, I think we're in good shape on SG&A, very modest investments required to support launches. Obviously, we're going to put the field sales force in place to launch COBENFY, and that will drive some incremental costs. But I think otherwise, we're in good shape as it relates to synergies and efficiencies across our SG&A. R&D should be relatively in line with what we've seen in the last few years. Obviously, big focus and resource allocation to our global portfolio. But as some of our late-phase opportunities start to -- in China start to come offline, we've got capacity there. So I think sort of flat to very modest growth in R&D. So this year, pretty straightforward thinking. Obviously, we've got some pushes and pulls as it relates to when things are approved and when we get them into the market and otherwise. I think then as we think about '27 and on, we'll start to get the benefits of these launches like COBENFY and TIVDAK and some of the assets that Rafael talked about in his upfront comments. Yajing, I don't know if you want to add anything to that? Yajing Chen: Maybe just to add a little bit more dynamics in 2026. I mean 2026 is a transition year. I think underlying demand growth, as Josh talked about, is very true. Also, we want to be mindful of other dynamics, moving pieces, including the IV -- the VYVGART IV price adjustment and maybe later on the rebate dynamics in the fourth quarter for VYVGART, the Hytrulo. So -- and then we are sort of like looking at the hospital budgeting purchasing behavior as well. So this is part of the reason that we want -- we are probably not going to provide the full year guidance at this time, but those are the moving pieces. When we get more clarity, we can share more specifics later in the year. Joshua Smiley: Thanks, Yajing. Rafael, do you want to talk about zoci, please? Rafael Amado: Yes, absolutely. So brain metastases, obviously, in this disease is a big problem. About 70% of patients develop brain metastases. And I think the speed with which patients' experience responses with zoci is well appreciated among investigators and it's actually one of the key properties of the molecule. So we've reported up to 80% response rates in patients with untreated metastases. So there are 2 situations. If a patient comes in with brain metastases, oftentimes, they have to have brachytherapy or some local regional therapy, which delays systemic therapy, whereas if it's an uncomplicated untreated met, patients can go into zoci directly. And we see, again, pretty high activity in the brain. The other is there are some drugs that may have activity, but then there is a high rate of relapse in the brain where the brain is a sanctuary site. So using zoci prevents recurrences in the brain, which is really important. So we've reported in RECIST criteria before, and we're planning to report now in the first half of the year using RANO criteria, which is a response assessment that is used in neuro-oncology is a much more stringent one where it's bidimensional and uses 50% instead of 30%. So it really characterizes the responses in the brain, and we look forward to presenting that in the first half of this year. Operator: [Operator Instructions] Our next question comes from the line of Li Watsek from Cantor. Li Wang Watsek: I guess my first question is more about sort of the U.S.-China development model that you alluded to in the opening. So I just wonder, can you elaborate a little bit more other than maybe sourcing assets from the region? I guess, how much clinical derisking or time line acceleration can you achieve by leveraging some of the resources in the region? Joshua Smiley: Thanks, Li. It's Josh. Rafael, why don't you talk a little bit about this point to Li's question? Rafael Amado: Sure. So our model obviously has been speedy development in China based on pretty efficient development structure as well as regulatory and other functions in China, and that's led to the success of registrations local regionally. And now we're applying that speed, relationship with investigators and sites to add China to global trials or to be the sole site when we want go/no-go decisions with products. So we now have all our global trials really, including China participation, and that really has allowed us to move with speed and quality. So, that will be also the case for Phase III studies. We expect that China will participate and enroll about 1/3 of the patients, at least that's our expectation, for instance, on our current pivotal trial in second-line with zoci. So I think all in all, this efficiency that we have built over the course of the past 10 years in China is serving us well as we are now expanding our pipeline towards global assets. And we are seeing the fruits of that by, for instance, zoci moving within 2 years to Phase III from IND as an example. Li Wang Watsek: Okay. And then my second question is on zoci. And obviously, you guys are going to present data in neuroendocrine. So just wanted to get a little color in terms of expectations, what sort of data you guys going to present, what's good data? And in terms of regulatory pathways, can you maybe just conduct a single-arm study to get approval, maybe expand a little on that as well? Rafael Amado: Yes. NEC is a complex group of diseases and first-line is treated with chemotherapy. There is the gastroenteropancreatic subgroup and then other neuroendocrine carcinomas that exclude lung because lung tends to have a different prognosis. And when you look across the board in second-line, chemotherapy really has dismal activity in terms of response rate and PFS. So our study has started in second-line and is looking at GEP, neuroendocrine carcinoma, non-GEP neuroendocrine carcinomas or extrapulmonary. And then there's a group that is looking at neuroendocrine tumors, which are less aggressive. So an initial data set will be presented in second-line. We are pleased with what we're seeing thus far. We will have, I think, sufficient patients to make an assessment in terms of the response. The durability may be limited, but we think that there's enough information there to present in the first half of this year. And there may be about 60-plus patients that will be included in this analysis. Like you said, we are sort of ourselves seeking a regulatory path for NEC in second-line. And this is actually the subject of regulatory discussions that we're initiating now in terms of whether a single-arm would be sufficient or whether a randomized trial would be required. It's unclear what the control arm would be in the second option, but it's still a possibility. So those discussions are beginning now as we uncover the data. And we're also thinking about what to do in frontline as well. As you know, some T-cell engagers are getting into this space, and we would probably consider something in first-line in combination, but that is standalone in the future. We want to sort of see what we can do to help patients in second-line where options are just scarce. Operator: [Operator Instructions] Our next question comes from Michael Yee of UBS. Michael Yee: We have 2 questions. First, just wanted to understand, given all the thoughts and comments you have talked about regarding steady revenue growth and pushes and pulls as it relates to financials this year. Does the company believe that they could achieve breakeven or profitability by the end of the year? Do you think that's something that is achievable given what we had expectations for last year? And then the second question is, obviously, zoci and DLL3 are critically important. What is the expectation for completion of enrollment and the timing of reading out the primary endpoint on response rate in order to file? Joshua Smiley: Great. Thanks, Mike. How about Yajing, you talk about the cash flow, and then we'll hand it over to Rafael. Yajing Chen: Yes. So our corporate profitability, I mean the cash flow breakeven is definitely continue to be a very clear objective for Zai Lab. We will manage the business accordingly. Our business right now is commercially profitable today. That provides a stable foundation for the company. At the corporate level, I think the timing of the profitability is really driven by the 2 primary factors. One is the top line growth, the rate of the growth and the other one is the level of investment that we choose to make in the high-value global programs. So I think at this time, we remain efficient, disciplined in our spending. We do expect the corporate profitability to emerge. I won't be able to share the guidance for 2026, where we're going to be, but that's definitely the goal for us to continue to drive. And also, I want to mention that we are focused on progressing towards the goal, but also focus on continue to expand our global pipeline. So we do want to preserve the flexibility to invest when we see the strong value. Joshua Smiley: Thanks, Yajing. Go ahead, Rafael. Rafael Amado: Thanks, Josh, and thanks, Michael, for the question. So the study started in December. It's a global trial. It started in the U.S. first, and China is coming online imminently as Europe will and North America and other countries in Asia as well, Asia Pacific. Our plan is to have about 75% of the patients enrolled by the end of the year. We have to have everybody enrolled before we do the interim analysis for response. And we think that we will finish enrollment at the end of the first quarter of next year and do the analysis and subsequently file. So we're hoping for an approval in 2028. And the study, as you know, is a combination of second-line as well as post-tarlatamab patients, and we're balancing the accrual of each one of those subgroups in the study. So 2027 end of accrual and filing and 2028, hopefully, accelerated approval. Operator: [Operator Instructions] Our next question comes from Yigal Nochomovitz from Citigroup. Caroline DePaul: This is Caroline on for Yigal. Could you talk about your strategy to grow VYVGART, specifically how to increase cycles per patient? Joshua Smiley: Thanks, Caroline. VYVGART, we are focused on moving the cycles per patient to the minimum of 3, which is what's embedded in the national myasthenia gravis guidelines in China that were updated in July of last year. Of course, in the clinical data, getting out to 5 or more over a 12-month period demonstrates really significant benefits. But our focus right now is on 3. We're making reasonable progress, and we made reasonable progress in 2025. We -- if you just look at average cycles closing out the year in 2025, we improved versus 2024 by more than 50%. So we're on the way, but we're not yet on average at 3. So I think we've got a couple of key initiatives to help drive that focus. I mean the first is to leverage the guidelines, and that's through our medical professionals and our sales professionals. And I think that's really important, and we're seeing the benefit of that. We know guidelines make a big difference in China. They make a big difference in most markets. And this has been just -- it's been a build the market approach with VYVGART. So I think we're making good progress there and certainly have the clinical data and now the national guidelines to support that. We are also working on affordability initiatives, while NRDL listing is clear for VYVGART, patients do pay co-pay and pay out of pocket. So we've got in place an online support program that helps patients navigate things like appointments and resources and otherwise to help on the logistics and the co-pay. We have a targeted co-pay assistance program that helps, and it really is focused on the national guidelines and focused on ensuring we can get patients out to 3 cycles without -- with as minimum economic burden as possible. We are seeing the benefits of those focus points. And I do expect during the year that we'll continue to see good expansion in duration of therapy and get the majority of our -- certainly patients who are in the acute phase of the disease, the majority of those patients, I think this year are going to get to 3 and more cycles. We also, this year, though, are expanding, really focusing on patients who are in the non-acute phase. They, of course, also benefit from long-term therapy and getting 3 or more cycles, but that's probably going to be a little bit longer climb to get there. So I think as we look at the data throughout the year, we've got great patient expansion opportunities by leveraging our strength in acute patients, moving to non-acute. Those acute patients, I think the initiatives are underway and having results that will get us out to those on average, 3 or more cycles. And then the non-acute patients will start to pick up and add certainly good volume growth throughout the year. So I think that's -- we're quite excited about the opportunities with VYVGART this year, the opportunities to get to many more patients and for them to get the full benefits of the drug through persistence and duration. Operator: [Operator Instructions] Our next question comes from Anupam Rama from JPMorgan. Anupam Rama: On the global second, third-line DLL3 study, which is enrolling patients, you kind of talked about this, but can you remind us what the ultimate regional breakdown of sites is going to be given this is a global effort? And is there a breakdown of patients that need to be ex China, for U.S. and more global approvals? Joshua Smiley: Thanks, Anupam. I'll start, but Rafael can talk about the enrollment and how we're thinking about that. But I think first, if we look at small cell lung cancer and focus first on the U.S., I think in the second-line and later settings, we see about 15,000 patients available. First-line is probably 25,000. If we sort of look at that on a major market, Western market sort of look, that's probably 100,000 patients total in small cell lung cancer that are eligible for treatment in first or later-line settings. So it's a big opportunity. And of course, when we sort of size that and you guys have done this as well, it's approaching $10 billion probably in terms of total opportunity, and we think zoci can fit really well in that space. I think when we look at neuroendocrine, we're probably in the U.S., it's somewhere in that [ 5,000 to 10,000 ] sort of range, maybe similarly in other markets. We have more to learn here, I think, as we continue to work through the trial. But it's not insignificant, I guess, is what I would say. Rafael, maybe you can talk about enrollment. Rafael Amado: Sure. The distribution, I think, of the countries and patients coming from China and other regions is really designed to make sure that we have enough patients post-tarlatamab that reflect real-world usage in the United States. That may be up to 30% of patients or so coming from the United States. About 30% of patients will come from China. This is a reasonable number. I don't think it's ever been questioned that a percent of patients of that magnitude can jeopardize approval in a positive study. The rest of the patients will come from Europe. in terms of post-tarlatamab patients, obviously, we count on Japan as well. We count on the U.K., some countries where a lot of studies have been done with tarlatamab. And obviously, the United States where tarlatamab is gaining market share. So I think that's probably the distribution that you should expect on the study. Operator: [Operator Instructions] Our next question comes from the line of Cui Cui of Jefferies. Cui Cui: So I have 3 questions for the management team. The first one is as a follow-up to the JPMorgan question. So could you please share some more details on zoci? So because for this time, we are also very excited to see the clinical trial design for the first-line small cell lung cancer, including the [ combo regimen ] and also for the strategy of NEC. Will it also be advanced to the first-line treatment in the future? And my second question is regarding the KarXT. So what should we expect from KarXT in 2026 and 2027? And how will you build your commercialization team going onward? And my last question is also -- because for the past 1 year, we also saw some deals regarding the autoimmune bispecific. So can we talk about some [Technical Difficulty]... Joshua Smiley: Thanks, Cui Cui. Rafael, why don't you start and then I'll come back in with the next 2. Rafael Amado: Yes. Maybe I'll focus on the first-line opportunity. I mean just the overarching sort of desire for zoci to be the centerpiece ADC for different lines of therapies and combinations. And that is because of its low incidence of grade 3 toxicity, activity in the brain and high response rate really and durability. So on first-line, we've seen in the first study, the Phase I/II study 001, we've been enrolling patients in first-line for some time. We started with a doublet with atezolizumab and then a triplet adding carboplatin. And we hope to present mature data towards the second half of this year. We have -- just to give you a sense, we've treated about 60 patients or so, and we continue to follow these patients. I think once we have an idea of the activity, we will then make a decision of what the design of the frontline study should be. Our desire is for it to be one that spares chemotherapy. But also, we have our eyes on how the frontline set of landscape is going to change with the entrance of IMDELLTRA potentially in frontline and other TCEs in frontline. And if we continue to see this high level of activity, we will be testing with other agents as well to see whether this combination offers even more activity for patients in first-line. So I think stay tuned to the data, but our final design will be when we actually see the entire durability and activity in first-line with the data that we've been able to elicit from the Phase I/II study. Joshua Smiley: Thanks, Rafael. I'll talk about KarXT for a minute. Cui Cui, we're really excited about this opportunity, was approved without only -- product approved without a black box in this setting, first new mechanism in more than 70 years. So there's a really exciting introduction here. We'll launch the product commercially in the second quarter. So we're going through all the process now of getting product in and labeled and inspected and otherwise. So second quarter, we'll be out with the product in the market. Of course, we don't have NRDL listing this year, just given the timing, but we do expect that in 2027. So this year's focus will be on getting physicians' experience using the drug, getting a commercial team up and running. I think prescribing here is really concentrated in China. So while there were, I think, in 2024, over 2 billion days of atypical antipsychotic prescription use. We -- when we look at how that's prescribed and how it's managed, it's probably 800 institutions, give or take, that make up a vast majority of that volume, at least from a sort of initial prescribing and monitoring perspective. So we'll focus on those institutions at launch. That generates something in the range of 100 plus or minus sort of commercial team. So very focused this year, and we'll expand as necessary, but we do see this as a relatively efficient big opportunity. And again, for this year, I think in terms of financials, I wouldn't expect significant sales. Again, this is going to be a non-NRDL product for patients who otherwise aren't going to have things like commercial insurance or other access to payment mechanisms. But for 2027, I think if you look at NRDL and how to think about this, if you look at the branded olanzapine, for example, it's in the range, I think, of about $5 a day on NRDL, paliperidone, similar. So there's, I think, a pretty straightforward reference here. Final comment I'll make on KarXT is I do think this is a relatively straightforward opportunity. Atypical antipsychotics are monotherapy, is like 90-plus percent of the standard of care today. This is a drug that brings great additional benefits in terms of safety and negative symptoms, and we'll be educating physicians on those points this year in preparation for what I think will be an exciting unlock in terms of financial value beginning in 2027. On business development, we've got Shan on the phone and Rafael, we're spending a lot of time around the world looking at opportunities. But certainly, as you mentioned, I think if you look at the innovation happening in China, particularly in areas that we're interested in oncology and immunology modalities like ADCs and T-cell engagers, there's a lot of good opportunities to pick from, and you should expect us to continue to do that. We announced recently a deal on the MUC17, which I mentioned earlier. And I think that's kind of our typical kind of deals you should think about from us would be late preclinical targets that are -- have some biological precedence and where we can move fast, leverage the clinical development expertise that Rafael talked about earlier and have a chance to introduce first and best-in-class products in oncology and immunology to the world, and we're really excited about that. Operator: We will now take the last question from Linhai Zhao from Goldman Sachs. Linhai Zhao: My question is around zoci. The first one is regarding the Phase III trial for the second-line small cell lung cancer. Understood that the current clinical protocol does not take tarlatamab as a control arm, but it was allowed to be available both as a prior treatment option and the post-progression treatment options. So on that end, I want to collect your thoughts on the potential risk of having an elongated OS for the control arm given that you're allowing tarlatamab both before and after the second-line treatment? That's the first question. And the second question is about first-line. Understood that you're going to share the Phase I trial data for both doublet and triplet in the second half. And just want to collect your detailed plans about when do you want to make a decision on what to choose from doublet versus triplet in first-line? Joshua Smiley: Go ahead, Rafael. Rafael Amado: Thanks for the question. Maybe let's start from the second one. In terms of first-line, we would like to start the first-line study, Phase III study this year. So in spite of the fact that it may take some time for us to see durability, we may just use a landmark in terms of patients without progression at a given number of months and then make a decision. And again, our strong desire is to spare chemotherapy because that's really what leads to most of the morbidity. And most patients can only get about 4 cycles of carbo/etoposide and a checkpoint inhibitor because they progress, actually, the majority of them, some of them are intolerant. So if we're able to give more therapy with ZL-1310 plus a checkpoint inhibitor with the kinds of responses that we see in second-line, we should be better in first-line, and we think we stand a good chance of actually having a positive trial. So that's for first-line. I expect that we will launch a study by the end of the year. And then with regards to your question about tarlatamab, I mean, the patients will be post-tarlatamab in both arms, but they can only come in if they have progressed on tarlatamab. So they -- some may have responded and progressed, some may have been de novo resistant patients, but they will be equally in each arm and the study is stratified for post-tarlatamab versus no tarlatamab. So in that regard, I think each arm will perform equally. With regards to post-progression therapies, the same things apply. We obviously cannot control post-progression therapy. Some patients may get tarlatamab, some may get lurbi, some may get something else. But they should, because it's a sufficiently large study, get those therapies equally in each arm. So whatever advantage tarlatamab may afford in terms of survival, it should be the same in each one of the arms. So we're not really concerned about bias here, particularly in the post-tarlatamab patients that entered the study because they're stratified, and again, they can only come in if they have progressed. So I hope this answers your question. Linhai Zhao: Just to quickly clarify that you're saying that you're not really concerned about bias between the 2 arms. Can you share a bit more because I would say if the patients use zoci in the second-line, would the physicians still wish to use tarlatamab after zoci? Rafael Amado: The physician may use tarlatamab after zoci, but so could they after topotecan, for instance, or lurbinectedin. So I guess what I was saying is that tarlatamab is a post-progression therapy, which, again, in survival studies, in any study, we cannot control, but they should be used equally frequently in both arms, because once they progress, it's up to the investigator to decide what therapy to use. Operator: We have come to the end of the question-and-answer session. With that, I would like to hand the call back to Samantha Du for closing remarks. Ying Du: Thank you, operator. Thanks, everyone, for taking the time to join us on the call. We appreciate all your support and look forward to updating you again after the first quarter of 2026. Operator, you may now disconnect this call. Operator: Thank you. That concludes today's conference call. Thank you all for participating. You may now disconnect your lines.
Joahnna Soriano: Good afternoon, everyone. Thank you for joining us today, and welcome to Ayala Land's Full Year 2025 briefing. Let me begin by introducing our panel, Meean Dy, President and CEO; Jed Quimpo, CFO and Treasurer; Mike Jugo, Head of the Premium Residential Business Group; Mariana Zobel De Ayala, Group Head for Leasing and Hospitality. We are also joined today by members of our management committee, Robert Lao, Head of Strategic Growth, New Ventures and Central Land acquisition; Darwin Salipsip, Group Head of Construction Management; Raquel Cruz, Head of the Core Residential Business Group; and Isa Sagun, Chief Human Resource Officer. We likewise acknowledge your presence of our broader management team. Please note that the press release and presentation materials are available on our Investor Relations website. For any questions that we may not be able to address during the briefing, we will respond via e-mail at the soonest possible time. At this point, I'd like to turn it over to our CFO, Jed Quimpo for his presentation. Jose Eduardo Quimpo: Thanks, Joe. Again, good afternoon to everyone, and thank you for joining us this afternoon for our full year 2025 analyst briefing. Allow me to present the key highlights of our 2025 financial and operating results, and then I will give the floor to our CEO. We are pleased to report that Ayala Land delivered total revenues of PHP 190.2 billion, up 5% versus prior year and net income of PHP 39.1 billion, up 39% versus prior year. Excluding gain from our sale of our 50% stake in Alabang Commercial Corporation and what we call as core revenues. Core revenues amounted to PHP 178.9 billion just 1% below prior year, and core net income reached PHP 30.6 billion, up 8% versus prior year. We invested in capital expenditures totaling PHP 92.9 billion, up 10% versus prior year with notable increase in our leasing and hospitality asset investments. Our balance sheet remains strong with net gearing ending at 0.78:1 within our guardrails on leverage. On portfolio segment revenues, despite market headwinds, Property Development revenues reached PHP 113.9 billion, plus 1% versus prior year following strong bookings of estate lots and offices for sale offsetting lower residential revenues. Leasing and Hospitality revenues reached PHP 48.7 billion, plus 7% driven by broad-based growth across all our segments, this despite ongoing renovations in key malls and hotels. Service revenues was down to PHP 11.8 billion, minus 34%, as a result of lower third-party contracts of our construction business and the absence of airline revenues, which we sold late 2024. Interest and other income was up PHP 15.8 billion primarily driven by gains from the sale of our stake in Alabang Commercial Corporation amounting to over PHP 11 billion. On our income statement, first, as mentioned, total revenues reached PHP 190.2 billion, plus 5% versus prior year. This is on the back of, number one, real estate revenues reaching PHP 174.5 billion, just slightly lower versus prior year as we saw stable property development revenues, improving leasing and hospitality revenues, but tempered by lower service revenues. Our interest and other income was up 275% primarily driven by the sale of Alabang Commercial Corporation. Total expenses reached PHP 134.1 billion, down 3%. We registered lower real estate expenses, PHP 104 billion, down 7% driven by the revenue mix where there was an increase in sales of estate lots an increase in share of leasing business in our overall mix and the absence of airline expenses. General and administrative expenses amounted to PHP 10 billion, up 9% and we registered a GAE ratio versus core revenues of 6%. Interest expense, financing and other charges amounted to PHP 20.1 billion, primarily driven by 2 factors. First, increase in total borrowings and increase in cost of debt; and number two, in 2024, we reversed provisions previously made for airline operations following its sale late 2024. Earnings before income tax came in at PHP 56.1 billion, registering EBIT margin of 40% and on a core EBIT margin basis 36%, 300 basis points better versus prior year. Provision for income tax was at PHP 10.5 billion with an effective tax rate similar to that of prior year. Noncontrolling interest increased by 7% to PHP 6.4 billion, mainly due to the higher net income of AREIT attributable to its own public shareholders. Consolidated net income climbed to PHP 39.1 billion, excluding the gain from the sale of Alabang Commercial Center core NIAT grew by 8% to PHP 30.6 billion, just shy of the 2x 2025 GDP growth. Turning to our detailed revenue breakdown. Property development was stable at PHP 113.9 billion despite market headwinds. Residential revenues hit PHP 91.4 billion, slightly lower by 4% versus prior year on strong core residential bookings, partially offsetting weakness in the premium residential bookings. Estate lots rose to PHP 17.7 billion, up 21% on strong bookings from Circuit Makati, Arca South in Taguig and Centralia in Pampanga. Office for sale increased to PHP 4.8 billion, up 40% on robust new bookings at One Vertis Plaza in Quezon City and the Genetic Corporate Plaza in Makati. On leasing and hospitality, broad-based growth across the entire portfolio, delivering revenues of PHP 48.7 billion. Despite ongoing reinventions in our flagship malls, shopping center revenues reached PHP 24.2 billion, 5% up versus prior year due to higher occupancy, lease rates and merchant sales. Offices reached PHP 12.2 billion, 5% higher on stable occupancy and higher average portfolio rental rates. On hospitality, it climbed to PHP 10.6 billion, up 9% on higher room rates and new capacity following our purchase of New World. Again, this despite renovations in key hotel assets for most of 2025. Industrials jumped to PHP 1.7 billion, up 37% versus prior year, on the contribution of industrial land, which we housed in AREIT and new cold storage facilities. Services was 34% lower year-on-year at PHP 11.8 billion. Construction stood at PHP 8.9 billion, 31% lower versus prior year, following our completion of third-party data center project in 2024. Property management and others dipped 42% to PHP 2.9 billion due to the absence of airline revenues. Property management by itself was stable, delivering PHP 1.9 billion. In terms of margins, most of our product gross margins and EBITDA margins are within our targets. For the Property Development business, Residential business registered 47% for horizontal products and 41% for our vertical products. Estate lots came in at 55%, primarily as a result of the product mix, and office for sale was steady at 48%. On our Leasing and Hospitality business, shopping centers delivered stable 64% EBITDA margin. Offices was likewise stable at 89%. Hospitality was at 22%, which we expect to improve with renovated room capacity now back online, which we brought back in 4Q 2025. Dry warehouses was stable at 78%. Cold storage was at 23%, which we similarly expect to trend up as we stabilize new capacity that we brought in. Services which is composed of construction and property management are at 5%, well within our expectations. Next, let me walk you through the operating performance highlights of our businesses, starting with Property Development. Total sales across our Property Development portfolio amounted to PHP 142.3 billion, basically flat versus prior year. Premium sales was slightly down at 3%, again, this despite market headwinds. Core was up 1% on our focused sales effort to move our inventory and stay ahead of the industry. Estate lots delivered PHP 17.1 billion in sales, up 16% as we saw robust interest in our various commercial, industrial and leisure lands. We launched a total of PHP 60.4 billion projects in 2025, notably 40% lower versus prior year, in line with our continued focus of capital efficiency. Deep diving on the residential products. Residential sales was sustained at PHP 125.2 billion, just 1% down versus prior year. By segment, our premium generated nearly PHP 80 billion in sales at PHP 78.6 billion. Our core market delivered positive year-on-year growth at PHP 46.6 billion. On an overall basis, our residential revenue as of end 2025 stood at 19 months, better than the 22 months as of end 2024. By product type, vertical sales was resilient at PHP 82.3 billion, up 2% year-on-year anchored by Laurean. Horizontal sales declined by 7% to PHP 42.9 billion as we saw buyers look at our estate lots as an alternative. We launched a total of PHP 46.6 billion in residential products last year, again, notably 42% lower versus prior year as we focus ourselves on selling existing inventory. Almost 3/4 of our buyers are local Filipinos and on a year-on-year basis was flat. Sales to overseas Filipinos stood at 17% which declined by 4% to PHP 20.7 billion, and sales to other nationalities was lower by 7% to PHP 12.8 billion, primarily attributable to sentiment headwinds or tighter terms and our shift to more premium segment products. Moving on to the op stats of our Leasing and Hospitality business. First, on shopping centers. We manage a total gross leasable area of 2.2 million square meters in 2025 and opened 29,000 square meters of gross leasable area during that year. With additional space in Ayala Malls Vermosa, and the opening of new malls in Evo City and Park Triangle. Lease-out was 1% higher year-on-year at 91%. We have a rolling pipeline of over 800,000 square meters of new mall space, 86% will be within our existing and our future estates. For 2026 alone, we will open over 200,000 in GLA, our largest annual incremental GLA to deal. This includes new malls at Arca South, Gatewalk in Cebu, an additional leasable area in Park Triangle, TriNoma, Nuvali, Evo City, and Greenville. On offices, our total GLA stood at 1.5 million square meters, and we opened 48,000 square meters with new assets in Nuvali and Atria in Iloilo. Portfolio average lease out is at 87%, 4% lower versus prior year, following completion of new facilities. Lease rate is up 2% despite continuing elevated supply in the market. Our 5-year expansion pipeline is over 300,000 square meters. Most of which will be concentrated in our key estate in Makati, BGC, Vertis North and Cebu. On hospitality, we ended the year with 4,658 rooms with net additional rooms of close to 400 primarily driven by the acquisition of New World last year. Hotel occupancy improved to 68%, plus 1% versus prior year, and resource occupancy was stable at 42%. Our updated pipeline involves the following, we look to open Mandarin Hotel this year, bringing in an additional 276 rooms, and in the next 5 years, build out and deliver over 1,500 additional keys. Finally, on our industrial real estate business, we ended the year with dry warehouse portfolio of over 380,000 square meters and cold storage pallet positions of 31,500. This boosted by acquisitions that we made in 2025. Our lease out on a dry warehouse is at 85%, following the addition of new capacity. On cold storage, it improved to 80% with new clients, sign-ups and robust demand from clients. We are looking to double our cold storage capacity in the next few years and have likewise secured sites for potential build-to-suit dry warehouses to expand our portfolio. For this year 2026, we are opening an additional 9,000 pallet positions of new cold storage capacity at Artico Consolacion in Cebu City. As mentioned, we invested a total of PHP 92.9 billion in CapEx, 10% higher versus prior year. Leasing and Hospitality was a major driver, doubling investment to PHP 27.1 billion and accounting for just under 30% of our total spend. Of this total spend for leasing and hospitality, 3/4 of which went to expansion CapEx, and 1/4 to reinvention initiatives. CapEx for residential was 38% of total primarily focusing on build-out of projects for delivery. Estates investments comprised 18% of total CapEx and the balance of 15% were for continuing land acquisition commitments. Our debt position continues to be well managed with 90% contracted into long tenures. Total gross debt as of end December 2025 stood at PHP 318 billion, up 13% versus prior year. We have kept our average maturity stable at 4.8 years. Our average borrowing cost was slightly up, ending at 5.5%. A bit over 70% of our debt is on a fixed basis and just other 30% is on a floating basis and of the floating component, almost 1/3 of that as an option to convert the fix. Our balance sheet remains strong, with net gearing ratio of 0.78:1. Cash and cash equivalents stood at PHP 19 billion. Our stockholders' equity grew by 7% to PHP 385 billion. Our current ratio is at 1.59:1, and our interest coverage ratio, just looking at core earnings is healthy at 4.9x. To summarize, Ayala Land delivered total revenues of PHP 190.2 billion and net income of PHP 39.1 billion, excluding gain from the sale of our 50% stake in Alabang Commercial Center, core revenues registered PHP 178.9 billion and core net income reached PHP 30.6 billion, up 8% versus prior year. Thank you. Joahnna Soriano: Thank you, Jed. We'll pass it onto our CEO for her message. Anna Maria Margarita Dy: Thank you, and good afternoon. Thank you for joining our full year 2025 analyst briefing. So I won't revisit the 2025 numbers in detail because Jed has already covered them thoroughly. Instead, let me step back and highlight what sits behind the results and how we're positioning the business for the next phase. Let's start with what 2025 demonstrated. Number one, capital efficiency is improving. We delivered roughly the same level of residential sales in 2025 as in 2024, but with 40% fewer launches. This tells us two things. First, our products are sustaining demand well beyond their initial launch cycles. And second, our sales organization is extracting more value from our existing inventory. A market like this, capital discipline matters, we are becoming more productive with every peso deployed. Number two, active portfolio management and shareholder returns. The sale of Alabang Town Center allowed us to recycle capital from a matured asset and fund higher return opportunities. This reflects the discipline we aim to consistently apply in managing and recycling capital. You've seen this, you've seen us take these steps when we sold AirSWIFT in 2024 and then repositioned by acquiring New World Hotel in 2025. At the same time, we continued to return significant capital to our stakeholders or to our shareholders, distributing 65% of prior year's income through dividends and share buybacks. We have concluded our share buyback program, and we'll be canceling the shares acquired under it supporting 10% EPS growth, all told, we delivered ROE of 12.5% in 2025. Even in a tight market, our ambition remains the same, to deliver earnings growth at the multiple of GDP growth. Number three, the leasing pivot is underway. We have been steadily repositioning to balance the portfolio with recurring income and that shift is becoming more visible in the numbers. Our leasing business delivered 7% year-on-year revenue growth. And excluding the reinvention related disruptions, growth would have been 11%. Renovated malls and hotels are being reopened. The New World acquisition has expanded our hospitality footprint. And going forward, leasing will account for a larger share of capital deployment. 38% of total full year CapEx from 29% in full year 2025. By 2027, we expect our EBITDA to roughly balance between leasing and development, strengthening our earnings profile and balancing profitability and growth. Number four, quality is a long-term differentiator. Quality is job #1 remains a work in progress, but we are seeing tangible proof points. Park Central Towers is now turning over and has been very well received by buyers and industry partners. Laurean Residences reflects our next generation of design thinking and deeper integration with our hospitality capabilities. The Heights Katipunan shows our focus on student residence with targeted amenities and enhanced security. Across our flagship malls, say the hotels and need the resorts, reinvestments are producing more contemporary, consumer-relevant and higher-yielding assets. These investments don't just translate into earnings overnight, but they strengthen pricing power, market position and secure long-term returns. Here are outlook and priorities for 2026. We are planning for another challenging year. The reality is that GDP growth is projected to stay below 5% and residential supply in Metro Manila remains elevated. But we are not waiting for this cycle to turn. We are leaning into the parts of the portfolio that grow more reliably while keeping our property development business stable and capital efficient. Number one, we will accelerate our leasing growth. The biggest driver of earnings growth in 2026 will be leasing. We will start with sweating existing assets, many of our renovated malls and hotels are now operational and the focus shifts to consumer delight and operational excellence. After completing the renovation of 5 key assets in 2025, our focus is now monetizing these upgrades, and we project a 10% to 20% room rate uplift from these newly renovated properties. The reinvention of our flagship malls will be completed by the end of June 2026. So by middle of this year with the reopening of Glorietta and Greenbelt and following the completion of Ayala Center Cebu and TriNoma in December 2025, we expect these renovations to generate a 15% to 20% uplift on rent. Alongside extracting value from recently completed assets, we will continue expanding the leasing platform. Leasing will account for a larger share of capital deployment as we scale malls, offices and hospitality within our states. In 2026, we will open over 200,000 square meters of new retail GLA, the largest single year addition in our history. We started with the opening of Arca South Mall last weekend and saw over 200,000 visitors in just the first weekend. We will open over 70,000 square meters of new office space in Evo City, Arca South and Gatewalk. In addition, we signed 3 new major leases with big multinational firms in Quezon City and Cebu totaling 82,000 square meters. The Mandarin Oriental will reopen in the fourth quarter, adding another 276 rooms to our hotel portfolio, but more importantly, this marks the return of 5-star hospitality to Makati after more than a decade. We are scaling our cold storage business thoughtfully, working towards doubling current capacity over the next few years. These represent meaningful steps in recurring income that will build over the next several years. Number two, keep residential stable, but more disciplined. On property development, despite market headwinds, our objective is to keep it stable as we lean in on the strength of our domestic and international sales team -- teams and by focusing on projects where we have high conviction on value proposition and sales momentum. This approach allows us to protect margins and ensure we maintain our market leadership. We have clear sight of PHP 30 billion of new launches firmly scheduled for 2026, and we have already launched pipeline that we can move on as we see market windows open. This gives us flexibility to scale quickly as the demand supply dynamics improve. We expect to deliver roughly the same level of residential sales as we did in 2025, and we will continue to be #1 in the residential space. Number three, continued disciplined capital returns. We are maintaining our 30% of prior year's net income dividend payout. We are also declaring a special dividend from part of the ATC or Alabang Town Center or Alabang Commercial Center proceeds, and we will continue to return excess capital to shareholders where appropriate. Four, protect the balance sheet and preserve flexibility. Historically, in periods like this, opportunities tend to surface, and we are beginning to see some of this emerge. Maintaining a strong balance sheet ensures we have the capacity to deploy capital quickly when these opportunities meet our return thresholds and strengthen our strategic position. For this reason, we will manage our existing businesses within their means and keep sufficient balance sheet headroom to act decisively when the right investments present themselves. So for 2026, we expect steady property development revenues and retaining our #1 position, a double-digit growth in leasing revenues with the biggest ever delivery of leasing GLA, continued margin improvement from operational excellence PHP 70 billion to PHP 80 billion in CapEx with a higher proportion going towards leasing and debt levels to be maintained well within our guardrails. Taken together, this positions us to generate earnings growth ahead of GDP and deliver higher return of capital via dividends to our shareholders. Thank you. Joahnna Soriano: [Operator Instructions] Rafael go ahead. Rafael Alfonso Javier: Rafe from BofA Securities. First of all, congrats on the good earnings result for the full year '25. My first question would be on the lot sales. I understand that I think there was a lot of catch-up that you did in the fourth quarter. I wanted to know how we -- how it's -- how it will look this year, I mean in terms of the quantum and the timing so that I mean, it will help us also with forecasting going forward. Yes. That's my first question. Anna Maria Margarita Dy: So maybe let me answer that first question first. So we always say that lot sales are about 15% of our -- that's how we look at it. 15% of our total pickup for the year. And for 2026, that's still what we're looking at. Now in terms of timing, that frankly is a little bit harder to predict because these are deals and I'm sure you noticed that on the third quarter, it was actually quite weak. So these were deals that were still being worked on, and they would just happen to close on the fourth quarter. So there is a level of, I guess, lumpiness when it comes to these transactions. But at least when we're looking at the full year, it's still about 15% of the pickup is what we're looking at for our lot sales. Rafael Alfonso Javier: Okay. And my next question is on land bank utilization. I understand it is also part of the mandate last year to really net utilize rather than acquire. How is the progress last year? Jose Eduardo Quimpo: So our total utilization, Rafael last year is over 800. So the more precise number is 879. Rafael Alfonso Javier: Okay. I think my last question is just a housekeeping one on the residential inventory level. How is it looking so far? Do you have a target to -- I mean, a target level that you want to achieve this year? Joseph Carmichael Jugo: Yes. So thank you for the question, Rafe. So we've actually improved the inventory levels by a month. We ended the year about 19 months coming from 20 months and our aspiration for this year is to be somewhere in the 17- to 18-month range. Joahnna Soriano: Jelline from JPMorgan also has a question. She's virtual attendee today. Sorry, there seems to be feedback. We have a question here from Niki Franco from Abacus Securities. He has a couple of questions. Number one, what's our outlook for borrowing costs this year? Jose Eduardo Quimpo: Yes, I'll take that one. So as you know, there are projected or there has already been a reduction on policy rates. And when we talk to the analysts, the projection is there could also be another one. So taking this in mind, the way we model 2026 is that we are expecting or we're targeting to keep our borrowing cost at similar levels. So we ended the year at 5.5% We aim to keep it at 5.5% . Joahnna Soriano: The second question is of the 1.5 million office leasing portfolio, what percent is leased to BPOs? Mariana Zobel De Ayala: 70%. Joahnna Soriano: Of the 200,000 retail GLA to be opened this year, how much of this new space versus reopen spaces? Mariana Zobel De Ayala: That's entirely new space. Joahnna Soriano: Okay. If there are no questions from the floor, we'll call in Jelline next -- sorry, Gilbert, go ahead. Gilbert Lopez: More granularity or discuss your dividend policy. Moving forward, now that to end here buyback. Anna Maria Margarita Dy: So I think even before the buyback, we were already doing about 30% of prior year's net income, which we intend to keep, so we're maintaining that. This year, in particular, we're doing a special dividend because of -- from the proceeds of the sale of Alabang Commercial Center. I think the 30% is probably what we are seeing something that's more stable for now. Going forward, it's really special dividends in the event that we have an asset monetization event. Gilbert Lopez: So thank you, Meean. So for the special this year, how much does that bring your payout to inclusive of the special? Jose Eduardo Quimpo: So it should drop here about 33% of prior year. Gilbert Lopez: So it's around 10% -- so from 30% becomes 33%. Anna Maria Margarita Dy: Of core net income. Joahnna Soriano: Go ahead, Jelline. Yes, if you can just type in the question, we'll move on to Joan. Sorry, I think we're having some technical difficulties. So we'll just wait for the investors to type in the questions. Okay. So this one is from Daniela Picacho AB Capital. On residential launches, just to clarify, PHP 30 billion is your base case target for 2026. If so, what would be the triggers to push that higher? Is it purely dependent and you bring in your inventory life to sub 17 to 18 months? Or would you have to consider overall or system-wide inventory you see 4 years worth of inventory life? Also, can you remind us of the inventory life for your premium is. Anna Maria Margarita Dy: We don't generally provide the breakdown, but let me answer the first question. So there are 2 figures. One is our inventory level, which may not necessarily be the only thing. The second is, what would be the competitive environment in that particular area. So I think the analysis would need to be more specific to the target market of the project. So for example, you're launching something in geography A, then we'll have to look at who else is playing in geography A? And what's the inventory going to be out there? . Joahnna Soriano: On malls, you guided for roughly 15% to 20% rental uplift from reinvented projects. Could you quantify how much of this uplift should realistically flow into 2026 revenues versus later years? And what portion of this is already locked through signed leases? Mariana Zobel De Ayala: So the 15% to 20% uplift should be seen immediately for 2026. The basket of merchant replacement program, Jelline, we talked about already took effect. Now Obviously, that also happens on a rolling basis because every year, we allocate a certain part of the GLA, which we refresh or reinvent. Joahnna Soriano: Thank you, Mariana. We also have a question here from [indiscernible] can you provide an overall outlook on the demand scenario in the residential segment both at the premium and core and in Makati and other provinces as well? Yes, this is for residential. Anna Maria Margarita Dy: I suppose for us, the demand outlook remains very positive. Our launches have actually been very well received, I think, Laurean, which we launched this year 37%. Joahnna Soriano: 37% Heights Katipunan at 17%. Anna Maria Margarita Dy: Yes, 17%. So if you ask us, actually, we believe that demand continues to be robust. Maybe where this question is coming from is why the relatively low level of launch for this year. So for us, it's not so much a demand issue. It's really more of a supply issue. And we'd like to make sure that, I guess, this industry-wide supplies first taken up before we push more supply out there. So I think that's really the concern. It's not that we are concerned about the demand. It's just we want the supply to be absorbed first before we launch full blast again. Joahnna Soriano: He also has a question here on the current level of cancellations in the residential segment. We're now at 7.7% as of full year 2025, which is slightly better than 7.9% in the 9 months 2025. Any other questions from the floor? Still waiting for two to type Go ahead, Carl. Carl Stanley Sy: This is Carl Sy of Regis Partners. I just have a few questions, mostly on the residential segment. So first, it looks like the reservation sales of the core segment fell in the fourth quarter, both on a year-on-year and quarter-on-quarter basis. From what I can tell, there were still promotions and discounts offered during that period. So while I understand there was, let's say, a flood control corruption scandal going on. Is that -- do you attribute the weakness mostly to that? Or is there some other -- something else? Also on the residential segment looking ahead, do you have some launch plans? Do you have a more positive outlook on core versus premium or Metro Manila versus provincial? Joseph Carmichael Jugo: I think quarter 4, as we all know, a lot of negative sentiment. So I think that we didn't heavily -- whether it's a premium or our core market. But what we are looking at is really specific performances of certain projects. I think the Heights project, when you launched it, it's now at 17%. And Laurean had a very, very good take-up. We are ending as of today, PHP 10.4 billion or it's 37%. So the demand is there, based on certain projects and locations. As our CEO mentioned, certain geographies is really more challenging because of the supply situation now. Anna Maria Margarita Dy: Maybe to add to that. So your second -- I'll try to answer. Second question is, are you more confident about certain segments. So horizontal, we remain very bullish, horizontal -- obviously, horizontal ex Metro Manila. In fact, most of our launches, except one will be horizontal this year, including some provincial horizontal launches outside Metro Manila. In terms of core, why did core decline in the fourth quarter, I think there's -- Katipunan got launched first quarter of this year. So I think there's a recovery in the first quarter. Carl Stanley Sy: When you see a horizontal launches predominantly in 2026, would it be fair to say that's mostly premium? Anna Maria Margarita Dy: No. Actually, we will be launching core horizontal as well this year. Carl Stanley Sy: Got it. And then I'll ask a little bit about the office segment. I think if I heard correctly, you signed about 80,000 square meters of space already for this year. And with some context here, a lot of investors are concerned about the BPO sector, particularly in light of artificial intelligence. I want to check if the 80,000 square meters is predominantly BPO? Mariana Zobel De Ayala: Yes, it is. I think we're still tracking -- I think IBPAP believes that from a revenue standpoint, BPO should grow 5% from a headcount standpoint, 2% to 3%. So we generally follow that guidance. That being said, our headquarter offices actually grew at a faster clip than BPO unsurprisingly. Joahnna Soriano: I think Jelline's questions were similar to Carl, but we have a couple of other questions from Consilium. Can you please provide clarity on your -- okay, sorry, Sangam, we don't provide the breakdown for inventory. And then they're also asking about the strong pickup in the lot sales. Does this indicate that improving sentiment to premium level. Anna Maria Margarita Dy: I think we achieved what we set out what we thought would achieve. I mean it's just that some of the sales we thought would have happened in the third quarter ended up happening on the fourth quarter. But I guess the same forecast last year as this year, about 15% of our sales, our total take-up will be coming from the lot sales. Joahnna Soriano: Correct. We have a question here from RJ Aguirre of UBS. He wants to ask about the rationale behind selling ATC. This is arguably one of the group sought after Millstone location. And on market market, it's up for rebidding, this is going to be a priority for the group. Jose Eduardo Quimpo: So yes. So let me take the question on Alabang Commercial Center. So just to frame it, if you look at the gross leasable area attributable to Alabang Town Center, that's actually less than 5% of our 2.2 million square meters. So I think from a portfolio management basis, it's not super impactful. If you use 5%, that's being a threshold of something that is impactful. Number two, if you run valuation, we are effectively sold at a cap rate of 3%, 3% cap rate. So as most of you know, when we transact something, for example, with AREIT, we turn out in the area of 6.5% to 6.8%. So having a buyer that's willing to pay a cap rate -- effective cap rate of 3% was a clear -- from a financial perspective, a clear value offer on the table. What allows -- what it allows us to do is actually be able to recycle a substantial amount of capital. So if you imagine if we can generate yields on our commercial leasing assets in the area of 10% to 12%, the money that you raise on a 3% cap rate and redeploy, you have sufficient capital to, number one, reinvest in very similar footprint and number two, have sufficient available balances to actually provide tangible returns on capital. So when I say returns of capital, it gives us an opportunity, for example, to give special dividends as what we're doing in 2026. Anna Maria Margarita Dy: Yes, it's really a straightforward, I guess, capital recycling story. We're getting returns from a very mature asset. Meanwhile, we're opening 200,000 square meters of mall space today. We have 600,000 square meters of malls under construction and under planning. So this is simply reallocating capital from an asset that is already matured to one where we believe there will be more upside. The second question had to do with market market. So I think it's also been disclosed by BCA that we are in discussion for the extension of market market on the portion of the property that they are thinking of bidding out. I think we are also seeing in the news some government assets that they would like to privatize and to dispose. And as I said earlier, we do want to keep headroom in our balance sheet because times like this opportunities seem to surface. Joahnna Soriano: We have a question from Niki of Abacus Securities. With major advances in artificial intelligence models announced in recent months, how concerned is management about the large exposure to BPOs, primarily in offices, but also the possible knock-on effects for residential? Mariana Zobel De Ayala: Maybe I'll take for the offices portion. I think in the short term, we actually feel it might help -- the technology might help leapfrog some of the challenges on education and training side. I think generally speaking, medium to longer term, we're focused on opportunities around low vacancy areas and high-traffic areas. So that would be Makati, BGC, Candon City and Cebu. So I guess that's to say that we do imagine that AI will take effect on the sector. Anna Maria Margarita Dy: I guess the second question was AI impact on... Joahnna Soriano: Knock-on effects to residential, if any, in relation to... Anna Maria Margarita Dy: I suppose it's -- the effect would be more macro in nature. If AI affects BPOs and BPOs affect the GDP or the economy and employment, then that's the more indirect but impactful negative effect on residential. But direct effect, I don't think we see anything. Joahnna Soriano: These are the questions of Joy Wang from HSBC. What is your precommitment occupancy for the 200,000 new space to be introduced this year, is a 15% to 20% increase in rent just under rental rate for the new space. Mariana Zobel De Ayala: Yes. So I think we've committed to keep our lease-up rate at 91%. So that will be, again, blended across the entire portfolio, taking into account that some of the newer malls will take a little more time to mature. In terms of the rental rate, so the 15% to 20% quoted was really on the merchant replacement program. So that's taking existing tenants and replacing them for higher-yielding tenants. Joahnna Soriano: This one is for Jed. How should we think about the special dividend policy? Would this be a percent increase of the investment gain during the year or the previous year? I think this was already answered earlier by Jed. So the dividend policy, 30% of prior year's income. We're increasing that to 33%. So it's effectively a 10% increase from our existing dividend policy. Jose Eduardo Quimpo: Yes. So we're tracking 33% of prior year's income. I'm sure you already saw the disclosure. So regular cash dividend stays at 30% of prior year's core net income, but we saw the opportunity to return capital. And so we're declaring an additional 10% of that by way of special dividends. Joahnna Soriano: She also has a follow-up question. Management mentioned about capital return to shareholders while keeping sufficient capital for investment, what is the right balance sheet capacity that management wants to keep? How much more capital can we expect management to return to shareholders? Jose Eduardo Quimpo: Yes. So on returns to capital, as I mentioned, we are tracking 30% plus an additional 3% regular and special dividends, that's for 2026. That's what we're planning on. In terms of leverage position, as mentioned, we are at 0.78x net debt to equity in terms of our balance sheet. From our perspective -- from management's perspective, we want to make sure that we don't reach one. So from our that room between 0.78:1 is actually the dry powder that we want to give. And the more we're able to expand that, the more it allows us to give room for key acquisition opportunities. Joahnna Soriano: We have questions now from Jelline with JPMorgan. On capital deployment, launches and CapEx budgets appear lower on a year-on-year basis, while management does not intend to increase the buyback program. How do you plan to deploy freed up capital? What will entail to commit to a higher minimum dividend payout? I guess from a regular standpoint? Jose Eduardo Quimpo: So I guess Jelline, the math, eventually, if you run all your models is that you'll probably see us taking on very little incremental debt for 2026. So from overall sources and uses of funds, the net change is really that you'll see Ayala Land aim to minimize incremental debt for 2026. Joahnna Soriano: She also asked for the RFO mix in 4Q 2025, that's 8%. In terms of inventory to be completed this year, we're looking at about PHP 6 billion or 3.5% of inventory. Any more questions from the floor? Unknown Analyst: I'm Paul from [indiscernible] first of all, congrats on your 4Q results. I have questions about the -- first about the mall performance. I'd like to ask for the occupancy rate of your newly opened malls like Park Triangle and Arca South. And what's the current tenant behavior regarding this -- on the newly opened malls? Mariana Zobel De Ayala: So for Arca, we're actually almost 90% leased out for the first phase that we opened. And for Park Triangle, we're 65% leased out. Unknown Analyst: Thanks Mariana. And another follow-up question is how much is Ayala Malls same mall sales growth for full year 2025 compared to 2024. Mariana Zobel De Ayala: Yes. Same mall revenue growth was 7%, and the overall sales growth was 10% year-on-year. Unknown Analyst: Excluding reinvention, how much is the... Mariana Zobel De Ayala: One moment, let me get that for you. Joahnna Soriano: Yes. Ex reinvention. Mariana Zobel De Ayala: Yes. Okay. Ex-reinvention. Those figures that I gave. Unknown Analyst: And another question about the RFO promos. Can you provide us a recap or a refresh on how the management is currently trying to reduce the current inventory there. That's what RFO promos are you offering? And how much discounts are usually available for buyers? Joseph Carmichael Jugo: So generally, the RFO promos are stretch payment schemes or fairly sizable cash discounts. But I also want to highlight that our RFO situation now is much, much lower. It only represents 4% of total inventory. So it's quite low. Joahnna Soriano: We have one final question from Daniela Picacho. Just a follow-up. Just a follow-up. You said resi cancellation rates have improved to about 7% to 8%. Could you share whether recent cancellations are concentrated in specific price segments, geographies or older vintages? I'm curious if newer bookings are showing better buyer quality. Joseph Carmichael Jugo: So on the better buyer quality, what we've done and that has also admittedly impacted sales as we've tightened up on some of the down payment requirements. So even some of our launches, we do require down payments, especially for the core market. So that should help future cancellations or prospective cancellations. Most of the cancellations are actually in certain areas. So it's not spread out throughout the -- all of the projects within the premium core products. Anna Maria Margarita Dy: Sorry just cancel it's a percent of revenue. It's very close to where we were already in 2019. I think we were 6%, if I'm not mistaken, we were about 6% in 2019 before the pandemic, about 6% of cancellation. 6% of revenues. Cancellations is equal to about 6% of revenue. So now we're at about 8%, which is a very big movement from where we started a few months -- a few years ago. Joahnna Soriano: Correct, yes. Okay. Last question from the floor. Okay. If no more questions, that concludes our briefing on Ayala Land's for 2025. If you have any further questions, please feel free to reach out to the team. A recording of this briefing will also be made available on our website. Once again, thank you for joining us this afternoon.
Operator: Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Shenandoah Telecommunications Company Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Lucas Binder, Vice President of Corporate Finance for Shentel. Please go ahead. Lucas Binder: Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the fourth quarter and full year 2025. Our results were announced in a press release distributed this morning. In addition, we filed our Form 10-K and also a Form S-3 with the SEC to fulfill our Horizon merger contractual requirements to GCM. The presentation we will be reviewing is included on the Investor page on our investor.shentel.com website. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Ed McKay, President and Chief Executive Officer; and Jim Volk, Senior Vice President and Chief Financial Officer. After the prepared remarks, we will conduct a question-and-answer session. I refer you to Slide 2 of the presentation, which contains our safe harbor disclaimer and remind you that this conference may include forward-looking statements subject to certain risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements. Additionally, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. You are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Ed. Go ahead, Ed. Edward McKay: Thanks, Lucas, and good morning, everyone. Thank you for joining us today. This past year marked another important step forward for Shentel as we continue to execute on our fiber-first strategy. Strong year-over-year growth in both Glo Fiber and Commercial Fiber drove a notable shift in our revenue mix with our fiber-based lines of business surpassing our incumbent broadband revenue in the fourth quarter. Throughout 2025, we remain disciplined and focused on our 4 strategic pillars that continue to guide our operational and financial priorities, building on our long history of success, completing our fiber network expansion, accelerating growth and positioning the business to inflect to positive free cash flow in 2027. I'm pleased with the way our team delivered on each of these priorities, strengthening our position and keeping our strategy firmly on track. Starting on Slide 4, we share some of our full year highlights. At year-end 2025, we passed approximately 427,000 homes and businesses in our Glo Fiber expansion markets, an annual increase of 81,000 passings. Our government subsidized passings in incumbent broadband markets more than doubled year-over-year to 22,000 and penetration in these areas has already reached 31%. We are well on our way to substantially completing construction for these capital-intensive expansion projects by the end of 2026. Glo Fiber data RGUs grew 35% in 2025 to 88,000, and we maintained data ARPU by driving customers to higher speed tiers. Lastly, we successfully refinanced our debt with our inaugural ABS financing in December that will save us approximately 170 basis points in cash interest expense and extend our maturities to 2030. We finished 2025 with strong momentum, driving customer growth, expanding our high-value fiber business and strengthening our balance sheet. This performance gives us confidence in our trajectory as we move into 2026. Turning to Slide 5. We show our integrated broadband network that spans more than 19,000 fiber route miles across 8 states with over 679,000 total broadband passings. Our markets have compelling competitive dynamics that differentiate us from our peers in the broadband industry. 88% of our Glo Fiber passings are duopoly markets with only one fixed broadband competitor. And in our incumbent markets, 70% of our passings have no fixed broadband competitor. As we enter the home stretch of our Glo Fiber expansion, we remain focused on return on investment. Due to rising aerial make-ready costs in some areas, we have recently decided to pass on investments in certain Ohio markets where the cost to pass increased, reducing our ability to earn a return on investments above our hurdle rate of 15%. As you can see on the map, all of the planned Glo Fiber markets have been launched and our primary focus in 2026 is adding passings in our Virginia, Pennsylvania, Maryland and Ohio markets. Despite the reduction in targeted passings, we remain confident in our plans to achieve positive free cash flow in 2027. On Slide 6, our sales and marketing team continues to drive growth in our Glo Fiber expansion markets. In the fourth quarter, we added 5,300 new customers and more than 6,000 total data, video and voice revenue-generating units. For full year 2025, we added approximately 23,000 new customers and 26,000 total RGUs. As a result, total Glo Fiber revenue-generating units surpassed 103,000 by year-end, up 33% compared to the prior year. Moving to Slide 7. The fourth quarter marked our strongest construction period of the year with more than 26,000 Glo Fiber passings completed, bringing total passings to just under 427,000. While the significant increase in new passings kept penetration flat quarter-over-quarter at 20.6%, penetration improved 1.8 percentage points year-over-year. Penetration trends across our Glo Fiber cohorts are shown on Slide 8 and reflect blended penetration rates for both residential and small and medium business passings. Business passings account for about 8% of our total passings, and they typically exhibit a slower penetration ramp than residential passings. However, business customers generate data ARPU that is more than 40% higher than residential customers. Due to the slower business ramp, cohorts with a higher concentration of business passings can show lower penetration. This dynamic is evident in the Q4 2023, Q1 and Q4 2024, and Q1 2025 cohorts, which have a significantly higher mix of business passings than other cohorts. Excluding the differences in residential and business mix, penetration growth in our Glo Fiber expansion markets has followed a consistent and predictable pattern with steady increases as cohorts mature. Our earliest cohorts launched in 2019 and 2020 now have an average data penetration rate of more than 37%. On Slide 9, we highlight our most recent Net Promoter Score customer satisfaction survey, where we received an outstanding score of 61. This result compares very favorably with cable competitors that often have single-digit scores. Our continued focus on customer service is a key driver of our low churn with average monthly churn of 1.01% in the fourth quarter and 1.07% for full year 2025. Broadband data average revenue per user increased to more than $77 in the fourth quarter, representing a 2.3% year-over-year increase. Midway through the third quarter, we introduced new promotional rate plans offering higher speeds for the 5-year price guarantee. With these plans available for a full quarter, more than 75% of our new residential subscribers selected speeds of 1 gig or higher, including 20% choosing 2-gig service and 5% choosing 5-gig service. The increase in ARPU was driven by our shift away from a first month free promotion in prior periods, along with strong adoption of the 5-year price guarantee plans in the fourth quarter. As these plans continue to roll through our base, we expect data ARPU to decline by approximately 1% over the next few quarters before stabilizing. Turning to Slide 10. We show our operating performance for the incumbent broadband markets. At the end of 2025, we served about 112,000 broadband data customers, reflecting a year-over-year increase of over 600. Data, voice and video RGUs totaled more than 158,000 at the end of the year, down 3% year-over-year, primarily due to video customers moving to online streaming services. Total broadband passings in our incumbent markets grew to 252,000 at year-end, up about 13,000 compared to the prior year. This increase was driven by the construction of government-subsidized passings in previously unserved areas. We've substantially completed construction and fulfilled our grant obligations in Virginia, and we expect to complete the remaining 1,300 government-subsidized incumbent grant passings in West Virginia in 2026. As a result of our government grant fiber construction, approximately 21% of our incumbent broadband passings are now equipped with fiber-to-the-home technology. As shown on Slide 7, these new subsidized passings represent a strong growth catalyst for our incumbent markets with data penetration exceeding 45% within 6 quarters of a neighborhood launch. Our earliest cohort from the first quarter of 2023 has reached 61% penetration, and we've already achieved an aggregate penetration of 31% across more than 22,000 subsidized passings. Moving to Slide 12. Monthly broadband data churn improved sequentially and remained steady year-over-year at 1.47% for the fourth quarter. Our rate card strategy offering greater value with higher speeds at the same price continues to be effective at mitigating churn. As expected, broadband data ARPU declined 2.4% from a year ago to $82, driven by the addition of new customers with more aggressive pricing in competitive markets. Our Commercial Fiber business is highlighted on Slide 13. In the fourth quarter, incremental monthly bookings exceeded 155,000, in line with the prior year period. After record bookings in the first half of 2025, second half bookings increased almost 9% compared to the second half of 2024. We're seeing strong performance across a broad and diverse customer base, including wireless carriers, mid-market and enterprise customers, wholesale partners, educational institutions and state and local governments. Our service delivery team installed $191,000 in new monthly revenue in the fourth quarter, down modestly as we continue to work through the backlog and move bookings to revenue more quickly. Average monthly compression and disconnect churn remained very low at 0.6% in the fourth quarter, driven by exceptional support from our network operations center and sales team. Before I turn the call over to Jim, I want to briefly address the recently announced reduction in force. On February 23, we announced a workforce reduction of approximately 10% of our employees to better align our staffing levels with the planned completion of the construction phase of Glo Fiber. Impacted employees will have a staggered departure dates through the end of 2026 with the largest impact in the fourth quarter. All affected employees are eligible for severance pay and benefits as well as career transition services. We expect to incur approximately $3.1 million in restructuring costs and anticipate annual savings of roughly $12.3 million starting in 2027, split evenly between operating expenses and capitalized labor. While our major Glo Fiber market expansion is nearing completion by year-end, we remain firmly focused on driving continued growth in Glo Fiber and Commercial Fiber and delivering the high level of service our customers expect and deserve. I'll now turn the call over to Jim to walk you through our 2025 financial results and our outlook for 2026. James Volk: Thank you, Ed, and good morning, everyone. I'll start on Slide 15 with the financial results for the fourth quarter 2025. Revenues grew 7.2% to $91.6 million, driven by another quarter of strong Glo Fiber expansion market revenue growth of $6.5 million or 39%, driven by a 37% increase in data subscribers and a 2% increase in data ARPU. Commercial Fiber revenue grew $2 million or 10.8% year-over-year, driven primarily by a negative deferred revenue adjustment in the fourth quarter of 2024. Incumbent broadband markets revenue declined $1.7 million, primarily due to lower video and data revenues from a 14.8% decline in video RGUs as customers switched to streaming video services and a 2.4% decline in data ARPU due to a more aggressive rate card in competitive markets. Broadband data subscribers did grow 0.6% year-over-year. RLEC revenue declined $500,000, primarily due to lower DSL revenue from a 24.4% decline in DSL RGUs, partially due to customers migrating to our broadband data service in the recently constructed passings supported by government grants. Adjusted EBITDA grew $8 million or 31.3% to $33.5 million, driven by $6.2 million in revenue growth and $1.8 million in lower expenses from a combination of Horizon synergy savings, higher capitalized labor from a strong quarter of fiber construction and lower bad debt. Adjusted EBITDA margins increased 670 basis points to 36.5% in the fourth quarter due to a combination of recurring synergy savings seasonality due to a strong quarter of fiber construction, favorably impacting higher capitalized labor and lower network compensation expenses and nonrecurring bad debt expense adjustments. We expect adjusted EBITDA margin to decline slightly in the first half of 2026 before expanding again in the second half of 2026. On Slide 16, we share our last 5-year financial results. Revenues and adjusted EBITDA grew at a compounded annual growth rate of 10% and 16%, respectively. We believe these growth rates are industry-leading among publicly traded broadband companies. Please note that we acquired $19 million of annual run rate EBITDA when we acquired Horizon in 2024. This was fully offset by $12 million of lower EBITDA when we sold our tower business in the same year and $7 million in lower EBITDA from backhaul revenue churn due to the onetime network rationalization event following T-Mobile's acquisition of Sprint. While we are proud of our team's performance over the past 5 years, we are even more excited about our growth prospects over the next 5 years when we expect low double-digit EBITDA growth rates, combined with significantly lower capital intensity starting in 2027. Turning to Slide 17 for our annual guidance for 2026. We expect 2026 revenues of $370 million to $377 million or 4.4% growth based upon the midpoint. We are guiding to adjusted EBITDA of $131 million to $136 million or 12.1% growth based upon the midpoint. We expect 2026 CapEx net of grant reimbursements to be $220 million to $250 million or a 21% decline at the midpoint. Moving to Slide 18. We invested $359 million in capital expenditures in 2025 and collected $63 million in government grants for net CapEx of $296 million. We have completed construction of 84% of Target Glo Fiber passings and 94% of target incumbent government grant passings in unserved areas. In summary, capital intensity is trending down as we get closer to the end of the expansion phase. Capital intensity declined from 91% in '24 to 83% in '25 and to a range of 59% to 67% in '26 based upon our guidance. For 2027, we are currently trending to the high end of the long-term target capital intensity range we provided a year ago. We expect our residential businesses to be in the 25% range and our commercial business in the 30% range initially before declining further over time as our businesses scale. I'd now like to update you on our refinanced credit facilities and liquidity on Slide 19. As previously announced in December, we successfully refinanced our $675 million term loan and revolving credit facility with a hybrid capital structure featuring asset-backed securitization or ABS notes supported by most of our fiber business and a revolving credit facility backed primarily by our incumbent business. The ABS notes include $567 million of privately placed investment-grade notes to institutional investors due December 2030 with a weighted average interest rate of 5.69% and $175 million variable funding note facility or VFN, with a group of financial institutions. The VFN has a maturity date of December 2029 and bears interest at SOFR plus 175 basis points. The VFN is a revolving facility within the ABS special purpose entities that is also investment-grade rated and securitized by the same fiber assets and customer contracts. It is also governed by the same ABS indenture as the ABS notes. We did not borrow from the VFN as of December 31, 2025. Concurrently, we established a new $175 million revolving credit facility, or RCF, with a group of financial investors maturing December 2030. The RCF bears interest at SOFR plus 250 to 300 basis points, depending upon net leverage as defined in the RCF agreement. We borrowed $75 million from the RCF as of December 31, 2025. Please note that these are 2 discrete credit facilities separated legally by special purpose entities established for ABS. Shentel and the non-ABS entities have no recourse to the loans of the ABS entities. Likewise, the ABS entities have no recourse to the loans of the RCF. As of December 31, we had $642 million in outstanding debt with a weighted average interest rate of 5.75%. This compares favorably to September 30 weighted average interest rate of our prior credit facility of 7.47%, saving us 172 basis points in cash interest, driven by the investment-grade rated ABS notes. Based on our current debt levels, this will save us $11 million annually in cash interest. Total available liquidity was approximately $235 million as of December 31, consisting of $27 million of cash and cash equivalents, $21 million in restricted cash as required by the ABS indenture, $44 million available under the VFN, $93 million under the RCF and $50 million available under government grants. In addition, the company has over $130 million of VFN commitments that are not available to draw as of December 31. The available capacity of the VFN will increase based upon fiber revenue growth from the ABS entities, multiplied by a net operating income margin as defined in the ABS indenture and a 6.25 multiple. We are very pleased with our new credit facilities and the financial flexibility they will provide us in future years. In summary, as noted on Slide 20, we have 3 catalysts converging that we expect will lead us to generating and growing positive free cash flow in 2027 and beyond. Low double-digit adjusted EBITDA growth rates driven by our fiber businesses, declining capital intensity as we exit the construction phase of our business plan in 2027 and declining cost of capital after refinancing our debt in December 2025 with primarily investment-grade ABS notes. This is a very exciting time for Shentel and our shareholders. Thank you, operator. We are now ready for questions. Operator: [Operator Instructions] Your first question comes from the line of Hamed Khorsand with BWS Financial. Hamed Khorsand: About the markets that you've decided not to enter in Ohio, how much CapEx are you looking to save? And is it all being -- was it all planned for '26? So it already brings down the CapEx that you're projecting for '26? James Volk: Yes. Hamed, the CapEx per passing in this last year is roughly going to be around $1,400 per passing. Now some of that money has been previously spent in prior years, and we're now really focusing primarily on just placing the fiber. So it's mainly construction labor at this stage, which will probably be about 75% of the $1,400 or, call it, $1,000 per passing. The markets that we decided to pass on wasn't an issue of timing as much as it was an issue of return on investment. As Ed mentioned in his scripted comments, the cost of aerial make-ready has gone up significantly, like 2 and 3x in some markets. And it just made it uneconomical for us to build these markets and get a return on investment as we've expected of roughly 15%. Hamed Khorsand: Okay. And from a competitive standpoint, you introduced this 5-year guarantee, I think, last quarter. Have you seen any step down as far as competitive pressures go? Or is it still the same? Edward McKay: Hamed, recently, one of our large cable competitors actually increased their prices on their 5-year guarantee. But that just happened recently here in the first quarter. Other than that, we haven't seen significant changes since we launched the 5-year price guarantee. Hamed Khorsand: Okay. And then you had said, if I heard you right, that it takes a bit longer on the business than on the residential. How fast -- I don't think I heard you say how fast it takes for residential to sign up. Edward McKay: Sorry, say again, for a residential customer to sign up? Hamed Khorsand: Yes, to sign up for service. I know you were talking about how there's a delayed factor when it comes to business customers. Edward McKay: Yes. So with the business customers, in many cases, they're under contract. We have to wait for that contract to roll off. And in some markets, there are actually multiple providers going after business customers. So we expect terminal penetration on business customers to be lower than residential. But then residential customers that ramp to our target 37% plus penetration rate, we're tracking 5 to 7 years after we launch a market. Operator: Your next question comes from the line of Vikash Harlalka with New Street Research. Vikash Harlalka: I just have a couple of questions. Why did you feel the need to offer a 5-year price guarantee plans? Was it because competition was going in that direction? And then how does that impact ARPU growth? And I'll ask my second after you answer this one. Edward McKay: Yes. So it was in response to competition. One of our large cable competitors launched a 5-year price guarantee. We did initially see some impact on gross adds when they launched it, didn't see any impact on churn. But once we launched our own 5-year price guarantee, that impact on gross adds, we felt was mitigated. And as I mentioned on the -- in my script, we do expect short-term impact on ARPU as this 5-year price guarantees roll through about 1% over the next few quarters, but we expect it to stabilize after that in our Glo Fiber markets. Vikash Harlalka: Got it. And then I have one strategic question. We recently met with many small private fiber operators. There seems to be a lot of appetite for M&A. Could you just remind us how you're thinking about M&A? And if you're looking to buy fiber assets out there, what characteristics are you looking for in any potential targets? Edward McKay: Well, I'd say we've certainly seen consolidation start. We believe consolidation will continue. At this point in time, we're focused on successfully completing our build plan, accelerating customer growth and then reaching that positive free cash flow inflection point in 2027. So that's really our main focus right now. As we look ahead further into the future, from an M&A standpoint, we'd be most interested in a pure-play fiber provider, less interested in a cable provider and not interested at all in a copper provider. Operator: We have no further questions at this time. I will now turn the call back over to Jim Volk for closing remarks. James Volk: Well, thanks, everyone, for joining our call this morning. As I mentioned earlier, this is a very exciting time for Shentel, and we look forward to updating you on our progress in future quarters. Thank you. Have a good day. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Better Collective Annual Report 2025 Presentation 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 speaker today, Better Collective Co-Founder and Co-CEO, Jesper Sogaard. Please go ahead. Jesper Søgaard: Thanks a lot, and good morning, and welcome, everyone, to Better Collective's Full Year 2025 Webcast. My name is Jesper Jesper Sogaard, Co-Founder and Co-CEO of Better Collective. Normally, our VP of Investor Relations, Mikkel opens the call, but as he is currently out sick, I'll have the pleasure of doing so today. I'm joined today by our CFO, Flemming Pedersen, and I will provide today's business update in connection with our full year report that was disclosed yesterday. Please follow me to the next slide. We ask you to pay attention to this slide where we display our disclaimer regarding any forward-looking statements in today's webcast. Please turn to the next slide. Here you see today's agenda. I'll start by providing a business update, including some of the highlights for Q4 and full year 2025. Whereafter Flemming will take you through some of the financials before handing the word back to me for the key takeaways. As usual, we'll end the call with a Q&A session. Please turn to the next page. Let's dive into the highlights of report that for the first time is a combined Q4 report and a full annual report as we have moved the full year reporting forward by several weeks compared to earlier years. Please follow me to the next slide. Before turning to the details of Q4 and the full year of 2025, I would like to extraordinarily to take a step back. Over the past decade, we have successfully navigated multiple structural shifts across technology, regulation and market dynamics. Today, new themes such as AI and the emergence of prediction markets are increasingly shaping the industry landscape. Against that backdrop, it's relevant to provide a broader perspective on how Better Collective has evolved to reach its current position and what lies ahead. Better Collective has been built over more than 2 decades of continuous evolution in a fast-changing landscape. Our growth has come through a combination of organic growth and a series of acquisitions that have expanded our capabilities, strengthened our market presence and significantly increased our scale. Over time, this has enabled us to build a comprehensive ecosystem positioned at the intersection of sports media, sports betting and casino affiliation. The industry we operate in has never been static. I still remember the early shift from Yahoo being the leading search engine to Google gaining dominance, which was an early reminder of how quickly digital audience and traffic dynamics can change. Since then, regulation, technology and user behavior have continuously evolved and each structural shift has required us to adapt our model. We started as a small local affiliate business and quickly recognized that scale was essential to survive, which led to our transformation into a leading global aggregator. Over time, we also saw the strategic importance of owning stronger brands and direct audience relationships and gradually evolved into a global digital sports media group, while remaining anchored in affiliate marketing as our core monetization engine. Strategic acquisitions have played a key role in this journey, enabling us to establish strong positions in what are now some of the most important global markets, including North America, U.K. and Brazil, all while navigating changing regulatory environments. In parallel, we identified early that paid media would become an increasingly important acquisition and monetization channel, which led to the acquisition of Atemi and the subsequent significant scaling within the group. In essence, external change has consistently driven internal evolution at Better Collective. This long history of adapting to shifts in platforms, regulation and market structure has made adaptability a fundamental and embedded characteristic of the company. Importantly, we do not look back to anchor ourselves in the past, but to extract lessons from it. Experience across multiple market cycles provides perspective and informs how we prioritize investments, develop products and prepare for the next structural shift rather than the previous one. Today, we operate a scaled global platform with a very large audience reach, diversified monetization and strong positions across both sports betting and casino affiliation, supported by leading sports media brands and long-standing sportsbook relationships. Our positioning at the intersection of content, audience and iGaming is strategically relevant in an ecosystem that continues to converge and evolve. Looking ahead, the landscape will continue to evolve through AI, new wagering formats, regulatory developments and shifting user journeys. Our focus is, therefore, forward-looking. By learning from the past while preparing for what comes next, we believe we're strongly positioned for the next phase of industry development, supported by our scale, M&A track record, diversified business model and unique position at the intersection of sports media and iGaming. Moving back to 2025. The year has been defined by disciplined execution and structural strengthening of the business. We simplified our operating model, enhanced scalability across the organization and delivered on the full EUR 50 million efficiency program. This focus was about building a leaner, more focused and more scalable platform for long-term growth. We delivered on our full year guidance despite significant external headwinds, Brazil regulation, foreign exchange movements and sports win margin volatility all impacted reported performance during the year. Navigating through those factors while maintaining high profitability demonstrates the resilience of our diversified business. We are adding new layers to our ecosystem, strengthening engagement, data capabilities and partner value. The development within AI is on most companies and management's agendas these days. Let me also address this and its implications on Better Collective. AI is one of the most significant structural shifts in the digital landscape in decades. For Better Collective, it is first and foremost an enabler. We have embedded AI across product development, content optimization, data analysis and commercial optimization. Playbook is a clear external example, while internally AI is improving productivity, scalability and execution speed across the group. At the same time, we take a disciplined view on potential structural risks. We closely monitor AI-driven changes in search and discovery. Importantly, we remain unaffected by recent shifts and our traffic and commercial performance continue to demonstrate resilience, supported by strong brands and diversified acquisition channels. Most of our revenue base is structurally resilient. Within publishing, the existing recurring revenue share is not exposed once users have been referred to our partners. which provides a stable earnings foundation. Our advertising revenues are likewise not directly dependent on search dynamics as they are primarily driven by audience scale, engagement and direct commercial relationships. Paid media is also structurally robust. As a performance-driven, highly agile acquisition engine, we can dynamically allocate spend across channels and platforms if traffic patterns or user journeys shift. This flexibility significantly reduces platform dependency risk. [ esport ] in turn is built on strong direct community engagement and brand loyalty, making it inherently less reliant on traditional search and discovery channels. The area with the highest long-term exposure is future publishing growth, particularly related to new revenue share NDCs and CPA-driven NDC growth, where changes in search, discovery or user behavior could influence acquisition dynamics over time. We do not underestimate this risk. However, we have successfully navigated multiple structural shifts in the digital ecosystem over more than 2 decades and our diversified audience mix, strong brands and scalable platform give us confidence in our ability to adapt to future changes as well. My intention is not to suggest that AI does not introduce risks, but rather to emphasize that we are proactively addressing them and closely monitoring the development. Any potential impact is primarily concentrated in specific areas of our otherwise well-diversified revenue streams. which limits the overall exposure at group level. Another important emerging theme is prediction markets. During 2025, prediction markets have emerged as a structurally important addition to the broader sports and event-based wagering ecosystem. For us, this is an expansion of the total addressable market. Prediction markets introduce new product formats and attract incremental user segments while overlapping meaningfully with our existing sports and betting audience. Given our position at the intersection of sports content and wagering, we're structurally well positioned to support this evolution. We already have commercial relationships in place and are collaborating with relevant players. It's still early days with only a limited number of platforms live, and we expect increased competition in the coming year, which typically strengthens the aggregator position. Overall, we see prediction markets as a natural extension of our core business with the potential to diversify revenue streams and expand long-term growth opportunities. Lastly, we look forward both as shareholders and as sports enthusiasts to what is expected to be the largest World Cup in history. Importantly, for us, it will be played across some of Better Collective's core markets. Beyond its global appeal, the tournament represents a significant commercial opportunity. Historically, major football tournaments provide strong acquisition tailwinds, and we expect 2026 to be no different. The World Cup is likely to drive elevated user acquisition across our platforms as well as meaningful reactivation of dormant users and increased activity across our existing player base. This combination of new customer intake and high engagement levels supports both revenue growth and lifetime value expansion. Given our strengthened position with broader revenue mix and scalable platform, we believe we're well positioned to capture the incremental activity associated with the tournament. I'm extremely proud of the organization and my colleagues for navigating through another demanding period of change with focus and discipline. And I look forward to returning to a year of renewed growth in 2026. With that, let us move to the usual webcast. Please turn to the next slide. Overall, we are pleased to report a strong finish to the year with underlying growth and record profitability. Group revenue reached EUR 94 million in Q4, corresponding to minus 2% year-over-year and plus 2% in constant currencies. We were negatively impacted by a lower sports win margin compared to the year prior. Normalizing the sports win margin to a similar level as the year prior, revenue growth would have been 7%. Group costs were down 8% year-over-year, reflecting the disciplined execution and continued harvesting of synergies from acquisitions. We delivered record EBITDA before special items of EUR 37 million, translating into a 39% margin and growth of 10% year-over-year. In Brazil, we continue to see good activity levels in line with recent quarters with revenue above our expectations. However, the market remains affected by the marketing restrictions, which continues to dampen our ability to send new customers to our partners. In North America, revenue share amounted to EUR 7 million in Q4 as our revenue share database continues to ramp up, making it EUR 17 million pure revenue share for the year versus our own expectation of EUR 10 million to EUR 15 million. Value of deposits reached a record level of EUR 820 million in the quarter, up 6% year-over-year and 13% quarter-over-quarter. This was achieved despite being -- we continue to see strong momentum in Playbook, our AI betting solution, and I look forward to scaling the product across the U.S. and into additional geographies and platforms. Please turn to the next slide. Let me briefly put the 2025 financial performance into a longer-term perspective. Looking at the full year, revenue declined from EUR 371 million in 2024 to EUR 337 million in 2025, corresponding to minus 9% year-over-year. EBITDA before special items decreased from EUR 113 million to EUR 102 million or minus 10%. Since 2018, we have delivered a revenue CAGR of 35% and an EBITDA CAGR of 30% -- while 2024 and 2025 shows a temporary slowdown in organic growth, this must be seen in the context of significant headwinds from external factors such as foreign exchange headwinds on revenue of EUR 9 million as well as the regulatory transition in Brazil, which impacted EBITDA negatively by EUR 22 million and lower sports win margin volatility of EUR 17 million. These factors implied a combined headwind versus 2024 of more than EUR 40 million on EBITDA in 2025. Please turn to the next slide. Let me now turn to what we see as important part of the next chapter of growth journey driven by innovation with Playbook and FanReach. Starting with Playbook, we successfully introduced our AI-powered betting solution in 2025, just ahead of the NFL season. The product is designed to integrate naturally into how sports fans already consume content and make decisions. We have seen strong early engagement with millions of bets sent to our partners. Importantly, Playbook enhances user engagement and improves conversion strengthen the monetization of our existing audience while also opening new avenues for geographic expansion and product development. We will continue to invest in product refinement and international rollout to unlock further scalability. On the FanReach side, this is central to our advantage ecosystem. FanReach combines our proprietary first-party data with advanced audience segmentation, enabling more measurable, scalable and precise media solutions for advertising partners. FanReach was launched firstly in the U.S., utilizing data from selected brands, currently reaching more than 50 million sports fans across our network. We are moving beyond traditional performance marketing and adding a broader media monetization layer built on audience ownership and distribution strength. Together, Playbook and FanReach expand our monetization stack, deepen engagement and reinforce the structural scalability of the business. They are key building blocks for our next phase of profitable growth. Please turn to the next slide. On this slide, we show our new guidance for 2026 and the medium-term outlook. For 2026, we expect organic revenue growth in the range of 7% to 12%. On EBITDA before special items, we guide for growth of 8% to 18% or EUR 110 million to EUR 120 million. This reflects growth with lower cost base, continued focus on operational efficiencies and an expected stabilization of external factors compared to 2025. We also plan to execute an annual share buyback of EUR 40 million, in line with our capital allocation priorities and are confident in the long-term value creation potential of the business. At the same time, we remain committed to maintaining net debt-to-EBITDA below 3x, ensuring continued financial discipline and flexibility. Looking beyond 2026, for the 2027 to 2028 period, we expect continued positive organic revenue growth and target an EBITDA margin in the range of 35% to 40%. This margin ambition is supported by scalability in the business model, a maturing recurring revenue base, especially in the U.S. and increasing AI enablement across products and operations. Furthermore, we expect continued strong cash conversion and net debt-to-EBITDA to stay below 3x. With that, let us move to the next slide and over to Flemming. Flemming Pedersen: Thank you, Jesper, and good morning to you all. Please follow me to the next slide as we dive into the financials. Let me start by bridging the Q4 revenue development in more detail. We started from Q4 '24 revenue of EUR 96 million. During the quarter, foreign exchange negatively impacted revenue by EUR 4 million. Sports win margin volatility reduced revenue by a further EUR 5 million, reflecting more player-friendly results compared to last year. In addition, the regulatory transition in Brazil impacted revenue negatively by EUR 3 million. In total, these external factors reduced revenue by EUR 12 million year-over-year. This was partially offset by EUR 10 million of underlying operational growth across the business, mostly driven by paid media, talent-led media and sports media. As a result, Q4 2025, revenue landed at EUR 94 million, corresponding to a minus 2% year-over-year and positive growth of 2% in constant currencies. The key takeaway is that the underlying business continues to grow, but reported performance in the quarter was impacted by temporary external factors. As these headwinds normalize, the operational growth becomes more visible in the reported numbers. Please turn to the next slide. Let me briefly comment on recurring revenue as revenue share remains the backbone of our recurring earnings model and supports visibility and cash flow generation going forward. Revenue share continues to account for approximately 3/4 of our recurring revenue base. In Q4 '25, revenue share amounted to EUR 41 million out of total EUR 55 million of recurring revenue. Looking to the North American market, historically, a larger portion of the revenue share income has come from hybrid deals with a meaningful upfront component. Over the past 2 quarters, however, we see a clear transition towards predominantly pure revenue share agreements. This represents a meaningful improvement in earnings quality as pure revenue share provides stronger long-term visibility and cohort value. For the full year, we outperformed our expectations in North America. We expected EUR 10 million to EUR 15 million in revenue share, but delivered EUR 22 million. Out of this EUR 17 million was pure revenue share. Importantly, this number would have been even higher in constant currencies, highlighting the underlying strength of the region. In short, North America is scaling with an improved revenue mix, strengthening the recurring revenue and compounding nature of our earnings base. Please turn to the next page. Let me now bridge the EBITDA development in the quarter. Lower revenue year-over-year reduced EBITDA by EUR 2 million, as I just spoke to. In addition, we deliberately increased paid media investment, which impacted EBITDA by EUR 5 million downwards. This reflects continued confidence in the long-term return profile of our paid media activities, where we, to a large extent, spend to harvest the revenue later through revenue share agreements. However, these effects were more than offset by EUR 10 million in cost reductions, driven by the execution of the EUR 50 million efficiency program and broader structural improvements across the organization. And a lot of these cost savings relate to the synergies from previous acquisitions. As a result, EBITDA increased to EUR 37 million in Q4 '25, representing a 10% growth year-over-year and the highest quarterly EBITDA in our company history. This clearly illustrates the operational leverage in the model even in a quarter with slightly lower revenue, external headwinds and increased growth investments, disciplined cost execution enabled us to expand profitability and deliver record EBITDA. Please turn to the next slide. Let me now turn to 2 of our main KPIs, net depositing customers and value of deposits. As expected, NDC levels in '25 were impacted negatively by the regulatory transition we saw in Brazil. The marketing restrictions on welcome bonuses continue to deliver -- continue to limit our ability to send new customers to partners in that market, which is reflected in lower reported NDCs. However, and importantly, Q4 '25 did not show a return to growth quarter-over-quarter of 9%. Also in Q4, value of deposits reached an all-time high of EUR 820 million, showing growth year-over-year of 7%. This is a very strong outcome, especially considering the regulatory headwinds in Brazil during the year. Deposit values are reported quarterly and are not accumulated, meaning this represents actual quarterly activity. The fact that we reached a new record despite regulatory constraints clearly demonstrates the strength and loyalty of the users that we have in the revenue share databases. In combination, the graphs illustrates that while new customer intake has been temporarily impacted, existing cohorts remain highly engaged and continue to generate increasing deposit activity. Furthermore, it signals that we are -- that we continuously manage to send higher-value customers to our partners. This supports the durability of our revenue share accounts and underlines the quality of earnings. Please turn to the next slide. Now let's focus on our funding position and our considerations regarding capital allocation. From a financing perspective, we also took an important step in 2025 that further strengthens our financial position. During the year, we signed a new EUR 319 million 3-year committed club facility with our banking partners, including an EUR 80 million accordion option as well as a new EUR 50 million dedicated M&A facility. This extends our financing maturity profile through October 28 and significantly enhances our financial flexibility. Access to long-term committed financing on attractive terms has been a structural advantage for Better Collective since the IPO in 2018 and has been a strong facilitator in our M&A strategy. It has allowed us to act with speed and certainty when strategic opportunities arise while maintaining a balanced capital structure and disciplined leverage profile. In a fragmented and fast-evolving industry, the ability to combine strategic M&A with stable financing is a clear competitive advantage. Moving to 2025. We guided free cash flow at the low end to be EUR 55 million and landed at EUR 38 million. The deviation was driven by short-term working capital timing effects of EUR 15 million shifting into 2026. We also invested in new significant partnerships in Q4, where we'll see the most of the upside from 2026 and onwards. These deviations are mostly timing and growth related in nature and do not reflect any structural change in the underlying cash generation profile in the business. Cash conversion for the year ended at 92%. Board of Directors and executive management has formalized our capital allocation framework, which is as follows: First, we prioritize deleveraging when net debt-to-EBITDA exceeds 3x. Second, we invest in high-return organic initiatives and selective value-accretive acquisitions. Third, we return excess capital to shareholders, primarily through share buybacks and secondarily through dividends. Overall, we believe this balanced framework supports our focus through many years. For 2026, the Board of Directors has decided on an annual share buyback of EUR 40 million, in line with this framework. Please turn to the next page as I hand the word back to Jesper for the key takeaways. Thanks. Jesper Søgaard: Thanks, Flemming. Let me conclude with the key messages. 2025 was a year of disciplined execution and structural strengthening of the business. We delivered on our full year guidance despite significant external headwinds. In North America, revenue share ramp-up exceeded expectations. Innovation accelerated with Playbook and the continued build-out of FanReach. Looking ahead, 2026 marks a return to growth. We expect the World Cup in men's soccer to be the largest in history and played across some of our core markets to act as a big catalyst. Lastly, prediction markets is expanding our total addressable market and is becoming a clear tailwind despite it being early days. I'm proud of the organization for navigating a demanding period, and we look forward to delivering renewed growth in 2026. With that, we are happy to take your questions. Jesper Søgaard: [Operator Instructions] Our first question comes from the line of Sebastian Grave of Nordea. Peter Grave: Congrats on a strong result. And also thank you for a very comprehensive presentation. Now it's encouraging to see that you expect to return to growth here in '26 and with further top line expansion beyond that. I know you don't provide concrete numbers on the midterm target, but I'm going to try to push my luck anyway here. So the 7% to 12% growth in '26 is led by, easy comparisons in Brazil and from sports margins. And you also see significant tailwinds from a strong sports calendar here in '26 and prediction markets, as you highlight, Jesper. So I guess my question is, is this, i.e., 7% to 12% growth, is this as good as it gets? Or do you also believe that you're able to reach similar growth levels beyond '26? Jesper Søgaard: Yes, it's a bit boring, but obviously, we will not sort of comment further on the targets for '26 and 2028. But looking at the coming years and also a bit to the second half of '25, where we have seen the underlying growth in the business, we really feel we are on track to deliver this growth. And we're sort of further out feeling confident about continued organic growth. But for us, it's too early to start to put numbers to the outer years. Peter Grave: I guess it's not a big surprise, but I tried at least. My second question is on the midterm margin guidance, which you also reiterate here, 35% minimum from '27 kind of big leap from the implied margin here in '26. So how do we get to that number? And I mean, if this is just a question about scalability, well, then I guess the implied growth rates you give here for '27 is quite upbeat? Flemming Pedersen: Yes. I think the guidance, Flemming here, I can try to answer that. The guidance that we give 35% to 40%, you can say, reflects, of course, the scale that we see in the business, mentioning Jesper touched upon some of the growth areas that we see with Playbook, the AI bot that we have launched, FanReach speaking into the advantage and increased CPM revenue. And then you can say the scale from that is, of course, also reflects our opportunities for investing further to mention one is paid media, where we also can, you can say, invest part of the increased revenue into further growth when we see opportunities and of course, also in other growth areas such as talent-led media, which comes with a bit lower margin. So I think the scale is one thing. And with these, you can say examples, we see a higher margin. Actually, in Q4, we saw a 39% margin. So it's a scale that will drive this on a much lower cost base that we have seen in past years. Peter Grave: Okay. And just the last question from my side on the EUR 8 million tax effects you bake into the guidance in '26. I guess it's fair to assume a similar effect on top in '27, given the delayed impact on sports betting taxes in the U.K. Now I guess my question is, is this a gross or a net number that you provide? Meaning do you assume any mitigating actions from operators such as lower odds, et cetera? Or this is just sort of a mechanic gross impact from higher taxes? Flemming Pedersen: It's a number that we have, I would say, tried to assess as a net number also with mitigating factors because there will likely also be market factors such as lower bidding prices within paid media in the Google auctions. And you can say, in general, likely, you can say, lower competition. So there are also counteracting factors where we have a good position. So this is a net number that we have tried to assess and also continue that into the outer year guidance. Jesper Søgaard: [Operator Instructions] Our next question comes from the line of Hjalmar Ahlberg of Redeye. Hjalmar Ahlberg: Just wanted to check a bit on -- if you look at the Q4 numbers here, we see that CPM and sponsorship saw good growth at least what I could see initially here. Just wanted to hear if for the CPM part, if you already see kind of positive impact from Advantage there or what drives the CPM improvement? Flemming Pedersen: Yes. So on the sort of CPM and overall advertising developments, yes, we are starting to see effects of optimized ad campaigns and formats that is sort of part of the Advantage ecosystem. And as we already -- as I alluded to in the speak, is that we now have launched here in '26, the FanReach part of Advantage. So yes, we are gradually incrementally seeing the effect of Advantage, which we also expected that, that would be the way we could tell it in the numbers, incremental and gradual development. Hjalmar Ahlberg: Okay. And also listening to the Playbook here, it sounds like you are getting ready to expand the product internationally here. Is this something you will do during the World Cup? Or is it a broad expansion or is it more gradual expansion in new markets? Flemming Pedersen: So the view we take on this is that we obviously look at core markets and where the product would be most relevant and have the biggest impact. And that guides decisions for the launch. And yes, we have obviously in mind that the World Cup is a good event to have a product like a Playbook out. So yes, we are assessing where we will see the biggest effect from launching Playbook and have the World Cup in mind. Hjalmar Ahlberg: And then just a question on your efficiencies here. So really strong progress in cost savings during the year. Do you see more efficiency from here? Or is it more that you have the new cost base now and then the next step is maybe more to invest in growth? Flemming Pedersen: I think we are, of course, constantly driving efficiencies throughout the business, and now we have a new framework. So this is what we will go with. And you can say the primary focus is now to scale revenue from here on that lower cost base. So hence, also why the higher margin guidance for the outer years. So it's -- yes, it's a constant work in progress, but I think the big chunk we have behind us. Hjalmar Ahlberg: And then just a final one. I don't know if you have a comment on that, but looking at the kind of seasonality for the year, I guess, World Cup means that Q2, Q3 could be a bit more seasonally stronger than normal. But if you have any flavor on the seasonal effect over the year, it would be interesting to hear. Flemming Pedersen: No, you're correct on that, that the World Cup will sort of support Q2 and Q3. And then as usual, Q4 will be the quarter with the highest activity for our business. Jesper Søgaard: I will now pass to the speakers for questions via the webcast. All right. And I'll be taking those. So yes, there in Danish, I'll try and just sort of get to the essence of the questions and read that out loud. Yes. And it has always been already been answered to some extent because it relates to the margin profile in '27 and '28 and the structural drivers. And essentially, I think we will not -- like Flemming covered that just before. So I'll move to the next question, which relates to the continued buildup of our revenue share database, in particular in North America, whether we can quantify how big a part of the future EBITDA growth in '26 to '28, which is expected to come from already existing users rather than new depositing customers. And no, we are not quantifying that. But I think as the value of deposits show, there is a very high quality in the database and players already there. So in general, a significant part of the revenue and earnings generated are stemming from our databases, existing databases. And then a last question. Elon Musk implemented a new policy on X, which limited gambling affiliation marketing. Please comment if you noticed any impact on your partnership with X for Playbook. And we have seen no changes. And with that, I think we are at the end. So thank you very much for showing interest in Better Collective, and we wish all of you a very nice day. Thank you. Bye. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to The Honest Company's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference call over to Chris Mandeville, Interim Head of Investor Relations at The Honest Company. Please go ahead. Chris Mandeville: Good afternoon, and thank you for joining our fourth quarter and full year 2025 conference call. With me today are Carla Vernon, our Chief Executive Officer; and Curtiss Bruce, our Chief Financial Officer. Before we begin, I will remind you that our remarks today include forward-looking statements subject to risks and uncertainties. We do not undertake any obligation to update these statements, and actual results may differ materially. For a detailed discussion of these factors, please refer to our safe harbor statements in today's earnings materials and our recent SEC filings. We will also discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and accompanying presentation, which are available at investors.honest.com. Finally, please note that all consumption data included in our discussion today, unless otherwise noted, will reflect Circana MULO+ measured channel data for the 52 weeks ended January 4, 2026, as compared to the prior year. With that, I'll turn the call over to Carla. Carla Vernon: Thank you, Chris, and hello to everyone joining the call. Honest enters 2026 as a more focused and agile organization. Over the last several months, we've moved assertively to execute the Powering Honest Growth transformation we laid out last November. By exiting Honest.com as a direct fulfillment website, the apparel category and our Canadian business, we've successfully narrowed our focus to our right-to-win core of wipes, personal care and diapers. With these exits, we've also rightsized SG&A in line with this more focused revenue base. Later in the year, we expect additional financial efficiency as we consolidate our warehouse footprint. As a result of these actions, we begin 2026 with a leaner, higher-margin operating model poised for growth. Today, my discussion will be focused on the organic view of the product and channel mix that defines the resulting businesses after the strategic exits from Powering Honest Growth. As a reminder, organic excludes the impact of the exits of apparel, Canada and Honest.com fulfillment. Our execution in Q4 enabled Honest to deliver on our revised guidance for the year. In 2025, Honest delivered organic revenue of $294 million, up 5.3% versus last year and squarely in line with our long-term algorithm. Consumption growth of 5%, driven by double-digit growth in unit sales was in line with organic revenue growth and materially outpaced our comparative category growth of 2%. In 2025, our wipes and personal care portfolios delivered strong performance with consumption growth of 30% and 12%, respectively, which drove market share gains for both. This strength and momentum offset the softness in diaper performance. In 2026, we expect the growth on wipes and personal care to continue offsetting weakness in diapers. I will share more on our diaper performance in a few moments. Despite the volatile tariff environment, adjusted gross margins were 38.7%, an improvement of 50 basis points year-over-year, largely due to favorable product mix. Our 2025 adjusted EBITDA of $21.8 million was in line with our most recent guidance. We also closed out 2025 with a strengthened balance sheet, ending with $90 million cash on hand and no debt. I'm confident in the strength of our business, the discipline of our asset-light model and our anticipated future cash generation. Based on that foundation, our Board of Directors has authorized a $25 million share repurchase program. This authorization reflects deep confidence in our strategy and our commitment to delivering long-term value for our shareholders. Looking back on 2025 performance in more detail. We're particularly encouraged that momentum improved across the second half of the year with Q4 organic revenue improving by 6 percentage points over the Q3 decline and returning the business to top line growth of 1% in Q4. This inflection in revenue quarter-over-quarter was largely because we lapped 2 retailer-specific activations in 2024 that were mostly contained to Q3. Additionally, our total consumption improved by nearly 200 basis points quarter-over-quarter, driven by our higher-margin wipes and personal care portfolios. Taken together, these drivers allowed our underlying strength to resurface in the fourth quarter. We're proud that this momentum is also reflected in our all-time highest household penetration of 7.6% at year-end. This penetration growth represents an increase of 1.7 million households versus the prior year, proving that the Honest brand continues to resonate with a widening audience. And now turning to 2026. For the full year 2026, we expect to deliver organic revenue growth in the range of 4% to 6% while also driving margin expansion due to our more efficient operating model. This dual focus on top line leadership and bottom line health is central to our value creation thesis. As a reminder, we continue to drive our strategy through the 3 strategic pillars that guide every piece of our work: brand maximization, margin enhancement and operating discipline. This will be evident in our 3 growth drivers for 2026. Our first 2 drivers support our goal of brand maximization, which is how we scale the Honest brand. Driver #1 is our continued growth and leadership in the baby category. Driver #2 is our plan to accelerate our growth in households beyond those with babies. In addition to being a top baby brand, Honest also performs quite well in households beyond baby. And in the U.S., 89% of households do not have any children under the age of 6. This includes the 75% of households that have no children at all. To complement our strategy of broadening the Honest brand, our third driver of 2026 is grounded in our margin enhancement and operating discipline pillars, which allow us to make continued progress on strengthening our financial profile and operational excellence. Let me begin with our brand maximization drivers. The Honest brand is unique in its ability to travel seamlessly across categories, aisles and demographics. This was evident in our household penetration growth in 2025, which was balanced across households with no kids and households with kids. Even as we embrace this expanded approach to growth, our story always begins with babies. We believe there is no higher bar than the standard of care a parent gives to their precious babies. According to the National Institutes of Health, 42% of all parents and 49% of all first-time parents are concerned that their children have sensitive skin. This is why our Honest Standard, our rigorous set of guiding principles that help shape every step of product development, including our commitment to formulating without the use of more than 3,500 ingredients of concern resonates so strongly with our community. Honest is trusted by parents who demand a high standard of clean and refuse to compromise on safety or performance. Let me spend a moment addressing our diaper performance in 2025. The double-digit consumption declines on our diaper business had a dampening effect on the otherwise strong growth of our wipes and personal care collections. And while diapers are no longer our largest category, they are an important way to introduce the brand to the 11% of U.S. households with kids ages 6 or under. Our diaper declines were largely driven by retail assortment shifts at select brick-and-mortar retailers, the lapping of 2 large promotional events, which I discussed earlier, and macroeconomic pressures driving consumers towards lower-priced items. Because today's parents expect a value equation that balances price with performance and safety, we're strengthening that equation for our diaper business through thoughtful investment in pricing and improvements to price pack architecture while continuing to deliver the quality materials, fit and style that we are known for. Now turning to baby wipes and personal care. We are confident that our 2026 baby growth plan will deliver the ongoing strong momentum of our core products, along with a robust lineup of baby-focused innovation, much of which is rolling out this quarter. In 2025, our total Honest wipes portfolio delivered remarkable growth with consumption up more than 30%, which is 6x faster than the comparative categories. A standout performer was our all-purpose baby wipes collection, which grew consumption by 25%, materially outpaced the category and delivered the largest dollar share growth of any all-purpose baby wipes brand. One of the key drivers in this growth was trade-up to larger sizes. In response to the demand for value and convenience, we are launching our largest baby wipes configuration to date with 16 of our full-size packages for what we call our mega pack. Our baby personal care success is driven by the same demand for clean, safe ingredients we see across the Honest portfolio. With 12% consumption growth in 2025, we're building on this momentum with a strong innovation lineup in 2026. On the heels of the successful launch of our first partnership with Disney, we're expanding our Mickey & Friends bath time and bedtime items into additional retailers this year. Our baby personal care portfolio also focuses on bringing the sustainability and value that today's parents are seeking. This quarter, we are adding a new item to our collection of milk-carton-style 32-ounce refills with the addition of our fragrance-free shampoo and body wash. This gable-top packaging, which is our largest size offering, uses 89% less plastic than our standard 10-ounce bottle. And earlier this month, we launched our fragrance-free sensitive-rich cream moisturizer with a beautifully light and creamy texture that is clinically proven to deliver 48-hour moisturization for babies' delicate skin. As I shared earlier, in addition to growing with baby households in 2026, we will also bring intention and focus to our growth of Honest in households with bigger kids and no kids at all. This leverages momentum that has been quietly building. According to numerator data, 54% of current Honest buyers are in no kid households, and we have a history of appealing to those households in several ways. Many families who trusted Honest for their babies stick with us even after the kids grow up. Some of our most popular items from the baby aisle like our shampoo and body wash, body lotion or our conditioners and detanglers are favorites among households that don't have babies anymore. These are also households that discover Honest through products like our sanitizing wipes or our adult flushable wipes. Regardless of the reason, we have big plans to unlock more growth in households where the kids are older or where there may be no kids at all. The next natural step in this journey is our expansion into the section of the store dedicated to products for big kids. We know that as kids grow, they want things that show they are growing up, but that doesn't mean they lose the need for the gentle and clean formulations we bring. So we're practically cartwheeling with glee at our first launch into the big kid aisle in partnership with Disney Pixar's Toy Story. We are now taking bath time to infinity and beyond with a lineup of 6 items that add Woody, Buzz, Jessie and more Toy Story friends to the Honest family. The collection launched this month online and in stores at Walmart and will roll out at additional retailers ahead of the Toy Story 5 release this summer. In 2026, we are also poised to continue our growth in the 75% of U.S. households that don't have any babies or little kids. We have a two-pronged approach for growing with these no kid households. In many instances, we have seen that our existing items are already a great solution for these households. So in 2025, we began evolving our marketing messages to introduce these older households to our personal care items and wipes. We're also designing new items specifically with this broader set of households in mind. A great example of this success is our beautiful countertop-friendly adult flushable wipes collection, which grew consumption by 175% in 2025 and has ascended to the top 5 in Amazon's personal cleansing wipes set. Following our 2025 launch into brick-and-mortar retailers, including H-E-B and Target, we are striking while the iron is hot as we rolled out our flushable wipes into Walmart stores earlier this month. Also, in addition to our successful fragrance-free offering, we expanded the range of our sanitizing wipes by adding full-size packs in 2 new scents, grapefruit and lavender, alongside convenient pocket packs for on-the-go occasions. These are rolling into market as we speak. This strategy to grow across demographics is not a pivot. It's an advancement of what's working. Our community has spoken, the Honest brand and the Honest Standard are for everyone from babies and kids to kids at heart. And finally, we are also driving value creation through our focus on margin enhancement and operating discipline. Now that we've exited our lower margin and less strategically aligned categories and channels, we will be able to deliver end-to-end efficiencies in our supply chain, along with improvements to inventory management and reductions in SG&A. And with these Powering Honest Growth actions in place, we expect to deliver gross margins in the low 40s in 2026. We have strengthened our balance sheet, lowered our cost structure and have clear momentum in our right-to-win categories. And today, we believe Honest is better positioned than ever to deliver long-term value to our shareholders while building a stronger, bigger Honest. With that, I'll now turn things over to Curtiss to provide more detail on our Q4 and full year 2025 performance as well as our 2026 outlook. Curtiss Bruce: Thank you, Carla, and good afternoon, everyone. The financial results we are sharing today represent the conclusion of a necessary and decisive chapter for The Honest Company. While our headline numbers for 2025 reflect the deliberate streamlining of our portfolio, the underlying metrics reveal a business that is fundamentally stronger than it was a year ago. Through Powering Honest Growth, we have built a stronger financial foundation, specifically designed to power our future expansion. This program is expected to deliver between $10 million and $15 million in annualized savings, serving as a direct catalyst for margin expansion while at the same time, providing us with the fuel to reinvest and drive growth in our highest margin portfolios. To that end, our execution is moving at pace. Since our announcement in November, we have seamlessly exited nonstrategic channels and categories, taking actions to rightsize our SG&A and initiated plans to consolidate our footprint that will deliver structural improvements and efficiencies in 2026 that will endure well beyond this year. The performance and guidance I will detail today provide evidence of this continued scale for Honest. Beginning with our fourth quarter results, revenue was $88 million, down 11.8% year-over-year. This decline primarily reflects the deliberate impact of our strategic exits. These headwinds were partially offset by the continued momentum Carla detailed in our total wipes and baby personal care collections. On an organic basis, revenue grew 0.7% to $71.3 million, reflecting continued momentum in our total wipes and personal care categories, largely offset by ongoing diaper sales declines. Importantly, this was a significant inflection from our third quarter performance as we lapped select merchandising headwinds, observed continued strength in our wipes and personal care portfolios and executed on targeted investments. Gross margin was 15.7% compared to 38.8% in the prior year period. This was primarily related to a discrete inventory write-down on apparel as we finalized our exit of this lower-margin portfolio. Additionally, an increase in tariff costs was also a slight headwind compared to the prior year period. These pressures were partially mitigated by favorable product mix as we shift toward our higher-margin wipes and personal care portfolios and a decrease in fulfillment costs. On an adjusted basis, our gross margin was 38.3% and generally in line with the prior year period. Operating expenses increased $2 million year-over-year. This reflected $4.2 million of the total restructuring costs we expect to realize from Powering Honest Growth. This was partially mitigated by lower year-over-year SG&A, primarily reflecting a reduction in legal expenses. Q4 marketing expenses were consistent with the prior year period. In the quarter, the company reported a net loss of $23.6 million, primarily related to the onetime costs associated with Powering Honest Growth. Adjusted EBITDA for the fourth quarter was $3.8 million, down $4.8 million versus last year, largely due to lower revenue. Adjusted EBITDA margin was 4.3%. Turning to our full year 2025 results. Revenue was $371.3 million, representing a 1.9% decrease compared to the prior year. This top line performance primarily reflects the intentional impact of our strategic exits under Powering Honest Growth. On an organic basis, full year revenue increased 5.3%, landing squarely within our long-term algorithm and highlighting the underlying strength in our core wipes and personal care portfolios. Our GAAP gross margin for the year was 33.3% compared to 38.2% in 2024. This contraction was driven largely by a discrete inventory write-down on apparel and a headwind from increased tariff costs. These factors were partially offset by more favorable product mix. On an adjusted basis, gross margin was 38.7%, an increase of 50 basis points over the prior year, highlighting the underlying health of our core business. Total operating expenses decreased by $9 million or 5.8%, primarily driven by a reduction in SG&A related to lower legal and stock-based compensation expense compared to the prior year. This was partially offset by the aforementioned discrete restructuring costs and a strategic increase in marketing to support our growth. For the full year, we reported a net loss of $15.7 million compared to a loss of $6.1 million in 2024, with the variance almost entirely attributable to the discrete costs associated with our transformation. On an adjusted basis, net income was $8.3 million. Finally, adjusted EBITDA was $22 million, which landed within our updated outlook range and compared to $25.9 million in 2024. Now turning to our cash flow and balance sheet for the year. We generated free cash flow of $13.6 million, a substantial improvement compared to the $1 million in the prior year. This strength was driven by significant working capital improvements stemming from our focus on operating discipline. Our balance sheet ended the year in an exceptionally strong position with $89.6 million in cash and cash equivalents and 0 debt. This capital position, coupled with our asset-light operating model, provides us with significant financial flexibility. As Carla shared earlier, with this strength as the backdrop, our Board of Directors has authorized our inaugural share repurchase program of up to $25 million effective immediately. This decision is a direct reflection of our confidence in Powering Honest Growth and the substantial near- and long-term benefits we expect this transformation to deliver. We believe our current valuation does not fully reflect the structural improvements we are making to our operating model, and this program underscores our commitment to a disciplined capital allocation strategy, one that balances reinvestment in our growth initiatives with a clear focus on returning value to our shareholders. As we look ahead, the decisive actions we've taken to optimize our portfolio have created a much stronger foundation for profitable growth. We have effectively shifted our resources toward the categories where Honest has the clearest competitive advantage, and our 2026 framework reflects the early returns of that discipline. For 2026, we expect the following: reported revenue declines of 18% to 16% due to our strategic exits; organic revenue growth of 4% to 6%, in line with our long-term algorithm; adjusted gross margins in the low 40s; and adjusted EBITDA of $20 million to $23 million. To provide greater color on these figures, we anticipate sequential improvement in our organic growth throughout the year. While we face difficult comparisons in the first half of 2026, particularly in Q1 due to last year's retailer inventory buildup ahead of tariffs, our momentum will be driven by a robust pipeline of innovation and significant distribution gains established early in the year that will build throughout the remainder of 2026. For modeling purposes, it is also important to account for a high teens percentage headwind to reported sales resulting from the strategic business exits we finalized in 2025. While this impacts the reported top line, it effectively concentrates our resources on our most profitable categories. Our adjusted gross margin expectations reflect the continued success and ongoing shift in our revenue base toward our higher-growth, higher-margin wipes and personal care portfolios. As these categories represent an increasing share of our total business, we expect a consistent mix benefit to our consolidated margin profile. However, tariffs will remain a year-over-year headwind until they enter the base period beginning in Q2. Regarding supply chain efficiencies realization under Powering Honest Growth, we expect these savings to materialize in the second half of the year as we move past the implementation phase of our footprint optimization. Specifically, we are consolidating from 2 fulfillment centers into our state-of-the-art facility in Las Vegas with a focus on automated large-scale retail fulfillment. We are executing against a comprehensive project plan designed to ensure the continuity and stability of our operations. By applying our core principle of operating discipline to this move, we are focused on maintaining strong service levels for our retail partners and consumers throughout the process. Finally, our adjusted EBITDA expectations reflect the operational leverage inherent in our leaner business model. To fully appreciate the significance of our profitability outlook, it is important to look beyond the absolute dollars. While we expect our adjusted EBITDA performance to be consistent with the prior year, it is being generated off a materially lower reported sales base. The fact that we are maintaining our profit levels while intentionally shedding nearly 1/5 of our top line is a testament to the fundamental improvement in our business model. In terms of shape of the year for adjusted EBITDA, we expect performance to strengthen as the year progresses, mirroring the cadence of our organic growth and gross margin profile. When we look at the long-term earnings power of The Honest Company, we see a business that has moved past the era of structural complexity and into a phase of structural leverage. Regarding our top line potential, our 4% to 6% organic growth algorithm remains the appropriate yardstick for our long-term framework anchored in our focus on driving sustained market share gains. Just as brand maximization is a catalyst for revenue growth, we see a similarly long runway for continued margin enhancement. As our higher-margin, higher-velocity products continue to outpace the broader portfolio, we are establishing a new elevated baseline for gross margin. Additionally, the supply chain efficiencies and SG&A rightsizing we expect to realize are not onetime wins. We believe they are structural enhancements to our earnings power. As I close, I want to express my confidence about 2026 and the great future ahead for Honest. We are moving forward with a more productive portfolio, a stronger financial foundation and clear line of sight toward sustainable, profitable growth. We are committed to ensuring that the Honest brand thrives in the modern household for years to come. With that, I turn it over to Carla for final remarks. Carla Vernon: Thank you, Curtiss. Powering Honest Growth was never just about restructuring. It was about unlocking the full potential of the Honest business model and brand. In 2025, we did the heavy lifting to streamline our portfolio and establish a stronger financial foundation. And now in 2026, we build on the great momentum of our core products, our strong brand building and our great innovation lineup. This year, as always, our progress is due to the incredible execution by our team. Curtiss and I offer our sincere thanks to our employees, proudly known as our Honest Butterflies across our L.A., Las Vegas and Minneapolis locations. Their resilience and commitment as a community continues to power our success. We enter 2026 with a high degree of confidence in our ability to deliver sustainable, profitable growth. Thank you for your support as we build a stronger, more focused and enduring Honest. And now I turn it over to the operator to open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Owen Rickert with Northland Capital Markets. Owen Rickert: It's great to see the underlying strength of the organic business with that returning to positive territory. With the $25 million share repurchase announcement signaling confidence from the Board here, how should we think more about the cadence of organic growth building throughout 2026? Carla Vernon: Owen, Carla here. As we exit 2025, we really tried to express and indicate our confidence in the momentum we see as we're exiting the year. We leave Q4 with consumption of north of 3.5%, and that really sets us up well for the strength that you heard about on our wipes and personal care businesses, where we expect to see really continued strong performance in the year. We've got such a lineup of innovation against what we know works on those businesses. In the wipes portfolio, I talked about a bunch of the new products that are already shipping in the quarter; personal care entering that kid personal care set for the first time. So we're expecting the complement of new product innovation along with momentum on the core. But we really want to undergird all of that with the strength of our business model through supply chain improvements that we're also going to see across the year. Curtiss shared in his remarks that we're going to be optimizing our fulfillment center footprint. Some of those benefits will happen as the year runs. And our SG&A really bringing that in line with our new smaller revenue base was an important piece of progress we wanted to demonstrate on our transformation, and we'll be doing that over the course of the year. I think Curtiss can dive into more of the specifics quarter-over-quarter, but overall, we're really looking forward to seeing that continued strengthening over the course of the year. Curtiss Bruce: Yes. So let me just add the momentum that Carla is talking about that we're exiting the year with gives us a lot of confidence to be able to deliver our guidance of 4% to 6% organic revenue growth for the year. It's worth noting that, that organic growth will, however, represent down 18% to down 16% on a reported basis. In order to help with the modeling, we have provided the 2025 quarterly organic base that is in the press release. You can also find it on the website in the IR section on our Q4 [ presentation ]. In terms of the phasing from an organic growth perspective by quarter, we do expect to see sequential improvement in our growth rate as we lap the tariff inventory build in Q1 of 2025. We are absolutely confident in our ability to deliver our guidance on both the top and bottom line. Owen Rickert: Got it. Super helpful, guys. Secondly for me, with nearly $90 million of cash and no debt, how do you balance buybacks with reinvestment in maybe marketing and innovation going forward, especially with the stated goal of accelerating growth in those core categories? Curtiss Bruce: Yes. So let me start by just saying what a milestone this is for The Honest Company as a public entity to have our inaugural buyback authorization. I think that is quite an achievement, quite a milestone for us. And as we said in the remarks, it's a reflection of our ability to execute Powering Honest Growth. It's a reflection of, as you just stated, the $90 million we have in cash and 0 debt. And that $90 million was a significant increase from our balance at the end of Q3, so I think that is representative of our ability to execute Powering Honest Growth as we close the year. It also marks, I think, our confidence in our ability to execute the transformation program, our continued ability to generate cash and the confidence we have in our ability to deliver on our 2026 guidance. It also -- we believe that valuation does not reflect the potential of this business nor our ability to execute the transformation. What we will continue to do is prioritize investment in growth. We will maintain liquidity to weather any macroeconomic headwinds that could be in front of us, and we will balance that with returning value to shareholders. That is our capital allocation plan. Operator: Our next question comes from the line of Aaron Grey with Alliance Global Partners. Aaron Grey: Just want to dive a bit deeper in terms of some of the growth opportunities. In the past, we've talked about ACV opportunities, both in terms of breadth and depth. You alluded to some of the innovation earlier on the call. Curtiss, you also talked about some distribution in terms of the sequencing of the growth. So I just want to get some further color in terms of maybe you can size out how much of the growth you're expecting now is from breadth versus depth for the year 2026 and we think about some of the growth opportunities. Carla Vernon: Aaron, nice to talk to you. As we look at how we've built 2026 with a top line growth algorithm in the 4% to 6% range, that growth is driven by a really nice balance of things. I think balance is such a -- going to be such a theme for us. So the growth is driven in a very well-balanced way by innovation of core -- excuse me, innovation of new product items and gaining distribution through the launch of those new product items like we just talked about entering an entirely new aisle. The kid personal care aisle is a different part of the store than where we are, where you find a lot of bubble baths and stuff. And so we have an entire new lineup entering that aisle with 6 new items at the launch. Those already rolled out in the year. That's a great example when we say growth driven by distribution of new items. We are also seeing growth and distribution gains on our core items as well. So I love talking about like we rolled out our flushable wipes over the last 2 years, only entering brick and mortar for the first time in 2025. This quarter, seeing our first brick-and-mortar launch at Walmart of the flushable wipes, so we've got a lot of strength and engine behind core items that still have more distribution upside. That's just one example. So we have distribution of the core. We have innovation of new items. We have the momentum and velocity of the core. So the items that we already have in market are doing quite well. For example, our all-purpose baby wipes are doing very well. So as Curtiss talked about, we really want to fuel the growth of our core by making sure we have marketing investment across that as well. So it's really a three-part growth and balance as you see our growth. The other way to think about that, which I talked about today, is we're talking about household types, which is also an important unlock for us. We're also balanced in that regard. So our business is surprisingly across kid and no kid households. Today already, 54% of our revenue is from households with no kids. And our household penetration growth was also very balanced in 2025 with growth coming from no kid households and growth coming from households with little kids. So as we look at driving that growth, we drive that growth with items created for those different kinds of households as well as marketing designed to talk to those households and give them the awareness of the product. Aaron Grey: Okay. Great. Second question for me is just on the cost savings. So it moved up again. It was 8 to 15, I believe, last quarter, now 10-15. So good to see the lower end of that raised a bit. But I want to talk about maybe the sequencing of those savings and when we can expect it to flow through the P&L and then maybe some color in terms of what would move that towards the lower and higher end of the range and the key factors there. Curtiss Bruce: Yes. So thanks for the question. I just want to jump in here and reiterate the fact that we guided now to a gross margin in the low 40s. I am sure you remember back in Q2, when we crossed the 40% gross margin threshold for the first time, there was quite a bit of excitement with us on that achievement. So as we look at 2026 and we talk about the guidance, we did guide to the low 40s on an adjusted basis. Those savings are going to come or that performance is really connected to a couple of things. Number one is, as we think about the higher margin categories that are driving growth in wipes and baby personal care, we will have a sustaining mix benefit throughout all 4 quarters related to mix. The second big driver for that outsized performance will be the transition from 2 warehouses down to 1. And so that execution is planned to start having the benefit in our business in the second half of the year. We -- as you think about sort of the range of outcomes, I think the potential for more or less really comes down to the ability of the -- or the impact from a mix perspective, is there more upside on the higher-margin pieces of the business that will drive a higher mix benefit and then related to the timing and the absolute value of the savings related to the warehouse transition. Operator: Our next question comes from the line of Shovana Chowdhury with JPMorgan. Shovana Chowdhury: I wanted to delve a little bit further into the diaper. It's 30% of your sales, and you called out the decline in the diaper revenue. First, I wanted to clarify, is this decline mainly due to the general neutral print issue with Target, which should not be a headwind this year? Or is it really a factor or like worsened by the fierce competition in the category? And what is your expectation for the diaper performance in the future? And if you could also give me -- give us a sense of -- you did mention in your prepared remarks about the thoughtful pricing in diapers and improving in price pack architecture. What is the price gap that you're seeing? I understand your more premium products, there's usually a price gap. But what is this price gap? And how much are you willing to close this gap? And if you can just give us like some thoughts on the latest trends and market share performance, specifically for your diapers, that would be very appreciated. Carla Vernon: All right. Shovana, I want to make sure I break apart the different components of your question and make sure I address them. So let me start by stepping back and saying that it's been a very volatile year. 2025 was a very volatile year for the diaper category overall. And I know people are probably hearing that not just from us. The category overall for 2025 was down 1%. And we know that there are a number of drivers that are causing that to happen for the category. One of the biggest things that we're seeing is that with the macroeconomic uncertainty, consumers in the diaper category, in particular, have been shown to switch to lower-priced diaper items. And what we're seeing is category -- the category is just losing dollars overall as consumers shift to lower-priced items. And so that certainly affects us as well when we see those consumer shifts. We also know that for us, last year, we had that lapping issue that I talked about that was a real driver of our Q3 diaper declines but was pretty well sort of encapsulated to a Q3 impact. And then we know that we had the portfolio simplification over the course of the year. Some of that portfolio simplification was indeed due to the ones you brought up, Shovana, the loss of the gendered prints at one of our largest retailers. We know that retailers are doing some shifts and simplification of their sets overall. So that was among one of the drivers. As we look at the future and what we expect, we do believe that 2026 is likely to be another challenging year for Honest in diapers, and we -- that will be driven somewhat by some of the same factors, the macroeconomic uncertainty. We're going to be watching that just like everyone. I mean, there's a lot, and it's been changing quickly in the category. And there have been some aggressive moves by some of those low-priced competitors. So we'll keep our eye on that. We do believe that the portfolio simplification that we're experiencing will continue into the course of the year, but that's already in our guidance, Shovana. So what we expect from our diaper business in '26 is already reflected in this 4% to 6% top line growth algorithm. And when we think about how we want to address it in the future, you are right. We want to make sure we've got the right price value offering that makes sense for our business while maintaining our commitment to driving margin expansion as a whole. So we want to do that in the right way and in a way that means so much to our consumers. But that's also why we need to have a very balanced growth portfolio overall for our baby business in general because we have a lot of strength we bring to the aisle and a lot of margin strength we bring as a leading baby brand that is not dependent on diapers the way it used to be so much when diapers was the bigger piece of our business. You did ask me about pricing and the price gap. Our average price gap can be anywhere ranging from 20% to 30% of a price premium on an Honest diaper. We do know we develop our diaper to a higher standard of clean, always trying to push the categories that we're in to bring the Honest Standard to life through the offering we bring and with the highest expectations of our sensitive skin consumers. So that is something we need to make sure we get right in our cost structure, and that's all been built in as we've already reflected in the guidance for the year. Operator: Our next question comes from the line of Anna Glaessgen with B. Riley Securities. Anna Glaessgen: I guess I'd like to start as a follow-up to the prior question on diapers. Just curious especially given the dislocation we've seen this year given retailer actions in the category. Roughly, how should we think about consumption trends versus the industry? And then building off the prior commentary around the price premium and consumers trading down, I guess, how should we think about returning to consumption in excess of the industry in light of those headwinds to premium products? Carla Vernon: I'm going to speak to the consumption trends. I want to make sure I do totally understand your question, Anna, so if I'm not hitting on it, please let me know with a follow-up. For our 2025 performance, as we look at our diaper consumption, we did share that we had double-digit declines in diapers. Now that's not the same everywhere. That's what's been very interesting about us in our diaper performance. The category overall was down 1% as a diaper category. When we look at our diaper performance and we take out our performance at Target, our diaper consumption grew 2% for the year last year. So we definitely have seen that our diaper dynamics can be different based on the different consumer patterns at the various retailers. But overall, we are certainly experiencing the sort of broad-based challenges and headwinds that the diaper category faces. Again, I would say that as we have built our 2025 model, we've been very clear-eyed about what we expect from our diaper business and from our consumption. And as we look at our expectations to grow consumption overall across our portfolio for the year, our wipes and personal care businesses are performing so strongly, and that's one of the reasons why we are also bullish on our ability to grow with our highest margin businesses where they can drive the biggest impact on our portfolio and against the households that love what we have and want more of it. So that's why we have a very balanced approach to our growth next year. Anna Glaessgen: Got it. That's really helpful. So it seems to suggest, taking out the noise at that key retailer underlying share actually -- or underlying performance actually exceeded the category. Carla Vernon: It did. Anna Glaessgen: Okay. Perfect. And then building on a prior question on the first quarter, the commentary of sequential improvement in organic growth through the year seems to imply that the first quarter is expected to produce year-over-year organic growth. Is that fair? Curtiss Bruce: Yes, that's very fair. We do expect organic growth in Q1. We expect sequential improvement thereafter, but you heard that correctly. Anna Glaessgen: Got it. And then just one more if I could. You're now a couple of quarters into the shift from DTC. Any high-level thoughts on your expectations for transfer of those sales to your retailers and anything you've seen thus far? Curtiss Bruce: Yes. I think we had a conservative assumption on the flow back to retailers as we exited the fulfillment. What we've seen early days and I guess very complicated and complex to attribute exactly where it's coming from when you look at the -- some of the early green shoots that we've seen as we've made that change on some of the retailer dot-com sites, but it has exceeded our original expectation. And so we're happy with the early, call it, qualitative performance that we've seen. Operator: And our next question comes from the line of Dara Mohsenian with Morgan Stanley. Dara Mohsenian: Just a couple of follow-ups. A, on the diaper side, you mentioned some investments in value. Can you just give us a sense of some of the adjustments you're making from a promotional cadence standpoint, a pricing standpoint in 2026? Is that the most important intervention you're making in diapers? Or are there other things that should also drive improved performance? And is there a point where you think you can get back to consistent growth? And then just on the share repurchase side, how do you think about repurchases? You mentioned that you see greater value here than perhaps the market is. Do you expect to repurchase aggressively? Or is this more a program that's in place for opportune repurchases over time as opposed to putting the dollars to work right away? Curtiss Bruce: Yes. Maybe I'll start with the repurchase, and then we'll pivot to the first part of that question. So the repurchase authorization of $25 million was open-ended, right? And so we've got no specific time horizon that we are executing against. I think when you look at the benchmarks, however, in the industry, it would indicate that most public companies when they have an authorization program sort of reach that limit or renew their program over the course of a 2- or 3-year time horizon. We absolutely believe that the valuation is not fully reflective. We will be opportunistic. I cannot tell you specifically when and how much, but we believe that is undervalued and we have an opportunity. Carla Vernon: And I'll -- let me just hit the -- let me hit the diaper. I think you were asking about diaper pricing and diaper value overall. So I know you know, but obviously, retailers set the pricing strategy that's in the market. And we don't discuss in advance any of our specific approaches to where we're going to execute and advance merchandising or promotional support against our categories. What I would say is, in this category, in the diaper category right now, we do see that when we look at the overall performance of the category, the observation you can make is that consumers are shifting to lower-priced diaper offerings, many of which are manufactured in China. And so we can take from that, that bringing consumers the right value equation is important. What we also see is that, last year, when we take out the impact of one of our large retailers, our diaper business did grow. So what that tells us is that our diaper business has a good value offering for the people who want the kind of diaper that we offer. What's important as we look ahead is making sure we've always got that right, that we balance benefits and price with our overall responsible business model strategy and that we also understand that the Honest brand has become very scalable across many categories and that that's one of the reasons why we're shifting towards higher margin, higher growth areas because this business will grow forward with baby households against a very broad array of categories like baby personal care, like wipes, like lotions. So we feel very good about our baby strategy, and we will keep our eye on the right way to manage our diaper business. Curtiss Bruce: And if I could just wrap that up, I just want to just reiterate that we have taken modeling several multiple different scenarios on how our diaper business moves or doesn't move throughout 2026. And all of that is reflected in the guidance that we provided today. Operator: I'll now hand the call back over to CEO Carla Vernon for any closing remarks. Carla Vernon: I just want to thank everybody for joining us for the call today and giving us the opportunity to tell you about the confidence we have about 2026. I look forward to talking to you all next quarter. Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for participating, and you may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Preliminary Full Year 2025 Results Conference Call. I am Jota, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rafael Pérez, CFO. Please go ahead. Rafael Perez: Good morning, and welcome to the Preliminary Full Year 2025 Results Conference Call of Befesa. I am Rafael Pérez, CFO of Befesa. And this morning I'm joined by our Group CEO, Asier Zarraonandia. Asier will start with an executive summary of the period. Then we will cover the business highlights for the steel dust as well as aluminum salt slag recycling businesses. I will then review the preliminary full-year financials by business, and we'll cover the evolution of commodity prices, our hedging program, and finally, cash flow, net debt, and leverage and capital allocation. Asier will close this presentation, providing an update on the outlook for 2026 and an update on our growth plan. Finally, we will open the lines for the Q&A session. As always, this conference call is being webcasted live, and you can find the link in our website. Now let me turn this call over to our CEO, Asier, please. Asier Zarraonandia Ayo: Thank you, Rafael. Good morning all. Moving to Page 5 of the business highlights. We have delivered strong full results -- year results, continuing the solid trends seen in the first 9 months of the year. Our performance demonstrates once again the resilience of our business model and the benefits of our diversified operations. Adjusted EBITDA for the full year of 2025 reached $243 million, up 14% year-on-year. The EBITDA margin improved significantly to 21% in the full year '25 compared with 17% in '24, reflecting a strong operational efficiency and disciplined cost management. Financial leverage was further reduced to 2.27 in December 2025 compared to 2.19 a year ago, well below the 2.5 target, marking the seventh consecutive quarter of deleveraging. Net income and earnings per share also increased sharply. EPS rose 58% year-on-year to 2.01, reflecting a strong profitability and improved financial performance. In our steel dust business, we achieved resilient EAF dust volume across all markets despite adverse market conditions. Performance was further supported by lower zinc treatment charges and favorable zinc prices. Our salt slag operation delivered solid performance, while secondary aluminum has been impacted by persistent challenging environment, driven mainly by the weak automotive market in Europe, as well as the usual summer period maintenance activities in the auto industry. The Palmerton expansion project was completed as expected, with the second kiln successfully commissioned in July '25. We expect '23 to be another year of earnings growth, primarily driven by higher EAF steel dust volumes in the U.S. as well as some recovery in secondary aluminum. Our financial leverage is expected to remain at around 2x by year-end 2026, supported by solid cash generation and disciplined capital allocation. Growth CapEx will continue to focus on the Bernburg project. I will comment on the outlook in more detail later. Moving on to Page 6, business highlights for the steel dust business. In Europe, steel production in the full year of 2025 has remained depressed, down 3% year-on-year, mainly due to weak manufacturing activity and higher imports from China. Despite this, our steel dust deliveries from electric arc furnace steel customers continued in line with the 2024 average at very solid levels, demonstrating the resilience of the business model. Operationally, the European plants performed strongly, achieving a 94% load factor in the fourth quarter, showing a strong performance and no maintenance stoppages. In the U.S., steel production increases by 3.1% year-on-year, driven by overall economic growth. Our U.S. plants operated at a 71% load factor in Q4, continuing a gradual improvement year-on-year. The 2 new kilns in Palmerton have been fully operational since July 2025, and new electric arc furnace steel supply contracts are ramping up progressively through the Q4, following some initial start-up delays. At the same time, cost reduction measures in the U.S. Zinc refining plant continued to deliver the expected improvements in asset profitability. In Asia, volumes in Turkey increased by 11% year-on-year, recovering strongly after a weak second quarter affected by maintenance shutdowns. In Korea, the load factor reached 76% in 2025, up 6% year-on-year, driven by higher domestic deliveries and strong operational execution. In China, operation continued at low utilization level with earnings around breakeven, reflecting ongoing market weakness. Moving on to the Page 7, business highlights for the aluminum salt slag recycling business. In our aluminum business, performance has remained mixed in 2025. Starting with the salt slag recycling business, operations have continued to perform strongly, running in line with previous quarters. Utilization levels remained above 90% in 2025, demonstrating the robustness and efficiency of our assets. In our secondary Aluminium segment, the market environment continues to be very challenging. As we have been commenting during the year, the European secondary aluminum industry remains under pressure with tight metal margins and limited production activity, largely as a consequence of the ongoing weakness in the automotive sector. However, the performance in the fourth quarter of 2025 reinforces the view that the Q3 was the lowest point of the cycle and that the recovery should be underway. Despite these headwinds, we continue to focus on operational discipline, cost efficiency, and customer diversification to preserve profitability and position the business for recovery once market conditions improve. Now Rafael will explain the financials in more detail. Rafael Perez: Thank you, Asier. Moving on to Page 9, the financial results for the Steel dust segment. Steel dust delivered EUR 212 million of adjusted EBITDA in 2025, which represents a 25% year-on-year improvement. EBITDA margin improved from 21% to 27% in the period, mainly driven by better pricing environment on treatment charges and zinc hedging. The EUR 42 million EBITDA improvement has been driven by the following factors. The year-on-year impact from volume has practically no impact, with similar plant utilization at group level around 70%, similar to last year. As explained by Asier, we have been able to run our European assets at a high utilization despite a very challenging market environment. On price, strong positive EBITDA year-on-year impact of around EUR 35 million. With the 2 main price components being higher zinc hedging price, 3% higher year-on-year, and lower zinc treatment charges, which was set at $80 per ton for the full year 2025 versus $165 per ton in 2024. On cost and other, the net positive EUR 6 million impact is largely driven by the lower operating cost in the zinc smelter in the U.S., as well as lower average coke price. These 2 positive effects have been partially offset by higher inflation costs in the recycling business as well as unfavorable FX. Moving on to Page 10, financial results for our Aluminum segment. Aluminum salt slag delivered EUR 32 million of EBITDA in 2025, which represents a 27% year-on-year decrease compared to the EUR 43 million in the same period of last year. The year-on-year EUR 11 million negative EBITDA development was mainly due to the lower aluminum metal margin, as well as slightly higher operating costs and energy prices. On volumes, overall marginally negative EBITDA year-on-year, with a decrease of EUR 3 million. Our recycling volumes of salt slag remained pretty much in line with the previous year. With these volumes, we operated our plants at a strong capacity utilization rates of about 89% in salt slag and 75% in secondary aluminum. With regards to prices, negative EBITDA year-on-year impact of around EUR 5 million, mainly driven by the pressure aluminum metal margin versus the previous year. As commented by Asier, our view is that the industry has bottomed out already in Q3 last year, and we expect positive development from now on. This was partially offset by higher aluminum F&B price with an increase of 3%, averaging EUR 2,369 per tonne. On cost and other increased pressure from higher operating and energy-related expenses. Moving on to Page 11, zinc price and treatment charges. Regarding zinc LME prices during 2025, heat zinc has traded in the range of $2,521 to $3,351 per tonne, showing a particular positive trend in the last months of 2025. The average of zinc LME price in 2025 have been $2,867 per ton, which is 3% above the last year average. However, unfavorable evolution of the foreign exchange of the euro-dollar has resulted in a slightly lower zinc price in euros, down 1% at EUR 2,542. On the right-hand side of the slide on treatment charges, in 2025, treatment charges for zinc were set in April at $80 per tonne for the full year 2025, compared to the $165 of the previous year, marking an all-time low record level. Turning to Page 12 on hedging. We have taken the opportunity of the recent rally of the zinc price to be very active on our hedging program. Our hedging book has been extended to the first half of 2028 at all-time high levels of $3,100 per ton. For 2027, the hedge is set at $3,000 per ton. This provides stability and visibility over the coming quarters and years. Average hedge prices amounted to $2,923 in 2025 and $2,990 per 2026. Turning to Page 13, Befesa energy prices. The page shows the evolution of the 3 energy sources that we have in Befesa: coke, natural gas, and electricity. With regards to coke price, which today represents around 60% of the total energy bill, the normalization that started in the second quarter of 2023 continues throughout 2025. Average coke price in Q4 was around EUR 152 per ton, consolidated its downward trend compared to the previous quarters. Regarding electricity, which today accounts for 30% of the total energy expense, price are at similar levels than in Q3 2025 after significant correction in the second quarter of last year. Finally, gas prices continue its normalization throughout 2025 with a slight increase to EUR 45 per megawatt hour in the fourth quarter of last year. Turning to Page 14, the cash flow results. Operating cash flow in 2025 has reached a record of EUR 212 million, which represents an increase of 10% compared to the same period of last year, despite higher taxes, with EUR 21 million paid taxes in 2025 versus a positive tax impact in 2024. On the EBITDA to cash flow walk, starting with EUR 243 million adjusted EBITDA and to the left, working capital consumption amounted to EUR 10 million in 2025 with a strong end of the year recovery from previous level in the first quarter, reflecting the intra-year seasonality that we explained already in the first quarter. Taxes paid in 2025 came in at EUR 21 million as a result of the final tax assessment of the previous year, in comparison with a positive tax impact in 2024, resulting in an operating cash flow of EUR 212 million in the year, making a record in the history of Befesa. On CapEx, in 2025, we have invested EUR 50 million in regular maintenance CapEx across the company, EUR 26 million in growth CapEx related to the refurbishment of the Palmerton plant in Pennsylvania, which is now completed as well as the part of the Bernburg expansion project in Germany. In summary, total CapEx of EUR 76 million in the year, which is lower than the range of EUR 80 million to EUR 90 million that we initially provided, reflecting a strong discipline on capital allocation. Total interest paid amounted to EUR 34 million, and total bank borrowings amounted to EUR 34 million in the full year. For 2025, the EGM approved in June to pay a dividend of EUR 26 million in July, equivalent to EUR 0.63 per share or 50% of the net income. In summary, final cash flow amounted to EUR 40 million in 2025. Cash on hand stood at EUR 143 million, which together with our EUR 100 million undrawn revolving credit line, provides Befesa with more than EUR 240 million of liquidity. Gross debt at the end of December stood at EUR 695 million. Net debt was greatly reduced by 11% to EUR 552 million compared to EUR 619 million in the same period of last year, resulting in a net leverage of 2.27 at closing of December '25, a strong improvement compared to the 2.9 at December 2024 and well below our initial target of 2.5. Turning to Page 15, debt structure and leverage. Following the refinancing back in July 2024 and the repricing in March last year, 2025, Befesa today has a long-term capital structure with optimized financial cost. Net leverage improved significantly, as explained earlier, to 2.27 at the end of last year. This marks the seventh consecutive quarter of leverage reduction, as well as well below our company target. For 2026, net leverage is targeted around 2x and below 2x onwards, reflecting Befesa's continued commitment to disciplined capital management. We will prioritize the growth CapEx on those projects that will deliver immediate cash flow upon completion, like the approved project of Bembur and other market opportunities that may appear. Also, we will keep the annual regular maintenance CapEx around EUR 40 million to EUR 45 million over the coming years. On dividend, we are committed to maintain our dividend policy to pay between 40% to 50% of the net income to shareholders. For 2026, the Board will propose to the EGM to pay a dividend of EUR 40 million, equivalent to EUR 1 per share or 50% of the net income. This dividend is 37% higher than the dividend paid last year in 2025. Moving on to Page 16. Befesa is entering a new cycle of low CapEx and high earnings, resulting in a strong free cash flow generation and shareholder value creation. During the last years, we have gone through a high CapEx cycle, which has allowed us to expand our operations globally into the U.S. and China. Now that this cycle is completed, we enter a new cycle of limited total CapEx below 80% over the coming years, along with high earnings, resulting in a strong free cash flow. Total cash flow after 3 years of negative cash flow, 2025 has been marked at an inflection point, delivering strong final cash flow. Total cash flow is expected to follow a positive trajectory, reflecting the company's improving a stronger underlying cash generation profile. Finally, as we have already commented, leverage is expected to be kept below 2x for the coming years, allowing greater optionality in future capital allocation decisions. Now back to Asier on outlook and growth. Asier Zarraonandia Ayo: Thank you, Rafael. Moving on to Page 18, 2025 guidance. Befesa closed 2025 with solid delivery within the guidance provided, achieving $243 million in EBITDA and strong operating cash flows of $212 million and maintaining a strict CapEx discipline, spending $76 million. The company continued to deleverage, reducing net leverage to 2.27, supported by improved EBITDA and consistent cash generation. Earnings per share rose to $2.01, reflecting a strong underlying performance and enhanced financial efficiency. Overall, the result demonstrates disciplined execution and continuous focus on long-term value creation forareholders. Moving to Page 19 on '26 outlook. Looking ahead to '26, as in the past, we will provide guidance in the first quarter once the 2026 treatment charge has been announced. However, I can provide some comments about the year. We expect 2026 to be another year of earnings growth, strong cash flow generation, and continued deleverage. Steel volumes are expected to remain solid and stable in Europe, while the U.S. anticipates higher volumes driven by new contracts with the steelmakers. In China and the rest of Asia, stability is also expected to prevail. Salt slags operations are projected to maintain stable volumes compared with 2025, supported by higher collection fees. The metal margin for second aluminum is also expected to improve gradually through the year, particularly after having bottomed out in the third quarter of 2025. The smelter has benefited from a strong fixed cost reduction achieved in 2025, and further efficiencies are expected to be realized through 2026. On the other hand, energy costs are expected to evolve more moderately. The group anticipates a slightly lower to stable overall coke prices, while European natural gas and electricity prices are projected to rise in 2026. General inflation continues to impact maintenance, ancillary materials, and personnel costs across all regions, creating a negative pressure point in the cost structure. In the treatment charge environment, the benchmark TC settled at $80 in 2025, its lowest level in 15 years. Although the concentrate market remains tight, characterized by low spot treatment charges, TCs are expected to rise in '26 toward a range of $100 to $130. Hedging activity foreseen remains stable with the average '26 hedge price set at approximately EUR 2,990 per metric ton, consistent with 2025 levels, suggesting a neutral hedging position. Total CapEx for the year will be below EUR 70 million, with around EUR 45 million for regular maintenance and the remaining for growth in expansion of Bernburg. Net leverage will be around 2x by the end of the year. Moving on to Page 20 on Palmerton. In the United States, our Palmerton plant has been successfully refurbished, marking a key milestone in our strategic growth road map. Both kilns are now fully operational, positioning Befesa to capture the significant growth expected in the U.S. electric furnace steel dust market over the coming years. U.S. electrical furnace steel capacity is projected to increase by more than 20% by 2028, equivalent to around 18 million tons of new steelmaking capacity. This expansion translates into over 300,000 tons of additional steel dust, creating a substantial opportunity for Befesa's recycling operations. With a total installed capacity of 650,000 tons across our U.S. plants, we are now well-positioned to leverage this growth. Our goal is to progressively ramp up utilization from below 70% today to around 90% by 2028 as new electric arc furnace capacity comes online. The combination of our modernized departmental facility, long-term customer relationships, and strategic geographic footprint near key steel producers ensures that Befesa is ready to capture this next phase of growth in the U.S. market. Moving on to Page 21, our expansion project in Bernburg, Germany. This is another important milestone in Befesa's growth journey as we continue to strengthen our aluminum business and expand our recycling capacity in Europe. From a timing perspective, our permits have now been obtained, and our construction officially started in August '25. We expect a 12-month construction period followed by a 6-month ramp-up phase in the second half of '26. On the commercial side, we have already secured strong customer support. Overall, the Bernburg expansion is progressing fully in line with plan. Moving on to Page 22 about the European steel industry. Europe is accelerating its transition toward electric arc furnace steelmaking, largely driven by decarbonization targets and supportive policy frameworks. Between '26 and 2030, 12 new electric arc furnace projects have been announced to come online. This represents more than approximately 20 million tons of new EAF capacity, which means 23% increase compared to the 60 million, 90 million of electrical arc furnace capacity in Europe. As a result, EAF penetration is expected to rise from the current 45% over the next 5 to 10 years, supported both by this new project and the progressive replacement of blast furnaces. Given our strong market position, established customer relationships, and ongoing business development efforts, Befesa is strategically well positioned to capture the significant volume growth expected from this strong. We are already engaged in advanced negotiations with key customers to support this expansion phase in the coming years. Thank you very much. Rafael Perez: Thank you, Asier. We will now open the lines for your questions. Operator: [Operator Instructions] The first question comes from the line of Shashi Sekhar with Citi. Shashi Shekhar: So I have a couple of questions. So my first question is on capital allocation. I just wanted to understand what's the priority here? Is it deleveraging, dividend payment, or further expansion into European steel dust business, given improved outlook for European steel segment? My second question is on China. I believe one of the plants is still burning cash. So I just wanted to understand at what point you will consider either closing it or moving it to some other province? Rafael Perez: Thank you, Sashi. On capital allocation, I think we have tried to explain many times. We want to deliver a combination of keeping the leverage below 2x. I think this year, we have made -- last year, 2025, we made great progress in our deleveraging efforts, achieving a target which is below what we initially envisaged at 227. We are targeting around 2x for this year, 2026. And beyond 2026, we expect to keep the leverage below 2x, okay? Secondly, on dividend, yes, we want to keep the promise that we made at the IPO to pay 40% to 50% of the net income as a dividend to shareholders. And then on growth, obviously, as we have explained, we are coming from a high CapEx period where we have invested heavily in China and in the U.S., and that has enabled us to expand our operations. I think the focus at the moment is for this year in Bernburg, as Asier has explained. And then we also see a clear opportunity to deploy capital in Europe, as Asier explained at the end of his speech, to capture the growth of the EAF steel market in Europe, okay? We envisage to do that through a brownfield. We will provide all the relevant details about the project at the right time. But it's a combination of capturing the growth opportunities that we see in our main market, Europe, while keeping the leverage below 2x and keeping the commitment to pay dividend. Asier Zarraonandia Ayo: Yes. Sashi, and regarding the second question about China, well, yes, we have one plant running probably levels in 50%, 60% and the other one is just 10%, 20% depending on the availability. But it's not burning cash because basically, what we have is that plant stopped under control, and even when we run in periods where we have stopped the plant, moving the people to run the business. And basically, the cash is -- we are not negative cash in general in China for the whole business. So we are doing EBITDA positive and converting into cash positive for the year. So we have some confidence to be in that way until the market comes back. Possibilities for the future, well, you talk about. I mean, we are open to see if we can move in another province. And in that case, we consider even to transfer or translate the assets. We will see. The whole thing now is that China is in a situation that we don't see the need to invest in that so far more and wait for the recovery and as well because we are not, again, making cash negative, we have time to do that. Operator: The next question comes from the line of Adahna Ekoku with Morgan Stanley. Adahna Ekoku: I also have 2. So first of all, just on secondary aluminum, there was quite a strong margin improvement quarter-over-quarter, given the market backdrop. Is this a level we should expect to persist throughout 2026? Or were there any kind of specific positive effects in Q4 here? And second, just on the Q1 outlook, could you run through the kind of key moving parts to consider here, like volumes and margins? And are there any maintenance activities we should be aware of? Rafael Perez: Adahna, thank you for the question. Well, secondary aluminum, I think that -- well, yes, I think as I reference the last quarter margins, and probably we will see this, and we are starting to see this level in the first part of the year. But still, it's a little bit early to say this is going to be there, perhaps the level even is increasing, we will see. I mean it's a good reference because we see that the last part of the part has gone. In terms of the outlook and maintenance, I think that the reference could be the last year situation for maintenance stoppages, and probably the dust and the activity volumes are going to be in line with 2025, but we think that we can improve the figures. But in terms of activity, it could be a good reference, the first quarter of 2025. Operator: The next question comes from the line of Fabian Piasta with Jefferies. Fabian Piasta: I have 3 and one follow-up. So could you give us an indication what the EBITDA contribution from your U.S. smelting business is? Are we breakeven already this year? And what are you expecting for 2026? The second one is on the treatment charge outlook. Do you think that this is more driven by capacities or the recently increasing LME zinc price, basically making smelter compete for the zinc? And the third question would be you were referring to demand from data center verticals. Is there an end market split that you can share? How do you see that? What do you expect this growth to influence volumes in the U.S. And the last one was on maintenance. Did you say that the phasing is going to be similar like last year, so more maintenance shutdowns in the first half? Or did I get that right? Asier Zarraonandia Ayo: Thank you, Fabian. So many good questions. Well, regarding the U.S., refinery is where the plan is where we thought to be and is closing to the breakeven point, and the costs are under control. Now the operation depends on the volumes as well of material we can treat there, and it's basically a control of the cost already done. Even you can gain a little bit more efficiency cost for next year. Regarding the treatment charge, it's a good question about what is affecting the most is capacity demand of about concentrates market, and it's a little bit strange. But obviously, it's affected by the rest of the factors, which affects to the zinc price. Normally, the period is still in favor of the miners. The question is where it's going to be spot TC that is not -- has not to be a real election, but it's a little bit down again. So well, all the music sounds that it's going to be another year of favor of minus. The level could be in the range as we see more than $100 now, but it has to be confirmed, basically those days with a meeting for the International Zinc Association in U.S. those days. We will see. In terms of the steel demand and so on, I think that everywhere is an expectation about the general evolution looks positive because we can see the steel share prices of everyone. I think that the expectation is that a recovery, and because the tax and custom action they are taking for -- in Europe or U.S. could have an effect in the production. If this happens, we see positive outlook for the steel in general. And regarding the last point, as I said before, yes, when we -- maintenance stoppage is sometimes not easy to move from 6 months or a longer period because yearly basis is when we do the maintenance. So more or less, what we see now for '26 is the same level than '25 with the Q1 and Q2 and then Q3 and Q4 having more volumes. This is a little bit the view that we have now, no major changes. We try to move and to do longer periods before the maintenance, but no big changes are going to come in the short term. So again, the '25 maintenance stoppage reference is a good point of your expectations. Operator: The next question is from Olivier Calvet with UBS. Olivier Calvet: I have 3. Firstly, on volumes in the U.S., what's your expectation for additional volumes in 2026, and that if you could give us a sense of the range you're thinking about, depending on when your clients' volumes come through? The second question would be on the CapEx level. So I fully understand the message on sort of below EUR 80 million CapEx going forward. But I noticed slightly higher maintenance CapEx in '25 than I think you had indicated. So are you expecting a similar level of maintenance CapEx in '26? And just the growth CapEx part related to Berenberg, I had in mind the EUR 10 million to EUR 15 million. Is that fair? And the third one, just on the zinc hedges. So great to see you've been active on hedging. So what you've added in '27 and '28 is in USD, right? In '26, I think you had hedged in euros, right? And just if you could remind us what level of exchange rate you hedge '26? Asier Zarraonandia Ayo: Thank you, Olivier. I can get the first question about the U.S. volume, which is what we do expect, is partly the same that we were expecting in '25 with the new contract. So -- and then depending on the evolution of the steel production in general for the rest of the customer, but we see more or less in the range of 60,000 to 70,000 tonnes of more volume in U.S., more or less is a good reference for you to have. Rafael Perez: Regarding CapEx, Olivier, I think we have said very clear, obviously, it's not a fixed number, but maintenance CapEx will stay between EUR 45 million to EUR 50 million over the coming years. And then growth will be based on -- in this year, for 2026, on Bernburg. We are envisaging a maximum CapEx for this year of EUR 70 million. And for the coming years, we don't see any year of CapEx higher than EUR 80 million. So what I tried to explain is that we are entering into a new cycle of limited capital, limited CapEx, and high earnings resulting in strong free cash flow. And regarding the hedging, yes, we -- for 2026, we are hedged in euros for our European volumes, in dollars for our American volumes. And for '27 and '28, the hedging at the moment in U.S. dollars. Olivier Calvet: And just on the CapEx, so the growth part of the guidance for '26 is basically only Bernburg, or is it -- is there some headroom to do-- Rafael Perez: Yes. Operator: The next question is from the line of Jaime Grivanomayes with Banco Santander. Jaime Escribano: A couple of questions from my side. The first one on salt slag. So the EBITDA in '24 was close to EUR 32 million, around EUR 29.5 million in '25. What could we expect in 2026? Also, if you can comment on the margin of Salted slags in Q4, which was a little bit low at 21%, more or less. What could we expect? If you can give us some color on the dynamics in salt slags, basically? And second question on secondary aluminum would be very much of a similar question. So EUR 2 million in 2025, which seems to be a trough. What should we expect for 2026, a number that you feel comfortable? And maybe a final question on the guidance 2026, which I know you don't provide, but if we look to the consensus at EUR 260 million EBITDA, EUR 260 million EBITDA more or less, how comfortable you feel with this number? And building on this, if the treatment charge ends up being around 100 million, 110 million, and zinc price averages above 3,000. How do you see this 260, do you see upside risk, or you're still comfortable with this number? Asier Zarraonandia Ayo: Thank you, Jaime. Starting for the salt question, yes, we have -- I think it's a business which the current normal capacity of the secondary aluminium production in general in Europe is quite stable. We do hope this reference of EUR 32 million that we have in '25 could be a reference even to increase something in '26, because we have increased fees for aluminum producers. So we see that it is a good reference, even slightly higher. The '25 number has been affected by basically the volume that you have seen that is not better, and some more weight of the cost of production because you are not increasing or compensating with the volumes. But the dynamics of the business is clear. It's very similar to the steel dust. The volumes is the key because we have the plant almost full capacity. But the current aluminum producing -- secondary aluminum producing situation is putting some stress to the plant, and we are not so efficient like in the past because the full production is the best situation to absorb the cost. We see the '26, as I say, a stable business, but probably a little bit higher, 10% or something like that could be a good reference. With regards to secondary aluminum, what we can wait or we can expect for '26. Well, the 2 million of the Q4 is a good reference. I mean, just repeating the 2 million in every quarter, we will talk about $8 million or something like that. So well, it's not coming back to the years that we have even EUR 20 million in this business, but well, [ Sala's ] reference of EUR 8 billion to EUR 10 billion is something that will be very strange for us, right? We will see if it's going to be even better because we see very difficult to be back on the worst period like it was the Q3. So yes, the Q4 could be a good reference, perhaps conservative, but repeating this, as I say, could be a reference. And with regards with the guidance, I know you guys that you like the numbers and basically one number and an average in the range, whatever, EUR 260 million, something that is the current consensus. Well, we are comfortable with this figure, but we need a little bit more time to see the evolution of TC and put our estimations. But I think that is, in any case, will be in the range, this amount, and we are not -- we are comfortable, yes, really. Operator: The next question is from Bertran Palazuelo with DLTV. Beltran Palazuelo Barroso: Congratulations all of you and the team for the strong results. I have 2 questions. First of all, regarding capital allocation, I know you answered, but I will ask again. Clearly, seeing the dynamics you're seeing and you're stating and clearly also stating the visibility you start having with the zinc prices due to the hedges, and seeing that the spot price is higher than your hedges? Well, it looks like in the future, well, your balance sheet should get stronger and stronger. So my question is, apart from paying the dividend, what is making you not start buying a little bit of shares to show the market all your, let's say, improvements. We -- from us, we would like to see the share count decrease. In 2021, you increased it at a good price. Now we want to see it decrease because the balance sheet, it looks like it gets stronger and stronger. And then my second question is apart from the -- what growth opportunities now apart from the state do you see medium to long term to allocate capital accretively. Rafael Perez: Thank you, Beltran. I think we have discussed many times. I think, obviously, share buybacks is something that we have looked in the past, but the financial profile of the company was not adequate. It is true that we expect to generate a very healthy cash flow going forward. We want to keep the leverage slightly below 2x. And yes, if we don't see any growth opportunity, we will definitely consider share buybacks, considering also the share price and the valuation of the company. So always any time that we see that the valuation of the company or the share price doesn't reflect really the -- what we believe should be the fair value of the company, we will analyze share buybacks. I don't think that's something that you can expect this year. We have another project in the pipeline, which is going to explain to you, which is in Europe, as you know very well. So it's about balancing everything. But yes, I think share buybacks are something that we are looking at, not in the short term, but more in the midterm. Asier Zarraonandia Ayo: Yes, indeed, I think Beltran is a good question. And I think that we are starting to enter in a cycle that we are going to generate strong cash, and the massive growth opportunities that we have in the past are not coming so high. So probably those considerations are on the table, and we have to see what is better is to keep growing with the projects as you are asking, or yes, to some program of say buybacks or whatever, what is better for the shareholders at the end of the day. In this regard, the project that we have in the pipeline for the next years clearly is to finish the Berburg plan as we are indicating basically in '26, and the next one could be -- or it could be -- the question is when, but probably starting '27 is a good reference and to run in '29 is the European second kiln in our French plant going on hand-to-hand with the projects of the steelmakers. We have in the pipeline as well the slab plant in the East Europe. If and following the developing of the decarbonization and the evolution of the automotive sector that nowadays, I think that is not the time to do because everything is delayed and has to be confirmed. Out of those 2 projects, we have, of course, the idea to medium term for new geographies like India, or let's say, 4, 5 years, China is back at the end of the day to see opportunities, small M&As or whatever. But it's true that this is the reason, as Rafael said, that we have to evaluate the new projects against new ways of contribution to the sales holders clearly. But anyway, we are really interesting because I think there is a very good opportunity for the Befesa evolution on the growth of the European market, and then we will see what is going on with the rest of the geographies. Beltran Palazuelo Barroso: Okay. But also, as I said in the past, and I said it now publicly, I think you have demonstrated to the market that you're extremely good, let's say, operators. Now what you have to demonstrate to the market is that you are extremely well capital allocators. I think you demonstrated in 2021. Now you have to demonstrate it going forward because if you start a share buyback of EUR 10 million or EUR 20 million in the future when the stock is at EUR 60 million, that would make no sense. So I -- you don't have to make a big thing, but I think the balance sheet is getting stronger and the stock market is not reflecting it, and all the support. Rafael Perez: Fully agree, Beltran, you so much for your comments. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Perez for any closing remarks. Rafael Perez: Thank you all for your questions. Please don't hesitate to contact the Investor Relations team of Befesa for any further clarification. We will now conclude the conference call. Thank you for joining, and have a good day. Bye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call.
Operator: Good day. Thank you for standing by, and welcome to the Ethos Technologies, Inc. Fourth Quarter 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 today, Aaron Turner, Head of Investor Relations. Please go ahead. Aaron Turner: Good afternoon, and welcome, everyone, to Ethos Technologies fourth quarter of fiscal year 2025 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me today are Ethos CEO, Peter Colis; and our CFO, Chris Capozzi. Today's call is being webcast and will also be available for replay on our Investor Relations website at investors.ethos.com. A slide presentation accompanies this call and can be viewed in the Events section of our Investor Relations website. During this call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding our financial outlook for the first quarter and full fiscal year 2026, our expectations regarding financial and business trends, impacts from go-to-market initiatives, growth strategy and business aspirations and product initiatives, including future product releases and additional carrier partnerships and the expected benefits of such initiatives. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends. These forward-looking statements are subject to a number of risks and other factors. For a discussion of these risks and other factors, please see the information under Forward-Looking Statements in our financial results press release issued today and our presentation materials as well as the more detailed discussion in our SEC filings available on our Investor Relations website and on the SEC website at www.sec.gov. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially. All forward-looking statements made during this call are based on information available to us as of today, and we do not assume any obligation to update these statements as a result of new information or future events, except as required by law. In addition to the U.S. GAAP financials, we will discuss certain 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. A reconciliation to the most directly comparable U.S. GAAP measures is available in the presentation that accompanies this call, which can be found on our Investor Relations website. Now let me turn the call over to Peter. Peter Colis: Good afternoon, everyone, and welcome to our fourth quarter 2025 earnings call. At Ethos, we are on a mission to protect families by democratizing access to life insurance and empowering agents at scale. And I'm pleased to share that in Q4, we continued our strong execution. We delivered $110.1 million in revenue in Q4, representing a 65% year-over-year revenue growth, and achieved adjusted EBITDA of $26 million and an adjusted EBITDA margin of 23%. We activated over 54,000 new policies this quarter, bringing us to over 500,000 policies activated through Q4. We also ended the year with over 15,000 agents selling on our platform in 2025. For the full year 2025, we generated revenue of $388 million, representing growth of 52%. This marks our third consecutive year with growth over 50%. We also generated a Rule of 40 score of 75, demonstrating our ability to balance growth and profitability. For those of you joining us for the first time and as a refresher for others, I'd like to share an overview of how Ethos is transforming the buying, selling and underwriting process of life insurance. Our goal at Ethos is to become the largest issuer of life insurance in the world. We built a vertically integrated platform that owns the full consumer journey, from marketing and application through underwriting, policy issuance, policy administration and long-term servicing. That control lets us deliver a level of speed, accessibility and approval rates that don't exist in the legacy life insurance industry. Our automated data-driven underwriting engine processes hundreds of thousands of data points per application, leveraging pharmaceutical records, medical claims billing data and more. The engine then applies over 1 million rules of logic and over 800 adaptive questions to make accurate risk-adjusted pricing decisions in real time. Our 95% instant decisioning rate would be tremendously difficult to achieve without our proprietary engine and logic IP developed over the previous 6 years. Surrounding the engine is the industry's only natively built 100% digital and modern vertically integrated technology platform. Ethos draws tremendous strength and competitive moat from our application engine, underwriting engine, admin system, payments and commissions infrastructure, agent operating system, unified data infrastructure and AI and ML layers. To achieve our 98% gross margin, we have leveraged those AI and machine learning layers on top of our data infrastructure to deliver lead level revenue predictions, better agent quality, more accurate policy recommendations and automated fraud management that traditional carriers simply cannot replicate. Our moat is structural. Every application engine, underwriting decision, issued policy, retention event and claim feeds back into our system. More data improves risk selection and better risk selection strengthens carrier performance. Stronger carrier performance expands take rates, capacity and product breadth. Simply put, our platform gets better as it gets bigger. Our advantage is a cutting-edge technology platform and years of structured underwriting data, real-time feedback loops and deeply integrated carrier relationships trained on our unified system. A significant portion of our team are engineers and data scientists. That shows up in the model. Revenue scales without proportional headcount growth, automation expands margins and underwriting accuracy improves with data density. Our 3-sided technology platform serves consumers, agents and carriers alike. For consumers, Ethos transforms what can be an 8-week purchase process into as little as 10 minutes online. We've removed the friction, no invasive medical exams, no long waits, no endless coordination between multiple parties, just a seamless tech-driven experience. For agents, we transform their workflow, allowing them to sell policies instantly and accelerate their working capital cycle. Our agent operating system transforms how agents sell life insurance and how agencies operate. By digitizing the sale, Ethos allows agents to focus on what they do best, building relationships and growing their business. Agents can control the application or send clients a link to self-serve. Agents use Ethos to market to their consumers, nurture their pipeline, sell instantly, track incentives and rewards, automate payments and automate agency operations. In the absence of the Ethos Agent OS, agents are stuck using multiple unintuitive legacy platforms. For carriers, we deliver scaled incremental growth on modern technology, and we prioritize their underwriting profitability above our own. That is why these relationships are deep, long term and expanding. For many of our carriers, Ethos is their single largest source of new life premiums. We are proud of the 6 carriers we work with today. We've intentionally focused our carrier network, which allows Ethos to form stronger relationships with each carrier. For Ethos, this translates into better pricing, prioritization on the carrier's IT road map and faster product development. Historically, we've introduced 3 to 4 new products a year. And in Q4, we brought 2 new products to market with 2 new carriers. Our accumulation indexed universal life product with North American Sammons targets consumers who are looking for protection as well as investment features in their life insurance products. We also launched a supplementary health product with Aflac that allows us to provide additional coverage like cancer insurance. We believe these products open up new revenue streams and expand our addressable market, strengthening the ecosystem that fuels our growth. Looking ahead, we see 3 durable growth vectors. First, growing our ecosystem by bringing more consumers into our direct channel and recruiting more agents to the platform; second, enhancing our platform by making agents more productive and increasing our share of their sales; and third, expanding our product portfolio to broaden our addressable market. Ethos is a business that gets better as it gets bigger. All 3 constituents on our platform benefit from our scale and extensible nature, delivering great network effects. Every new client improves our risk models, client and agent experience and marketing machine learning models efficiency. Better risk models improve pricing and unit economics for our clients, our carrier partners and Ethos. More scale and underwriting experience allow us to grow our product portfolio and carrier panel, delivering more value to clients and agents. A broader product portfolio both enables us to capture more of an agent sales and recruit different types of agencies. Our unified end-to-end platform captures and analyzes granular data across both the consumer and agent journeys. While the legacy industry is hindered by on-prem technology and manual processes, our end-to-end digital platform fuels a virtuous data cycle that is spinning faster and faster. As an example, in 2023, it typically took around 3 weeks to reach statistically significant results in our product development and marketing experiments. As of January 2026, it takes us as few as 3 days. This dramatically increases our testing velocity, allowing us to run more experiments in parallel, iterate faster and bring successful innovations to market with greater speed and confidence. This quarter's results prove that our 3-sided technology platform has strong product market fit with consumers, agents and carriers alike. With that, I will pass it to Chris for a review of our fourth quarter 2025 financial results. Christopher Capozzi: Thanks, Peter, and good afternoon, everyone. To begin, I'll review the highlights of our fourth quarter results. Then I'll outline our expectations for the first quarter and the full year 2026 before opening up to your questions. We concluded the fourth quarter with consistent execution across several key strategic priorities. Our financial results demonstrate both strong top line momentum across our direct-to-consumer and third-party channels and the earnings power of our platform. Before reviewing the details of our results, I'd like to remind everyone that some of the financial measures and metrics that I'll discuss today are presented on a non-GAAP basis, which we believe provides additional insight into our performance. With that in mind, let me walk you through the details behind our results. In the fourth quarter, we delivered $110.1 million in revenue, representing a 65% increase from the same period last year. In our direct channel, fourth quarter revenue increased to $74.2 million, representing 93% year-over-year growth. This performance was fueled by optimized advertising spend and innovation up and down our vertical stack. By refining everything from the initial user experience to our core underwriting algorithms, we've driven meaningful compounding improvements in our conversion rates. In our third-party channel, fourth quarter revenue was $35.9 million, representing a 27% increase over the same quarter last year. This growth was driven by an increase in both active agents and revenue per agent. Moving to our nonfinancial metrics. We activated 54,714 policies in the fourth quarter, representing 42% year-over-year growth. The average revenue per policy was $2,012. The fourth quarter was also strong from an efficiency perspective. We recorded a contribution profit of $47.2 million, representing a 43% contribution margin. As a reminder, we define contribution profit as gross profit less sales and marketing expenses. This includes agent payments and underwriting costs for nonactivated policies but excludes noncash stock-based compensation and allocated overhead. We continue to maintain a 2-month payback on variable costs while prioritizing growth of contribution profit dollars. By diversifying our product portfolio to reach historically underserved segments, we're maximizing the yield on every dollar of marketing spend and leveraging the fixed investments in our technology stack. Fourth quarter adjusted EBITDA was $25.8 million, representing a margin of 23%. This quarter's performance reflects our commitment to balancing growth and operational efficiency. We remain focused on disciplined spending and strategic investments in both of our go-to-market channels. As of December 31, 2025, our cash, cash equivalents and investments totaled $157.4 million, and we ended the year with a commission receivable balance of $290 million, which we expect will convert to cash over the coming years. Now I'll walk you through our expectations for the first quarter and full fiscal year 2026. For the first quarter of 2026, we expect total revenue in the range of $144 million to $146 million. At the midpoint, this represents 53% year-over-year growth. We also expect adjusted EBITDA in the range of $30 million to $32 million. For the full year 2026, we expect total revenue in the range of $510 million to $514 million. At the midpoint, this represents 32% year-over-year growth. We also expect adjusted EBITDA in the range of $99 million to $103 million. In 2026, we're focused on driving sustainable growth by further diversifying our revenue sources, specifically through the continued ramp of our new product lines and the strategic expansion of our third-party and direct-to-consumer channels. By deepening our brand recognition and leveraging the inherent efficiencies of the Ethos platform, we are well positioned to capture significant market opportunity while meeting our profitability targets. And with that, I'll turn the call over to the operator to begin the Q&A session. Operator? Operator: [Operator Instructions] Our first question comes from the line of Eric Sheridan of Goldman Sachs. Eric Sheridan: Maybe 2, if I can. First, Peter, what do you see as the biggest strategic priorities for the company when you think about the way you've laid out the potential for revenue growth in 2026 that you're most focused on executing against to deliver against that top line performance? And then maybe a second question would be, as you continue to scale the platform, what is the landscape like in terms of deploying marketing dollars and earning a stable to rising return on marketing dollars as a growth stimulant for the business? Peter Colis: Thanks for the question, Eric. We're glad to be here. We're excited to be on this first earnings call with you all. First, let's talk about our priorities for 2026. I'll talk about our kind of business-as-usual priorities and then AI as well. Business-as-usual priorities. We have 3 very durable vectors for growth. The first is recruit more clients to the platform and recruit more agents to the platform. The second is make agents more productive through optimizations to the agent operating system. And then the third is to broaden our product portfolio and enhance the value that we are delivering on a per product basis. And so when you look at our results over the past year and when we think about the guidance that we've provided going forward, all 3 of those vectors are really firing with full cylinders. So we're excited to just continue executing and doing a great job across all of those. The second is really taking advantage and implementing AI across every vector of the company, whether it's -- and which we have been doing for the past year, whether it's accelerating engineering, analytics, marketing, client service, agent service, fraud management models, agent quality, automating operations, internal tooling and more. This has really been a key driver behind our 98% gross margins and our client satisfaction ratings, if you look at our NPS of over 70 for the past year. So we think there's a lot more opportunity to continue harnessing the power of AI and improve. Second, as far as the landscape of efficient marketing dollar spend, if you look at this past year and if you look at our results in Q4, I really think it's an illustration where we were able to grow our direct business in Q4 at really an eye-popping rate with consistent year-over-year direct-to-consumer unit economics. And that's really the virtuous data cycle spinning at full speed, where we are a business that gets better as we get bigger, our machine learning models that power our marketing become more intelligent. We're able to run more user experience optimization tests that improve the conversion rates and efficiency. We are able to approve more people at better prices as we get better at risk management with underwriting. We're able to negotiate better take rates or better client pricing. We're able to become more efficient at administrating clients and post purchase. So really, the machine is getting more intelligent and more efficient as it gets bigger. The second component of that is really we have a diverse panel of marketing channels where we're not overly reliant on any one given channel. The majority of our spend is in upper funnel channels where the user is not looking for life insurance like television, social media, radio, et cetera. And that's great because those channels are really scalable at the right unit economics for us. Operator: And our next question comes from the line of Ross Sandler of Barclays. Ross Sandler: Great. Peter, I was just curious, so the market seems very jittery around the AI topic, not as it relates to how you guys might be using it internally, but more how consumers use agentic AI for research or prospecting in the process of buying various types of insurance, including life insurance. So I was just curious like how are you guys thinking about the opportunity as it relates to partnering or integrating with third-party agentic AI services? Or how you see this playing out as it relates to the purchase funnel for buying life insurance in general? Peter Colis: Yes. Thanks, Ross. It's a great question. So AI is a huge opportunity for us to further accelerate both our growth and our profitability as a company. We have been and will continue to be, I think, uniquely positioned to harness the advancing powers of AI really across all the dimensions of the business that I spoke to earlier, while doing so, operating in a highly regulated industry. If you just take a step back before we talk to the specifics of consumer behavior and online shopping, carriers rely on really -- the incumbent carrier set really relies on a disjointed mix of on-premise and vendor-managed systems built on top of a fragmented data infrastructure, which is oftentimes filled with low quality and conflicting data. Conversely, because we have a native end-to-end technology platform with a cutting-edge data infrastructure, it's really enabled us to embed AI and ML across the entire business. And so I think there's a lot more opportunity to continue harnessing the power of AI to improve. If you think about sales and marketing specifically, which consists for us of advertising spend and agent commissions, it's our largest expense. And so if AI reduces the cost of distribution or changes the medium in which life insurance is bought, as the leading D2C provider in the category, these shifts in consumer behavior should uniquely be an accelerant to our growth and our margin expansion. And I would say that our advantage isn't really just access to AI tools, which are widely available. It's really a native platform, years of structured underwriting data, real-time feedback loops and deeply integrated carrier relationships that are trained into a unified system. Our moat is structural, I would say. Every application engine, underwriting engine, issued policy, retention event and claim feeds back into our system, and it makes our AI and ML models more intelligent and more efficient. Like simply put, our machine gets better as it gets bigger. We have specific initiatives related to GEO, where we are maximizing that opportunity as a source of user acquisition and further building our brand as consumers use LLMs for research. And we have -- we are actively focused on integrating with these LLMs in the manner that you described, where I think we are most uniquely and best able to do that given our incredible native technology platform. Operator: And our next question comes from the line of Colin Sebastian of Baird. Colin Sebastian: I guess I'm curious, as you move into some of the more adjacent products, what you launched in Q4 as well as what's in the pipeline. Curious how much is embedded in the outlook from those new products, maybe how quickly they're ramping? And then the additional investment necessary to -- from both the perspective of customer acquisition as well as back-end data, the data platform and integrations there, how much is required incrementally as you sort of roll out those additional products? That would be helpful. Peter Colis: That's a great question, Colin. Thanks for it. I'll first talk about our guidance, then I'll talk about the specific products. So just important to understand our guidance philosophy, we ascribe very little revenue in our forecasting to newer or less proven products. We really take a wait-and-see approach. It's early days for both of the products that we launched in Q4. As a reminder, we launched a new accumulation indexed universal life insurance product, and we launched a cancer insurance product. We are seeing healthy agent adoption of our accumulation IUL product. That is a permanent life insurance product with a compelling investment feature performance and the same incredible Ethos 10-minute purchase process. So we're encouraged. It's early days, but we're excited for it to continue growing and compounding. Our cancer insurance product, it's really early innings of testing and iteration. So I think it's too early to make a judgment call on its potential. While cancer insurance is not typically sold outside the workplace in the U.S., we think it's a compelling value proposition given the rate of cancer diagnosis. If you look at our track record historically, we tend to launch around 3 to 4 new products per year. Our teams are actively working on new products with more in the pipeline. As far as the incremental investment needed when we launch a new product, launching a new product can take anywhere from 4 months to up to a year for the more complicated ones. And it's really a company-wide effort across not only building that new product but integrating it with our distribution systems with all of our analytics and our infrastructure. So there is incremental cost to launch each new product. It's not massive. It's more the time and effort to do it right and set up these deep integrations and build the relationships with our carrier partners. Operator: Our next question comes from the line of Ron Josey of Citi. Ronald Josey: Peter, I wanted to better understand the 93% growth in D2C revenue from this past quarter. And I know we talked about sales and marketing and advertising and the ability to really target. But specifically, I would love your thoughts on just what changes were made to the product or the application path that drove that and any insights on conversion rates because of these changes. So question number one is on the 93% growth in D2C and product changes that might be driving greater conversion rates. And then I think the second durable vector you mentioned, make agents more productive, optimized through the Agent OS. We now have 15,000 agents on the platform. I think that's a notable step-up from the last disclosure. So just talk to us about the drivers that's attracting more agents to the platform here. Peter Colis: It's a great question. Thank you so much, Ron. So on the first topic, it really wasn't any one change to the platform that drove that exceptional direct growth. It was really the vertically integrated up and down the cycle seeing gains. So we saw gains in efficiency of our marketing models. As they've gotten larger, they've gotten more intelligent. We saw a number of user experiment improvements, which are leading to more people buying life insurance. We saw gains in underwriting being able to approve more people at better prices. So it's really up and down the vertically integrated stack. I think when you think about our direct business in comparison to a lot of other direct businesses, we benefit from having a very deep stack of real estate on which to optimize. And there's -- and so we've been able to really consistently improve our unit economics, and we expect to be able to going forward, which allows us to then go and increase our marketing spend across a myriad of channels. And if you look at year-over-year, we've increased marketing spend really across the portfolio of marketing channels, both our upper funnel channels where people are not looking for life insurance as well as bottom-of-funnel channels where people are looking for life insurance. And within our category, we're really winning in both of those parts of the advertising market. Drivers of agent growth to the platform, it's really a combination of adding new agencies and growth of our more tenured agency partners. And if you think about our agency business, it's a highly reoccurring model where we benefit not only from the new agencies, but the more tenured partners on the platform, right? When we add a new partner, they roll Ethos out to their existing agents. And then those agents repeatedly sell policies and that agency is constantly recruiting more new agents onto the platform at no incremental cost to us. And then Ethos can make those agents more productive through enhancements to our operating system. And then ultimately, we attempt to grow our share of that agency sales by broadening and enhancing our product portfolio. And so if you look at this past year's results, we saw excellent growth both in the more tenured cohort of agencies as well as productive new agencies who are joining the platform. Operator: Our next question comes from the line of Lee Horowitz of Deutsche Bank. Lee Horowitz: So you mentioned sort of impressive unit economic stability in the quarter despite the really fast growth in the D2C business. I guess can you expand upon that and how you're looking at perhaps unit economics on a go-forward basis? Why is this maybe not the right time to lean into growth given sort of the competitive landscape that you're playing against as the only scaled digital player left in the market? And then secondly, there's certainly some opportunities to expand the monetization of the platform over the longer term into perhaps some more traditional recurring revenue streams. I guess how are you thinking about that opportunity set and where that may sit in sort of your list of many priorities as you grow your business? Peter Colis: That's a great question, Lee. Thanks for asking it. So I'll start on how we think about the right balance between growth and profitability in our direct business. If you take a step back, really the standard that we hold ourselves to is whether or not we're selling through our direct business or our third-party business and whether or not we're selling a term or a whole life or an indexed universal life product, we really attempt to be cash profitable by month 2 of the policy's life cycle, right? And so we have a very efficient working capital cycle, and we build up a contribution margin over that life of the policy. And so we take that in -- we think about that as a constraint to the growth model. In all direct businesses, unit economics are the governor. And so we're looking at how efficiently can we grow at the standard of unit economics that we want to achieve. So that's how I would think about just generally the rate at which we grow our advertising spend. And remember, we're constantly improving our platform, improving unit economics, which then allows us to increase advertising spend or bench higher unit economic gains. As far as our revenue model, we don't have any near-term plans to change it. We're really focused on becoming the largest issuer of life insurance. And it's an incredibly important market where we have a unique opportunity and advantage by virtue of having built this modern digital machine that is vertically integrated that is a 3-sided platform, delivering incredible value proposition to clients, agents and carriers. And so we're accumulating great momentum and advantage in this market, and that's really our focus going forward at this point. Operator: And our next question comes from the line of Michael McGovern of Bank of America. Michael McGovern: I have 2. First, could you speak to your carrier relationship dynamics underpinning guidance for the full year of 2026? Like for example, do you have any multiyear contracts that might be coming up and there's any assumptions around the negotiations or anything on that front? And then secondly, could you speak to kind of the relative strength in your revenue growth guidance in Q1 relative to the full year? Are there any assumptions throughout the second half of the year that changed relative to Q1? Peter Colis: Mike, thank you for the question. Our carrier partner contracts are typically evergreen. I wouldn't think about any material upcoming negotiations that are influential in our guidance. If you think about our existing panel of carrier partners, there's much more demand and capacity for Ethos premiums than there is supply of Ethos premiums today. Now we don't want a panel of 30 off-the-shelf carrier products. We've intentionally built a focused panel of carriers where we really work to co-develop custom proprietary products with deep technical and operational integrations from the carriers into our unified platform. Importantly, scale with our partners provides Ethos the necessary position in negotiating the economics we have today. And that scale in the relationship puts our priorities at the front of the carriers' IT and operational road maps, where we often have to dislodge some other important work on their road map related to maintaining a legacy system or some other initiative they have. Now when the 10-K flips in the near future, you'll see our carrier concentration disclosure decline by around 10 percentage points within our existing 6 partners, and we've built a considerable amount of redundancy into our business among our 10 products in the portfolio, given that we have multiple products in multiple categories. It's also important to remember that in our contracts, we typically have an extended notice of cancellation period that lasts well beyond the time that's required for us to build a new product with a new carrier. So we expect to continue building more products with more partners in the future, and we're very happy with our existing panel of carriers. Christopher Capozzi: And Mike, in terms of the revenue guidance, the Q1 guidance reflects very strong operational momentum that we've carried into 2026. The new policy activations in January were strong. February is pacing ahead of internal targets. So I think when we look beyond Q1, we continue to be very encouraged by the momentum of growth in the direct channel, and as Peter noted, the contributions that we're starting to see from new agencies that we brought on to the platform in 2026 that are fueling revenue growth -- I'm sorry, we brought on the platform in 2025 that are helping fuel revenue growth here in 2026. And I think you're seeing some of that confidence flow through these gains in the full year revenue guidance that we shared with you. Other things to think about just as you model revenue throughout the year, as we've noted in the past, our business does exhibit seasonality, with Q1 and Q4 being our strongest quarters from a seasonal perspective and then 2Q and 3Q seeing much less seasonal effects. In terms of revenue mix, you'll tend to see the direct business index up here in the first quarter. You kind of think of it as like a 75-25 split. And then for the year, it probably takes on a profile along the lines of a 2/3, 1/3 mix, again, weighted towards direct. But very consistent, I think what you've seen in terms of our historic performance, it really is what informs our 2026 guidance. Operator: [Operator Instructions] Our next question comes from the line of Pablo Singzon of JPMorgan. Pablo Singzon: So first question, DTC sales have historically been a minor portion of overall industry sales in life insurance. So the question is, what is your long-term view of the opportunity here and are there differences of note between the customers you cater to in DTC versus the customers that legacy DTC providers have historically served? So that's question one. And then question 2 is about your agency strategy, right? So can you just talk about your strategy for adding agency partners? On the carrier side, it sounds like your approach is to target category leaders for specific verticals, which makes sense if you think about the growth impact you want to deliver. But on the agency side, I'd be interested to hear about your thought process for selecting which agencies to partner with. Peter Colis: Pablo, thanks for the great questions. On the first question about generally what is our long-term view for direct. I think that before Ethos, direct was very difficult to do. And our innovations really up and down the entire stack by building a completely native technology platform, by innovating and being able to accelerate underwriting, by bringing elite level tech execution and go-to-market execution really has made it possible. And Ethos is really the first demonstration of scaled, profitable unit economics in this category. And I think that if you fast forward the future, this market could take a similar dynamic to where the auto market -- the auto insurance market went through over the last couple of decades, where you had a purely agent-dominated high transactional friction-heavy process. And a company like GEICO or Progressive was able to make it simple and easy and online. And over time, direct went from an insignificant part of the market to roughly half or a bit more than half of the market. I really think that Ethos has the potential to deliver the same kind of transformation of the life insurance market. And I think part of it -- a large part of it is also going to be incremental to the existing market today. So one of the things we love about the life insurance business is it's highly reoccurring in that every year, around 10 million Americans are going to buy life insurance whether or not Ethos exists, right? And they're pushed into that purchase journey by virtue of having new children, getting married, taking on a mortgage or debt, having health scares, watching their parents age. And Ethos is really the most efficient way for those families to get protected and we're also the most efficient way for agents to sell. And so we're excited to continue capturing both that large reoccurring demand. And then we're also excited to protect families that wouldn't otherwise have gotten protected that year that because we make it so simple and easy and efficient, they're able to take a step that they otherwise wouldn't have taken through a more traditional high-friction experience. As far as how we go about bringing agencies onto a platform, we try to be really thoughtful about which ones are going to be successful and appreciate our incredible value proposition for agents, which is a very fast transactional velocity, right? The ability to sell a policy in 10 minutes instead of taking weeks to sell a policy, that frees up so much time and space for them to go prospect for clients and convince them to buy instead of case managing people through a bureaucratic process. And then we are paying agents very quickly as well, which allows them to reinvest those commissions into prospecting and lead buying to go find more clients. So we look for agents that really have a match with our transactional velocity, that have a match for the products that we have in our portfolio. And the agent onboarding process, it's a fairly organic process, I would say, where it's typically an agency to agency or agent to agent referral where someone says, "Hey, I've had a great experience with Ethos. I launched them in the past year, and they now account for x percent of my sales." And the agents really love it. So we're excited for that organic agency onboarding process to continue evolving. The other thing I would say is that if you look at the latest indexed universal life product that we launched with a carrier partner, it's a first unique distribution model for Ethos where it's a combined effort between the carrier's distribution team and Ethos' distribution team of bringing it to market. And so how we'll benefit from that is it will accelerate agents coming into the platform that, that carrier might have relationships with that we previously have not served. And so those agents are going to come into the agent platform, and we're going to do a great job serving them into that new accumulation indexed universal life product. Operator: I'm showing no further questions at this time. I'll now turn it back to Aaron Turner for closing remarks. Aaron Turner: Great. Thank you all for joining us today on our first call as a public company, and we'll speak with you all again next quarter. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.