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Operator: Good day, and welcome to the Solaris Q4 2025 Earnings Teleconference and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Yvonne Fletcher, Senior Vice President of Finance and Investor Relations. Please go ahead. Yvonne Fletcher: Thank you, operator. Good morning, and welcome to the Solaris Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us today are our Chairman and Co-CEO, Bill Zartler; our Co-CEO and Director, Amanda Brock; our President, Kyle Ramachandran; and our CFO, Steve Tompsett. Before we begin, I'd like to remind you of our standard cautionary remarks regarding the forward-looking nature of some of the statements that we will make today. Such forward-looking statements may include comments regarding future financial results and reflect a number of known and unknown risks. Please refer to our press release issued yesterday, along with other recent public filings with the Securities and Exchange Commission that outline those risks. We also encourage you to refer to our earnings supplement slide deck, which was published last night on the Investor Relations section of our website under Events and Presentations. I would like to point out that our earnings release and today's conference call will contain discussion of non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release, which is posted in the News section on our website. For more details on the company's earnings guidance, please refer to the earnings supplement slide deck published on our website. I'll now turn the call over to our Chairman and Co-CEO, Bill Zartler. William Zartler: Thank you, Yvonne, and thank you, everyone, for joining us this morning. 2025 marked a meaningful step forward for Solaris. We showed that we are successfully executing our strategy of growing and establishing a more diversified services and solutions business with accelerated earnings growth, improved long-term visibility and multiple pathways for meaningful expansion. Through new products, services and targeted investments, both organic and inorganic, we've strengthened our engineering, manufacturing and operational capabilities. This has positioned us to deliver reliable, integrated power solutions to meet our customers' rapidly escalating needs. Coming out of 2025, we're serving a much wider customer base, with active contracts and deployments now spanning multiple data centers, energy infrastructure and diverse industrial and commercial end markets with generation, distribution and full turnkey power. Our 2025 financial results highlight the success of our diversified strategy. Full year 2025 revenue nearly doubled year-over-year to $622 million, while adjusted EBITDA of $244 million more than doubled. Both of our Power and Logistics segments contributed meaningfully to these results. This is just the beginning of additional step change growth that we believe will accelerate through '26 and '27. Starting with our Power Solutions segment, which has become the primary growth engine for Solaris. Power now accounts for roughly 70% of our earnings and is heading to 90% contribution as we've consistently grown the business, expanding our capabilities and built on a strong track record of execution. Solaris is capitalizing on the rapid demand growth for power, particularly to support data center compute needs. Our solutions have enabled customers to deploy power quickly and cost effectively, while delivering the operational reliability, high uptime and efficiency they require whether as an alternative or as a supplement to the grid. We have strategically positioned Solaris across the power life cycle from molecule to electron. This integrated approach delivers true turnkey power for our customers. We can handle sourcing and delivery of clean natural gas at the right volumes and pressure, convert it through multiple generation sources and manage the distribution, storage and final delivery of electrons, all engineered as a cohesive system to meet the most complex and demanding load profiles. Our strategy has translated into commercial success with both existing and new customers. In 2025, we significantly expanded our partnership with our initial major data center customer. We finalized a 15-year joint venture and upsized the associated long-term power agreement for approximately 500 to 900 megawatts, providing greater visibility with substantial committed capacity for years ahead. We also acquired a specialty provider of voltage distribution and control equipment that has now been integrated into Solaris Power Solutions. This strategic acquisition has deepened our capabilities and accelerated market penetration, enabling us to deliver integrated equipment and engineered solutions to at least 6 different data centers across the U.S. as well as in numerous industrial and commercial sites. Building on our success, I'm excited to highlight a significant new long-term contracted customer which further validates our strategy and reputation in the behind-the-meter power market. In early February, we announced a 10-year agreement, with a 5-year extension option, to provide leading investment-grade, global technology company with over 500 megawatts of power generation tailored to their compute needs. The initial 10-year term begins January 1, 2027, with energization targeted to be phased in, in the beginning of the Q1 of 2027. This agreement validates our strategy of sourcing generation capacity in advance of a contract so that we can successfully deliver behind-the-meter power on aggressive time lines. We are actively working with this customer to deliver more services related to balance-of-plant equipment such as full power control, storage and delivery infrastructure, engineering and site preparation. As we move forward expanding our scope, we will deploy additional capital, which will provide Solaris with enhanced returns through the contracted period. We believe that we are well positioned to continue to work with this customer on behind the meter solutions to meet their growing compute needs. Underscoring the opportunity ahead, the 4 largest global technology companies have recently guided to combined capital expenditures exceeding $600 billion in 2026, focused primarily on data center infrastructure and compute. That's roughly a 70% increase from 2025 levels and nearly double the spending seen in 2024. With data center and compute power investments accelerating rapidly, Solaris is exceptionally well-positioned to capitalize on the surging demand for reliable, scalable power. Our proven solutions enable us to partner effectively with leading technology companies who are contracting directly for behind-the-meter options to meet their urgent compute needs. I would also like to highlight the continued performance of our Logistics Solutions segment, which is performing well and contributed over $80 million of free cash flow in 2025. In the fourth quarter, we saw activity levels for both the industry and Solaris increase, with Solaris' success driven in part by increasing adoption of our top-fill systems. Our top-fill system utilization rate was in the mid-90% in the fourth quarter and now nearing 100% in the first quarter. This momentum is expected to carry through for the first half of 2026, supporting consistent utilization and margins while generating cash to fund our broader growth initiatives across the company. In summary, 2025 was a year of successful execution which positions Solaris for even greater success in 2026. We are extremely focused on delivering value for our customers and shareholders, and we're excited about 2026, which is already shaping up as another year of significant growth, new opportunities, continued execution and results. With that, I'll turn it over to Amanda. Amanda Brock: Thank you, Bill, and thank you, everyone, for joining us this morning. We want to spend a few minutes sharing with you how we see our opportunities evolving in the power sector. 2025 was a year of rapid change and significant tailwinds for the company. Our customer base expanded and we grew our capabilities to meet our customers increased demand for turnkey behind the meter power. We focused not only on building on our proven track record in generation, but also distribution, offering a comprehensive power solution, which we refer to as molecule to electron. We're strategically building our capabilities through organic growth and targeted acquisitions like HVMVLV, which Bill mentioned which has already exceeded expectations since closing last summer. This brings in-house expertise to design, manufacture, refurbish, sell and rent specialized control and distribution equipment, such as transformers, switchgear, e-houses and this also deepens our engineering expertise across voltages and related applications. The result is broader reach to data centers, industrials, utilities and beyond, delivering tailored power solutions regardless of source or setup. For example, Solaris is now providing equipment and engineering support to customers where grid connections are delayed due to utility equipment and interconnection challenges. This type of diversification creates real value and expands our opportunity set significantly, beyond just generation. We will continue to look for opportunities like this to expand our capabilities as a comprehensive provider of critical power infrastructure. As we evaluate opportunities across the power spectrum, emissions controls is another area of focus where Solaris has invested both organically and inorganically to enhance our capabilities. We view being best-in-class in emissions management as essential to our own operations and customer priorities. Organically, we've drawn on our growing internal engineering and manufacturing teams to refine and customize selective catalytic reduction, or SCR, designs for improved flexibility and mobility. Additionally, we recently made a small inorganic investment in an SCR manufacturer, bolstering our ability to further integrate these technologies. Our emissions control technologies are well aligned with the EPA's recent subpart KKKKa, quad k, amendments to the New Source Performance Standards. These changes provide clarification and support for operating modular and mobile turbines in temporary applications for up to 24 months, bridging the gap before permanent behind-the-meter air permits or grid connections are secured. Combined with our vertical integration in emissions controls, this gives us significantly greater flexibility to deliver fast, reliable and compliant deployments for our customers. We're continuing to see strong regulatory tailwinds from ERCOT whose recent push to batch large-load studies for requests over 75 megawatts is a necessary step forward to clearing the estimated 230 gigawatt queue backlog fueled by data center demand. However, it also spotlights the growing delays and scrutiny facing grid-based projects. Our rapid deployment behind-the-meter solutions mitigate these challenges for technology companies attempting to quickly deploy compute capability. Starting a project in island mode, fully behind the meter can avoid significant delays associated with connecting to the grid. The growing demand for power, combined with these regulatory tailwinds, our demonstrated track record of execution and our expanded capabilities have accelerated our ongoing discussions with multiple end users to deploy more capacity. We're in advanced negotiations to contract our remaining open capacity and are actively pursuing new capacity additions to support incremental opportunities. Simply put, we believe we have more demand than we have capacity and are actively exploring innovative ways to access new capacity to ensure we can meet the growing needs of all our existing and potential new partners. We are particularly encouraged by the accelerated pace of these opportunities and the credibility we have earned through nearly 2 years of successful at-scale operations, including the rapid commissioning of multiple large data centers. This proven foundation gives us a clear edge as we scale further and continue to grow in the coming years. With that, I will turn the call over to Kyle for a detailed financial review. Kyle Ramachandran: Thanks, Bill and Amanda, and good morning, everyone. Solaris' fourth quarter demonstrated solid execution in our Power Solutions segment as well as continued execution and strong free cash flow generation in our Logistics Solutions segment. For the full year, growth was tremendous across the Power Solutions platform, and we're excited to continue to grow this segment as well as the total company. 2025 was also a year in which we strategically positioned Solaris for growth from a financing perspective. We strengthened the balance sheet by raising capital through 2 convertible bond issuances, established financing for our joint venture partnership with a key customer and repaid our 2024 term loan. The combination of these activities has driven significant interest cost savings and financial flexibility for the company. As a result of these recent financings and the ongoing cash flow generation from the business, we are currently fully funded for all of our expected deliveries to reach 2,200 megawatts of power generation we expect to have pro forma for all the scheduled equipment deliveries. This leaves our secured borrowing capacity outside of the JV completely available as an option to fund future growth outside of our planned deliveries. Our financial profile has also improved significantly with our recent commercial success. Adding a new investment-grade customer for a minimum 10-year term for over 500 megawatts adds significant visibility to our earnings and cash flow profile, providing additional financial flexibility. Turning now to a review of our fourth quarter results and our outlook for the next 2 quarters. During the fourth quarter, Solaris generated revenue of nearly $180 million and adjusted EBITDA of $69 million on a consolidated basis. Our adjusted EBITDA increased slightly from the prior quarter and nearly doubled as compared to the same quarter of 2024, driven by the acceleration of our Power Solutions segment. During the quarter, Logistics Solutions benefited from an increase in completions activity as well as continued adoption of our top-fill solution, which more than offset a modest decline in Power Solutions due to a less favorable project mix and related timing impacts on costs. We generated revenue from approximately 780 megawatts of capacity during the fourth quarter, relatively flat with the prior quarter. Segment adjusted EBITDA for the Power Solutions segment was $53 million, a modest decrease from the third quarter due to costs associated with timing and mix impact as owned generation units rotated off a utility resiliency project and into planned refurbishment before being redeployed under a long-term contract in the first quarter of 2026. This impact was more than offset by an increase in the continued selective use of third-party power generation capacity as activity continued to ramp at our second data center site, which also contributed to a lower margin mix. We expect Power segment adjusted EBITDA for the first quarter to increase by more than 20%, as both owned and third-party leased capacity generating revenue should increase. In our Logistics segment, we averaged 93 fully utilized systems, an increase of 11% from the third quarter. Fourth quarter segment adjusted EBITDA was approximately $23 million. We expect our Logistics segment adjusted EBITDA to remain relatively flat for the next 2 quarters. Netting these factors and considering corporate and other expenses, total adjusted EBITDA guidance for the first quarter is now $72 million to $77 million, up from the prior guidance of $70 million to $75 million and a sequential increase from the fourth quarter. We are also introducing our second quarter 2026 total adjusted EBITDA guidance of $76 million to $84 million. Accounting for expected longer-term tenor on our fully delivered 2,200 megawatt generation capacity and our recent acquisition, we continue to expect pro forma total company earnings of over $600 million, before considering any additional project scope or growth with our existing customers or new opportunities. Finally, I'd like to introduce and welcome Steve Tompsett, who officially joined earlier this month as Solaris' new Chief Financial Officer. Steve brings a strong record as a financial executive with deep expertise in capital markets, building and leading high-performance finance and accounting teams and guiding companies through periods of significant transformation and growth. Many members of our management team, Board, employees and investors have worked with Steve before, and we are confident he will exemplify the Solaris culture and deliver substantial value to the company. I am excited to continue as President of the company and will be able to allocate increased focus on our strategic priorities of advancing our overall growth strategy, strengthening operations and driving long-term value for our stakeholders. With that, we'd now be happy to take your questions. Operator: [Operator Instructions] Our first question will come from David Arcaro with Morgan Stanley. David Arcaro: Congratulations on the new customer announcement here, but I do have to ask, where do negotiations stand with additional customers now to allocate your remaining capacity, if you could elaborate on that and what potential timing might be possible? William Zartler: Well, we're in very active dialogue, and I think it tees up the discussion. We really have the history and operating philosophy of focusing on announcing deals when they're completed and done. The pipeline is extremely active. We have lots of paper flying back and forth with multiple customers, but our goal is to deliver to the public and to our shareholders signed and completed contracts that have a lot of meat in them. So the dialogue is active, and we feel very confident that we've got plenty more demand than supply, as Amanda referred to, and that we'll be seeing things unfold in due time. Amanda Brock: David, these are not discussions. We were very deliberate in our wording. These are active negotiations. So we expect to have good news here in the near future. David Arcaro: Okay. Excellent. Understood. That makes sense. And then I was curious, you had mentioned increasing scope here that you are seeing opportunities for. Wondering if you could just maybe characterize how much of a value uplift you could realize relative to maybe like the EBITDA stream in the baseline power offering if you're starting to consider those things like balance of plant emissions control, et cetera. And I'm wondering if that could apply to your current contracted fleet as well? Are there kind of almost upsale opportunities there? William Zartler: Yes. I think the notion of adding additional distribution equipment and battery systems to the offering is real. I think with the current customer that with the most recent announcement, the intent is to build out that system and deliver a full turnkey power service. So as that develops, we continue to believe return on capital is the way we look at that and the return on incremental capital will be there. And I think the range is anywhere between 20% and 50% per megawatt depending on how that scope varies and how far upstream to the gas handling it goes and how far downstream to the actual distribution and transformation of the power goes. Operator: Our next question comes from Derrick Whitfield with Texas Capital. Derrick Whitfield: Also congrats on your recent hyperscaler contract. Perhaps Amanda, in your prepared remarks, you noted you're in advanced negotiations to contract your remaining open capacity and are actively pursuing new capacity additions to support incremental opportunities. Regarding the new capacity, are you attempting to solve for new capacity in 2027 or early 2028? And then secondly, is that really to expand with your current customers? Or is it really to add a third hyperscaler to the opportunity set? Amanda Brock: Thanks for the question, Derrick. And yes, capacity is something we've been talking about for a long time. We made it very clear that the 2.2 gigawatts was not where we were going to stop. We also, as you know, have talked about through all of our acquisitions, got a lot of domain knowledge through MER and HP in terms of where there is additional capacity. We are looking and have line of sight for capacity -- additional capacity in '27 and '28. And this capacity will be for additional opportunities. We have enough capacity for the opportunities that we have signed up for at this time, even though we also expect that to expand over time. Derrick Whitfield: Terrific. And then maybe, Amanda, just staying with you on EPA's recent quad K amendment, it seems like a very positive development for your business and speed to market. How should we think about its practical impact for what you're facing today? And while I understand permits aren't your issue per se, there has been some noise or concerns around the Mississippi operations. So I guess, in your view, a, what's your view on the business impact with quad K amendment? And then secondly, how are you thinking about what's taking place right now on Mississippian, and if that will likely take the same direction than Memphis did? Amanda Brock: So quad K is a clarification and further sort of enabling certainty. And so it comes up as a regulatory tailwind. We see this as something that we expected to come through. We were very pleased to see the 24 months, so expanding the temporary ability to be there from 12 to 24. That is certainly something that very much favors the behind-the-meter options and alternatives that we offer, particularly in an environment in which speed to compute is incredibly important. So this is great for us and having this clarification. In terms of Mississippi, we really don't comment on that. And moving on to another question, where you referred to our responsibility from a permit perspective, I will say that we track that very carefully. And there are circumstances in which we are in discussions where we will, at certain locations, work with our customers as it relates to ensuring that the appropriate permits are there. Customers are increasingly ask us to take on additional scope. We are talking about this as molecule to electron. In Bill's remarks, he referred to doing more on the gas side and obviously, as part of that, we may be doing more on the permitting side. So quad K, great tailwinds for us. Operator: Our next question comes from Bobby Brooks with Northland. Unknown Analyst: This is [ Ketan Chokshi ] on for Bobby. Other companies providing or planning to provide behind-the-meter power have come out and announced targets to where their peak capacity will grow to. For example, they might be at 100 megawatts today with another 300 megawatts ordered because they talked about getting to a full gigawatt by 2030. What are your thoughts on that, firstly? And then secondly, could you discuss maybe how you think about your capacity evolving through the end of the decade? William Zartler: That's a good question. I mean I think I alluded to it a little bit earlier. I mean that the pipeline of opportunities is just giant. And we have come out when we bought MER 2 years ago and said we'd be at 2 gigs now. We didn't do that, but we did it. So I think our philosophy on how we operate is communicate to our shareholders when we have deals across the finish line and not spike the ball too early. But the pipeline of opportunities and the opportunity set is very large. I'm very confident that we will have more than we have today in a couple of years. And if you look forward, it continues to grow. There's a lot of tailwinds, both in how power should work in this country for these large loads and what the right mechanical setup is for that generation behind the meter. And I think we'll play a significant role in how this evolves with our partner customers that understand how to position this, how to position it within the greater power infrastructure and ecosystem to enable it to be there for the development of data centers as well as trying not to impact consumer pricing in a negative way. Kyle Ramachandran: Yes. And just to follow up, and we alluded to the note on the call around the hyperscalers capital spending, but this is a massive investment cycle, and we've got really attractive opportunities to build infrastructure to support their underlying investments at rates of returns that are very attractive to us under long-term contracts. And to the last point Bill made there, clearly, last night in the state of the union, affordability with respect to energy prices broadly is paramount to the administration as well as to the consumer. And I think what's very clear here is what we're offering is both economically attractive relative to the long-term cost of adding additional power onto the grid. And secondly, from a time to power perspective, it's a really valuable strategic opportunity for our customers to have in their quiver. Unknown Analyst: Great. Very helpful additional color. And then secondly, for another follow-up. It was great to see the 500 megawatts come off the board with an investor-grade technology leader. What I was curious to hear was if you could provide any further color around how the deal came to fruition and the associated time line of that deal? William Zartler: Well, every deal -- every transaction has its own life cycle. I think we've been in communication with most of the major customers for the past 6 months to a year, and they evolve, their needs have evolved and the recognition of where they need kind of takes a while. These are big decisions. So at the end of the day, the contract tenor length requires a high level of approval within a very large organization. So we're nimble and quick, and we'll go at the pace at which our customers can go and need the power. So they -- I would, on average, say that the industry would agree they're taking slightly longer to put together than anyone might have expected, but they're happening and deals are closing. Kyle Ramachandran: And we've been at this strategy and operation for roughly 2 years. And I would say the first year was certainly in stealth mode. And more and more of the sort of track record that we developed is being well understood by the other participants in this market. And so that has just been a process for that track record to get unfolded, and I think that's really resonating with customers. William Zartler: Yes. And philosophically, our notion of underpromising and overdelivering, both from a delivery of information to the Street as well as from an operational perspective, our operational capabilities and engineering capabilities and execution capabilities have dramatically improved as we've built that out over the last year. And so that gives us a lot more confidence on how we build out the balance of plan and how we deploy the equipment. Amanda Brock: Ketan, to be a little specific, we do make the comment that these conversations are accelerating as people are looking at sites, as people are getting comfortable in island in mode, complex deals and that we've been dealing directly with the hyperscalers themselves, which is an advantage, and these deals and the time lines are accelerating. Operator: Our next question comes from Derek Podhaizer with Piper Sandler. Derek Podhaizer: Just wanted to go back to the capacity expansion commentary. Obviously, I know you need more than the 2.2 gigawatts that you have today. But maybe on the funding side, just how should we think about the funding mechanisms that are available to you? You obviously noted that you freed up your secured borrowing capacity. But just thinking about as you progress towards 3 gigawatts, 4 gigawatts, wherever that target may migrate over time. Maybe just help us understand further as far as what funding we can expect as we continue to push the capacity targets higher? Kyle Ramachandran: Yes. I think we really cleaned up the balance sheet quite well at the end of last year and added significant liquidity into the system. That liquidity is already proving to be very advantageous from a strategic execution standpoint. We did that last year, obviously, with a couple of convertible bonds. As the maturity and the contract profile continues to grow and the notion of potentially multiple investment-grade counterparties, we really think the secured financing options for the business, both in the bank market as well as the sort of term debt market are ample. Bringing in Stephen has been a huge help with that regard. Steve has got extensive experience in getting out game rated, getting notes issued on behalf of companies. And that bandwidth is critical for us as we look at the long-term opportunities for us to finance the business. So I think as we look at it going forward, we've got really attractive cost of capital options relative to where we've been over the last couple of years. Stephan Tompsett: Yes. This is Steve. I'll just add on to that. There's quite a bit of appetite out there in the market, as Kyle alluded to, both bank market, term loan market, high yield and project finance. So I think you're going to see our cost of capital is improving, and that's just going to accrete to the bottom line. Derek Podhaizer: Got it. Okay. No, that's great. I appreciate the color. And then maybe thinking about the integrated power solution, you've talked about molecule to electron. Just thinking about how you optimize your turnkey solution with the grid longer term. Obviously, we're behind the meter. We're island power today. But maybe longer term, how do you think about potentially integrating with the grid, just say, as we move further into the 2030s, just how do you see your turnkey solution evolving with an integrated strategy and optimization with the grid over a longer period of time? William Zartler: Well, we certainly believe that, that will be potentially excess power ability at times to move back into the grid, complicated interconnection agreements and all that stuff. Mechanically, we have supported the grid in many ways with our equipment before. So we know how to form to the grid and perform all that. It's a matter of working closely with the utility and the regulators to ensure that what we can provide from the interconnection agreement. What we focus on today, however, is getting that power up and running at speed. The timing for those agreements is not fast. And -- but over time, we do think it may evolve that direction. Operator: The next question will come from Scott Gruber with Citigroup. Scott Gruber: I'll echo the congrats on the latest contract. So how do you think about getting back into the queue for additional equipment? Do you wait to contract the additional 400 megawatts? Do you get into the queue soon? And what are your thoughts on diversifying your supplier base, just as backlog is still across the supplier base? Kyle Ramachandran: I think we've been pretty clear from the beginning that as capacity gets contracted, we will be back obtaining more capacity in multiple different options in that regard. So to your point, there's OEMs. We have to date been tied pretty closely to one OEM. They've been a great partner. We'll continue to work with them. But we're obviously looking at other options. There are other new product lines coming into the market that look quite similar to the sort of workhorse asset that we've got in our generation fleet. And so we're evaluating all of those options. And clearly, while we were working in conjunction with our new customer, we were also working supply chain. So this isn't like a standing start. We've had these conversations warm for quite some time, and those dialogues are very healthy. I think we've demonstrated to be a very good customer to suppliers, paying on time, doing what we say we will do and generally being pretty cooperative with that whole mix. So we are being consistent with what Bill mentioned of doing what we say. And so with respect to more capacity, that's more of the same. And so we are actively analyzing those opportunities and expect to be able to provide updates in due course. Scott Gruber: I appreciate that. It was nice to see the 1Q EBITDA bump and 2Q grows, but it's a little bit more slowly than expectations across the Street and maybe the Street was just a bit ahead of itself. But Logistics, that segment is looking better. So can you just walk us through the kind of megawatts deployed across 1Q and into 2Q? And is there any uncertainty around the deployment schedule at Colossus 2 into 2Q? Or are you just embedding some conservatism until you get better line of sight? Kyle Ramachandran: Well, I mean, I think generally, as we look at providing guidance, we always try to embed some level of conservatism, rational and reasonable, but some level of conservatism. I mean when it comes to the timing of equipment getting deployed, most of that is out of our control. That's obviously subject to the OEM. And if you look at how we even shaped sort of the capital guidance for the fourth quarter relative to what happened, we assumed in the guidance that we would be receiving installment invoices ahead of when we actually did. And so some of this is a function of the supply chain and where they sit with their processes. We feel very good about the Colossus 2 project with respect to the total 900 megawatts that will be deployed there. The exact prescriptive timing week-to-week, month-to-month, quarter-to-quarter is going to be somewhat in flux depending on OEM deliveries. It's a massive project that's being built in real time. And so there's lots of civil work that needs to take place there as well. So there are lots of puts and takes that are outside of our control, quite frankly. And so that's driving may be somewhat of the guidance, but I don't think it has any impact whatsoever with respect to the run rate as we look at it. And we're still on track for Q1 of next year to be at the full 900 megawatts at Colossus 2. And then just finally, we have been able to use and to Amanda's point, with respect to some of the new regulatory analysis, an ability to put more power out there on a temporary basis to allow the customer to ramp their demand potentially ahead of when the permanent power comes into play. Operator: Our next question comes from Stephen Gengaro with Stifel. Stephen Gengaro: I think 2 for me. The first, and I'm not sure how much color you can add. But when you talk about discussions that are out there for that, I guess, roughly incremental 400 megawatts, are we talking about like discussions that are in the gigawatt range where you have multiple conversations going on? Or is it -- are they more sort of isolated discussions with specific customers? I guess is there any way to think about and kind of quantify sort of the near-term demand for that power? William Zartler: Stephen, I think the discussions are as widely varies as we need 100 megawatts to we need 2 to 3 gigawatts and how does that roll out over the course of '27, '28, '29 kind of time frame, and it's with multiple customers or a single customer. So the opportunity set, as Amanda mentioned, is significant. It's large. I think where we will focus on is closing with 1 or 2 customers in that 400-megawatt kind of range. Amanda Brock: What happens in these negotiations, which, like we've said, are negotiations not discussions, is we will maybe start with the 400 megawatts, but because of how electrification is phased in, we will then add over time. Stephen Gengaro: Okay. That's helpful. And the other question, when you think about the price of power, and I know like when you were first deploying assets and -- because you're basically at the customer site, you're kind of -- your cost of power is pretty close to grid power. And it feels like grid power or even at or below grid power. But as we have these kind of conversations about rising electricity costs over time, how do you price the power? Like are you able to take advantage or at least leverage the fact that power prices are likely rising over the next decade when you're signing these longer-term contracts? Like how does that discussion go? William Zartler: Yes. I mean I think customers intuitively understand this and how the shape of barcode. We're really focused on return on capital, focused on protecting our costs with colo. We're, in most cases, not buying the gas. The customers are buying their gas. So we're not at risk for that part of the expense going up, but we do see maintenance and all the regular costs that can increase over time. But I think this is a -- you can lock it up now and just like you might with a big power, you could do a capacity deal with some variable, which is what we're seeing both on this kind of behind-the-meter scale as well as colocated scale and protect and hedge for the next 10 to 20 years as it does. Operator: Our next question comes from Michael Dudas with Vertical Research. Michael Dudas: As you indicated in your prepared remarks and certainly, as we've seen in the market, demand seems to be much greater than supply and capacity. How is that evolving relative to the moat that you're creating given the momentum you've put together over the past couple of years? And how does that impact relative to what you want to do in the uplift to the other services to provide for your integration? Is the acquisition market or the opportunities there, are there quickly enough for you to generate the value from that just to really solidify your solutions profile? William Zartler: Yes. I mean I think, number one, this is a very big market. We will not be alone in development power for this industry, right? The numbers are staggering. So our moat and our offering is one of experience of operations, of knowledge of ensuring as reliable power as possible at attractive pricing. As we build out our offering, the more capital we can put to work and the more services we offer that we can get paid for is valuable and I think valuable to the customer and that what we're doing ultimately is just ensuring that they get the power where they need it, when they need it at the right voltage and type. And that will give us the amount of runway that this business needs to continue to grow very rapidly over the next several years. Operator: Our next question comes from Jeff LeBlanc with TPH. Jeffrey LeBlanc: In SLS, you're guiding to flat EBITDA on a sequential basis, while the pressure pumpers are flagging the winter storm fern, excuse me, is having a sizable impact on Q1 profitability, can you expand upon how your rentals business is insulating SEI from these types of disruptions? William Zartler: Well, we did see some downtime during the storm. So what we also see is additional growth in the business that's offsetting that. So I think we are growing maybe faster than the current pressure pumping market is just in terms of touch, the top-fill offering and the savings that it offers for some of these large frac jobs is real. And so we continue to see demand there, and we're virtually sold out, as I mentioned on the call, with that equipment. So given the growth in that from quarter-over-quarter, that's going to offset some of the declines that we saw in -- or most of the declines we saw in the storm. Operator: Our next question comes from Don Crist with Johnson Rice. Donald Crist: One macro question for me. As you're having these discussions, given all the state of the world right now with energy prices and the consumer-facing kind of aspects of that, how many of your discussions are 100% behind the meter versus kind of a hybrid approach with grid versus behind the meter? Is it more -- is it shifting more to where you're going to be a stand-alone island power plant for the life of the data center? Or is it still kind of a hybrid approach? William Zartler: I think there's a little -- there's still a bit of a hybrid. It's probably weighted toward behind the meter for the life of the plant, although we're having discussions with a few customers around having a mobile kit that they may rent for the next 10 years that we set up in advance of grid connections that they hope to get there over some period of time. And so the mobile nature and the service of being able to set up power quickly, the tailwinds with the quad K regulations, which is allowing some of that to happen on a temporary basis, kind of gives a couple of pieces of this offering. One is the pure behind the meter that may end up being co-located over time or we can go in and are looking for long-term contracts to be a bridge provider, which would mean that we may sit on sites between 1 and 2 years, but we have a contract with that customer for multiple years beyond that to move to site to site as they recognize that connections are slow and they're building out locations maybe faster than the grid can connect to them and they need a solution like that to complement their rapid growth. Amanda Brock: Don, we are seeing, as we said, there's acceleration of discussions. The tailwinds here, one, greater tenor on contracts. We always like to see that. Two, people in the last quarter, customers and end users getting very comfortable that they can be in fully islanded mode, successfully, reliably for a 10-plus year contract. So it's all of the above, but definitely a tailwind toward people getting comfortable that maybe they don't have to connect to the grid. And we think that last night, state of the union address with the ratepayer protection pledge, these discussions will continue to gain traction. Donald Crist: Yes, that makes a lot of sense. And just one further one for me. Obviously, the fourth quarter had some maintenance issues or not issues, but maintenance costs that were elevated as you had to kind of update your equipment. But how do we look at it going forward as you add a whole lot more new equipment, is that maintenance schedule kind of de minimis going forward? Or do you have another wave of stuff coming through in the next 12 to 15 months or so that need to go through that process? Kyle Ramachandran: Yes, Don, I think the color on the fourth quarter was around some equipment coming off of a utility project that was relatively short term in nature, and we're doing some modifications to that equipment to get it ready for a long-term contract to serve a microgrid in West Texas area. So that was sort of, I'd say, more of a kind of a one-off in nature. As we've talked about historically, this equipment has an overhaul cycle, which is episodic relative to the number of hours run in the engines. And on average, they're roughly 30,000 hour overhaul cycle. So it's every 4-ish kind of year time frame depending on the fired hours per day or per year for those engines. So yes, we're obviously in a period here where we're not seeing significant maintenance capital. Over time, that will be running through the business, and that's several years out from now. And then the other thing in the fourth quarter was we did secure some additional third-party equipment to meet an accelerated ramp schedule for one of our larger projects. And so we pulled that in a little bit ahead of when the equipment was deployed on to site. And so that was just some additional cost that was transitory in nature in the fourth quarter. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Bill Zartler for any closing remarks. William Zartler: Thank you all for joining us today. We're excited about the strong momentum we've built in all aspects of our business in 2025 and the significant opportunities ahead. It's rewarding to see our team grow and deliver real value in this fast-evolving market. And to take a big thank you to our dedicated employees, our trusted customers and valued supplier partners. Your commitment makes it all possible. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, everyone. Thank you for joining Volaris' Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please note that today's event is being recorded and webcast live on Volaris website. At this time, I'll turn the call over to Liliana Juarez, Investor Relations Manager. Please go ahead. Unknown Executive: Welcome to our fourth quarter 2025 earnings call. Joining us today are our President and CEO, Enrique Beltranena; our Airline Executive Vice President, Holger Blankenstein; and our CFO, Jaime Pous. They will be discussing the company's results followed by a Q&A session. This call is for investors and analysts only. Please note that this call may include forward-looking statements under applicable securities laws. These are subject to several factors that could cause the company's results to differ materially as described in our filings with the U.S. SEC and Mexico CNBV. These statements speak only as of the date they are made, and Volaris undertakes no obligation to update or modify them. All figures are in U.S. dollars compared to the fourth quarter of 2024, unless otherwise noted. And with that, I'll turn the call over to Enrique. Enrique Javier Beltranena Mejicano: Good morning, everyone, and welcome to our fourth quarter 2025 earnings call. As ever, I'm proud of the disciplined execution, operational agility and commitment demonstrated across our organization throughout the past year. I especially want to thank our ambassadors for their hard work and resilience in what was a demanding environment. 2025 was both busy and historic for Volaris. We executed with precision across our network and operations, delivering measurable progress despite a complex industry and macroeconomic backdrop, including engine constraints, FX volatility and geopolitical developments that temporarily influenced cross-border travel sentiment. Through disciplined network management, focused pricing strategy and operational flexibility, we continued strengthening the foundation of our business. In the fourth quarter, we delivered 5.6% capacity growth and drove TRASM towards the levels recorded in the same period of 2024. At the same time, we strengthened revenue quality with ancillary revenues comprising 56% of total operating revenues, reinforcing the structural advantages of our ultra-low-cost carrier model. We also initiated targeted capacity growth in the U.S. with routes maturing as planned, all while maintaining a healthy level of cash as a percentage of revenues of 25.5% and strong cost discipline. During 2025, we kept CASM ex fuel in line with plan at $0.0558 while proactively adjusting ASM growth from an originally planned mid-teens increase down to 6.3%. These actions ensured our seat offering remained aligned with demand while prioritizing profitability. Equally importantly, we delivered on our guidance, finishing 2025 with a full year EBITDAR margin of 32.5%. Performance strengthened as the year progressed, reinforcing the improving trajectory of the business as we move into 2026 and demonstrating that our strategic and operational initiatives are gaining traction. More specifically, in the cross-border market, travel sentiment continued to improve sequentially, in line with our expectations. We matched demand with disciplined capacity deployment and the Mexico-U.S. capacity added in the second half of the year generated positive results as routes continued to mature. Fourth quarter international load factor reached 79%, up from 77.5% recorded in the first 9 months of the year. In the domestic market, load factor reached 89.8%, reflecting disciplined supply adjustments to align with demand across the network. As the best-in-class carrier operating in a structurally growing and underpenetrating emerging market, we remain focused on stimulating demand through our low fare model, supporting profitable growth, capital efficiency and long-term value creation by continuing to connect families, communities and business across Mexico and beyond. As we enter 2026, the Mexican economy is showing earlier signs of improvement, supported by recovering consumption trends and better-than-expected inflation performance. The economy-wide wage bill has recovered part of the ground lost during most of 2025, supporting improving consumer confidence and household expectations around purchasing durable goods and making travel plans in the coming months. For the year, we are expecting ASM growth of approximately 7%, fully aligned with our disciplined deployment strategy. Most of the incremental capacity will be allocated to international markets where we have seen sequential improvement in TRASM since last August, supported by encouraging first quarter booking trends. Domestically, we continue to support a balanced supply-demand environment, scaling capacity in line with improving demand indicators. Our 2026 growth will be managed through 3 levers: the first one scheduled Airbus deliveries, the second one, AOG reduction and the third one, aircraft lease returns. Together, they enable a balanced and controlled fleet profile that supports disciplined growth with flexibility and enhanced asset productivity. Importantly, we are now at an inflection point in aircraft on ground or AOGs, and we expect this trend to improve progressively toward year-end. We expect more meaningful acceleration in grounded aircraft returning to service as we move into the summer and the second half, and Jaime will discuss this in greater detail. To support this recovery, we are proactively advancing certain maintenance events and inducting roughly twice as many engines as in 2025 with a significant improvement in turnaround times. While this implies higher temporary near-term costs and a little bit more CapEx, we view it as a disciplined investment that accelerates inspections, shortens downtime and allow us to restore fleet availability sooner. We're focused on increasing the share of productive aircraft in our total fleet as doing so allows us to generate greater productivity from our existing asset base without adding leverage. This, in turn, strengthens our earnings profile and improves free cash flow conversion. Many of you have asked about our strategy to return capacity to service without creating excess supply in the market. I want to be very clear that our capacity decisions have been and will remain firmly anchored in customer demand and sustained profitability. Our flexible fleet and engine management framework allows us to dynamically adjust deployment as conditions evolve. We are fully in control of our growth trajectory, not only for 2026, but also for 2027 and 2028 when we expect to have the engine availability constraints normalized and fully behind us. Against this backdrop, the setup as we move into the back half of the decade presents a compelling opportunity for Volaris to drive long-term shareholder value. Our ultra-low-cost customer remains the main source for our growth. As you know, in December, we entered into an agreement with Viva to create an airline group to accelerate our carriers' expansion of air travel penetration in Mexico and beyond. Strategically, the proposed airline group represents a natural next step to broaden access to low-fare travel in the domestic and cross-border markets while preserving our unique brands and passenger choice. As both carriers share a common ultra-low-cost carrier foundation and compatible fleets, the formation of the airline group is consistent with Volaris' commitment to low-cost, low-complexity growth for all stakeholders. The regulatory process is moving forward as expected, and we remain in active dialogue with the relevant authorities. We have filed with Mexico's National Antitrust Commission and have already responded to the first round of information requests. In parallel, on March 5, alongside the call for the extraordinary shareholders' meeting to be held on March 25, we will publish the transaction's prospectus or [Foreign Language]. At this stage, we continue to expect the overall regulatory review processes to take up to 12 months from the merger announcement date. We will provide updates on our earning calls as we advance throughout the process and reach new milestones. Now -- I will now turn the call over to Holger to continue to discuss our fourth quarter commercial and operational performance as well as our commercial plans and outlook for 2026. Holger Blankenstein: Thank you, Enrique. Our fourth quarter operations reflected disciplined planning and strong execution across the network, supporting solid operational and revenue performance. As Enrique highlighted, our cross-border market continued to demonstrate stable recovery even as northbound flows moderated year-over-year during the holiday period. We were particularly encouraged by the 79% load factor on international routes in the fourth quarter, a solid outcome given the more challenging backdrop earlier in the year, particularly in the second quarter. This marks a clear improvement versus the first 9 months of the year that exceeded our expectations and brings us closer to our historical low 80s median load factor for this market. In the domestic market, our 89.8% load factor reflected steady demand in a balanced supply environment. Weather-related disruptions, including persistent severe fog in Tijuana and other stations during December led to temporary cancellations and resulted in lower quarterly capacity growth of 5.6% versus our guidance of approximately 8%. We estimate the P&L impact of this extraordinary weather-related operational disruption was approximately $7 million. At the same time, rebookings deep into the holiday season affected the take-up of higher-yielding close-in demand. Nevertheless, we delivered fourth quarter TRASM of $0.0935, in line with our guidance and consistent with the strong results from the fourth quarter of 2024. By actively managing our capacity and remaining responsive to demand trends across our network, we drove TRASM to converge year-over-year toward the level of a strong fourth quarter of 2024. Our top line resilience continues to be supported by outstanding ancillary performance with ancillary revenues per passenger increasing 6% versus 2024, along with emerging benefits from our segmentation initiatives. As we enhance our product suite, capture more diverse customer base and customize our pricing strategy, we are seeing structural tailwinds emerge from fare mix, yields and margins as our revenue grows. A clear example of this is Premium+. Introduced in October last year, our blocked middle seat product in the first 2 rows of the cabin is designed to better address needs of more diverse customer segments. By the fourth quarter, despite still being in its ramp-up phase, performance has exceeded our expectations, supported by strong uptake and positive customer feedback. The key to our success remains low-cost, low-complexity development of ancillaries that generate high returns on investment. In 2026, we anticipate a compounding effect across our affinity portfolio as we drive enrollments and channel our customers into our loyalty program, altitude, where we have already achieved an encouraging base of approximately 800,000 enrollments in just 7 months. We are on track to integrate altitude with our co-branded credit card by the end of the second quarter, allowing all card transactions to earn loyalty points. Demand for our higher-value products remains strong. In the domestic market, approximately 60% of our traffic already consists of leisure, business and multi-reason travelers who choose Volaris for our strong value proposition. At the same time, our VFR customers are increasingly adopting our broader product suite, supporting more stable yields across cycles. With this diversified demand profile, we continue to differentiate our network and selectively expand where fundamentals are attractive. Earlier this month, we announced 33 new routes that will start this summer, offering a balanced mix of domestic and international services from Guadalajara, including the U.S. destinations of Detroit and Salt Lake City as well as new operations from 3 strategically attractive secondary cities, Puebla, Queretaro and San Luis Potosi. These markets have demonstrated solid demand growth in recent years, supported by rising income levels and meaningful state-level investment, making them compelling opportunities for disciplined network expansion and sustainable profitability. These launches build upon the success we have achieved in Guadalajara and Tijuana. As we explained on our October call, Guadalajara has become a strong market for multi-reason customers, representing roughly 20% of traffic in that market, and we are extending this proven playbook to new regions to support profitable growth. In parallel, we continue to optimize our slots and schedules, shifting certain flights to earlier times to better serve business and leisure travelers, improving customer experience and potential yields. The financial benefits of these adjustments are already beginning to materialize in our TRASM results. We are also expanding connectivity beyond our network. In recent months, we activated our codeshares with Copa and Hainan, complementing our existing agreements with Frontier and Iberia and providing customers with broader global connectivity while enhancing revenue opportunities across our network. Revenues from codeshare partners increased more than 30% in 2025 and many are still in the ramp-up stage. For our international market, we observed an inflection point in the third quarter of 2025, which continued to materialize in the fourth quarter and as we start 2026. Our U.S. routes are recovering nicely. We are planning to deploy roughly 2/3 of our total capacity growth this year to the cross-border market, consistent with our broader international strategy, which now represents approximately 42% of our total capacity and supports a more diversified and resilient network. As we broaden our competitive positioning with new destinations, we are well positioned to capture cross-border demand as recovery continues. Booking trends so far in 2026 have been very healthy with momentum building into Semana Santa and the spring season. As we lap favorable comparisons in the first quarter of this year, the demand environment gives us confidence in sustained strong performance. Now I will turn the call over to Jaime to cover our financial results and 2026 guidance. Jaime Esteban Pous Fernandez: Thank you, Holger. In the fourth quarter, we continued to act nimbly, leaning into our variable cost structure to manage short-term headwinds. We also remain prudent and proactive with managing our capacity to support demand and fleet availability trends. This diligence is reflected in our financial results for the quarter and the full year. For the fourth quarter of 2025, total operating revenues were $882 million, a 5.6% increase versus the comparable prior year quarter. This increase was driven by a substantial TRASM recovery in the back half of the year, as Holger explained, pointing to continued diversification of our revenues and early strength of segmentation efforts. Our top line also benefited from a strengthened peso, which appreciated 8.7% versus the U.S. dollar despite providing an incremental cost headwind. We continue to diminish the impact of FX volatility on our business through increased cross-border flying and U.S. dollar-denominated sales. On the cost side, CASM was $0.0829, an increase of 3.2% despite average economic fuel costs rising 5.5% to $2.65 per gallon. CASM ex fuel was $5.76, aligned with our guidance and up just 1.4% year-over-year. For the fourth quarter and full year, we achieved CASM ex fuel results in line with our planning despite flying materially fewer than originally planned ASMs in both periods. Looking down our P&L, the impact from our grounded fleet and engine maintenance and our actions to manage the related interim capacity deficit is reflected in several lines. Our depreciation and amortization, right of use and maintenance items continued to reflect cost of our total fleet, including the grounded aircraft. Additionally, as we approach elevated aircraft lease returns scheduled for 2026, our aircraft and engine variable lease expense line continued to reflect redelivery accruals, including reserves for aircraft maintenance on returns. Meanwhile, in the other operating income line, we booked sale and leaseback gains of $10.4 million related to the Airbus deliveries of 5 new aircraft. This line also includes our aircraft grounding compensation from Pratt & Whitney. For the fourth quarter, we generated EBITDAR of $328 million with a margin of 37.2%, aligned with the guidance provided for the quarter. EBIT was $100 million for a margin of 11.3%. Finally, we generated a net profit of $4 million, translating into an earnings per ADS of $0.04. Moving briefly to our P&L for the full year 2025 compared to full year 2024. Total operating revenues were $3 billion, a 3% decrease. CASM was $0.0804, a 0.1% increase with an average economic fuel cost of $2.59 per gallon, 6% lower. CASM ex fuel was $0558, 3.5% higher than last year. EBITDAR totaled $988 million, a 13% decrease with an EBITDAR margin of 32.5%. EBIT was $135 million, representing an EBIT margin of 4.4%. Over the next several years, we expect to meaningfully reduce the spread between EBITDAR and EBIT margins as we reverse the impact of capacity reductions related to engine-related AOGs. Prior to these issues and the resulting groundings, the spread between EBITDAR and EBIT margin hovered between 18% and 19% of revenues, but reached 28% in 2025. In 2026, we expect this EBITDAR to EBIT spread to tighten to 24% and to return to historical levels in 2028. Net loss was $104 million or a loss of $0.91 per ADS. Turning now to cash flow and balance sheet data. For the fourth quarter, cash flow generated by operating activities was $252 million. The cash outflows provided by and used in investing and financing activities were $2 million and $280 million, respectively. CapEx, excluding fleet predelivery payments, was $56 million for the fourth quarter and $251 million for the full year of 2025, in line with guidance. Volaris ended the quarter with a total liquidity position of $774 million, representing 25.5% of the last 12 months' total operating revenues. We continue to target liquidity of at least 20% of the last 12 months' revenues as part of a disciplined and conservative approach to cash management. At fourth quarter end, our net debt-to-EBITDAR ratio stood at 3.1x, unchanged from the third quarter. We expect deleveraging in the second half of the year, supported by improving earnings and fleet productivity as AOG levels decline, finishing 2026 with a ratio of approximately 2.6x. We continue to have no material near-term debt maturities and have already financed all predelivery payments for the aircraft scheduled for delivery through mid-2028. We remain focused on our core financial priorities of cost control, profitability and conservative cash management to preserve the strength and value of our business. Now turning to our fleet plan and engine availability. As of December 31, our fleet consisted of 155 aircraft with an average age of 6.6 years with 66% of the fleet being fuel-efficient new models. During the fourth quarter, we averaged 36 aircraft on ground due to engine-related issues. As Enrique discussed, we are at an inflection point in aircraft on ground, which peaked at 41 aircraft in January. We expect a steady reduction from here on with more meaningful improvement in the second half and towards year-end. We anticipate closing 2026 with approximately 25 AOGs. This trajectory implies a full-year average of approximately 33 AOGs, representing 3 additional aircraft returning to service versus 2025. The reduction in AOGs is supported by concrete manufacturer actions, including durability upgrades to the hot section of the engine, expanded MRO throughput across the global network and the rollout of enhancements and certifications. Together, these initiatives are extending time on wing and reducing shop turnaround times such that the number of engines being induced into MROs and returning to service are expected to be consistently larger than those being removed. As we gradually narrow the gap between our total and productive fleet while remaining disciplined in aligning capacity growth with demand, we expect to unlock meaningful financial benefits, particularly from the second half of the year onward. As grounded aircraft return to service, we will be able to generate ASM growth and earnings from essentially the same asset base. Our fleet in absolute numbers of aircraft will somewhat decline in the next couple of years, but the available of productive fleet will increase and close the gap between our total and available productive aircraft, providing adequate ASM growth to meet our guidance without the need for incremental fleet-related debt for the remainder of the decade. This will improve the EBITDAR to EBIT conversion and translate directly into a stronger free cash flow and return on invested capital. We have aligned our fleet plan to prioritize disciplined growth in productive capacity rather than total fleet size. Looking ahead, our base case assumes a roughly stable total fleet until 2030 with growth driven by the increasing share of productive aircraft. To preserve flexibility, we continue to actively manage the multiple levers we have, including managing lease approaching expiration and adjusting our order book. Given these moving parts, rather than viewing them in isolation, we recommend focusing on our guided ASM growth, which already incorporates aircraft deliveries, engine returns and aircraft redeliveries. Despite engine availability headwinds over the past 30 months, Volaris has consistently demonstrated a strong operational resilience. As fleet productivity improves, we are excited about the next phase of our growth as we evolve our network and products, maintain operational focus and continue strengthening our already world-class cost structure and margin profile in the years ahead. Turning now to guidance. For full year 2026, we are expecting ASM growth of around 7% year-over-year, EBITDAR margin of around 33% and CapEx, net of finance fleet predelivery payments, of approximately $350 million. Double clicking on this CapEx, we expect higher major maintenance activity due to the number of aircraft scheduled for delivery and a pull-forward of major maintenance activities to support accelerated engine inductions into Pratt shops. It is important to note, we expect this strategy to also support a more stable maintenance profile in the years ahead. Our full year 2026 outlook assumes an average foreign exchange rate to be approximately MXN 17.7 per U.S. dollar. We also assume an average U.S. Gulf Coast jet fuel price to be in the range of $2.1 to $2.2 per gallon. For the first quarter of 2026, we are targeting an ASM growth of approximately 3% year-over-year, TRASM of around $0.085, CASM ex fuel of approximately $0.06 and an EBITDAR margin of around 25%. As the AOG trend reverses, as I previously mentioned, we expect improved EBITDAR to EBIT conversion to support a stronger underlying profitability. We, therefore, expect first quarter EBIT margin to remain broadly flat, in line with our historical margin seasonality and implying a year-over-year improvement over the minus 1.5% margin reported in the first quarter of 2025. Our first quarter 2026 outlook assumes an average foreign exchange rate of around MXN 17.5 per U.S. dollar and an average U.S. Gulf Coast jet fuel price of approximately $2.2 per gallon, consistent with the realized prices for January and February and the forward curve for March. Separately, the recent appreciation of the Mexican peso has created near-term translation effect as approximately 40% of our cost base is peso-denominated. For reference, at the MXN 17.5 per dollar rate embedded in our guidance, FX translation alone will represent approximately a $0.004 impact on first quarter CASM ex. On top of the expected peso appreciation, the CASM ex fuel increase in our guidance is explained by nonrecurring factors. First, as I just mentioned, to achieve our target reduction in AOGs throughout the year, we accelerated engine inductions to Pratt & Whitney shops, which increases maintenance expenses in the near term. Second, we are projecting secure onetime expenses related to the proposed merger with Viva. Taken together, these nonrecurring items account for approximately $0.22 in unit costs in the quarter. These fleet actions strengthen our operational trajectory and support margin expansions, not only this year, but over the medium term. We have clear visibility on our fleet normalization and remain firmly in control of our growth and execution plans through 2026 and beyond. As the engine situation progressively moves behind us, we believe Volaris is entering a period where improved productivity, disciplined growth and structural cost advantages position the company to generate meaningful long-term shareholder value. Now I will turn the call back over to Enrique for closing remarks. Enrique Javier Beltranena Mejicano: Thank you, Jaime. I'd like to conclude our remarks with a few takeaways. First and foremost, Volaris continues to demonstrate the strength and adaptability of our ultra-low-cost model and our command over our markets and cost structure. A highly flexible, low-cost operating framework is especially well suited to an emerging market like Mexico, allowing us to manage unit costs effectively across any level of capacity growth. This operating discipline has enabled us to adapt quickly to changing macroeconomic and industry conditions, preserve affordability for our customers and continue operating profitably through periods of disruption. Our experience demonstrates that in this market, a disciplined ultra-low-cost carrier model is not only resilient, but a key driver of long-term value creation. Second, travel sentiment in the cross-border market continues to improve, and we are well positioned as the recovery progresses. Our evolving segmentation strategy gives us greater ability to capture profitable demand while remaining disciplined in how we deploy capacity. Third, we remain committed to delivering low-cost, high-value service across our customer base, including our core VFR segment. Our expanding product suite and network allow us to address diverse customer preferences while maximizing TRASM among higher-yielding segments. Fourth, we are not changing our DNA. Our proven low-cost, low-complexity development of ancillary and affinity offerings is enabling higher revenue per passenger and improved fare mix while preserving our cost efficiency and long-term profitability. Finally, Volaris is advancing from a position of strength. As we narrow the gap between our available and total fleet, we expect meaningful financial tailwinds, including further improvement in our already world-leading cost structure. Before opening the call to Q&A, I would like to briefly reiterate the strategic rationale behind the proposed transaction with Viva. As outlined in our announcement, we believe this transaction has the potential to create value for all stakeholders. In the case of the passengers through affordable access to an expanded network, in the case of communities through increased service and local economic development, in the case of our employees or ambassadors through enhanced stability and job opportunities across new markets and in the case of Mexico, through improved regional connectivity. Together, these benefits support a stronger and more inclusive future for ultra-low-cost air travel in Mexico. At this stage, there is nothing further we can share beyond what has already been disclosed. We will continue to provide updates as we progress through the process. As we move into the Q&A session, I kindly ask that questions focused on Volaris' operating and financial results. In sum, we believe Volaris is exceptionally well positioned to generate strong sustainable value for our shareholders in 2026 and beyond. I'll now turn the call over for questions and answers. Operator: Our first question comes from Michael Linenberg with Deutsche Bank. Unknown Analyst: This is [ Angela Adal ] on for Mike. You reported a tax rate of 89% in the quarter. Could you help us understand the key drivers behind that? Jaime Esteban Pous Fernandez: This is Jaime. When you talk about the tax rate, remember that during the first 3 quarters of the year, we used the legal tax rate of 30%. Then normally, in the fourth quarter, we adjust to apply the actual tax rate of the year considering the numbers. So the full year effective tax rate for Volaris was 11.8%. Normally, we will include the 30% over the first 3 quarters of the year. And in the last one, we will apply the actual number of taxes that we are going to pay. For Modeling, we strongly recommend everyone to continue to use a 30% effective tax rate. Unknown Analyst: Got it. Another question on the 7% capacity growth for 2026. How should we think about it in terms of the domestic versus international mix? Holger Blankenstein: This is Holger. As we mentioned in our prepared remarks, first of all, I'd like to mention that our capacity decisions are firmly anchored on customer demand and on profitability. If we look at the breakdown that you're referring to, we plan an overall capacity growth of 7%, and that is consistent with an emerging market and an emerging customer base that we are observing in our customers. We are going to be more skewed towards the international market, and we're expecting domestic growth to be in the low to mid-single digits for 2026. And then if you look at it on a quarterly basis, in the first half, ASM growth will be relatively lower to the lower base in 2025, where we made tactical adjustments to capacity in 2025 given the cross-border environment at that time in 2025. The overall growth rate of 7%, we do have flexibility to move up and down within the range of a few percentage points as we move forward in the year and observe demand trends. Operator: Our next question comes from Duane Pfennigwerth with Evercore ISI. Jacob Gunning: This is Jacob Gunning on for Duane. First question, just as you talk about the flat fleet count through 2030, could you perhaps talk about what that means for the multiyear capacity growth outlook and potential CapEx? Jaime Esteban Pous Fernandez: This is Jaime, Jake. In terms of capacity, I think that we are going to be growing in that 7% even in the midterm of our 5-year program, but with the availability to increasing capacity or lower capacity by 2, 3 percentage points. So if you look at total number of aircraft, the number that we finished in 2025 should be at the same level in 2030. And all of that growth is going to be coming from the unproductive fleet, putting them into production. We have the leverage that we mentioned in the call, which is aircraft redeliveries during the period. We have a high number, which provides flexibility, Airbus deliveries. And that's why we will be managing capacity, matching the capacity to the demand we observe in the market. Jacob Gunning: Great. And then can you just remind us on how many planes are being returned this year and what the associated redelivery expense is? Jaime Esteban Pous Fernandez: We are returning 14 aircraft this year, Jake. And the increase in the CapEx of the year is in connection to redelivery of the planes. And in addition to that, in the investment that we are doing in major maintenance events to reduce the number of AOGs. The CapEx that we are estimated for this year is around $350 million to accomplish that. Operator: Our next question comes from Rafael Simonetti with UBS. Rafael Simonetti: My question is about leverage. So leverage went from 2.6x to 3.1 from the fourth quarter '24 to '25. And with higher CapEx ahead and only marginal margin improvement guidance, what's the path back towards deleveraging? And there is a leverage target that the Board is working towards? Jaime Esteban Pous Fernandez: Rafael, this is Jaime again. You should think that deleverages have been sequentially improving towards [ the range ]. As I mentioned during the call, we expect the 3.1 that we started in the year to go to 2.6x during the year. It's also going to be a result from the improvement in reductions of AOGs of the fleet. Operator: This concludes today's question-and-answer session. I would like to invite management to proceed with his closing remarks. Please go ahead, sir. Enrique Javier Beltranena Mejicano: [Audio Gap] as well as our Board of Directors, investors, bankers, lessors and suppliers for their support through a historic 2025. I look forward to demonstrating what Volaris can deliver in 2026 and beyond. Thank you very much for all your support. Operator: This concludes the Volaris conference call for today. Thank you very much for your participation. Have a nice day.
Operator: Greetings, and welcome to the LTC Properties, Inc. Fourth Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions]. As a reminder, this conference is being recorded. [Operator Instructions]. It's now my pleasure to introduce Pam Kessler, Co-President and Co-CEO. Pam, please go ahead. Pamela Shelley-Kessler: Good morning, and thank you for joining us. Eight months after launching our SHOP initiative, we are almost halfway through our transformation from a lower growth triple-net REIT into a faster-growing SHOP-focused REIT a transformation that will lead to higher multiyear, internal and external SHOP and earnings growth and to superior shareholder returns. This transformation has included substantial investment in people, systems and technology, which will continue to be a focus to support our aggressive growth plans. We have made great progress growing our seniors housing portfolio through SHOP reflecting successful execution across every aspect of the business. Today, we are guiding to $600 million in acquisitions at the midpoint for 2026, all of which we anticipate will be in SHOP. This acquisition guidance is nearly 70% higher than SHOP acquisitions in 2025. 2026 started off strong with $108 million in SHOP acquisitions already completed and another $160 million on schedule to close in the second quarter, which takes us nearly halfway to our $600 million midpoint investment guidance for the year. Throughout our transformation, we have continued to maintain a strong balance sheet with well-laddered debt maturities and a FAD payout ratio below 80%. Since launching SHOP last May, we grew it to 25% of our investment portfolio by year-end. Based on our 2026 acquisition guidance, we expect to end this year with SHOP growing to 45% of our investment portfolio and 40% of our NOI capitalizing on LTC's ability to accelerate our growth through acquisitions. By launching SHOP at a small-cap REIT, we are leveraging the denominator effect to our advantage. LTC's smaller initial footprint provides the power to capture outsized growth, where even modest investments have a meaningful and visible impact. Additionally, after the prepayment of the $180 million Prestige loan expected later this year, loans should be reduced to less than 10% of our portfolio, and skilled nursing investments will represent less than 30% by the end of 2026. This strategic portfolio transformation reflects our SHOP launch and rapid growth within a targeted 18-month period. With our transformation complete at the end of 2026, we see the opportunity for continued accelerated internal and external growth powered by SHOP in 2027. Now I'll turn the call over to Gibson to discuss our portfolio and strong SHOP performance. J. Satterwhite: Thank you, Pam. We've undertaken the transformation to increase the organic growth and new investment growth profile of our portfolio and maximize risk-adjusted returns for our shareholders. To that end, we have focused over the last 1.5 years to develop and enhance our platform to position LTC and our operators for success, and we'll continue to make further investments going forward to position LTC for profitable growth. In addition to adding accounting, FP&A and data analytics resources, we recently welcomed 2 Vice Presidents to our asset management team, both with extensive experience in systems development and seniors housing asset management. Our SHOP portfolio results support our 2025 strategy by outperforming our expectations. The original 13 properties converted to SHOP grew NOI over 2024 pro forma NOI by 22% and produced $16.2 million of combined rent and NOI in 2025 compared to $12.3 million of rent in 2024. The remainder of the SHOP portfolio outperformed expectations in the fourth quarter by contributing $5.9 million of NOI, about $700,000 above the midpoint of guidance. Our 2026 SHOP NOI guidance includes 13 properties we originally converted and 14 properties acquired to date. Our guidance for these 27 properties assumes 14% NOI growth at the midpoint for full year 2026 over pro forma 2025. This subset of properties realized occupancy of 89.7% in 2025, which we are projecting will grow by about 150 basis points in 2026. We further project that RevPOR will grow by approximately 5% and EXPOR will grow by 2.5%. We do want to note that the 2025 results for the 14 properties we have acquired include occupancy and performance as reported by the prior owners adjusted for the current management fee structure. We will continue changing the mix of our portfolio in 2026. Prestige Healthcare has delivered notice of their intent to prepay on or about July 1, the $180 million loan, which is currently yielding approximately 11%. Additionally, we expect to sell 5 skilled nursing properties and have certain loan payoffs totaling $90 million in the next 60 days. These transactions, together with our external growth through SHOP will meaningfully reduce our skilled nursing and loan exposure. With that, I'll turn things over to Dave for an update on our growth strategy. David Boitano: Thank you, Gibson. In 2025, we put $360 million to work through SHOP acquisitions. By the end of the second quarter of this year, we will have added an additional $270 million moving us rapidly towards our $600 million midpoint acquisition guidance and making 2026 our most active investment year yet as we accelerate our growth towards an increasingly SHOP weighted portfolio. LTC's relationship-focused culture is the foundation of our success. In 2025, we closed 2 follow-on transactions with existing operating partners and our momentum is continuing in 2026 with another follow-on deal completed and 2 more and the $160 million we expect to close shortly. At the same time, we are in active conversations with operating partners new to LTC and are evaluating acquisitions to kick off those relationships. In a competitive senior housing acquisitions environment, our smaller asset base and personal relationship-driven strategy are competitive advantages. We find opportunities in both single and multi-property investments and do not need to chase overpriced large on-market transaction. We are keenly focused on every deal and every LTC operator relationship, each of which directly contributes to our growth and furthers our transformation into a SHOP growth engine. Existing and prospective operators desiring to grow their portfolios or retain assets when an investor wishes to exit, seek LTC because we listen, we collaborate and we engage. The evidence of this success can be seen in our accelerating year-to-date external growth that in addition to the $160 million previously mentioned, includes an acquisition pipeline of over $500 million in deals under review and consists entirely of SHOP. Our acquisition strategy is to partner with experienced, regionally focused operating teams and add newer communities with lower CapEx requirements. These are stabilized assets, but that does not equate to low growth. We are buying assets with strong pricing power, high incremental margins and durable contributions to earnings growth. Our expanding SHOP platform is positioned to perform over time, and we expect to achieve unlevered IRRs in the low to mid-teens. I'll now pass the call to Cece for a review of our financial results. Caroline Chikhale: Thank you, Dave. For the end of the year, we bolstered our growth capacity by expanding our credit facility to $800 million, including $200 million of term loans. We anticipate receiving nearly $270 million in asset sales and loan payoffs in 2026, which will be used to fund future investments using multiple levers, including proceeds from our ATM program, borrowings under our revolving line of credit and asset sales where attractive pricing provides a better cost of capital, we feel very confident in our financial strength, which will support our ability to fuel our SHOP growth. With the $270 million of expected proceeds, our liquidity stands at $810 million on a pro forma basis. We have minimal near-term debt maturities, giving us virtually no refinancing risk. At year-end, our debt to annualized adjusted EBITDA for real estate was 4.5x, and our annualized adjusted fixed charge coverage ratio was 4.4x. While we are well within our stated leverage target of 4 to 5x, we believe we can reduce that further over time. Compared with the same quarter last year, core FFO per share improved $0.05 to $0.70 and core FAD per share improved $0.07 to $0.73. These results represent core FFO per share and core FAD per share growth of 8% and 11%, respectively. The increases were primarily due to new SHOP acquisitions and triple-net conversions to SHOP, partially offset by an increase in interest expense and decreased rents related to asset sales. Our 2026 guidance for core FFO per share is projected to be in the range of $2.75 to $2.79 and core FAD per share in the range of $2.82 to $2.86. For the first quarter, we expect core FFO per share in the range of $0.66 to $0.68 and core FAD in the range of $0.68 to $0.70. Our 2026 guidance includes $400 million to $800 million of SHOP acquisitions with SHOP NOI in the range of $65 million to $77 million and FAD CapEx of approximately $5 million. Additionally, our guidance includes the $270 million of proceeds from asset sales and loan payoffs. Other assumptions underpinning this guidance are detailed in yesterday's earnings press release and supplemental, which are posted on our website. Now I'll turn the call over to Clint for some closing comments. Clint B. Malin: Thanks, Cece. 2026 will complete LTC's transformation from a triple-net skilled nursing and seniors housing REIT, fueling our growth through idea to become a larger SHOP focused REIT. Increased NOI growth will come organically through our existing portfolio and through new SHOP acquisitions. With our investment guidance of $600 million at the midpoint in 2026, SHOP will exceed $1 billion of assets and represent 45% of our portfolio by year-end. Including the SHOP acquisitions under contract, the average age of our SHOP portfolio will be 9 years, reflecting our strategy of investing in newer SHOP communities that are best positioned to compete against future new development. We will drive strong organic SHOP NOI and per share growth through aligned operator relationships and the quality of the assets. In fact, we believe that organic NOI growth will double by the end of this year compared with our pre-transformation to SHOP. We have made rapid progress in executing on our SHOP strategy. So most importantly, on behalf of the entire LTC team, I want to extend a sincere thank you to the operators who have placed their trust in us, helping us establish and grow our SHOP platform. We have 8 SHOP operator relationships in our portfolio, 6 new to LTC since our launch. And in Q2, we will be adding 2 more. Each one of these operator relationships represents a huge opportunity to continue driving LTC SHOP growth through management agreements that align interest to deepen our relationships. We have a simplified and compelling investment thesis, which we are executing upon with speed, determination and conviction to power future growth by optimizing risk-adjusted returns to our shareholders while increasing our organic and investment growth profile. This success is made possible by a talented group of tenured employees and new professionals recently joining our team, all coalescing around a transforming LTC that is standing out in the industry and is well positioned for tremendous growth. With that, we are ready to take your questions. Operator: [Operator Instructions] Our first question today is coming from John Kilichowski from Wells Fargo. William John Kilichowski: This pivot is happening relatively quickly, and it sounds like messaging has been it's not if but when something happens to the SNF funding landscape. I'm curious in your minds, like what are the nearest 1 or 2 greatest threats to SNF today that could cause some sort of re-rating the market isn't expecting? Clint B. Malin: From a SNF perspective, John, I would say that there's a tremendous amount of private capital, I think, that's driving prices in skilled nursing. So that's one element that could have a change. And then just as we've generally seen over the years, I mean, skilled nursing at cap rates that it has, it has a stroke of the pen risk and things tend to happen when you least expect it. And we do see much more organic growth from investing in newer assets with a better growth profile. So that's really our thesis and why we're aggressively growing into SHOP. William John Kilichowski: Okay. Well, the 14% same-store growth is a great starting point. I'm curious, is this sort of like a 3- to 4-year run rate as the business remains immune, likely immune to supply shocks and demand is relatively known? Or do you forecast that moderating slightly as occupancy fully stabilized at these assets? J. Satterwhite: It's a fair question. John, this is Gibson. It's a fair question. We are -- it is a relatively new portfolio for us. And so we're comfortable with the guidance. I think the way to think about this is that, that pro forma occupancy that I gave in my prepared remarks, 89.7% that's pretty close to stabilized levels. And so we're encouraged to see that this year, our expectations are in that mid-teens growth rate. So we really just don't want to get into the out years right now. Operator: Our next question is coming from Austin Wurschmidt from KeyBanc Capital Markets. Austin Wurschmidt: Just going back to SHOP for a minute. Gibson, you had highlighted that the 13 original assets grew NOI by 22% last year on a pro forma basis versus '24. Can you give us a sense how the 14% on the 27 assets compares to how that trended in 2025 or just versus the fourth quarter? J. Satterwhite: Let me see if I can answer this in another way and see if that scratches your heard, Austin. If you look at our projections, '25 over '24 and you pull out that original 13, our growth rate of 14% isn't going to materially change. Austin Wurschmidt: Got it. That's helpful. And then maybe just going back to John's question a little bit differently here. I mean you mentioned the 89% is nearing stabilization, but this portfolio does continue to evolve as you layer on additional acquisitions. I mean, what are your latest thoughts for the portfolio today as to where stabilized occupancy levels are? And what sort of the right feeling on where you can kind of send out in-place rent increases or drive RevPOR in the coming years? Pamela Shelley-Kessler: Austin, this is Pam. For stabilized occupancy, given the lack of supply that we see over the next few years, we feel occupancy can climb into the 90s. We did not project that in our 2026 guidance. But it is possible. And it's always a fine balance between occupancy and rate growth, and we feel that this portfolio has the opportunity for both. Clint B. Malin: And this also -- this is a key of what we're focused on, what we're investing in. It's newer assets, and we've emphasized that in our comments about the average age. We feel those are going to be best positioned to compete against new development. That will happen. And we think in the interim, they'll have pricing power to be able to drive growth. And we've done that by design, on intention, looking long term to have assets that can effectively compete in the future. Austin Wurschmidt: And then what was the in-place rent increases now for this year? J. Satterwhite: Well, the RevPOR guidance we gave is around the 5%. And so that ranges across the portfolio from 4.5% up to 7%. But a lot of the hay is in the barn with respect to year-end increases or increases that went into effect in January. But then we have some more that increase on anniversary. And then we have to see what happens with the Street rate. So I think we're comfortable with our all-in like RevPOR assumption of that 5% range. Operator: Next question is coming from Juan Sanabria from BMO Capital Markets. Juan Sanabria: I'm just hoping you could talk a little bit about the pipeline of investments and the year 1 yields you're underwriting for SHOP. And then on the flip side, how we should be thinking about some of the disposition yields for some of the SNF that you're selling. You've already given us the loan piece. David Boitano: Juan, this is Dave. I'll take the first half, and I think Gibson will take the second half. So from an acquisition pipeline perspective, you saw in our remarks that we have 160,000 -- $160 million under LOI and in process. We are looking at generally what we looked at last year in terms of sort of going in year 1 yields about 7% or so with good growth headroom beyond that. Clint B. Malin: Also one thing to think about on what we're looking at for deals, as Pam mentioned in her prepared remarks, mean the size of LTC really we're using to our advantage to be able to grow because we can look at smaller transactions, which have better price points to be able to drive those initial yields. So we think that's a huge opportunity for us as we're growing this portfolio and are projecting on gross book to be a 45% SHOP by the end of the year since we launched this midyear in '25. J. Satterwhite: And then Juan, this is Gibson on the dispositions. I think the Prestige loan is a unique case where that, we had a heavy concentration with one operator in one state that caused some disruption a couple of years back because of that state's specific reimbursement program. And so that was a strategic decision to derisk the portfolio and reduce operator concentration. We still have investments to for Prestige, and it's not a Prestige thing. It's just an overall operator concentration thing. On the rest, if you blend it together, we're selling at about an 8.2% cap. And so there, if you think about that in terms of swapping out of older skilled nursing assets as we've been doing on an opportunistic basis over the last 1.5 years or so, and 8.2% with 2.5% anywhere from 2% to 2.5% escalators, and we can recycle that into newer seniors housing assets that are really built and will be competitive over the long term. We feel like that's a good risk/reward trade for our shareholders. Juan Sanabria: And then I just wanted to ask ALG, there was previously some discussion about some change in that portfolio going forward and some options they had. So just curious how we should be thinking about piece of your exposure longer term? Clint B. Malin: I think for ALG, Juan, I think that they do have purchase options. We talked previously about -- it's really more interest rate sensitive for them to look at probably bond financing to take this out. So we look at this probably will be in 2027. We have 3 different or 4 different investments with them. There can be a small -- one of the small portfolios could trade maybe towards the end of this year possibly. But I would really think of it more as a '27 event. Juan Sanabria: Got it. And then if I could just be greedy, one more question. For the incremental financing, like if you hit the top end of your acquisition guidance, how should we think about that? It sounds like you said leverage could go down. I'm not sure if that's a product of EBITDA growing or if we should assume that maybe the goal would be to over-equitize positions over and above kind of the dispositions you've laid out or loan repayments. So just curious on the funding for the pipeline at kind of the different -- either the midpoint or the high end in particular. Pamela Shelley-Kessler: Yes. Thanks, Juan. It's Pam. Yes, I think you're thinking about it right. I mean the beauty of a higher growing portfolio is that your deleveraging happens naturally a lot faster through EBITDA growth. But we would also look to overequitize acquisitions if the pricing is right. Operator: [Operator Instructions] Our next question is coming from Michael Carroll from RBC Capital Markets. Michael Carroll: Clint or Dave, can you guys provide some more color on the competitive landscape for seniors housing deals right now? I mean, how difficult is it for you to find deals that you want to own that meets your underwriting? And then when you do find those transactions, I guess, where have cap rates trended? I know you've been talking about that 7% range for some time. I mean, are we starting to see that take a little bit lower? Is it hard to find yields at that 7% yield? David Boitano: So this is Dave. On our -- I mean Clint hit on this nicely in terms of the importance of a deal to LTC and how our scale works for us. So we do a good job of finding transactions that are probably in that onesie-twosie time frame and our size, and our customers, our sellers know that they're important to us. So one great benefit here, it's been sort of in fashion to have buyer interviews. So I can bring a C-suite, bring my CEOs onto those calls to sort of underscore how important the deal is. And as you know, with any seller, certainty of execution matters an awful lot. So we can give a transaction a lot of attention and hyper focus. We've continued to see a pretty good stream of opportunities. And generally in that first year, underwriting of around 7% or so, it doesn't mean that there's not pressure, but our whole world is looking at a lot of transactions to find a few that are worthy of underwriting and progression through the process. So we're seeing a good flow of potential opportunities, and we feel good that we'll find the right ones for LTC out of that stream. Clint B. Malin: And so with that backdrop, we've guided to $600 million at the endpoint for investments for '26 and with deals closed under contract, we're almost halfway through that. So although it's a competitive landscape, we feel that we've been able to be at the table on transactions. And a lot of the deals that we have, as Dave mentioned previously, are operators bringing us into transactions, which with having -- soon to have 10 operative relationships in our portfolio. We think that's going to help drive continued access to deals. And when we're looking at them on onesie-twosie transactions, it can be helpful. And another thing that we're seeing also on one of the transactions we're working on is the seller is looking at a tax-efficient transaction. And so we're looking at a down REIT structure. So when you look at financing transactions and utilizing equity, pricing through a down REIT structure, it can be an attractive option for us. Michael Carroll: So then, in this type of environment, if you look at the 7 yields, I mean, do you see -- foresee like if you kind of get back to the end of this year, you might have to go below that? Or is there enough transactions at that level that you think at least through this year, you can still achieve that 7% target? David Boitano: So as Clint mentioned, right, we have $270 million in the door, right? So those are set. So we've got another $300 million plus to go. Nothing is easy if you're going to do it well. So we'll be working hard to find the right deals all year long. But we are steadfast in working to maintain that kind of year 1 yield of 7%. But definitely, there will be pressure in the industry. A lot of people are discovering senior housing or people showing up at the table. We still feel like we've got a good opportunity kind of given our relationship focus and our style of execution to find the deals that make sense for LTC. Pamela Shelley-Kessler: And Mike, I have one more thing to add to that. Last year, when we talked about our projected underwriting and being at 7%, very conservative. Our 2026 guidance is already a year 1 over 7.5%, it's like 7.7%. So we're already beating that. So we've created value there just in a few short months and expect to create more. Michael Carroll: Okay. Great. No, that's helpful. And then just last for me. Related to Prestige on the remaining loans that LTC is holding after, if they potentially pay them off in July or half of them. I mean, is there a desire to have them pay off those loans too? Or should we think about that as a longer-term hold that LTC plans to continue to maintain? Clint B. Malin: We should think of it as a long-term hold. Right now, we -- after the payoff of $180 million, we'll have $90 million remaining with them. So they will be reducing concentration as Gibson spoke about, and they would probably fall outside of our top 5 operator relationships. Pamela Shelley-Kessler: And they don't have an option to prepay those. Operator: Next question is coming Rich Anderson from Cantor Fitzgerald. Richard Anderson: So I just want to make this sort of crystal clear. Is your expectation on a go-forward basis, 2027 and beyond for your SHOP business to be producing sort of low mid-teens type of same-store NOI growth? Is that the target you're going after? Or is it something lower than that? J. Satterwhite: We're going to see how this year plays out. We're excited about what we're seeing as we go into this year and as we get into later in the year, Rich, we'll update that. I mean I think going in a few calls ago, we said that we were targeting -- we're going in at 7% and targeted low teens IRRs. And so that's basically telling you we expect mid-single-digit growth over the long term. But I think as we work through the process. We just acquired a lot of this, getting to really understand the portfolio. We're excited. And as Pam mentioned, in our projections, we're assuming higher yields on the initial purchase price than we did an acquisition. So I think we're excited about the opportunity in 2026, and we hope that continues on. But we'll update you as we get to the end of the year -- throughout the year. Michael Carroll: But the 22% NOI in the 13, that's really apples-to-oranges from a previous net lease structure, correct? Just so I understand that correctly. J. Satterwhite: Yes. That's fair, yes. Clint B. Malin: And that was intended just to give visibility in regard to what we had under our rent structure and what we had to for comparable metrics what it looked like under SHOP. So that was why we broke that out separately. J. Satterwhite: That's right. And that was in -- sorry, go ahead. Richard Anderson: No, you go ahead. J. Satterwhite: I was just going to say, yes, but I mean, that was -- we were in the structure able to capture the upside in those properties. And that's something strategically as we thought about entering RIDEA, really started talking about seriously 18 months ago, how to go about doing that. And we're just really excited that we're able to do that and be able to capture the upside and do so in a way that aligns our interest with our operators to incentivize them to drive performance. But yes, your comment that we're comparing that increase in NOI or the triple-net structure is fair. But I will say that as we did that, we were able to capture the upside because there was -- the coverage on that Anthem portfolio was pretty close to where the rents we were collecting. Richard Anderson: Right. Understood. Got that. Okay. In terms of the CapEx, I see your guidance is $0.10, a little less than $5 million a year on whatever you own average -- weighted average wise for the year. I don't know, $5 million just feels low to me for a $1 billion portfolio. Is that a function of its age? I wonder what do you think the CapEx burden might be for LTC going forward when you're kind of fully built out $1 billion or so of assets? J. Satterwhite: Yes, that's a fair question. I guess I'll answer it this way. So we've assumed basically about $1,500 a unit. So for the portfolio that we currently have, the 30 properties, we did go through those recurring CapEx budgets, and we feel pretty comfortable with those given the age of the assets. So I don't -- we didn't feel like we were really stretching or deferring anything and felt like that was what was requisite to keep the buildings competitive. So we'll have to see how that evolves. I'll say the overall number includes assumption kind of a weighted average of that $1,500 a unit for acquisitions going forward. Pamela Shelley-Kessler: Yes. And I don't think you can compare our CapEx budget to our peers just because the makeup of our SHOP portfolio is so different. I mean with an average age of 9 years, that's really young, really new buildings that don't have a lot of CapEx requirements. Clint B. Malin: That was strategic on our part because as we were introducing this portfolio, to simplify the integration of this and have assets that can compete against potential new development. I mean, we do see that over time, that will increase. But for the interim and short-term period, that's why you're seeing a lower spend. Richard Anderson: Yes. Okay. Yes, I was going to say young does become old unfortunately, over time. Clint B. Malin: And we'll see... Pamela Shelley-Kessler: We all age, Rich. We all age. J. Satterwhite: But -- Rich, I will say as we work through the budgets, we're not deferring things that we're not targeting a number. We're committed to invest in the portfolio to keep it competitive. And so if that number drifts up to drive NOI growth, that's what we'll do. But we did try to look at this from a holistic perspective. And when we certainly weren't looking to trim number out of those maintenance CapEx budgets going forward. Richard Anderson: Okay. Last for me. You call yourself done at the end of 2026 with this transformation, 45% essentially SHOP. Is that your version of the efficient frontier? Or will you expect the SHOP exposure to sort of trickle up from that point forward? Or is it like a 50% exposure to SHOP sort of your kind of your sweet spot? Pamela Shelley-Kessler: No, we don't have a target on it, Rich. It really -- transformation versus evolution, I mean, transformation. This is something that we've done quickly. And to Clint's prepared remarks point, 18 months. That's really, really fast to change the complexion of a company. After this year, it's an evolution. We will continue to invest where we see the best return for our shareholders, which in our crystal ball looks like it will continue to be SHOP. But if it's not, we'll pivot to the investment that drive shareholder value the best. But for right now, it will be an evolution more towards SHOP than a transformation at the -- after this year. Operator: Next question is coming from Okusanya Omotayo from Deutsche Bank. Omotayo Okusanya: Given the RevPOR, EXPOR spread you guys saw in the quarter, how confident are you that the SHOP portfolio can deliver the growth you're guiding to? And can you walk us through kind of the key operational levers that you kind of are relying on to get you guys there? J. Satterwhite: I think the key levers are laid out there in the supplemental on our guidance page. So I think that if you zoom out and with occupancy growth, our EXPOR expectations are just slightly below what people would expect for inflation. I don't think that that's a particularly aggressive assumption. But I think some may point to the top line occupancy growth of 150 bps is maybe a little conservative. So we're really trying to -- it's a 29 property -- sorry, it's a 30-property portfolio. The 27 that we guided to, which the 27 being, 13 we converted and then everything that we've acquired since. So everything is kind of at or near stabilization. But it's really hard to -- what the portfolio of that size really zoom in more than the detail that we've given you on the operational levers. I mean, we feel like that's appropriate. And just with 29 -- or sorry, with 27 properties you're going to have more variance than you would in a 500 property portfolio. But I think Again, we feel good about the RevPOR assumptions going forward. We think it's achievable. We don't think it's a layup. EXPOR, same thing. So we try to put the goldilocks level of guidance out there that stretches our operators, but it's achievable. Richard Anderson: Right. That makes sense. I guess the second question I have is, I know you guys have talked about -- and we all know like suppliers have really been an issue, but have you anything around that changed at all? Clint B. Malin: I would say not really supply. Now we haven't seen -- what you do see though more is that operators that have a track record in development are talking more about gearing up for development. So I think that's where you're hearing more talk. It's not so much shovels in the ground. It's more of -- they see that there's going to be a need for supply in the future. And they have experience in doing it, and they're trying to prepare to be -- to participate in that when the time does come. J. Satterwhite: And I think what specifically within our SHOP portfolio construction activity is very light. There may be 1 under construction, 1 under consideration and some expansions here and there around the edges, but it's very light. Operator: We reached end of our question-and-answer session. Before I turn the call back to management, please note that today's comments, including the question-and-answer session may have included forward-looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in the LTC Properties filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2025. LTC undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. I'd now like to turn the floor back over to management for any further or closing comments. Pamela Shelley-Kessler: Thank you, operator. And thanks to everyone for your thoughtful questions. We appreciate your continued interest, and we look forward to updating you on our progress next quarter. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.
Operator: Good morning, ladies and gentlemen. Thank you for standing by, and welcome to 5N Plus Fourth Quarter 2025 Results Conference Call. [Operator Instructions] And I would now like to turn the conference over to your speaker today, Richard Perron, President and Chief Financial Officer. Please go ahead. Richard Perron: Good morning, everyone, and thank you for joining us for our Q4 and full year 2025 results conference call and webcast. We'll begin with a short presentation, followed by a question period with financial analysts. Joining me this morning is Gervais Jacques, our CEO. We issued our financial results yesterday and posted a short presentation on the Investors section of our website. I would like to draw your attention to Slide 2 of this presentation. Information in this presentation and remarks made by the speakers today will contain statements about expected future events and financial results that are forward-looking and therefore, subject to risks and uncertainties. A detailed description of the risk factors that may affect future results is contained in our management's discussion and analysis of 2025 dated February 24, 2026, available on our website and in our public filings. In the analysis of our quarterly results, you will note that we use and discuss certain non-IFRS measures, which definitions may differ from those used by other companies. Further information, please refer to our management's discussion and analysis. I would now turn the conference over to Gervais. Gervais Jacques: Thank you, Richard, and thank you all for joining us today. 2025 was truly record-setting year for 5N Plus. By leaning on our strength, we navigated a complex macroeconomic and geopolitical environment with agility and delivered phenomenal growth. This was driven by our strategic focus on value-added products in key end markets, our flexible global sourcing and manufacturing capabilities and strong customer relationships. Customers recognize our expertise. They trust us to deliver reliability and quality in demanding advanced material applications. In 2025, we also reached new heights in our financial performance, far exceeding the objectives we set for ourselves when we started the year. This includes accelerated revenue growth, record adjusted EBITDA and significant margin expansion, and it was made possible by contributions from both of our segments. In Specialty Semiconductors, our strong performance across the board once again confirm our status of -- as a supplier of choice in the high-growth renewable energy and SPACE Solar Power sectors. Starting with renewable energy. The new and expanded agreement for the supply of thin-film semiconductor materials with our strategic customer announced last August was an important milestone, providing visibility on a multiyear growth path. Under the new agreement, we increased volumes by 33% for the 2025 and '26 period underway and by another 25% for the subsequent term, taking us to the end of 2028. This agreement supports our customers' U.S. manufacturing growth plans as the leading American solar technology company. It also reinforces our critical supplier role within this value chain. SPACE Solar Power is another key end market with a clear and multiyear path for growth. After a strong year, our project pipeline at AZUR is very robust, extending beyond 2028. By the end of 2025, we successfully increased solar cell production capacity by 30% as planned. We are also now working towards an additional 25% capacity increase, which we expect to start gradually coming online in the second half of 2026, in line with customer demand. Whether in Montreal or in Germany, our sites are focused on scaling production and pursuing capacity expansion with discipline, unlocking productivity improvements and operational efficiencies along the way. Earlier this year, we also announced that we received a USD 18.1 million award from the American government to expand germanium recycling and refining capacity at our St. George, Utah facility. This investment aims to strengthen domestic supply chains for optics and SPACE Solar applications. Once again, it is a recognition of our expertise in reliability in a strategic sector. Finally, in performance materials, our intentional focus on key products in the health, pharmaceuticals and technical materials sectors has been the right one. In 2025, we capitalized on favorable pricing conditions and delivered strong results despite lower volumes. And this was no accident. As the leading supplier of bismuth-based chemicals and compounds, we took full advantage of our flexible sourcing and manufacturing capabilities to realize improved margins. Looking ahead, while the operating environment is expected to remain complex, the underlying growth trends across our key end markets remain clear. Strategically, 5N Plus sits at the intersection of utility scale and space-based renewable energy infrastructure. We supply advanced materials that enable critical sought-after technologies. As we previously discussed, solar energy remains a key component of the U.S. energy mix despite policy shifts. One of the driver is the fast adoption of AI technology, which required large data centers with significant power needs. At the same time, structural expansion in the space industry continues at elevated levels, where we are the go-to partner to the main players in this sector, thanks to our leadership in solar cell technology. Medium term, we also anticipate growth opportunities in imaging and sensing, both on the security and the medical imaging front. In performance materials, we remain a key partner for health and technical materials with growth expected to remain broadly in line with GDP, consistent with historical trends. With strong foundations, a clear growth path and a proven strategy, we are well positioned to level up our performance in 2026 and deliver long-term value for our shareholders. With that, I will now turn it over to Richard for a detailed review of our financial results and outlook. Richard Perron: Thank you, Gervais, and good morning, everyone. We are very pleased with our record financial performance of 2025. What you're seeing today is the result of strategic choices. Over the past several years, we have made a concerted effort to grow our specialty semiconductor business and to increase the proportion of revenue and earnings coming from high-end and high-growth sectors. At the same time, we have streamlined our performance materials activities, increasing the resilience of our highly complementary business. We have accomplished this by adjusting our footprint and investing in operations over the years, streamlining our product portfolio with a focus on growing or solidifying our position in key end markets and prioritizing client partnerships built over the long term. Our results speak for themselves and validate our strategy. In full year 2025, total revenue increased by 35% year-over-year, reaching $391.1 million with $285.4 million of those revenues coming from specialty semiconductors. Adjusted gross margin increased 44% year-over-year to reach $131.8 million in full year 2025. This translated into a robust adjusted gross margin as a percentage of sales of 33.7% for the year. This was boosted by an exceptional adjusted gross margin of 42.4% of sales for full year 2025 in performance materials. Finally, full year 2025 adjusted EBITDA increased by 73% over last year to a record $92.4 million. This includes a $70.1 million contribution from specialty semiconductors, helping us exceed the high end of our twice increased annual guidance range of between $85 million and $90 million. With our increased cash flow generation and prudent balance sheet management, we have significantly reduced net debt from $100.1 million at the end of 2024 to $50.3 million at the end of 2025. This brings our net debt-to-EBITDA ratio at year-end to 0.5x. Let's now take a closer look at our segments. Starting with our Q4 performance in Specialty Semiconductors. Revenue increased by 47% compared to Q4 last year to reach $76.2 million, supported by higher volumes in renewable energy and space solar. Adjusted gross margin increased by 27% in dollar terms. As a percentage of sales, adjusted gross margin was lower year-over-year coming in at 25.5% because of a less favorable product mix and higher planned maintenance expenses. As discussed on our last conference calls, we completed incremental preventive maintenance in full year 2025 to support our operational objectives for the full year 2026. Adjusted EBITDA in Q4 2025 increased by 12% to reach $14.2 million, supported by higher volumes, partially offset by the same factors mentioned before. Quarterly variations aside, the segment's performance for the year was excellent with a 41% increase in revenue to $285.4 million and a 59% increase in adjusted EBITDA to $70.1 million, while maintaining a robust annual adjusted gross margin of 30.8% of sales. Backlog also continues to be maxed out at 265 days as per our definition, with strong demand and orders in our strategic sectors booked several years out. Turning now to performance materials with the story in Q4 consistent with what we've delivered all year. Revenue increased by 36% in the quarter to $25.8 million over Q4 2024. This brought full year segment revenue to $105.7 million, up 22% over 2024. Q4 adjusted gross margin was 40.9% of sales compared to 33.5% in Q4 of last year. As mentioned, the segment's full year adjusted gross margin came in at an impressive 42.4% of sales. Adjusted EBITDA in Q4 increased by 108% to reach $7.8 million for the full year adjusted EBITDA increased by 59% to $35.1 million. The segment's overall performance was driven by a favorable inventory position coming into the year and improved product mix, higher prices net of inflation and higher metal input costs. Turning now to outlook. As the geopolitical and economic backdrop continues to evolve, we expect our operating environment in 2026 to remain complex. The underlying growth fundamentals and structural expansions in our key end markets remain very strong, providing a long runway for growth. However, we must also contend with rising input and operating costs that will pressure our margins, especially after the exceptional performance of 2025. From an operational perspective, we are laser-focused on the execution of our growth plans. This includes scaling production and increasing capacity in strategic sectors in order to meet customer demand. We have that called all of those key projects. Driving productivity and operational efficiency in 2026 is also key to help mitigate anticipated margin pressures. With our strong balance sheet, we will continue to invest in our operations, while also pursuing external growth opportunities to further strengthen our advanced materials leadership in key markets. Taking into account this environment and what we have in the pipeline, we anticipate generating adjusted EBITDA of between $100 million and $105 million in full year 2026 with a higher contribution in the second half of the year. This reflects a measured and disciplined approach to build on what we have achieved last year. Our focus is on solidifying our expanded earnings base and investing selectively in capacity to generate a sustainable performance. This approach positions us to further strengthen our standing as a supplier of choice in strategic sectors and to deliver continued value creation for our shareholders. That concludes our formal remarks. I will now turn the call back over to the operator for the Q&A with our financial analyst. Operator: [Operator Instructions] Your first question comes from Baltej Sidhu from National Bank. Baltej Sidhu: Congratulations on the quarter. First one for me is on the back of the results of America's largest solar technology manufacturer, which saw its guidance coming in below expectations and some strategic underutilization of international facilities. Just given the Trump administration's new countervailing duties for Southeast Asian imports on solar cells and panels and if this stick, we think that its U.S. operation should be a benefactor. Any comment you can provide as it relates to that, but also the pressure on international sales and any impact to BNP, if you were looking to gain more market share in that realm? Gervais Jacques: Well, thanks for the question. I believe that the emphasis that they are doing on reshoring and supply chain resilience that they've been talking about, I think it's all favorable for 5N Plus, and it's positioning us as the supplier of choice for them. Baltej Sidhu: Fantastic. And now turning to your 2026 guidance. The midpoint currently aligns with consensus and implies roughly 11% year-on-year growth. Just given the underlying momentum in the business, along with the recently announced capacity expansions for Cad Tell and AZUR, can you walk us through the key drivers underpinning that 11% growth at the midpoint? And if there's any details that you can shed on puts and takes that are embedded in the guidance? Richard Perron: Okay. Essentially behind the guidance in terms of growth, Bal. In the case of our renewable energy, I think we've been -- it's all out there and following our press release of last year. So we have confirmed volume for 2026 and further increase in volumes to '27 and '28. That's essentially -- this is locked in, and that's by default, a solid assumption to use in our guidance. As for space, it follows also our most recent press releases in terms of capacity expansion. So more recently, we announced capacity expansions for -- in '26 with benefits in '27. But if you go back to previous announcements of last year, all of that extra capacity on a full year basis is also embedded in our guidance numbers for this year. That's for the space business. Everything else, we -- from a guidance perspective, we keep our assumptions as I'm going to use the term with conservatism, and small growth. And obviously, we're applying ourselves to do always better. So first 2 sectors is backed up by orders and capacity expansion projects. And on FV, we remain prudent. Baltej Sidhu: Okay. That's great detail. And another one for me is just on the performance materials outperformance and the margin normalization that you noted just given the anticipated cost pressures that was noted. Could you provide more detail on your assumptions around business pricing? Margins have continued to remain elevated. What visibility are you seeing on pricing trends? And what are you hearing in conversations with your suppliers and the offtakers? Richard Perron: The metals we play with, it's always extremely hard to forecast any movement in prices. So we essentially -- the way we work is through our commercial contracts. That's how we protect ourselves forward. But by default, because we hold a certain inventory on hand, we have to be more prudent than less. So again, from a guidance perspective, we tend to use either stable or decreasing prices in order to face any -- in order to plan for any, let's say, unfavorable movement from notations. But if you recall, we've made so many changes to our product portfolio and footprint that actual variations in notations, they don't have as much, impact as they had in the past. So -- but we commercially hedge ourselves to protect us against any variations rather than guess where the nations will go in time. So we don't have a public opinion as to where bismuth prices will go in the future. We tend to manage any variation in limitations through commercial hedging and making sure that we hold on to products that have the smallest percentage of metal as possible. So value -- deliver value-added products. Operator: Your next question comes from Amr Ezzat from Ventum Capital Markets. Amr Ezzat: Congrats to you and the 5N team on an incredible year. Maybe I should start with the margins on Specialty Semi. They stepped down meaningfully in Q4, which I think we all expected given your comments in Q3. But I'm just wondering how much of that step down is structural or product mix versus like the maintenance that you guys sort of spoke to? And what should we read as the right sort of normalized margin range heading into '26 for Specialty Semi? Richard Perron: Okay. Most of the key factors behind this lower margin expressed as a percentage of revenue is essentially from accelerated or definitely us applying ourselves at getting ready -- accelerated preventive maintenance expenses and us getting ready to start 2026 on solid grounds, okay? So the vast majority of that lower margin, again, expressed as a percentage of revenue due to that. There's a little bit of product mix, and there's a little bit by default of the usual slowdown that comes in, in December. Then going forward, I think you can hold on to the full year gross margin in order to modelize your -- the business. Amr Ezzat: Fantastic. No, that's helpful. Just another one on your EBITDA guide for fiscal '26. I appreciate your remarks in the -- in your prepared commentary on the gating factors there and the inflation of input costs. But can you speak to what assumptions you guys are using or are embedded in your model for inflation for the different input costs, like just at a very high level, then you did mention that you're being conservative as well, which is always good. So should we be expecting another 2 increases in 2026? Richard Perron: Yes. Look, it's not a perfect science. Obviously, labor costs, we come up with assumptions that are based on external data. When it comes to energy and consumables, we tend to anticipate a bit more than what is the market consensus right from the start. Then the tough part remains the input metal that we use, okay? Obviously, we're using much less metal than everything we're manufacturing and selling today, but it starts with a piece of metal. There are 2, we tend to look back and assume that similar increase will happen in the following year, okay? That's our approach, which is an approach that is more -- that shows more conservatism than less. But again, the best way for us to protect us against input metal increases is through our commercial aging practices and everything else. Amr Ezzat: Okay. I appreciate that. Then maybe if we could dig into space a little bit. Can you speak to the pricing dynamics you're seeing? Should investors expect any erosion whatsoever once competitor capacity arrives or from your vantage point, demand absorption is strong enough to keep pricing rational? Richard Perron: Well, if you remember, the way this business works, you earn contracts today to be delivered later on. So the backlog that we have for '26, '27 and '28, all of that is based on the most recent favorable pricing environment, okay? So everything that you're describing is more on a way forward-looking basis. But have in mind that we're producing more and more and we have economies of scale going forward that allow us to maintain margins independent of where pricing will go to. Amr Ezzat: Fantastic. That's always good to hear. Then maybe one last one, Richard. It will be your first year as CEO, then as Gervais as Chairman. What changes, if any, should we expect in strategic priorities? Richard Perron: Look, it's a transition where there's -- we're making sure that there's continuity in our strategy. So don't expect anything more than us applying ourselves to go further the business on everything that we've built so far. Operator: Your next question comes from Yuri Lynk from Canaccord Genuity. Yuri Lynk: You called out in your outlook section, I think, for the first time, some medium-term opportunities in Security and Defense. Just wondering if you can provide a little more detail on that line. Gervais Jacques: Well, as you may know, we've been working really hard in developing new products for this product line. And we know all these -- the shift to photon counting detector is starting to happen, and we can feel it, we can see it. And this will have an impact going forward. This year, quite limited, but in 2027 and '28, that's going to start to be something significant. And we also -- we're developing all sorts of detectors that are being used both for Medical and Defense application. And today, being a Western world producer being able to do that is now definitely a key attribute that position 5N favorably. Richard Perron: Over the past few months, many of the big names associated with the Defense industry have come up to us and they're pretty impressed and interested in our capabilities to grow crystals, make substrates, lenses, recycle and refine strategic minerals and health. So all of that is giving us a lot of comfort that the whole topic of Defense will play favorably for us in time. Yuri Lynk: And does that Defense reference in the outlook, does that specifically tie back to the upstream expansions at St. George? Richard Perron: It's one of the factor, but it's the equation -- what is favorable -- what is playing favorably for us is the equation of us starting from piece of metal all the way to fancy semiconductor products. That's really the full integration that we can offer to the industry, obviously, based out of China, which is a definite -- it's a prerequisite. Yuri Lynk: Okay. And it reads to me that those security and Defense applications might show up in your revenue line before the sensing and imaging opportunity that you've talked about previously. Is that the correct way to read that? Richard Perron: No, it's going to -- we -- as you know, the way -- like we have this segment and we have those sectors that we serve under those segments, Defense is actually kind of spread out in between space and sensing and imaging today and to some extent, technical materials as well. Yuri Lynk: Okay. Switching gears, really nice cash generation in the quarter, balance sheet in fantastic shape. Can you talk a little bit about the M&A pipeline, if we want to call it that, and how that might have evolved over the last, say, 6 to 9 months? Richard Perron: We continue to look at many different files. Yes, we have what you call -- what you refer to as a pipeline, but it still requires a fair bit of work on our side before coming out to the market and say, here's the target and here's why it's a good target. But we're actively revving many different files, meeting people, making what choose and out. We're very serious about completing a transaction this year, highly motivated as we say. But can we give you more details this morning as to the exact materials and/or markets that it came for? It's a bit hurry. Yuri Lynk: Yes. No, I understand that. I mean you say you expect to do something this year. I mean, sometimes these things aren't in your control. I mean, are you okay, if nothing -- if you can't do an acquisition this year, you're okay with that? I mean, how do we think about other ways to put the balance sheet to use? Richard Perron: We have a lot of internal growth to manage. This year, we're focusing on execution and deliver a strong pipeline of order that we have. And we have -- the backlog is more than 365 days. But if you look at it segmented by sectors in renewable, it's more than 3 years. Then what we're doing now is looking at M&A, but without pressure because we want the right deal. We don't want to do an acquisition. We want to do the right one, like we did successfully with AZUR 3.5 years ago. Operator: Your next question comes from Michael Glen from Raymond James. Michael Glen: Maybe just to start, CapEx in '25, including intangibles, was just below $21 million for the full year. Can you provide an outlook for 2026 on CapEx? Richard Perron: It's going to be in a similar range. Michael Glen: Similar range. Okay. And then working back to the germanium investment or alignment with the U.S. Department of War. What should we think about in terms of revenue impact in 2026 and 2027 from that specific agreement? Richard Perron: For 2026, very little. 2027, we will start to realize some benefits out of it, but it's more a '28, '29 perspective because it takes some time to install it all and get going, and we expect it's going to take at least a year, like we have already a plan with a short list of equipment and feeds to treat, but all of that will take most likely all of this year to at least get the initial stuff in place and get going. So it's more of an horizon '28, '29, but there will be some benefit this year and next year associated with recycling and refining complex feeds that contain germanium and from that germanium additional businesses associated with lenses, detectors and else. Michael Glen: Okay. And then just circling back to the First Solar-related business. So I get that a lot of what they're speaking about during the conference calls related to low capacity utilization internationally. Can you remind us or speak to your -- what level of capacity increases you've put in Canada and Germany, maybe since the end of 2024, like how much has capacity increased for you? And speak to or remind us of the -- some of the higher level contract terms associated with First Solar volumes? Richard Perron: Essentially, since the end or close to the end of 2024, we must have at least doubled our capacity. And this year, we continue to add a bit capacity, and we're adding new and we're adding new equipment, brand-new capacity associated with this additional thin-film PV materials that we're going to be supplying for Solar, Cadmium [ selenide ] as we presented in our press release last August. Michael Glen: Okay. And are you able to remind us just the contract like pricing or volume commitments? Like how do we think about those? Richard Perron: Well, the volume for '25 and '26 is 33% higher than '24. And for '27 and '28, it's an additional 25%... Gervais Jacques: Over 25%, 26%. Richard Perron: Yes. Michael Glen: And that's -- we can characterize that as take-or-pay in nature. Gervais Jacques: It is. Richard Perron: And it is back with their capacity and most of their growth has been happening in the U.S. with their Louisiana and Alabama facility. And as you know, Petersburg has been also optimizing their production. Then what they said and what they continue to do is trying to refocus, recenter their production in North America. Michael Glen: Okay. And just final one. How do you think about -- are you able to give us -- I know you guide on EBITDA, but not on revenue. Are you able to give us any indication? Should we expect that revenue will -- should meaningfully outpace EBITDA growth next year? Richard Perron: Yes. Based on our current assumptions and again, being prudent, we're very prudent as to the actual gross margin expressed as a percentage of revenue. So you see where our guidance goes from our current 2025 EBITDA. So yes, revenue should -- as a percentage increase, should outpace a little bit the growth in EBITDA. Operator: Your next question comes from Frederic Tremblay from Desjardins. Frederic Tremblay: Just wanted to dig a bit deeper on the '26 guidance. In your comments, you did mention that you expect a higher contribution in the second half of 2026. Wondering if you can maybe provide a bit more color on the factors that are driving that? Is it just business seasonality or some of the capacity increase is coming online? Richard Perron: As you know, as I explained in order to build or compile our guidance, we have renewable energy and our space solar business essentially all under contract. So it's just the actual anticipated release date of those contracts that makes it -- that makes the second half a bit -- anticipated to be a bit stronger than the first half. Obviously, releases can change from clients. We occasionally can move things around. But based on the current releases communicated by clients, assuming a stable allocation of the rest of our businesses throughout the quarter, we can anticipate the second half to be stronger. But all of that is -- I mean, it's still early stage, but it's based -- what's behind it are communicated releases from clients. Frederic Tremblay: Okay. And you mentioned a bit stronger. So it's in terms of quantifying it, it's not -- it's not really a huge. Richard Perron: It's a bit stronger, exactly. But as I said, the full year is always committed under contract, but it may change from one quarter to another depending on confirmed releases from clients, but we start the year with a first plan discussed with clients, and that's what we have modelized and built up from a bottom-up forecast perspective. Frederic Tremblay: Yes. Understood. Okay. And then you did mention your intention to drive productivity and operational efficiencies across the business. Wondering if you could provide some high-level examples of what you guys are working on, on that front? Gervais Jacques: Well, as you know, we've been adding capacity. And normally, when you're adding capacity, you're hiring new employees, you're training them, you're developing new methods of working. And then second wave is you're doing optimization. And this is what we will be focusing on doing is trying to optimize, also bring more automation on board in both at AZUR, but also into our renewable energy. Then we've been successfully able to start the equipment, deliver products. Now we're now starting the wave of improvement. Frederic Tremblay: Perfect. And then last question for me. Just on the preventive maintenance that happened in Q4, did you complete everything you wanted to complete there? Or are we expecting an impact in Q1 as well? Richard Perron: It's not going to be -- we did not complete everything we wanted to complete, but it's not an impact per se because if you recall, what we've done is accelerating stuff that we typically do every year. Whatever is not done in '25 is not incremental to '26. It's rather the other way around. Gervais Jacques: It's a burden to '25 that's what he said so... Operator: [Operator Instructions] Your next question comes from Kaelan Purdie from Cormark. Kaelan Purdie: It's Kaelan Purdie here filling in for Nick. Great clarity there on the maintenance strategy. Could you also maybe just speak to the pipeline for AZUR given the incremental capacity at Heilbronn, has the uptick in capacity come with any new contracts, both commercially and on behalf of government? Richard Perron: Well, if you recall, our approach to capacity expansion, more specifically to our SPACE Solar business is that as comes a point in time when the backlog for the following reaches the previous year's capacity level, that's when we trigger capacity expansion. So what we have announced a month or so ago is aligned with that approach, meaning that we see 2027 at level -- confirmed contracts at level of our most recent capacity and it goes on, and then we trigger those investments. So the same will likely -- the same assessment will likely be done late '26, early '27 for '28 and so on and so forth. So to answer your question, when we increase capacity because we have the contracts. Kaelan Purdie: Okay. Understood. So nothing in terms of significant pipeline without the contracts? Richard Perron: But the pipeline is by itself significant because the whole satellite industry continues to grow and there are more and more opportunities. It's still on a fast-growing mode today. But again, the key for us is not to bring too much capacity too earlier in time. That's where it comes to discipline that we have. Gervais Jacques: Every other week, we're bidding on projects. And when we are winning a contract, then we need to question ourselves, do we have the right capacity for -- in 2 years in time, then it's triggering decision. Then this is why we've been announcing the third expansion of AZUL might not be the last one. Kaelan Purdie: Great. Understood. One last one for me. You previously identified that medical imaging is a pretty promising catalyst. I think we chat about it in the call a bit earlier here. Can you just maybe provide a quick update on the commercialization time line for the detectors? Is it still 2027? Gervais Jacques: Yes. Well, we have now one customer who is manufacturing PCBs at industrial scale. What we expect is later this year and starting next year, you will have more than one customer doing it. Then the demand will be increasing. We will play an important role. We're not the only one we're competing against China, but we will play an important role in securing the supply chain for these new products. And that's something we've been developing for many, many years. Then I think the change is happening. We see the industry moving from scintillators to photon counting detectors. It takes time. But when it's done, it's going to be there for a long period of time. Operator: Your next question comes from Baltej Sidhu from National Bank. Baltej Sidhu: Just a quick one for me. Just given we've spoken about the cadence of contribution from the recent U.S. government investment to expand domestic germanium refining. And appreciating that it's still early days, could you share any details on how we should think about the CapEx deployment cadence? Richard Perron: Okay. The CapEx deployment, essentially that grant pays for CapEx. That's what's behind it ultimately. It covers also some of our own development costs, our engineers' time [indiscernible] to that. The actual deployment -- if it's for modelizing him, again, keep in mind, it's all backed up by grant, it's for your model. It's to anticipate the business that will come out of it by default, there's a little bit of CapEx in the first year, but most of it comes in, in the second and third year by default because what's behind it is for us to finalize developing the processes and put the capabilities and capacity in place to treat various feeds that contain germanium, where by default, we will start with the easier feed and then more complex feed and even more complex feed and keep towards the end, like the real complex done, okay? So the CapEx will also be linked to the complexity of the feeds in time. So it's going to be gradual with the most important CapEx to be realized somewhere in the middle of the project by default. But again, if your question is around helping you to modalize CapEx, there's a grant behind it. Baltej Sidhu: Yes, yes. No, I was just looking at kind of backing into the cadence of the realization for that. Operator: And there are no further questions at this time. I will turn the call back over to Richard Perron for closing remarks. Richard Perron: Okay. Well, we would like to thank you all for joining us this morning, and we wish you a great day. Gervais Jacques: Thank you. Richard Perron: Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
Operator: Hello, and thank you for standing by. Welcome to the Carlyle Secured Lending Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Nishil Mehta. Sir, you may begin. Nishil Mehta: Good morning, and welcome to Carlyle Secured Lending's Fourth Quarter 2025 Earnings Call. I'm joined by Justin Plouffe, our former Chief Executive Officer; Alex Chi, CGBD's newly appointed Chief Executive Officer; and Tom Hennigan, our President and Chief Financial Officer. Last night, we filed our Form 10-K and issued a press release with the presentation of our results, which are available on the Investor Relations section of our website. Following our remarks today, we will hold a question-and-answer session for analysts and institutional investors. This call is being webcast, and a replay will be available on our website. Any forward-looking statements made today do not guarantee future performance, and any undue reliance should not be placed on them. Today's conference call may include forward-looking statements reflecting our views with respect to, among other things, our future operating results and financial performance. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the Risk Factors section of our 10-K. These risks and uncertainties could cause actual results to differ materially from those indicated. CGBD assumes no obligation to update any forward-looking statements at any time. During this conference call, the company may discuss certain non-GAAP measures as defined by SEC Regulation G, such as adjusted net investment income or adjusted NII. The company's management believes adjusted net investment income, adjusted net investment income per share, adjusted net income and adjusted net income per share are useful to investors as additional tools to evaluate ongoing results and trends and to review our performance without giving effect to the amortization or accretion resulting from the new cost basis of the investments acquired and counted for under the acquisition method of accounting in accordance with ASC 805 and a onetime purchase or nonrecurring investment income and expense events, including the effects on incentive fees and are used by management to evaluate the economic earnings of the company. A reconciliation of GAAP net investment income per share, the most directly comparable GAAP financial measure to adjusted net NII per share can be found in the accompanying slide presentation for this call. In addition, a reconciliation of these measures may also be found in our earnings release filed last night with the SEC on Form 8-K. With that, I'll turn the call over to Justin. Justin Plouffe: Thanks, Nishil. Good morning, everyone, and thank you all for joining. As many of you know, I've assumed the role of Chief Financial Officer of Carlyle and resigned as CEO, President and Director of CGBD. Earlier this year, Alex Chi joined the firm as Deputy Chief Investment Officer for Global Credit and Head of Direct Lending and was recently appointed CEO and a Director of CGBD. With Alex's deep expertise, including prior experience as CEO of multiple BDCs, his proven leadership and strong industry relationships, we're confident he will help us continue to deliver results and growth for CGBD shareholders. Separately, Tom Hennigan, who has been with the platform since inception has been appointed President of CGBD in addition to his existing role as CFO, Chief Risk Officer and Director. I'd like to now introduce Alex and hand over the call for his remarks. Alex Chi: Thanks, Justin, and good morning. I'd like to start by highlighting how excited I am to join Carlyle. CGBD's core investment strategy will remain the same. We're focused on stable, high-quality credits in the core and upper middle market. As I look forward, I'm highly focused on continuing to build out our origination engine and harness the full power of the Carlyle platform for the benefit of CGBD shareholders. On today's call, I'll give an overview of our fourth quarter and full year 2025 results, including the quarter's investment activity and portfolio positioning, and provide an update on our investment outlook. I'll then hand the call over to our President and CFO, Tom Hennigan. 2025 was a record year of originations for both CGBD and the Carlyle Direct Lending platform, a direct result of our efforts to enhance our origination capabilities. We deployed over $1.2 billion at CGBD and closed over $7 billion of commitments at the platform level. The fourth quarter was also a record at CGBD with over $400 million of investment fundings, resulting in net investment activity of $193 million after accounting for repayments. Total investments at CGBD increased from $2.4 billion to $2.5 billion during the quarter and total investments at our MMCF joint venture increased to over $950 million. While we benefited from strong origination across the platform, CGBD was impacted by lower investment yields due to lower base rates and historically tight spreads on new originations. We generated $0.33 per share of net investment income for the quarter on a GAAP basis and $0.36 of adjusted NII per share. Our Board of Directors declared a first quarter 2026 dividend of $0.40 per share. Our net asset value as of December 31 was $16.26 per share compared to $16.36 per share as of September 30. Although the public markets have experienced volatility due to a reset in valuations for companies potentially disintermediated by AI, we remain confident in the quality and stability of our portfolio. Our software track record remains exemplary. Over the last 5 years, Carlyle Direct Lending has originated over $6 billion in commitments to software deals with 0 defaults. On average, the software borrowers in our book have grown revenue and EBITDA by approximately 8% and 20% year-over-year, respectively, and the weighted average loan-to-value of our software book is 40% below the rest of the portfolio, even after adjusting for multiple degradation based on public comparables. In addition, CGBD's software exposure as a percentage of the portfolio is below that of our peer group. We invest in software companies that we believe deliver embedded, data-driven and mission-critical products that deliver tangible ROI for customers on a daily basis. Our underwriting process focuses on businesses that have a strong competitive moat driven by either incumbency, data ownership, a network effect or any combination of these. Software as an industry has always been about innovation, and we believe that the same key factors that have traditionally provided market defensibility will also provide insulation from the newest market threat, AI. The products that are truly embedded in mission-critical, we view AI as a way to augment the functionality of these products, not necessarily to replace them. Many of our borrowers, which are already embedded mission-critical to their customers, either have already or are in the process of layering AI capabilities into their product sets to bolster their offerings. In addition to this core software investing framework, which we believe will insulate our portfolio from AI disintermediation, our underwriting process incorporates AI-specific risk factors into every new origination regardless of industry sector, and we actively assess both direct and indirect exposure across the portfolio using the same framework. In light of recent volatility and concerns in the software space, we have re-underwritten and examined our entire portfolio to evaluate AI disruption and displacement risk. We continuously monitor the portfolio closely through a detailed review process and continue to feel comfortable with our exposure, finding no material near-term risks to our portfolio companies from AI at this stage. We remain focused on portfolio diversification while managing target leverage. As of December 31, our portfolio was comprised of 165 companies across more than 25 industries. The average exposure to any single portfolio company was less than 1% of total investments and 94% of our investments were in senior secured loans. The median EBITDA across our portfolio was $97 million. As always, discipline and consistency drove performance in the fourth quarter, and we expect these tenets to drive performance in future quarters. Following quarter end, we announced the formation of a new joint venture capitalized by 4 BDCs comprised of CGBD, a private perpetual BDC Carlyle Credit Solutions and 2 BDCs managed by Sixth Street. The new JV, Structured Credit Partners, or SCP, is expected to increase diversification and portfolio yield at CGBD. SCP will focus on investing in broadly syndicated first lien senior secured loans financed with long-term non-mark-to-market and predominantly investment-grade rated CLO debt. Returns from SCP will be enhanced by no management fees or incentive fees at the underlying CLOs or at the joint venture, reflecting Carlyle's continued commitment to CGBD. SCP highlights the benefits of scale through partnership with Sixth Street and underscores the power of the Carlyle platform, which houses one of the largest CLO managers in the world with $50 billion of AUM. Historical median CLO returns have typically been within the 10% to 12% range, and we anticipate a potential 400 to 500 basis point uplift from the fee-free structure. So we expect the investment to be highly accretive to return on equity for CGBD. Looking ahead, we expect 2026 to be an active year as M&A activity increases. Through a combination of increased market activity in Carlyle Direct Lending's rejuvenated origination platform, our pipeline for the first quarter has picked up, and we expect to continue to see strong deal flow. CGBD is well positioned to capitalize on this opportunity with Carlyle's deep expertise across multiple asset classes, a strong and long-standing track record in direct lending and a growing origination apparatus. As manager dispersion increases, we expect the breadth of our platform and the consistency of our performance that differentiate us from credit managers that do not have access to the same scale, scope of investment capabilities or dedicated in-house investing, portfolio management and restructuring resources the Carlyle platform offers. With that, I'll now hand the call over to our President and CFO, Tom Hennigan. Thomas Hennigan: Thank you, Alex. Today, I'll begin with an overview of our fourth quarter financial results. Then I'll discuss portfolio performance before concluding with detail on our balance sheet positioning. Total investment income for the fourth quarter was $67 million, in line with prior quarter, in the average portfolio size was offset by a decrease in total portfolio yields, as a result of lower base rates and lower spreads. Total expenses of $43 million increased versus prior quarter, primarily as a result of higher interest expense due to a higher average outstanding debt balance as well as the acceleration of debt issuance costs from the repayment of our 2028 notes in December. The result was net investment income for the fourth quarter of $24 million or $0.33 per share on a GAAP basis and $0.36 per share after adjusting for the acceleration of debt issuance costs and the impact of asset acquisition accounting related to the CSL III merger and the consolidation of Credit Fund II, both of which closed in the first quarter of 2025. Our Board of Directors declared the dividend for the first quarter of 2026 at a level of $0.40 per share, which is payable to stockholders of record as of the close of business on March 31. In addition, we currently estimate we have $0.74 per share of spillover income to support the quarterly dividend. As mentioned during last quarter call, we expect to see earnings trough in the first half of 2026, primarily due to the impact of the base rate cuts, but we anticipate an increase in earnings thereafter as we ramp the portfolios of both JVs. Given CGBD shares continue to trade at a compelling discount, we repurchased $14 million of shares at an average discount of nearly 23% during the fourth quarter, resulting in $0.06 of accretion to NAV per share. We continued to repurchase shares in the first quarter with an incremental $14 million to date, which results in an additional $0.06 per share of accretion. Now we've nearly exhausted the existing $200 million share repurchase program. So our Board approved a $100 million upsize, increasing the total program to $300 million. On valuations, our total aggregate realized and unrealized net loss for the quarter was about $7 million or $0.09 per share, primarily attributable to unrealized markdowns on select underperforming investments. Turning to credit performance. We continue to see overall stability in credit quality across the portfolio. Key credit stats continue to be stable, including portfolio company margins, leverage levels and LTV and we expect interest coverage will continue to improve in future quarters, aided by lower base rates. The majority of our PIK is underwritten in origination or what we would consider to be a good PIK. And nonaccruals remained relatively flat as of December 31, with 5 names on nonaccrual representing only 1.2% of investments at fair value and 1.8% at amortized cost. Moving to the Middle Market Credit Fund, our long-standing JV. We continue to focus on maximizing both asset growth and returns. During the first quarter, we closed an upsize to the MMCF equity commitment, from $175 million to $250 million for each partner. MMCF is currently achieving a 15% dividend yield generated through over $950 million of investments with no fees at the JV. The equity upsize will enable us to continue to grow the JV and increase the impact of CGBD earnings. In addition, as Alex previewed earlier this month, we announced the formation of Structured Credit Partners or SCP, a new JV capitalized with $600 million of equity commitments from the Carlyle and Sixth Street BDCs that will invest in broadly syndicated first lien senior secured loans. The financing of these assets will be primarily through CLOs separately managed by Carlyle and Sixth Street, subject to oversight from SCP's Board of Directors. Governance of SCP has shared equally between Carlyle and Sixth Street as managers, and each BDC has equal representation on the Board. All key investment, financing and capital decisions are subject to joint approval by the JV board. CGBD committed $150 million of capital to the vehicle, which as Alex highlighted, will not charge any management or incentive fees on the underlying assets, providing a potential 400 to 500 basis point uplift to total returns, which have historically been within the 10% to 12% range for similar underlying vehicles. The JV plans to ramp at a cadence of 4 CLO issuances per year to ensure vintage diversification. And over time, the JV is expected to manage approximately $6 billion to $7 billion of assets fee-free at SCP. So we expect the JV to be accretive to return on equity for CGBD. I'll finish by touching on our financing facilities and leverage. As a reminder, in October, we raised a new 5-year $300 million unsecured bond at an attractive swap adjusted rate of SOFR plus 2.31%. We used the proceeds in part to repay in full the higher-priced legacy CSL through credit facility. And in December, redeemed the $85 million baby bond. In the aggregate, these capital structure optimizations lowered our weighted average cost of borrowing by about 10 basis points, extended the maturity profile of our capital structure with limited maturities until 2030 and reduced reliance on mark-to-market leverage. Our debt stack is 100% floating rate, matching our primarily floating rate assets, meaning CGBD is well positioned in advance of any additional interest rate cuts. At quarter end, statutory leverage was 1.3x. However, adjusted for unsettled trades of loans to MMCF, leverage at quarter end was closer to 1.1x, in line with prior quarter. Given our current strong liquidity profile, we believe we're well positioned to benefit from the expected pickup in deal volume in future quarters. With that, I'll turn the call back over to Alex. Alex Chi: Thanks, Tom. As we approach the middle of the first quarter, our portfolio remains resilient and our strategy remains unchanged. We continue to focus on sourcing transactions with significant equity cushions, conservative leverage profiles and attractive spreads relative to market levels. Our pipeline of new originations is active. And with a stable, high-quality portfolio, CGBD stockholders are benefiting from the continued execution of our strategy. As always, we remain committed to delivering a resilient, stable cash flow stream to our investors through consistent income and solid credit performance. At the platform level, I'm excited to continue building out the Carlyle Direct Lending team, expanding our existing capabilities. I'd like to now hand the call over to the operator to take your questions. Thank you. Operator: [Operator Instructions] Our first question comes from the line of Erik Zwick with Lucid Capital Markets. Erik Zwick: I wanted to start with a question for you, Alex, one nice to meet you virtually here. In the press release, you mentioned that fund is well positioned to take market share going forward. So I'm just curious from your perspective, who you'd be taking that share from? Is it BSL market, other private credit funds, banks? And then what is your competitive advantage relative to those that you'd be taking it from? Alex Chi: It's great to meet you as well. One thing I just want to underscore is that the investment strategy here, it's not changing. As I said, we're going to continue to focus on investing in high-quality companies in the core and upper middle market. While my prior firm's credit platform also had a strong presence in the large cap market, that's not an area I plan to aggressively push us into right now. As I mentioned, we have a strong credit culture, team underwriters dedicated to industry verticals, deep expertise. So we're going to stick to our knitting, and we're going to concentrate on playing a lead role in the majority of our deals. But also, one thing that we're going to do a lot more though is to win and take share is really just harness the power of the other parts at Carlyle, whether it's the large liquid platform we have, such as the CLO business, our Carlyle Alplnvest platform, which is truly differentiated, our Washington, D.C. presence in connectivity, of course, our global private equity platform and the list goes on. So we're not a pure-play direct lending shop. Rather, we have a direct lending business housed within one of the most formidable alternative asset managers in the world, and we're going to take it full advantage of that. Erik Zwick: I appreciate that. And then just a follow-up on the positive commentary that you guys expressed about the pipeline here in 1Q '26, seeing stronger deal flow. There's certainly some concern about a K-shaped economy and some cracks forming somewhere from your perspective and the sectors that you lend to. Can you just maybe talk about what's driving borrowing demand and contributing to the strong pipeline flow today? Alex Chi: Sure. Well, first of all, another good aspect of playing in the middle market and the core number is that there is always a better, more consistent flow of opportunities to look at. And we've all talked about the lack of DPI over the last 2, 3 years. We're starting to see that change. If you look at Carlyle at the platform level, you saw that last year that we returned a significant amount of capital through exits to our investors. We're starting to see that play through in the broader pipeline. What's also interesting is that, again, just given Carlyle's heritage around industrial, aerospace and defense, health care, those are areas that we're starting to see some more activity as those areas are now back in vogue, if you will. So -- that plus the fact that we have a rejuvenated origination platform. You've heard Justin say before, we hired a senior originator from Kaub that's been here for over a quarter. We have a couple of other managing directors who come with long-standing relationships. There are others coming on board. It's not a coincidence that the fourth quarter was a record quarter for us from an origination standpoint. And therefore, from a pipeline perspective, we're starting to see a lot more there as well. Erik Zwick: And last one for me. Just curious if you could talk a little bit about the rationale for the SCP JV. Why now? Is this potentially reflective of your view that spreads may remain tighter for a while in the middle market, and therefore, you can kind of take advantage of the nonqualified bucket availability to get some additional yield using the structure. Just kind of curious if how you describe kind of the timing and rationale for that new venture? Thomas Hennigan: It's Tom Hennigan. If you go back to last year, when we had our 2 JVs, we collapsed the 1 JV on the balance sheet. We've been looking to grow the existing JV with PSP. But we're looking to maximize and fully utilize the nonqualifying asset bucket. So we've really been over the last year, looking, "Hey, what's the next big venture for use is something we've been working on for a while. And to Alex's point, it's leveraging the broader Carlyle network and the strength of global growth syndicated team and at the same time, producing very strong expected returns based on no fee structure. So it's again, leveraging the broader Carlyle network and what we think is a very attractive overall structure. Operator: Our next question comes from the line of Brian McKenna with Citizens. Brian Mckenna: Alex, great to meet you, and congrats on the role and also same to you, Tom. Maybe starting with you, Alex, taking a step back here with a new set of eyes looking at the broader Carlyle Direct Lending platform, what are some of the near-term opportunities across the business? And what are your top priorities really for CGBD and the related direct lending strategies over the next year or so? Alex Chi: Sure. Look, as I mentioned, my plan is not to make large wholesale changes to the strategy. The Carlyle Direct Lending platform has actually been here for quite some time. Although I am relatively new here, Tom, who is sitting here next to me, has been on the platform for nearly 15 years. And our Chief Underwriting Officer, Mike Hadley, he's been here for 20 years. And there's deep underlying expertise across the core verticals where we play. So what we're going to do, again, with our rejuvenated origination strategy is just really start to take more share, see more flow. And one thing that I think that the leadership of Carlyle has done a great job of over the last handful of years is really start to just break down the silos so that we're harnessing the full power of all the different aspects of what Carlyle has to offer. And again, I don't want to interplay just the Washington, D.C. routes that we have. I think that really no one has a better handle on policy-driven cash flows than we do. So I think there's a lot of opportunity here for us to just take more share while we just stick to our core knitting. As I mentioned in my earlier comments, although, again, in my power shop, we had a formidable presence in the large-cap space, that's not an area that we plan to push into right now. Brian Mckenna: Okay. Great. That's helpful. And then just a little bit bigger picture. Clearly, volatility has picked up across a number of different segments within the market. It seems like capital liquidity is coming in a bit just across the capital markets. But I'm curious what you're seeing on new deals today that are coming together have spreads started to move out a little bit? Like I'm just curious what you're seeing real time on that front. Alex Chi: It's a great question. In terms of spreads, we are starting to see an opportunity where we're going to see a bit of spread widening. It's not going to happen in a significant manner. But in some of the deals that we're looking at right now, the proposed spreads that are coming in reflect what we were seeing perhaps 2, 3 months ago. I think just given the volatility that you just referenced, it's an opportunity to start getting some spread back, especially in the middle market. Another -- yet another reason as to why we're not actively pursuing a strategy back in the large-cap piece of the landscape. Look, I think software is an area that a lot of people have spoken about. I think in terms of the flow of software opportunities, I think you're going to see a bit of a pause there, not so much because we just think that software is better or anyone is getting out of the market. It's just because many of the software deals that were acquired, they were acquired at very, very high robust multiples 2, 3, 4 years ago. And I think just given the fact that people are still trying to figure out what AI means for these companies, I think the value expectations versus what buyers want to pay for, they're probably -- you're going to see some enterprise value gaps here. So I think we're going to need some time in order for people to really assess what's happening in that landscape before you start to see more deal flow. So I think that people are going to start to focus their areas more on more core parts of the economy, and those are areas where you see significant amount of portfolio companies that yet to be monetized. So I think that's where we're going to start to see more of the flow. And I think on spreads, to your question, I think for the time being, we're not going to see any more compression, which is good. And if anything, we're starting to see some opportunities for us to get the spread back. Brian Mckenna: Got it. Okay. That's helpful. And then just one more for if I may. Two months into the first quarter here, I mean, just any incremental color or detail you can share with quarter-to-date trends just as it relates to new originations, markups, markdowns, and even just credit quality more broadly. Thomas Hennigan: Brian, I think that the -- on the portfolio continue to have overall strong performance. We're still in the process of getting fourth quarter results. Obviously, you're not going to see anything in those fourth quarter results. One thing we have done is just based on -- certainly, we're seeing in the broadly syndicated market, some volatility in trading prices, while that does not directly translate by any means to our private credit valuations, we and our third-party valuation providers are taking a look broadly at the portfolio, specifically at the technology and software deals in the portfolio. So I think probably you're going to see a modest markdown on software names just based on market volatility and uncertainty, but relatively modest, certainly relative to some of the volatility in the broadly syndicated market. Operator: [Operator Instructions] Our next question comes from the line of Rick Shane with JPMorgan. Richard Shane: Congratulations on all youf new roles. Look, one of the themes that has emerged listening to all of the BDC calls or many of the BDC calls is the potential relief from the asset sensitivity of your borrowers' balance sheets. And I am curious when we think about this, and again, remember, we come at this from the perspective of also covering many of the commercial mortgage REITs where interest expense is a huge, huge part of owning commercial real estate. I am curious when you think about the businesses that you're lending to, and their revenue and cost structures, how significant is interest expense in their overall expense load? Thomas Hennigan: Yes. It's something that -- obviously, when we look at our credit metrics, interest coverage ratio is getting better, it's marginal, base rates down 75 basis points, expected additional rate cuts -- on the margin, it's going to be helpful. But just like we ran the sensitivities when rates were going up, even if we said, okay, rates were at 5%, 6%, they had a gap up materially before we were concerned about liquidity at particular our sensitivities that they had to go up another 300 basis points. So certainly, on the margin, it helps. Is it a material benefit where we think it's going to be a material difference? No, it's certainly going to help on the margin. But based on certainly where the current base rates are -- based on where the current curve is. Alex Chi: The other comment that I'd make is on new originations that we're looking at right now. It's not only just interest coverage that we're looking at. We're also looking at fixed-charge coverage ratios. And the fixed-charge coverage ratios that are now coming out that we're underwriting to, there's a lot more cushion than what we saw before. We would typically look at a 1.1x fixed-charge coverage ratio, and then we sensitize that, of course, for different industry curves. But now out of the box, we're starting to see much more cushion, call it, 1.25x or even higher going towards 1.5x, which is really nice to see because I think that the borrowers are starting to take a bit more of a conservative approach with respect to how much leverage that we'll put on these companies when we buy them. Richard Shane: Got it. Okay. And then the question that I've sort of asked a couple of companies through earnings. Look, you guys are in the position you are able to do more than one thing at a time, but you are experiencing significant repayments, stocks trading at a significant discount to NAV. You have a history of repurchasing shares. Is the best incremental dollar the next investment given dynamics in the market? Or is the best investment repurchasing stock? Thomas Hennigan: Rick, we think it's a balanced approach as you see what we've done in the last 90 days is we started buying back shares last quarter. We've continued into this quarter. So again, it was $14 million in the fourth quarter, another $14 million quarter-to-date in the first quarter. That represents 3% of our total shares. It's about $0.06 per share accretion in each quarter to $0.12 in total. That's $186 million since inception. So we've been supportive of going back a number of years in buying back shares. And our Board increased the $200 million threshold up to $300 million at our recent Board meeting. So we certainly anticipate based on where the stock is trading, it's certainly accretive for investors to continue considering buybacks. At the same time, when you look at primarily our 2 JVs where we we're within our target leverage range. Net-net, if we're adding investments to our JVs, that's very accretive for the fund. So on the margin, we're not adding -- if we're adding 475 or 450 spread deals. It's to our current JV where we're able to generate a 15% plus return from that fund. And certainly, we anticipate over the course of the next 2 years, investing and growing our second -- well, not our third JV, but our Structured Credit Partners JV. So we think those are very accretive dollars in terms of where we're putting our new investment dollars on a net basis... Richard Shane: I think I interrupted. Thomas Hennigan: No, go ahead. Richard Shane: No, that's it. I just wanted to say thank you. I appreciate the clarity on that. It helps us think about the talent you may be paying off over the next 12 months. Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Alex for closing remarks. Alex Chi: Great. Well, thank you very much. Very excited to be here, and we look forward to coming back in subsequent quarters. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Ian Hawksworth: Thank you very much. Okay. Yes, we've got the thumbs up. So if we're ready, we'll start. I know you've all got a very busy day and a very busy week. So very much appreciate you coming to our third set of annual results this morning. So we're really very pleased with the results for this year. Another excellent year of progress and performance. I think we're delivering growth as we said we would do. The agenda for this morning, fairly straightforward. I'll give you a bit of an overview of the results. Situl will then go through the financial review. I'll then update on what's going on in the portfolio, and we'll finish with a summary and outlook and some Q&A. So as I said, another very successful year, delivering strong performance, an increase in rents, values, income and dividends while strengthening our financial position and creating significant optionality for the group. Obviously, macroeconomic issues and geopolitical risks have been well documented. However, I'm pleased to say that conditions across the West End are very active. We continue to see positive trends in footfall and sales across our prime portfolio, and the team is successfully delivering leasing well ahead of ERV with excellent levels of activity, limited vacancy and a strong pipeline. During the year, we were pleased to have formed a long-term partnership on Covent Garden with the Norwegian Sovereign Wealth Fund, which highlights the fundamental value and attractiveness of our portfolio. We continue to expand over GBP 100 million invested through acquisitions and capital expenditure and a number of properties are currently under review. And with enhanced liquidity, we're well positioned to take advantage of market opportunities. As one of the largest property owners in London's West End, we play an important role in shaping the area's long-term future. Visitors continue to be drawn to the West End's exceptional cultural, retail and entertainment offering, reinforcing its position as a leading destination for experience-led travel. The portfolio is benefiting from record international arrivals to London airports. Hotel occupancy remains strong, whilst the Elizabeth line continues to broaden catchment for visitors and workers alike. Shaftesbury Capital's irreplaceable portfolio of properties located at the heart of the West End provides high occupancy, low capital requirements and reliable growing long-term cash flows. Turning to results. Our valuation increased 6.6% like-for-like to GBP 5.4 billion. This was led by a 6% increase in ERV and a small 2 basis point inward yield movement. Total accounting return and total property return of 9.1% and 10.1%, which is in line with our medium-term targets. We continue to deliver rental growth, which increased by 6% and every effort continues to be made to enhance customer service whilst delivering meaningful cost savings. Underlying earnings are up 12%, and the Board has proposed a final dividend of 2.1p per share, which brings the total dividend to 4p per share, which is an increase of 14% for the year. We have a very strong balance sheet and access to significant liquidity with low leverage. I think the performance overall demonstrates the exceptional qualities of the portfolio, delivering growth in cash rents, dividends, ERV and valuation. So I'll now hand over to Situl for the financial review. Situl Jobanputra: Thanks, Ian. Good morning, everyone. As you've heard, financial performance was positive in 2025 with growth in rental income, earnings, dividends, valuations and net tangible assets. In addition, we have strengthened our balance sheet and enhanced the group's financial flexibility. So starting with the income statement. The main points are that over the year, there was growth in rental income of 6%, earnings were 12% higher, and we've increased the dividend by 14%. We focus here on group share numbers, that is including Covent Garden at 75% post the transaction with Norges Bank. As is completed partway through the year, we've included in the appendix on Slide 43, a summary of how this affects year-on-year comparisons. Adjusting for this, gross rents were up 5.9% like-for-like to GBP 195.6 million, reflecting a successful year of leasing and asset management. In aggregate, lettings and renewals were 10% ahead of ERV and 14% up on previous passing rents. Management fees from Covent Garden for Q2 to Q4 represent the other income of GBP 3 million. Administration costs of GBP 41 million reflects an increased share option charge, which was up by nearly GBP 5 million compared with last year. Excluding this, costs were effectively 8% lower. Notwithstanding upward pressures, we are targeting further reductions in the absolute level of cash costs over the next 2 years. During the year, the cash receipt from the Covent Garden transaction lowered net debt significantly. As a result, finance costs have been reduced by almost 30% to GBP 41.4 million. This year, we will refinance or repay GBP 400 million of maturing debt. However, based on current levels of borrowing, we are targeting finance costs to be broadly flat overall. All of these movements taken together resulted in a 12% increase in underlying earnings to GBP 81.9 million, equivalent to 4.5p per share. The proposed final dividend of 2.1p per share takes the dividend for the year to 4p, up 14% year-on-year. Our leasing activity contributed to an increase in ERV of 6.2% over the year to GBP 270 million. As illustrated in the chart, there is the opportunity to grow passing rent significantly given the 26% uplift as we move through from annualized gross income on the left to current market rents on the right. There is embedded reversion in our portfolio and good visibility on the income growth potential in each of our locations. This includes almost GBP 16 million of income, which is contracted or relates to rent-free periods, the majority of which will convert to running income over the next 12 months. So turning now to the balance sheet. The market value of properties under management was up 6.6% to GBP 5.4 billion. Net debt has been taken down from GBP 1.4 billion to GBP 0.8 billion on a group share basis with loan-to-value of 17%. NTA was up 7% over the year to [ 2.15p ] per share, driven primarily by the valuation movement. The main driver for the uplift in property valuations was rental growth with ERV up across all sectors and in all of our estates with retail and Carnaby Soho being the strongest performers. Yields moved in marginally by 2 basis points to 4.43% overall, and the commercial portfolio is valued at an equivalent yield of 4.6%. Our assets continue to demonstrate attractiveness and affordability to our customers with average ERV for the portfolio under GBP 100 per square foot and customer sales significantly ahead of 2019 levels, outstripping ERVs. The balance sheet is in a strong position with low leverage and access to significant liquidity. With loan-to-value under 20% and the EBITDA multiple under 7x, there is flexibility to deploy capital towards growing our business through investment in existing assets and new opportunities. In October 2025, we entered into a new 5-year loan facility of GBP 300 million for Covent Garden. The maturity of the group's other banking facilities totaling GBP 450 million of undrawn firepower has been extended to 2029 and 2030. We've also taken the opportunity to reduce the margins on these facilities to better reflect current market conditions and the strengthened position of the group. Part of the proceeds from the Covent Garden partnership were used to reduce gross debt and we are positioned for repayment of the GBP 275 million of exchangeable bonds, which mature at the end of March '26. As well as the new financing extensions and repricing, we have protected finance costs from interest rate movements by capping GBP 300 million of SONIA exposure at 3% for this year. We will continue to review financing opportunities, taking advantage of the attractive credit profile of the group. So to summarize, financial performance has been strong, and we have enhanced flexibility. Total accounting and property returns of 9% and 10% have been achieved in 2025, driven by growth in ERV and cash rents, which, together with cost management, have resulted in good progression in our key financial metrics. We will continue to focus on our priority areas: earnings and dividend growth, deploying capital accretively and balance sheet strength and flexibility. And with that, I will hand back to Ian. Ian Hawksworth: Thanks very much, Situl. I can tell you a little bit about the portfolio, a little bit of color for you. We own an impossible to replicate portfolio. It's located in some of the most iconic destinations across London's West End, Covent Garden, Carnaby Soho and Chinatown. The GBP 5.4 billion portfolio under management comprises 2.8 million square feet of lettable space across 640 predominantly freehold buildings with approximately 1,900 individual lettable units. Portfolio is broadly 1/3 retail, 1/3 F&B, with the balance in the upper floors, which offer office and residential accommodation. Portfolio offers a diverse occupational mix and variety of income streams with a range of unit sizes and rental tones. Occupational demand continues to prioritize the best locations. Availability now on many of our streets is at near record lows, and this supports competitive pricing. Leasing success has been achieved across the portfolio with continued ERV growth. This slide shows some of the new brands introduced, which are attracted by the 7 days a week footfall and trading environment. 434 leasing transactions completed in the year, representing nearly GBP 40 million of contracted rent. They were achieved at an average of about 10% ahead of December '24 ERV and 14% ahead of previous passing rents. Vacancy is very low at 2.6%. The team's active and creative approach, which is informed by a deep knowledge of the West End, positions Shaftesbury Capital to deliver further rental growth. Seeing very strong conditions in leasing -- in retail. Leasing demand is very positive and trading conditions are good. In recent months, we welcomed a number of new brands to Carnaby Street as we enhance the customer mix there. Charlotte Tilbury opened a new flagship store, and they'll shortly be joined by Sephora and also by Edikted over the coming months. Covent Garden continues to attract new high-quality brands, including Nespresso and Byredo, which were introduced during the course of the year. All of this has contributed to a 10.4% retail valuation growth across the portfolio. We're home to approximately 400 food and beverage outlets. Operators are attracted to the vibrant pedestrian-friendly, well-managed estates. And there have been a number of signings across Covent Garden, including Borough in Floral Court, Harry's Restaurant and Bar on the Piazza and Buvette in Neal's Yard. There continues to be strong demand for Soho for the Soho portfolio with the introduction of several new concepts, including Padella and the Shaston Arms. In Chinatown, we've introduced more variety to the area, increasing the pan-Asian offering at a range of price points. So across the portfolio, 37 new lettings and renewals signed 15.7% ahead of December 2024 ERV. Our vibrant locations and the quality of accommodation continue to attract leasing demand for office space. The Carnaby and Covent Garden portfolios offer high amenity value and excellent environmental credentials. And we continue to see customers relocating from other parts of Central London as employers recognize the importance of location and amenity value in attracting and retaining talent. The residential portfolio continues to perform well. During the year, 285 transactions were completed with rents achieved around about 4% ahead of previous passing rents. We have the ability to add value through capital initiatives to our 640 properties. Our pipeline of asset management and refurbishment activities represents 4.2% of ERV, and it's expected to be delivered over the coming 12 to 18 months. The scale of our holdings also help us to shape not just the buildings, but the spaces around them, and we're working with local stakeholders to enhance the public realm across our destinations, making them greener and more enjoyable for everybody. Covent Garden's Henrietta Street public realm is currently being transformed, and we're also undertaking early engagement on improvements to Carnaby Street to enhance the visitor experience whilst preserving the area's unique character. We continue to rotate capital, improving the quality of our exceptional portfolio. And in this year, we disposed of GBP 12 million of assets and invested GBP 80 million in targeted acquisitions. As I said earlier, we have a number of properties under review. Situl mentioned that we introduced sovereign capital to Covent Garden this year. And by partnering with NBIM, leverages our operational expertise and property portfolio, providing investment and expansion opportunities. So our growth prospects are underpinned by strong fundamentals. The West End market has delivered attractive predictable growth over the long term with an annualized rental growth rate of approximately 4% per annum. Our portfolio has outperformed that with nearly 7% ERV growth delivered since 2010. And this is supported by consistently high occupancy and the scarcity value of the West End, where limited new supply continues to drive demand. A strength of the portfolio is its adaptable mixed-use nature, which allows us to evolve space in line with changing demand and importantly, to do so with relatively low CapEx requirements. We benefit from aggregated ownership, enabling us to enhance the public realm and shape our places, supported by data-led customer and marketing approach. And finally, we actively manage the portfolio through capital rotation, focusing investment on our chosen assets and improving performance through refurbishment initiatives. So overall, these factors drive consistent long-term rental growth and valuation progression. I'd like to take a moment to thank everybody involved, including our customers, partners and our very experienced team in delivering this strong performance in 2025. Some of our senior leadership colleagues are with us today, and I hope you'll have the opportunity to meet with them afterwards if you didn't see them during coffee. So in summary, we've had a successful year, and we've made a very good start to 2026. There are obviously a number of challenges in the economy, but the West End continues to perform with high footfall, customer sales growth and low vacancy. There are excellent levels of activity and a strong leasing pipeline. We're confident in our outlook and targets for rental growth of 5% to 7%, a total property return of 7% to 9% and a total accounting return of 8% to 10%. Through active management of our prime West End portfolio, the strength of our operating platform, and we're focused on sustained long-term growth in rental income, value earnings and dividends. And backed by our strong balance sheet, we're well positioned to grow and take advantage of market opportunities. So that concludes the presentation. We're going to move now to Q&A. For those of you that are on the phones, if you could let the operator know that you'd like to ask a question, we'll come to you. But if somebody likes to start the ball rolling in the room, that would be great. Max? Maxwell Nimmo: It's Max Nimmo at Deutsche Numis. Just a couple of questions, if I can. One on Carnaby and the ERV growth was exceptionally strong there. Do you expect that, that is likely to continue as you -- as it sort of catches up with some of the other villages within your portfolio, kind of extracting that low-hanging fruit? Should we expect that to be the strongest growth in the near term? And then secondly, just around kind of firepower with where you're at 17% LTV today. Obviously, fully acknowledge you're trying to manage the interest cost for the business, but how you see that and the relationship with Norges and what that does for their ambition to grow as well? Ian Hawksworth: Thanks, Yes, we're really pleased with the progress we've made on Carnaby Street. I think what gives us confidence that it will continue to perform really well is the brands that we brought into the estate are trading at significantly higher sales densities than some of the previous incumbents. And that gives us confidence that it will support rental growth over the medium to long term. And we are seeing reasonably positive improvements in Zone A rents, which is, as you know, is how the market actually looks at it. But they're still well below other locations within our portfolio and well behind the general tone in the West End. So yes, I do think you'll see significant growth, but we're delivering growth across the portfolio. Covent Garden is doing very well as is Chinatown. But yes, we've got high hopes for Carnaby Street, definitely. Do you want to? Situl Jobanputra: Yes, sure. On your point about firepower leverage growth, I think we're in a very strong position. And that's a deliberate strategy so that we are well protected on the downside. And as you say, we're managing interest costs, but it means that we can put money to work when we see interesting opportunities. And one of our priorities is deploying that capital accretively. So there's plenty of room within our leverage ratios and our liquidity to do that. And as you also observed, the formation of the partnership is a further source of capital for growth in Covent Garden. So we see opportunities across all of our estates. James Carswell: It's James Carswell from Peel Hunt. Maybe just one on -- following on from Max's question. You've got the firepower. What are you seeing in terms of acquisition opportunities? I mean I appreciate the small buildings pretty liquid in your kind of markets. But I mean, are you seeing any [indiscernible] of the larger lot sizes? Do you think that will kind of bring you some opportunities? Ian Hawksworth: Yes. The team has got quite a lot of real estate that they're tracking. Obviously, whilst there's a lot of activity in the West End buildings that are adjacent to our portfolios don't trade very often. So we are focused really on driving value out of the 640 buildings that we've got and being in a position to move quickly when real estate does come available. We bought 1 or 2 things last week -- last year. They are sort of acquisitions that add value to the individual components of the estate. But clearly, at some point, we'd like to expand our ownerships substantially. And I think those opportunities will arise. Oliver Woodall: Oli Woodall from Kolytics. Congratulations on the strong set of results across the board, particularly your office segment seem to have very strong like-for-like rents. I wonder if you could give an outlook for the demand here for office and then separately for food and beverage and retail looking forward, kind of what your outlook is? Ian Hawksworth: Yes. Thanks very much. Well, all parts of the portfolio are performing well. I mean office is about 20% of what we have split into 2 categories, really sort of purpose-built offices and then converted sort of Georgian properties. And as I said in the presentation, the demand is there, not just because the buildings are good and they're well managed, but the locations are really in demand. So we're seeing strong levels of demand, and I think we'll see continued rental growth in those components of the portfolio. But the bulk of what we do is retail and hospitality and retail demand is continues to be very strong. I mean many commentators are saying the retail leasing market is as strong as they've ever seen it. I think there was one of the brokers put out a report recently saying demand is significantly higher than it's been for many, many years. So that supports the prime locations that we have. And you can see that in the number of new transactions that we've done and the pipeline. I think Will Oliver is somewhere in the room. He's in charge of leasing. So he's a very busy man at the moment. So I think you'll see continued activity in that area. F&B also very positive. There's virtually nothing available. And where we do get something available, there's multiple operators want to take the space on. So yes, very, very, very positive conditions across the board at the moment. Thank you very much. Any questions on the telephones? We've got a nod. We hand over to you Nimmo, excellent. Maxwell Nimmo: Okay. We do have one question on the telephone we've taken now. The question will be coming from Zachary Gauge of UBS. Zachary Gauge: Just a quick one from me. Looking at the sort of the consensus numbers for earnings in 2026. I think it's currently at 5p. So assuming a pretty similar growth rate to the one you saw in 2025. I know you don't give formal guidance, but just thinking considering the exchangeable bond refinancing at the end of March and obviously, interest rates in the U.K. probably coming in a little bit over the year with a slight headwind on cash. Do you think that kind of growth rate is in the right ballpark for the year considering that refinancing headwind? Situl Jobanputra: Let's talk about the building blocks, Zach. As you said, we don't normally comment on consensus forecast, and there is a bit of a range. So if we go through the main components that we think about, rental income growth, we talked about aiming to grow that cash rents in line with ERV growth, and we have an ERV growth target of 5% to 7%. On the other components, you'll see continued improvement over the next couple of years in the property level net to gross, and there are a number of initiatives that underpin that. And then on admin costs, we've been quite definitive on the guidance around that in terms of bringing down the cash cost element of that. And then the finance cost is, as you say, you've got some maturities and refinancing or repayment of that, and you've got lower leverage in terms of the effects of the transaction from last year. So our target with the current level of leverage is for the finance costs overall to be flat. So hopefully, that gives you a guide on some of the moving parts. Maxwell Nimmo: Ian, I will turn the call back over to you as we have no further telephone questions. Ian Hawksworth: Thank you very much. Okay, short and sweet. If you'd like to hang around for coffee, Peel Hunt will be very happy to give you one. Thank you very much, Peel Hunt, for the use of the facilities. We'll be around for a little bit. I'd say most of the team are here, asset management team, investment team, marketing team. If you'd like to spend some time with them, please feel free to do so. Otherwise, we look forward to seeing you down on the estate. The sun is out. There's plenty of nice places for you to go and eat and drink, plenty of places for you to go shop. So thank you very much for your attention, and we hope you have a good day. And if there are any questions, just call any of us as the day goes on. So thank you very much.
Operator: Hello, everyone. My name is Jenny, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Meren's Fourth Quarter 2025 Results Presentation. [Operator Instructions] This event is being recorded, and the recording will be available for playback on the company's website. I will now pass the meeting to Mr. Mussannah Chowdhury. Please go ahead, Mr. Chowdhury. Mussannah Chowdhury: Hello, everyone. Thank you for joining us today for Meren's Fourth Quarter 2025 Results Presentation. I'm Mussannah Chowdhury, part of the Investor Relations team here at Meren. And I'm joined today by Oliver Quinn, our Chief Executive Officer; and Aldo Perracini, our Chief Financial Officer. We'll begin today with prepared remarks and then open the floor to questions. Just before we get started, a quick reminder that today's presentation contains forward-looking statements. These reflect our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially. More detail on these risks can be found in our regulatory filings with SEDAR + and on our website. With that, I'll now hand you over to Oliver. Oliver, please go ahead. Oliver Quinn: Thanks, Mussannah, and thank you, everyone, for joining us today. This is my first results presentation as Meren's CEO, and I'd like to begin by thanking my predecessor, Roger Tucker, for his strategic leadership and personal support over the past few years. I'm proud to have been given the responsibility to steer the company through its next phase of growth to lead a great team of professionals and to continue working with our industry and government partners towards long-term value creation. Turning to Slide 4 and an overview of 2025. I'm pleased to report on a year of strong delivery. To begin with, last March, we closed a transformational prime consolidation deal, doubling our reserves and production from our high-quality and high netback assets offshore Nigeria. This was a strategic transaction as we simplify the ownership structure of our core assets, enhancing day-to-day control and creating a strong platform for further growth. Through 2025, we have successfully integrated Prime and have a lean and fit-for-purpose organization to manage our production assets as well as progress our strong portfolio of growth opportunities. Underpinned by closing of the Prime amalgamation, we delivered strong shareholder returns with USD 100 million in base dividend and $8 million in share buybacks. Alongside shareholder returns, the balance sheet has been strengthened with the repayment of $420 million of the outstanding RBL facility, delivering both cost savings and a healthy year-end net debt-to-EBITDAX ratio of 0.4x, all whilst maintaining significant liquidity to cushion the business against market volatility. Aldo will talk in more detail about the maintenance of a prudent leverage position and our broader approach to ensuring financial resilience through the cycle. 2025 was a year of transformation for Meren, but our focus today remains on continuing to maintain our balance sheet strength, enhancing the production profile through organic growth opportunities, and continuing to mature options to deliver long-term value to our shareholders. I'll now take you through our production performance on Slide 5. For 2025, we achieved working interest production of 30,800 barrels of oil equivalent per day and 35,100 BOEs per day on an entitlement basis, both in line with our full year guidance. During the first 9 months of the year, the Akpo and Egina infill drilling campaign supported steady average production of around 32,000 BOEs per day on a working interest basis with production lower during the fourth quarter primarily due to planned maintenance shutdown on the Agbami field. Q4 production was also impacted by minor facility issues, including temporary shutdowns related to power supply, particularly during the second period of the quarter. These issues were actively managed through targeted operational interventions, enabling the fields to continue performing in line with expectations following resolution. As previously communicated, the Akpo and Egina drilling program was paused in the third quarter to allow incorporation of positive early results from our recently acquired 4D seismic data set that will aid in the optimization of drilling locations. Due to the earlier finish of the 2025 drilling campaign, our full year capital expenditure came in at the lower end of our guidance range. In 2026, we expect to see sustained drilling campaigns in each of Akpo, Egina and Agbami commencing later in the year. I'll now hand you over to Aldo to take you through the financials. Aldo Perracini: Thanks, Oliver. In the fourth quarter, Meren completed three oil liftings for around 3 million barrels at a realized all-in sales price of $64.4 per barrel. For 2025, we have completed 12 total liftings totaling around 12 million barrels at an average all-in sales price of $72.2 per barrel. Comparing favorably to dated Brent at $69.1 per barrel. Meren has applied a variety of different hedging instruments to protect the downside while also maintaining partial exposure to potential upside. This will include a mix of physical and financial hedges such as swaps, collars and puts, and you can find further details on this in our Q4 MD&A. Moving on to financial highlights. Before going through our numbers, it is important to note that we have reported an impairment of $105.3 million this quarter in relation to the Agbami cash generating units. I must emphasize that this impairment is noncash and it has no impact on our cash flows. This charge has come as a result of oil price volatility in 2025 and updated cost forecast relating to the Agbami field. More specifically, the updated cost forecast is mainly in relation to planned long-term life extension activities, allowing the FPSO to continue to operate reliably and safely through to the end of the license. This will also allow more flexibility on the FPSO to support future infield drilling and tieback opportunities, which we will touch on shortly. Moving on to our highlights. For 2025, we delivered an EBITDAX of $441 million. This fell just short of our full year guidance, mostly due to a larger overlift adjustment for the period relative to the estimates for the midpoint range of the revised guidance and other smaller variations on Nigerian royalties and levies. Cash flow from operations before working capital came in at $262 million for the year with a reported CapEx of $100 million largely driven by drilling activity in Akpo and Egina this year and facility costs on Agbami, both of which have met our 2025 guidance. Free cash flow before debt service and shareholder distributions was $289 million. As Oliver mentioned earlier, we have significantly deleveraged the business this year, paying down the RBL by $420 million, as well as distributing roughly $108 million in shareholder returns. Moving on to cash flow for the year. This slide shows the 2025 movements and year-end 2024 cash balance on a constructive basis as if the premium amalgamation had closed on first of January 2025. We ended 2025 with a cash balance of $175 million compared to an opening cash balance of $461 million. Net cash generated in operating activities for the year was $348 million, which included a positive working capital movement of $86 million, primarily driven by the receipt of oil sale receivables driven by the timing of cargo liftings. The cash outlay of $480 million post consolidation was for the repayments of the RBL, clearly demonstrating our intention to optimize our capital structure and resulted in about $12 million savings in reduction of financing costs. We also distributed a little bit over $108 million during 2025, comprised of about $100 million in base dividends and $8 million in share buybacks. Overall, through disciplined cash management, we have materially reduced our debt, strengthen the balance sheet and established a solid platform for sustainable growth and value creation. We are also pleased to announce our first quarterly dividend of 2026 of $25 million, which will be paid next month. Moving on to the next slide. At year-end 2025, our amounts drawn under the RBL stood at $330 million with a net debt position of $155 million and net debt to EBITDAX of 0.4x, significantly below our target of onetime. The chart on the right demonstrates our consistent and prudent approach over the last few years towards debt management with continuous efforts to optimize liquidity while minimizing borrowing costs. It is worth recalling that post premium amalgamation, we canceled an undrawn $65 million Meren corporate facility to eliminate standby fees. As a post fourth quarter update, we drilled down an additional $40 million under the RBL due to normal working capital timing related to liftings and short-term liquidity positioning within the group. So we have very good flexibility on the RBL revolver facility at competitive borrowing costs. We are currently in the process of refinancing the RBL that facility which will allow us to save more on borrowing costs and to enhance our debt amortization profile. In the meantime, as shown on the right hand side, we do retain an ample liquidity headroom. Moving on to the next slide. With our full year results, we have also announced our full year management guidance. Our working interest production guidance comparing to 2025 actuals reflects the timing for the recommencement of infill drilling campaign, which is currently expected to start towards the last quarter of the year. Our EBITDAX and cash flow from operation guidance relative to 2025 actuals reflect the lower production base and accounts for a lower full year Brent oil price at $63 per barrel compared to the actual Brent average of $60 per barrel for 2025. Moving on to the next slide. And before handing back to Oliver to take you through our organic growth opportunities, I will briefly highlight the positive developments in Nigeria. Implementation of the PIA was supportive to our business, and this positive development has been followed by a number of presidential executive orders aiming at facilitating investment in Nigeria's oil and gas sector and tackle project execution risks such as cost inflation and schedule delays. So we are seeing greater fiscal clarity, stronger government engagement and targeted incentives aimed at supporting upstream investments. Recent final investment decisions on projects such as Bonga North the Ubeta gas project and the HI offshore gas project demonstrate renewed capital commitment and growing confidence in Nigeria as a long-term energy investment destination. For us, a more stable and predictable operating environment is constructive for both capital allocation and valuation across our Nigerian portfolio. We are also seeing Nigeria's USD credit spreads tightening significantly from peak levels, reflecting a meaningful reduction in the market's perceived sovereign risk and improving investor confidence in the country. This has also been reinforced by recent positive credit rates and developments in recent months. We are very pleased to see these positive developments and continue to have high confidence in Nigeria and its oil and gas sector with clear fiscal and regulatory frameworks supporting our core business and key assets. I will now hand over to Oliver to take you through our portfolio outlook. Oliver Quinn: Thanks, Aldo. Turning to Slide 12 and our business outlook, I want to focus on the organic growth opportunities in the portfolio, starting with our production hubs in deepwater in Nigeria. For Akpo and Egina, we are planning to recommence drilling in late 2026 with the Akpo Far East exploration well. Akpo Far East is a near-field prospects located just 5 kilometers from existing production facilities and represents the test of a fast-cycle infrastructure-led tieback opportunity with around 23 million barrels unrisked mean recoverable resource net to Meren. In a success case, first oil could be achieved through the Akpo FPSO in less than 2 years. The drilling campaign will then move toward infill drilling across both Akpo and Egina from late 2026 and into 2027. And this will add new production as we move through 2027. Beyond that, we have made progress around our undeveloped discoveries, Preowei, Egina South and Ekija, all located within 20 to 30 kilometers of existing Meren production hubs. That proximity is important as it offers a growth portfolio of short-cycle, capital efficient and lower-risk developments that utilize our existing brownfield infrastructure and together consist of around 42 million barrels of resource net to Meren. At Agbami, drilling also recommends in late 2026 with a campaign including appraisal of the adjacent Ekija discovery and 6 infill wells within the field. We are excited to get back to drilling in 2026 and the combination of testing new, low-cost resource and short-term production growth through infill drilling presents a series of low-risk, high-return opportunities to bolster our production profile and in turn, supports long-term value for shareholders. On Slide 13, let's turn to another key growth area for Meren, the Orange Basin. Beginning with Namibia, the joint venture continues to progress the Venus development project, which remains on track for final investment decision this year. According to the operator TotalEnergies, FID is targeted for mid-2026, with the environmental and social impact assessment now published and the environmental clearance certificate application submitted marking a key regulatory step towards FID. As a reminder, front-end engineering and design, FEED, is progressing with a plan for 40 subsea wells tied back to an FPSO with a peak capacity of 160,000 barrels of oil per day and a production life of 20 years plus, delivering significant and sustained cash flow to Meren. As we get closer to the final investment decision, we anticipate scope for us to include Venus in our annual reserves reporting process. Beyond Venus, several material exploration prospects remain to be tested on the license with planning in progress. And importantly, we retain full exposure to these high-impact opportunities with no upfront cost as all exploration and development spending is carried through to first commercial production. In Block 3B/4B in South Africa, the legislative notification and appeals process remains suspended pending the Supreme Court of Appeals judgment for Blocks 5, 6 and 7. From a project perspective, the identified lead prospects, Nila is drill-ready and the operator TotalEnergies is ready to commence drilling once the appeals process is concluded. To remind you, the cost exposure to Meren in South Africa is limited with the transaction completed with TotalEnergies and Qatar Energy including a capped exploration carry. Whilst the regulatory issues elsewhere in South Africa of cause delay, our 18% carried interest, combined with the scale of the prospects identified means we remain excited about the potential for the block and its ability to act as a transformational catalyst for Meren. Now turning to Equatorial Guinea on Slide 14. We hold two operated licenses to offer another set of organic growth options within the portfolio. Starting with EG-31. This is a shallow auto gas position close to existing infrastructure and situated around 30 kilometers from the Punta Europa LNG facility. Through 2025, our evaluation is focused on maturation of the existing Gardenia gas discovery that represents a circa 200 Bcf gross resource with the potential to be developed as a low CapEx, low unit cost short-cycle projects that utilizes capacity in the adjacent LNG facility. Beyond Gardenia, several nearby gas prospects, Macif and Whistler offer material longer-term growth potential with unrisked gross prospective resource estimates of around 5 Tcf. As part of our wider organic growth options, EG-31 provides an attractive rightsized LNG opportunity with low CapEx exposure through utilization of existing gas and LNG infrastructure. Moving to EGA team, a deepwater exploration block with oil prospectivity. We have identified basin floor fan targets with multibillion barrel potential in a series of stacked prospects. Across both blocks, we have been running a farm-down process. And whilst the two opportunities offer differing investment profiles, industry interest has been encouraging, and we are now in active discussions with potential partners. Importantly, we have secured 2-year license extensions for both blocks, giving us additional flexibility as we progress partnership discussions and align next steps with the government. With the right partners in place, drilling activity could take place in the next couple of years. Moving to Slide 15. I want to bring together these catalysts to outline the breadth and scope of our organic growth portfolio set across four countries and multiple basins. Whilst delivering corporate transformation from Meren in 2025, we have remained focused on active in deepening our evaluation of organic growth options and are confident as we move through 2026 that we are building a strong portfolio that offers compelling growth through choice and most crucially, whilst remaining within our disciplined approach to the balance sheet and financial frame. I'll conclude on Slide 16 and revisit our capital allocation priorities. Disciplined capital allocation underpins our business plan and the execution of our long-term strategy. Firstly, our balance sheet remains a core pillar of the business. Throughout 2025, we have demonstrated that discipline, and we will continue to maintain a minimum liquidity position of $150 million and a net debt to EBITDAX target ratio of 1x or less. Secondly, we see compelling value creation in our organic growth portfolio. Our Nigerian assets provide multiple pathways to grow production through infill drilling and subsea tiebacks. These low-risk short investment cycle opportunities, leverage existing infrastructure, generate capital-efficient returns and help build a durable foundation for long-term value creation. With a streamlined business firmly in place and a strong balance sheet, we continue to selectively screen inorganic opportunities that meets our strict strategic and financial criteria, ensuring they are accretive and complement our existing business and priorities. Thank you, and I will now pass you back to the operator for Q&A. Operator: [Operator Instructions] First question comes from Jeff Robertson with Watertown Research. Jeffrey Robertson: Thank you. Good morning. Aldo, can you talk a little bit about the timing of the liftings you anticipate in 2026? Aldo Perracini: Yes. So for -- we have to look at the lifting as per FPSO, right? That is discretionary, and that creates the timing difference in relation to the liftings. So for 2026, we are expecting around eight cargoes spread throughout the year. So I think it's safely to assume they are evenly spread throughout the year just for simplification purpose. Jeffrey Robertson: And Oliver, with respect to EG, does the 2-year license extension give the potential partners that you have had discussions with time to get an exploration well drilled on EGA team? Oliver Quinn: Yes. Jeff, yes, I think the 2 years is important in the sense of -- as we said in the presentation, we are in active conversations on both positions, and they are very different things, of course. But what that 2 years does is, it just gives us a runway to complete those conversations and see where we get to without license time pressure, if you like, which is good. It signals strong support from the government for the ongoing process. And to the specifics, yes, I think, look, it depends exactly when we might close the transaction and who it's with. But I think it's sufficient time to mature and drill a well. I think when you look at 31, we're very focused on Gardenia because that's a discovery. So that's kind of appraisal development straightaway that shallow water is technically not challenging. Quick to do. And 18 is deepwater. But again, we have one very, very high-graded prospects. I think people have looked at it take different views, of course, but they see the same prospect. And so therefore, you know what you're going after. It's not a matter of saying well, hey, let's get a partner and then rework the whole block. So yes, there's a reasonable time line there. I think next key step is kind of as we go through the first few months of the year here, where do we get to on the commercial front? And can we get the right partnership in place so we get the right funding structure to unlock both opportunities. Jeffrey Robertson: Under the timing of the extension for Block 18, would the permitting of an exploration well add any time to the extension such that a group could consider the results of the well? Oliver Quinn: Yes. So I think in the detail of it, you've got a 2-year -- well, whatever license period you've got, say, 2 years in this case. You drill a well, you make a discovery, let's say, and then you move in, in the contract, it defines kind of appraisal periods, commercial evaluation periods before you would declare commerciality and that brings time to do that, if that makes sense. So the first period is in summary, really for the first primary activity. And then depending on success and how clear it is from the first well, there is a period for appraisal there where you can come and put an appraisal plan together. That could be more appraisal drilling. It could say, well, hey, I'm going to test a well or whatever, but you have that period to do that. Jeffrey Robertson: And lastly, for now, with respect to inorganic growth, Oliver, when you think about Meren's current opportunity set over the next couple of years, which would require capital dollars. What type of asset it's best in the portfolio do you think? Oliver Quinn: Yes. Good question. So I think I'll start with what we have today, and I think hopefully you saw that in the presentation that I'll take a step back, really when we completed the prime amalgamation, of course, we were doubling down on production reserves, cash flow that we knew well because we've been a co-owner. We also knew there was a lot of organic growth opportunity in there. So exploration resource, contingent resource, high-value stuff. I think as we've moved through putting the two organizations together with a bit more capacity over the last 6 months, we're more excited about that. So I think we see a lot more opportunity around that portfolio for tiebacks to the three FPSOs. EG, as we've just talked about, we've matured that very well, and that's come a long way and looks exciting. So I think that set of opportunities in the company today is exciting and I think has emerged in a very strong way as a set of options. The other backdrop there, and Aldo touched on this in the presentation is the Nigeria landscape has drastically improved. I think both fiscally, politically support, you see production rising there quite quickly. You see investment dollars coming back from international firms as well as local companies. So there's a better landscape there beyond the technical for maturing things in Nigeria. So in sum, we're really excited about what's in the current portfolio. When you look at the character of that, it's high-value contingent resource coming into production short period, but infill drilling next couple of years, new kind of tiebacks end of the decade. So that's great, and that delivers a lot of value. What it does mean when we look at the inorganic space is we say, well, look, are there opportunities out there that could add production, cash flow, scale up the business in that respect in the shorter term. So they would complement the growth that's in the current portfolio, but they would kind of build the balance sheet, build the operating cash flow, let's say, and help us kind of fund some of those organic opportunities because, again, as we show our kind of capital allocation, we're not going to overlever the business to do that stuff, right? We develop a series of options, but we're choosing which ones to do in the context of that disciplined balance sheet. So again, some inorganic growth, if it's the right opportunity. And again, we're very, very disciplined on that, could help unlock some of those barrels as well Operator: [Operator Instructions] Our next question is from David Round with Stifel. David Round: Perfect. Sorry about that. A few questions from me, please. The first one is on the gas sales agreement. I read something about that this morning. Just wondering if you can give us a sense of how meaningful that may or may not be. The second question for me, please, is you've mentioned ATCO Far East and Acacia as specific targets. Just wondering how quickly those could be tied back in a success case. And I suppose if that is going to take a few years, how many infill wells should we be assuming each year to support production in the meantime? And if I -- actually, I'll sneak just a follow-on to that. You've got a '26 CapEx budget of $100 million to $140 million, I think. Are you able to just break that down for us, please, just in terms of how many wells are assumed in that? Is it all just long lead items, please? Oliver Quinn: Yes. Thanks, David. I'll take the first one on the gas and then I can come back on the second one, and we can get to the third. Aldo Perracini: Yes. Okay. So in relation to the gas sales agreement, it was a result of a prolonged negotiation that we were having to revise the index that's based on the contract that we signed back in 2018, given that it took some time to get that result. So there will be a couple -- a few impact that you're going to see through cash flow and P&L in the coming period. So there will be first one lump sum payment that we're going to receive now in the first quarter of 2026. Second, there will be an increased price coming from the revised index, which will flow through all the periods as we produce and export the gas from Akpo and Egina and there is a third component, which is the recovery of the arrears, right? The difference between what we should have received back from 2020 compared with what we have received and that delta we will receive also in time through a reduction of the handling fee. So you should expect a larger impact in 2026, given to the resolution of the contract. And let's say, on an ongoing basis, we are talking maybe something about, let's say, doubling the gas revenues that we have comparing with the last 2 to 3 years. So it should be meaningful, especially in the first year. Oliver Quinn: Okay. I think on the second one, David, it's a good question on Nigeria. So maybe I'll just take a step back. We're getting two rigs back end of this year, which we'll come on to on timing and your CapEx question. But actually, what has happened is we've had the longest drilling break across the three deals since kind of first oil. So when you look at our '26 guidance, it's effectively that's what it reflects. There's, of course, natural decline, as you'd expect. But we've had this long drilling gap that, again, we haven't really had before. And that's probably what's underpinning that decline. So we turn to how do you firstly arrest that decline? And then how do you grow from the base, if you like. So I think in terms of arresting the decline, it's, as you said, the infill drilling. So when we look at that next program, to start with Agbami, rig will come somewhere at the end of this year. I mean there's operational uncertainty on exactly what time the rig arrives. But nevertheless, it's firm, it's coming. And there are 6 infill wells planned on Agbami through '27 across the year. So when you look at that, I mean, that's quite -- for a field of that age, it's quite positive. It's quite sustained. So there's a relatively big infill drilling campaign there, which will arrest natural decline. And then we go across to Egina and Akpo with TotalEnergies operating. And again, in parallel, if you like, TotalEnergies are contracting for a rig. The plan is to bring the rig in again, towards the end of this year. So we're kind of guiding Q4 plus or minus operational kind of issues on where the rig is coming from. And again, interestingly, there's two buckets of opportunity there. One is the kind of Akpo Far East, so testing growth, either prospective resource that's near field, contingent resource. And then as we move into '27, the focus will be on infill drilling Egina and Akpo, so three wells there. So that gives us in the kind of near term, if you like, at the end of this year, the kind of barrels that are coming on stream. It will be early '27, but barrels come back on stream and rest of natural decline. and equally gives us some more certainty on prospective resource, contingent resource and how that may play out. On the latter, I think reality for the tiebacks is Akpo Far East is quick because it's 5 kilometers from the FPSO. So we hope to get first oil from that in the success case in less than 2 years. And I think the wider tieback opportunity set, we didn't talk about it today really, but Preowei near Egina, there's Egina South, which is a similar size discovery to the south of Egina. Those things are kind of 3-year cycle. And again, we are optimistic of making project progress on those this year, and then that would be Preowei first oil '29. Egina South, a bit more uncertain, but again, 3-year cycle, so kind of end of the decade. Akpo, which we did mention is a potential tieback to Agbami. And again, similar to the well that we will drill probably end of this year, early next year, that's an appraisal well. So again, it's discovery contingent resource. And depending on what we find in that appraisal well, that's again circa 3-year cycle tieback to Agbami. So I think I'd characterize it good campaign of infill drill coming in the short term, kind of end of this year, good testing of contingent resource that gives us kind of a lot of options for growth barrels end of the decade. And then that leaves us kind of one more gap, which is, well, what more infill drilling is there to do before the end of the decade to keep production up in the fields. And so I think there we see 2 or 3 options at least in Egina and Akpo, so potentially '28, '29. And in Agbami, 6-well campaign is pretty big anyway, but we're working there on is there another similar campaign a year or so later. So I think we'll be on and off active on the infill drilling in summary through to '29, 30 with the aim of sustaining base production. And again, in parallel, that keeps us going while we grow the kind of contingent resource projects and prioritize which of those are the best to do. David Round: Okay. That's really helpful. And sorry, just a final one, just around CapEx for this year. I mean, is that mostly long lead items? Oliver Quinn: It's -- there's some long leads in there. I think the range that you see is really the timing of rigs arriving. So it's a classic year-end issue. So we're planning on Q4, but those rigs could arrive just contractually operationally, possibly Q3, and they could equally arrive late Q4. So it gives us a bit of a range on that number. But it's primarily -- we're assuming the wells are drilling Q4, so it's CapEx in the ground as it were. We did put some numbers in some CapEx into long leads last year for Agbami, for example. So that was done kind of '25 mainly. Operator: Our last question comes from David Mirzai with SP Angel. David Mirzai: Firstly, on exploration, you've got Far East Deep. You've got [indiscernible]. Is this in reference to deeper reservoirs or down fault? Have you intercepted them? What's the reservoir like? What's the kind of risk both around volumes and deliverability in regards to these prospects? Secondly, appraisal. You pointed out your contingent resources on Preowei on Ekija in South in Nigeria, but also the existing Gardenia discovery in Equatorial Guinea. Obviously, these discoveries have been around for a while. You've had capacity in nearby facilities and they haven't been developed. What's the key hold up, the key contingent reason behind these resources not being developed to fully utilize their respective FPSOs? And just lastly, on scale, I mean it's quite kind of observable to any analyst and investor that the market wants fewer oil and gas companies with greater scale, broader portfolios, more ability to finance their own developments and that they reward effectively higher cash flow with lower debt levels and with greater liquidity. Now having gone through the process of combining in Prime, that's clearly the next step forward for you. And I just want to kind of get your thoughts around what scale is enough or what your investor base is really looking for you to bring you up to the next level. Oliver Quinn: Yes, thanks for the questions. I think we start with the first one, the exploration point and kind of split that up. Akpo Far East is exploration. So that is prospective resource, let's say, it's kind of 1 in 3, 1 in 4 chance of success geologically. I think -- the commercial chance of success on the back of that is extremely high because it's very close to the existing infrastructure. It's within the kind of field physical ring fence, if you like. So the economics are extremely compelling. So it wouldn't take a huge volume there to reach commerciality. So that one is about geological chance of success. I think the others, just to segue that. So Ekija Egina South are appraisal. So those are contingent resource for us today. So the discoveries that we think, again, are strong candidates for tieback and development, but they do need some appraisal drilling to confirm volumes and technical parameters. And then Preowei is slightly different again because that is actually reserves for us, that's 2P reserves. And that really reflects the fact that Preowei has been very advanced as a project. It was delayed in COVID as many things in terms of CapEx contracting costs, but it stayed in 2P reserves for us because it's very advanced as a tieback to Egina, and that's a project that we are pushing with the operator and our partners to mature this year towards a final decision. So they're all slightly different. I think the only pure exploration one in that set is Akpo Far East. The others are really about appraisal and again, just rightsizing, improving commercial volumes. I think the second question, the wider point on Gardenia and some of the other resources. Look, I think there's a timing point to a lot of this stuff. So in two respects, one, the projects themselves and actually the second one, the market, which I'll come back to because I think it also addresses your third point. But if you look at our three FPSOs in Nigeria, huge fantastic facilities, huge capacity. They've been full for most of their life, of course, and their varying ages. They are in this natural decline phase, which you see in the base production. But what that means is there's an optimal timing point here of saying, well, actually, when is the right time to develop resource to backfill those facilities. And that's now because you don't just want to be able to bring a small amount of resource in. And of course, you want -- for the economic development, you want to be able to maximum development of something like a Preowei. So I think the timing point is partly on the infrastructure and when is that infrastructure available, when is the right time to backfill. I think specifically, again, on EG, look, we've had that block for a couple of years, '31, but having worked that through, matured it, particularly Gardenia as a discovery. Again, that's a timing point in that the monetization is through the existing EG LNG brownfield facility. And so it's the optimal timing of doing the project, knowing that there's capacity in the brownfield infrastructure, which you will use to produce LNG off the back of it. So I think that timing is now. So again, we'll make decisions on all of those through the coming period in terms of the right thing for capital allocation. But certainly, the project aspect has unlocked. I think more broadly, again, the second point on that, where is the industry? And I think you alluded to it again in your third question, but the industry is back in a kind of growth mode. I think a lot of bigger companies are short of resource. And so there's a lot more support for the right type of project, the right type of CapEx. Now again, from our perspective, we are super disciplined on the balance sheet. So lots of good opportunities, but what we're not going to do is overleverage the balance sheet, expose ourselves to CapEx overruns, et cetera. So we'll do it in a prudent way, but I think it's a good time to be maturing contingent resource and pushing that into reserves and ultimately monetization. So there's a macro backdrop, I think, is important there as well. I can move on to the third question, David, or if that covers your first two. David Mirzai: Sorry, I was just being unmuted there. Yes. No, just to dig down on Akpo Far East, what is the geological risk, sorry? Oliver Quinn: Geological sorry, specifics. Yes, it's trap really. So the reservoir is same as the Akpo field. So we understand it well. It's a phenomenal in the detailed kind of type permeability reservoir, super good fluids. So the thing on Akpo Far East is the trap. Is there an updip trap that works? And then I think there's a secondary more commercial risk on fluid. But that's secondary in two senses, one that we have a good handle on the seismic. So we think we understand that fluid and it's oily and we can characterize that. And actually, the second part of that, Akpo, of course, is a very gassy field, and we export that gas. And as Aldo just talked about earlier, we've got improved pricing on that gas as well. So I'd say that's a secondary risk, but the geological -- fundamental geological risk is trap, yes. David Mirzai: That's great the first two. Obviously, question three around scale. You've talked in your first two answers that you're being prudent with the balance sheet because cost overruns. Obviously, there's that argument that if you are twice as large as you are now, you have to be a lot less risk averse. Oliver Quinn: Yes. No, I think it's a great question. And I think in terms of the strategic position of the company, again, I'll take a step back. 25 years ago, we were Africa Oil as it was, a completely different company, much, much smaller in scale. You roll forward through that period, we've doubled reserves, production, et cetera, which has been a big step forward in the scale sense. I think that has allowed us to mature some of these projects in a better way with more confidence because of the scale. So I think it speaks to your point. As we then look forward, look, I think there's a balance here because I recognize and agree with the points you make about the industry. I think it is overdue this space within the industry, let's say, the international independents. It is overdue some consolidation, some capital efficiency, G&A efficiency, et cetera, absolutely. And we see that. I think when you come to execute around that, I think, again, our message is disciplined. So yes, the ultimate prize does all the things that you described, again, agree with that. So for us, it's not so much that fundamental principle. It's the pathway to get there. So again, we look at the business today, it's incredibly strong balance sheet. We have some natural decline in production this year, but it's arrested and we go back into kind of growth through the end of the decade. We didn't, for example, in this call, talk about Venus and Namibia, but Total have signaled very publicly that it's FID this year that adds barrels for us in 2030 on their time line. So we go back into that mode. So I think great. But what we're saying is, look, we protect that. That's always the #1 job is to protect that business, make sure it's robust. But equally, go and look at inorganic transactions that are accretive to that. And then they really have to be. We don't want to dilute that business just for the sake of scale, but we recognize there are steps that we could make that give us both scale and they are accretive. And those are the things that we are kind of narrowing our focus to. But I think short answer is yes, we are still active in that world. We still look at things. But again, we do it with rigor and discipline. Operator: There are no further questions at this time. I will now hand back to Mussannah to read through your written questions. Mussannah Chowdhury: Thank you, operator, and thank you once again, everyone, for joining today and submitting your questions. I'll go straight into the questions. So I think one for you, Oliver, is given the transformative potential of the Venus discovery, we currently have 3.8% effective interest through our stake in Impact. While this free option structure is highly capital efficient, does management view this level of exposure as sufficient to capture the full value creation potential of the Orange Basin? And is there potentially a pathway or a world where we increase that exposure? Oliver Quinn: Yes. Look, I think it's obvious question on Namibia and Impact. And again, for the third time on this call, take a step back. I mean, if you go to where we were a few years ago with this, Impact has done a fantastic job over a decade of driving Venus as a target at play, attracted TotalEnergies in, got the well drilled, made a great discovery. As co-owners of Impact, we're faced with the kind of interesting dilemma here that this huge world-class discovery, but of course, it quickly needs capital funding and capital funding of a big scale. I think as we've outlined many times on these calls, we've got a funding solution in place. We're not exposed to the capital, and we transformed that into a kind of CapEx demand that we couldn't fulfill into one that becomes a growth is a growth opportunity, adding barrels in 290. I think that then takes you to a place that says, well, it looks great. We'd like to have more. But I think with respect, we have another large shareholder in Impact. It's really the two of us own kind of 97%, 98% of that company now. And so we both see that. So I think, yes, in principle, of course, we'd like more exposure to a project with no CapEx or risk exposure and lots of barrels coming. But recognize that equally our fellow shareholder also sees the same attraction. So yes is the short answer, but the execution path on those things is a bit trickier. Mussannah Chowdhury: And then one for Aldo. Aldo, could you please give some more detail on the Agbami impairment and the increased costs expected going forward? Aldo Perracini: Yes. Of course, I think in Agbami was what we tried to explain throughout the materials that was not just related to one single item, right? So it was a combination of lower oil price and an increase in costs, mainly in relation to the life extension of the FPSO. So in terms of oil prices, I think that's obvious, right, throughout 2025 in relation to the decline. And then more specifically in relation to the Agbami FPSO life extension, Agbami will continue to produce beyond 2044, which is currently our license -- next license renewal period. So there's a significant amount of reserves already as 2P to be recovered from the field. However, what the life extension allow us to do not only to recover these additional reserves in a safe and reliable way, but at the same time, allow us to continue to invest or to develop or to plan for bringing contingent resources as 2P, right? And the 2P numbers are the ones we use for the impairment calculation, the recoverable value, but the 2C numbers, so the additional few wells that Oliver mentioned beyond the campaign 27, 28, [ Ika ], which is a to the Agbami FPSO, as well as other nearby opportunities outside our blocks -- those will all -- would all be produced through the Agbami FPSO. However, we need to make this investment upfront to extend the life of the facility and make sure that we comply with all the requirements and certification as well as having a reliable FPSO. So I think it's just a reflection of that. And when we get to mature midlife fields that we have to go through this exercise. So that's the detail behind the impairment on Agbami. Mussannah Chowdhury: And just two more, I suppose, for you is can you give us some thoughts on the percentage of total hedging for 2026? And I think the second from this investor was can you just give us some color on our plans for the RBL going forward? Aldo Perracini: So first of all, in relation to hedging, we have a policy where we hedge between 70% to 100% of our post-tax net entitlement production on a rolling 12-month basis. So what does that mean? It means that we check first, the amount of barrels that are exposed to oil prices, right, as we have cost recovery, for example, in our agreements in Nigeria, that means that not all barrels are exposed to oil prices, right? So we first calculate the post-tax and net entitlement and out of that, we hedge between 70% to 100% on a rolling 12 months basis. Now we make a combination of either physical port sales or swaps where we lock in the price that's close to the forward curve at the moment that we enter into the hedge. But we also have a mix of solar and food structures where we keep some participation on the upside as well for a certain percentage of these hedges. So that being said, at the end of 2025, we had approximately 3.5 million barrels of oil for 2026 sales that were hedged through a combination of physical and financial instruments. Out of that, 2.3 million are on the first half of 2026, which those are primarily hedged through the physical for sales, so through the physical offtake agreement with an average floor price of around $62 per barrel. And in the second half of the year, we have 1.3 million barrels hedged using a mix of swaps and collar structures. So we provide good downside protection, but we also retain some exposure to the upside. So that's in relation to the hedging part. For the RBL, I mean, as we saw through the presentation, our numbers, we -- it was very important for us in 2025 to pay down a substantial amount of the RBL facility, right? We had -- we started the year 2025 with substantial large cash position and to reduce financing costs, it made total sense for us to pay that down and reduce the financing costs. As we mentioned throughout the presentation, we estimated that we save around $12 million in financing costs just by doing that. Now the next step in relation to debt management, the last time we refinanced the RBL was in 2023 on the back of the license extensions in Nigeria. So we are now getting to that period where to keep a substantial headroom in the RBL facility, not necessary to utilize the money, but to have the flexibility to do so. We are in the process of refinancing the current RBL and we expect to finalize that sometime soon in the first half of 2026. So with that, we increased the RBL capability. But at the same time, we will continue to be very disciplined of how much we draw from the facility to reduce financing costs. Mussannah Chowdhury: Thanks, Aldo. And then Oliver, I'll put this one to you, and it's something you briefly touched on a little earlier. How much risk do you see when it comes to securing the Nigeria drill rigs this year? And if you could just give us some more color on that? Oliver Quinn: Yes. No, I think we're not concerned about that. I think we're very advanced, both joint ventures in the recontracting process. So I think we'll -- we're very confident those rigs will come this year that we'll get back to drilling. And again, I think what's been a quiet period for us, and that reflects our production, but actually, we're going to turn that around with those rigs coming towards the end of the year. And again, a combination of infill drilling, short-term barrels and getting back to testing some contingent resource and long-term growth and value. So look, I think first part of the year operationally quiet while we finalize the campaign. But then as we move into the latter half, it's pretty exciting for us to have two drill rigs again active for a prolonged period on our major assets. So I think that's quite a positive view to the year overall. Mussannah Chowdhury: Oliver -- and just keeping on Nigeria, as a question, our reserves have dropped from 2024 to 2025. Of course, there's been a portion of production in there as well, but maybe you can give some color on that and how we're arresting that decline. Oliver Quinn: Yes. And again, I think if you look at the shift in 2P, that is dominantly the produced resource. I mean every year, you're going to get some minor ups and downs on your kind of existing well stock and fields based on latest performance. But again, when you look at the year, it's really around the fact that we've had this, again, longest period in the kind of history of the fields without active drilling and adding new wells. And so you see that in the sense that you produce 2P reserves faster than you're replacing it in that context. But I think again, the two key points are, you look at our contingent resource, that has grown significantly through '25. So again, in terms of options for future value and growth of the business, that's good. And secondly, again, to the prior question, we're very confident that we're getting back to drilling here, not just with 1 rig, but with 2 and sustained campaigns starting end of '26 through '27. And therefore, we'll start to grow again on that time period, which I think is really positive as we look at the cycle, oil price cycle in particular. Mussannah Chowdhury: And just two more before we close off. So when we speak about capital allocation, balance sheet strength and organic opportunities are the first 2 that we speak about. Just what should everyone read from this? And then shareholder returns, of course, and M&A coming third or inorganic opportunities, I should say. Oliver Quinn: Yes. I think we've been very focused on the balance sheet, and we talked about that a lot on this call. And I think, again, that's important as a base to the business. Aldo talked about the moves we made last year. We paid down debt. We've got a lot of liquidity. We've got low leverage. And I think the way people should look at that is it's prudent. It's, of course, a volatile world, and I think our view is it will remain so. So we just have to deal with that. But starting with a strong balance sheet opens up a lot of options for us. It opens up options to allocate capital for organic growth, options to, as we are doing, returning cash to shareholders. And again, we've touched on it, the inorganic growth. It puts us in a very strong position to test from that kind of balance sheet, is there an organic transaction out there that makes sense for us? And is it better than the kind of organic growth capital allocation options we've got in the portfolio today. But that balance sheet gives us choices. And I think that's what's really key in this message is strong balance sheet, strong hedging in place for this year, very, very good foundation to grow the business, right? And there are a number of choices to do that, and we're always seeking to have those choices. And in parallel, again, we've been very strong on shareholder returns to recognize that we want to grow the business, but equally, we're not going to grow it at any cost. Mussannah Chowdhury: Perfect. And just lastly, and one on EG. Given the size of the prospects in EG, would it be possible to go into EG-31 alone? Or how much are we willing to give away farming to a partner? Oliver Quinn: We're definitely not going to give anything away if I put my commercial heart. But look, I think we're 100% in those licenses. Our partner is GPetrol a state national oil company. And so they have 20%, but they're carried in the early stages here. So it's 100% funding. So look, it's just -- it's a risk allocation and capital allocation that we're not going to do a project at 100%. That's not a statement of view of risk or value on the project at all. It's a point of saying, again, it's a portfolio effect, it's risk sharing and it's bringing in strong partners helps any project, and that's our focus. I think the important point on 31 is, again, we need to be really clear that the Gardenia discovery itself is something that could become a short-cycle fast track development with the right partnership in place. So it's not high-risk exploration dollars. It's lower risk short-cycle brownfield LNG, which could be incredibly low-cost resource for us as a company. So look, we wouldn't do 100%. But equally, we want to hold a material position in the project, recognizing the potential value it can bring to us. And again, I'll go back to the theme of it's around prudent capital allocation and discipline within that. Great growth options, we'll pursue them, but we'll do it in the right way that doesn't jeopardize the company. Unknown Executive: Okay. Thanks, Oliver. That's all the questions we have for today. So operator, I'll hand back to you to bring us to a close. Operator: This concludes today's call. Thank you for joining. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to Universal's Fourth Quarter 2025 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Arash Soleimani, Chief Strategy Officer. Arash Soleimani: Good morning. Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghy, Chief Executive Officer; and Frank Wilcox, Chief Financial Officer. Before we begin, please note today's discussion may contain forward-looking statements and non-GAAP financial measures. Forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release and Universal's SEC filings, all of which are available on the Investors section of our website at universalinsuranceholdings.com and on the SEC's website. A reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the quarterly press release and can also be found on Universal's website at universalinsuranceholdings.com. With that, I'll turn the call over to Steve. Stephen Donaghy: Thanks, Arash. Good morning, everyone. We had an outstanding quarter with an adjusted return on common equity of over 46% and results were solid across the board. I'm deeply proud of the progress we made in 2025. We're continuing to see the benefits of Florida's legislative reforms, which have visibly stabilized the market, benefiting all stakeholders. Our capital position is robust, and I believe our reserves are the strongest they've been in our history. We are already well underway in negotiating and placing our 2026 reinsurance program with a substantial portion of our first event catastrophe tower already placed as we stand here today, along with meaningful additional multiyear capacity secured for the 2027 hurricane season. I'll turn it over to Frank to walk through our financial results. Frank? Frank Wilcox: Thank you, Steve, and good morning. Adjusted diluted earnings per common share was $2.17, up from adjusted diluted earnings per common share of $0.25 in the prior year quarter. The increase mostly stems from a lower net loss ratio and higher net premiums earned and net investment income. Core revenue of $403.6 million was up 4.4% year-over-year, with growth primarily stemming from higher net premiums earned and net investment income. Direct premiums written were $483.7 million, up 2.7% from the prior year quarter. The increase stems from an 18.2% growth in other states, partially offset by a 3.1% decrease in Florida. Overall growth mostly reflects higher policies in force and inflation adjustments across our multistate footprint. Direct premiums earned of $538 million were up 3.6% year-over-year, reflecting direct premiums written growth over the past 12 months. Net premiums earned were $363.4 million, up 4.3% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio. The net combined ratio was 87.5%, down 20.4 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, slightly offset by a higher net expense ratio. The net loss ratio was 61.3%, down 21 points compared to the prior year quarter. The decrease reflects better current accident year results and the inclusion of Hurricane Milton in the prior year quarter. The net expense ratio was 26.2%, up 0.6 points from 25.6% in the prior year quarter. The increase was primarily driven by higher other operating costs. During the fourth quarter, the company repurchased approximately 210,000 shares at an aggregate cost of $6.9 million. On January 7, 2026, the company announced a new share repurchase program under which the company may repurchase up to $20 million of its outstanding shares of common stock through January 8, 2028. On February 4, 2026, the Board of Directors declared a regular quarterly cash dividend of $0.16 per common share payable on March 13, 2026, to shareholders of record as of the close of business on March 6, 2026. With that, I'd like to ask the operator to open the line for questions. Operator: [Operator Instructions] Our first question comes from the line of Paul Newsome from Piper Sandler. Jon Paul Newsome: Congratulations on the quarter. I was hoping you could give us a little bit more thoughts on the competitive advantage -- competitive environment today. We hear just a ton about price declines and increased folks in the market. How do you see it from your perspective? Stephen Donaghy: Paul, thank you. This is Steve. We see the competitive environment very favorable to Universal at this point. Our relationship with our agency force, the rates that we've implemented are favorable. And I think we're just seeing a whole lot of positive uptick in markets that we've opened due to analyzing our internal profitability model. So we're open in more markets. We have more business coming in across those markets, and I feel good about the business. So as you know, it's always a constant analyzation of markets that are favorable versus nonfavorable, closing certain markets, opening certain markets, but we feel good about the business in Florida in particular, and have seen very positive things as a result. Jon Paul Newsome: Do you have any thoughts on sort of the regulatory environment? And we hear a lot about the issues with affordability and whether or not the insurance industry will be asked to essentially kind of give back profits or something like that. Any exposure or thoughts on that probably? Stephen Donaghy: I would add that without the actions taken by the state of Florida and Governor DeSantis, we would not be in the position -- the industry would not be in the position we're in today, not just Universal. So without action, monies would continue to be going to third parties that weren't impacted by a claim, and that wasn't good for anyone. I think as we continue, and you've seen we've had modest declines in '24 and '25, we kick off our actuarial study on rate for '26 at the end of March, and we'll continue to do the right thing. And a decrease in rate does not always result in a decrease in earnings as a result of the favorable legislation and the less severity and frequency that we're seeing and you compile that with potential reductions in reinsurance and expenses, it's a very favorable environment right now. And we look forward to continuing to return funds to insurers as a result of that. And I would also add, too, our retention, Paul, has never been better. So we're in a very good place. Operator: At this time, I would now like to turn the conference back over to Steve Donaghy, Chief Executive Officer, for closing remarks. Stephen Donaghy: Thank you. I'd like to thank all of our associates, consumers, our agency force and stakeholders for their continued support of Universal. Thank you, and have a great day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Qazi Qadeer: Good morning, everyone. This is Qazi Qadeer from Panoro Energy. I'm the CFO. With me joining today is Eric d'Argentre, our Chief Operating Officer; and Julien Balkany, our Chairman. We are also supported by Andy Dymond, who is our Head of IR and Corporate Finance. I'll read out the disclaimer to you before we begin. This presentation does not constitute an offer to buy or sell share. So there are risks and uncertainties, including, among others, uncertainties in the exploration and for the development and production of the gas and oil interest in estimating those as well. And we basically -- we are going to discuss some forward-looking statements that are often identified here in these presentations. I think the disclaimer is understood to be read, so we can begin. For the housekeeping, we have a feature to do question and answers. [Operator Instructions] We are going to keep a disciplined, focused time on this call to take questions because we have a very, very packed agenda today, so we appreciate if the questions keep coming, and we'll try to answer those after the call on an offline basis. Next slide, please [ Sarah ]. I'll hand over now to our Chairman, Julien Balkany, who will take us through the materials. Julien Olivier Balkany: Thank you, Qazi. Good morning, everyone. Before we move to our Q4 results, trading, financial and operational update, I would like to say a few key words on the transformational and accretive acquisition that we have announced last night. I'm very delighted to announce that we have agreed to purchase an additional 40.375% in Block G offshore Equatorial Guinea from Kosmos Energy. The upfront headline consideration is $180 million with interim adjustments in Panoro's favor from the effective date of the transaction that is January 1, 2025, which expect to reduce the cash payment on completion between $140 million to $150 million. Closing is anticipated sometime during summer 2026. There is a further deferred contingent consideration of $29.5 million (sic) [ $39.5 million ] in aggregate link to certain production and oil price thresholds over 2026 to 2028. I would like to highlight that ourselves and our partner, Kosmos have been able to fully derisk the transaction, mitigating the execution risk, clearing all governmental approval and preemptive rights in advance. The only outstanding approval is CEMAC, which is an anti-competition assessment from Central Africa regulator, which we expect to be concluded within a set 6-month timeframe from submission to facilitate completion in summer 2026. As of the effective date and initial consideration, we are acquiring 46 million barrels at an enterprise value of about $3.91 per barrel, which is over 50% discount to Panoro last traded multiple market benchmark, including broker valuation and regional transaction comparables in West and Central Africa. Production net to the interest being acquired in 2025 was around 8,200 barrels of oil per day. In terms of funding to finance this acquisition, we launched yesterday an equity private placement at yesterday closing price, at no discount, for just below $50 million, which we have successfully closed and was multiple times oversubscribed last night. The demand for the placement and fact we completed it at no discount is a clear testament to the quality of Panoro asset base, including Block G and the compelling terms of the acquisition. We are also seeking to utilize the $150 million tap headroom in our existing bond framework. And today, we are commencing fixed income meetings with prospective bondholders. Next slide, please. Transformative impact, materiality and longevity. I would say this slide speaks for itself and show the transformational impact on Panoro's operating profile. Based on 2025 full year, the acquisition increased Panoro pro forma production by approximately 80%. And on a 2P reserve basis, it increased Panoro size by over 100%. This acquisition basically doubled the size of Panoro overnight. Other of the many benefits of the acquisition will be the increase and more frequent crude oil lifting, giving us better and greater regularity with the oil price through the years, which we fully expect to drive material cash flow expansion with the objective to enhance shareholder return for the next years to come. Next slide, please. Block G overview. Before I hand over to Eric d'Argentre, our COO and President, I want to remind people that it is almost 5 years ago today since we announced our entry in Equatorial Guinea and the acquisition of our current 14.25% interest in Block G from Tullow Oil. That acquisition paid back in less than 18 months. And as you can see in the graph on the slide in front of you, our 2P reserve at our last annual report are greater than the 2P reserve at acquisition, showing that we have replaced more reserves than we have produced. There are clearly some parallels with the acquisition we have announced last night, hopefully, at the right time in the current oil prices cycle and Panoro's ability to transact swiftly and with certainty and also the strong support of the capital market and our shareholders. I will now hand over to Eric, who will take you through the operation of not only Block G, but also the exciting and high-impact work program across our wider E&P portfolio. Eric d'Argentré: Thank you very much, Julien. Good morning, everybody. On this slide, on the Block G, you can see on the left-hand side our Ceiba and Okume Complex. So Block G is composed of 2 different oil accumulation, 6 fields on conventional more shallow water and the Ceiba field, which is a subsea development. The key figures on a pro forma basis are very strong. We have 115 million barrels of 2P. Our production for '25 on a pro forma basis is 11,000 barrel of oil per day. As you can see on the left-hand side, the production curve, delivery was strong through the years. 2025 saw a little low on production delivery mainly on the Ceiba field. We have discussed that in the previous reports, quarterly reports on the Ceiba multiphase pump failures or problems. I'm pleased to say that, back in October, one pump was back in service. Another one is being finalized now as we speak this coming weeks. And we expect the Ceiba field to gradually recover production and get back to its full potential in the course of the year 2026. Next, please. So Block G, Okume and Ceiba, it's important to note that it's very large oil accumulation, multibillion barrels of oil in place originally, 1.3 billion on Okume and 1.1 billion on Ceiba field, with the current recovery factor that is rather low at around 20%, 21%. And with our long-term view and extension granted in 2022 until 2040, we expect, with the work program, to recover around 30%. That is the target. And you can see from 2025 going forward on the next 5 years, we have in the first few years, focusing on the recovery of our cluster in Ceiba field, additional well workover and intervention, stimulation, pump optimization on the Okume Complex and then moved to -- in 2 to 3 years in 2028 and forward, on the drilling campaign to add additional drainage point on the Okume field and the Ceiba accumulation over the years that we expect in our 5 years plan to reach -- to get back above 30,000 barrels of oil per day and produce around 55 million, 54 million gross production at moderate development cost, around averaging $10 per barrel. Next, please. So on the large group production, Panoro has delivered a consistently increase of production with a historical level in 2025 at 2,300 barrel of oil per day pre-acquisition. And you can see here, the impact of the 40.3% acquisition of Kosmos interest on '25 pro forma basis. Our production guidance for 2026 on a pro forma basis are around -- between 15,000 and 17,000 barrel of oil per day with the current program. And as I mentioned in the previous slide on Block G, we have as well strong program -- investment program, specifically on Dussafu block in Gabon with MaBoMo Phase 2 drilling starting this summer. And we are on the road to the 20,000 barrel of oil per day net to Panoro Group. That is very strong asset base is as well in terms of cash generation, very healthy and strong. You can see on the right-hand side, we are very resilient at oil price. Even at $60 a barrel, we have a healthy cash flow generative way above our pro forma bond feature and going up to the $800 million and $900 million mark once the barrel price goes to $75, $80. Next, please. So we have discussed this morning the transaction on Block G, but let's not forget the rest of our asset base and especially the Dussafu asset, which is a cornerstone asset for Panoro, has strongly delivered production with a very good upside for the years. And here again, with historical peak production in 2025, about 33,000 barrels. We have a strong 2P base. As I mentioned, the MaBoMo Phase 2 was FID-ed and drilling will start very soon. And we have -- in parallel, we are maturing with the operator Bourdon FID. Bourdon was discovered late '24, '25. It's a 25 million barrel recoverable reserves and we expect FID to be sanctioned in the coming months. Next, please. On Tunisia, it's a more modest asset base, but very steady, very important in the portfolio as well. We have delivered good production last year, above 3,000 bopd fighting decline, maintaining our baseline. And we have a list of productive project and well intervention in 2026. And we are maturing some drilling project for later '27, '28, that will not just maintain the plateau or extend the plateau above 3,000, but increase production on the Tunisian asset. Thank you. Next slide, please. Another exciting project we have, on exploration. We have the Niosi and Guduma blocks, which are, as you can see right in the middle of a very prolific basin with the Dussafu production and the Etame field of VAALCO very close to it. And we have finalized the seismic survey back in December and January. It's now being processed and interpretation this year and part of 2027 to mature the already identified prospect, whether on the top corner of the Dussafu block or on the Niosi trend as well. That's a very, very exciting project, and we aim to well being sanctioned sometime in 2028. Next slide. Another very exciting project in block, Block EG-23 in Equatorial Guinea. We have high-graded Estrella discovery, very exciting discovery with well tested above 6,700 barrel of oil per day and almost 50 million standard cubic feet of gas. It's about 10s kilometers from existing producing facilities of the Alba field, making it a very fast track and easy tieback. And you can see next to Estrella, the green Rodo discovery that would conceptually could be a commingled development of Estrella and Rodo with one platform and drilling center. So another exciting project to follow. Next slide, please. Thank you. I will hand over to Qazi Qadeer to take you through the full year results. Qazi Qadeer: Thank you so much, Eric, and good morning, everyone. I'm going to discuss very briefly the 4Q and full year highlights for 2025. We are looking at revenue of $216 million, a little bit less compared to 2024, but it is a function of 2 items, which is oil price and the composition of liftings, which then basically affect the cutoff of the sales if they are very, very close to the period end. EBITDA was $98 million approximately. Again, this was driven by the volumes lifted during the year versus the realization for the year compared to 2024. We came exactly on our guidance on the capital expenditure of USD 40 million, which we believe is a good result for the discipline of capital we maintain at the company. Strong cash position, $77 million, and we are basically fully drawn on our bond, which we raised last year and very, very healthy and strong cash flow generation from operations at USD 73 million. We are looking at cash distribution of NOK 50 million, which we have announced this morning to be paid on or about 10th of March. And just looking at the few years, we have started to declare our distributions, accumulated basis is about NOK 710 million, with a very healthy set of buybacks as well at NOK 135 million. Next slide, please. Just to talk a little bit about the shareholder returns. So effectively, we have returned 30% of our current market cap. Obviously, this will be a little bit different if we consider the market cap of this morning, but certainly when we wrote this presentation, 30% of market cap since we started consistent distribution since March 2023. A very healthy yield so far we have maintained, but obviously, we are constrained by the framework that we have under our bond terms, which basically give us a finite capacity for distributions in 2026, which is about, in equivalent terms, USD 21 million. And off this, we have distributed for this quarter about NOK 50 million equivalent. Next slide, please. We are going to talk a little bit about guidance on liftings and also discuss how the announced acquisition affects our business. Very, very positive change from the acquisition of Kosmos' interest, which is expected to be fully available to us in 2027, but certainly from the later part of the year when we complete the transaction in the third quarter 2026. On an existing basis -- business basis, we are talking about accumulation of inventories until the first half of the year, which is about close to 600,000 barrels, but very, very active sale campaign in later part of the year. So for guidance purposes on existing asset base, 3 million to 3.5 million barrels of sales versus assuming on a pro forma basis, we get about 5.1 million to 5.5 million barrels of sales for this year. Now what it also does is that it increases our frequency of the lifting and during the completion period with Kosmos transaction, we are still taking the benefit of a more spread out profile of our crude liftings, which also exposes us to more data points on the pricing for our crude. Next slide, please. So again, just talking about how the buildup for cash has been for this last -- past year. As I mentioned very healthy cash flow generation from operations. We have also between the recycling of inventories through the advances. We are close to about $100 million of cash flow including operations. With our discipline delivery on the capital expenditure of our $40 million and after paying off all our obligations, we are returning about close to $40 million in share buybacks and cash distributions for this year, ending with about $77 million of cash at the balance sheet as of 31st of December 2025. We are also, as you have seen, announcing a tap issue for a $150 million bond to fund the acquisition of our announcement this morning to take the working interest of Kosmos Energy's Block G 40.375%. This will basically be the source which will basically fund this acquisition later in the year. For guidance purposes, we have some capital expenditure, which is about USD 50 million to USD 55 million on an existing basis of the assets. And with -- on a pro forma basis, assuming we complete the transaction with Kosmos, it is going to be another $15 million to $17 million higher. Next slide, please. So just in summary, I will let Eric summarize the messaging and then we'll go straight into Q&A. Eric d'Argentré: Thank you, Qazi. As a summary and the main message for you today is that we are delivering on our strategy -- on our growth strategy. The first pillar being the production baseline and the reserves, we have produced highest production this year -- in 2025 last year, at record level. We have FID'd the MaBoMo Phase 2 as we discussed. That will take us back to 40,000 on the Dussafu block. That's a very exciting Phase 2 drilling. So we have a consistent organic reserve replacement, whether it is in Gabon or in Equatorial Guinea as well as in Tunisia. In parallel to this strong production and reserve base, we are maturing growth project in our asset portfolio with the Bourdon discovery in Gabon. We mentioned -- and I mentioned the Estrella project in Block EG-23, for which we expect resource recognition very soon. And the new 3D seismic we just acquired with our partners, BW Energy and VAALCO, Niosi, Guduma and Dussafu block will allow us to mature and firm up extra additional growth within the south of Gabon area where we are already. And in terms of corporate, in our growth strategy, Panoro has a strong track record of accretive M&A. That's part of the company DNA, and we have delivered on that strategy with the announcement yesterday of the acquisition of the 40.375% interest of Kosmos in Block G offshore Equatorial Guinea. Thank you. That's the last slide. We'll now go on the Q&A for some time, and I would remind you to try and focus on the big news of last night and this morning on Block G, so that we stay focused. Thank you. Andrew Dymond: We will now open up to Q&A. As has previously been mentioned, for obvious reasons, we are on a tight timetable today. If we don't manage to answer your question or get to you, please do contact us on info@panoroenergy.com or ir@panoroenergy.com, and we will get back to you. First question is from Stephane Foucaud. Stephane Guy Foucaud: It's really around EG and around the production profile over the coming years. So two on that. The first one, could you confirm if this production profile is indeed just on the 2P case or whether it includes some 2Cs to achieve that target? And then I think you talk about a $540 million of CapEx from '26 to 2031, I think it is. Could you give a sense of the timing of that CapEx? How it is spread over the years? Eric d'Argentré: All right. Thanks, Stephane. So to answer your question, we have, in terms of production and the 5 years plan about your 2P, 2Cs, it's -- we are talking here about the 2P, not the 2C in this 5 years plan. The 2C would come as an addition to this 5 years plan. So the drilling we mention is on current recognized reserves, but not all developed, so underdeveloped reserves. And the other part of your question on the CapEx. So the next 5 years plan a net rev means producing around 55 million barrel of oil at an average cost of $10 per barrel. You can well imagine that some of the work like stimulation of light workover on the Okume Complex may come at $5, $4 to $5 a barrel development. Drilling in Okume Complex is more within the $10 to $12 or $13 range, and the Ceiba drilling will be around $15 to $17 per barrel development cost. So the average of this large portfolio is around $10 per barrel development cost. Stephane Guy Foucaud: Okay. So if I understand therefore, looking at the slide, that means that probably the higher cost, in overall, probably come in the later years rather than the earlier years of the program? Eric d'Argentré: Yes, exactly. The -- yes. The Ceiba drilling needs more work, more engineering. It's higher investment. So we are going for the conventional shallow water first, easy barrels on Okume wells -- well stock, maximizing the existing well stock, and then we will go on drilling. And the Ceiba drilling will come after the Okume drilling campaign. That's where we are very much aligned with the operator. Andrew Dymond: [Operator Instructions] Okay. On the basis that there are no further questions pending, I'd just like to remind you if you do have a question after this call, please feel free to contact us online and we will get back to you. Otherwise, that will conclude today's webinar. Thank you very much. Qazi Qadeer: Thank you. Eric d'Argentré: Thank you very much. Julien Olivier Balkany: Thank you all.
Operator: Thank you for standing by, and welcome to the Woolworths Group FY '26 Half Year Earnings Announcement. [Operator Instructions] I would now like to hand the conference over to Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead. Amanda Bardwell: Good morning, everyone. Thank you for joining us today for Woolworths Group's half year results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Dharug Country and pay my respects to Elders past and present. Joining me this morning are Stephen Harrison, our Chief Financial Officer; Annette Karantoni, Managing Director of Woolworths Retail; Amitabh Mall, Managing Director of Group eComX; Sally Copland, Managing Director of Woolworths New Zealand and Dan Hake, Managing Director of BIG W. I will start with an overview of the group's performance in the first half and then provide an update on our medium-term strategic priorities. Steve will then cover our financial performance before I conclude with an update on current trading and the outlook for H2. Turning to Slide 4. We took deliberate action to rebuild customer momentum during the half through investment in the areas that matter most to our customers, including value, fresh and convenience. We are seeing greater stability across the group following key leadership changes and structure changes that are better aligned to our priorities and our execution in the half has progressively improved. However, we know we have more to do to deliver the best experiences for our customers. Turning to our financial performance for the half. Group sales in H1 increased 3.4% with all businesses growing sales on the prior year. Group EBIT, excluding significant items, increased 14.4% with solid EBIT growth from all of our reporting segments, supported by CODB reductions. Excluding the impact of industrial action in Australian Food in the prior year and supply chain transition costs, group EBIT would have increased by 7.9%. In August, we spoke about taking action to reposition the group for long-term sustainable growth, and we laid out our strategic priorities. While the key focus in the half has been on rebuilding momentum in the short term, we have clear strategic agenda and have made good progress on these priorities. We also said that we expected to deliver mid- to high single-digit reported EBIT growth in Australian Food for the year and an improved result in New Zealand Food and BIG W. We remain on track to deliver this in F '26. Turning to Slide 5. Customers remain value focused. We have seen value-seeking behaviors continue in an increasingly competitive retail environment. Broader cost of living pressures continue to weigh heavily on our customers' household budgets. Price remains the top priority for Australian customers when choosing where to shop with quality and freshness and range also critical. After signs of tentative improvement in customer sentiment towards the end of last year, persistent inflation and the prospects of interest rate rises have seen customers again prioritizing ways to save. They are telling us that compared to last quarter and a year ago, they are buying more products on special comparing prices across supermarkets and cooking more at home. Turning to Slide 6. We're clear in quarter 1 that the sales momentum in Australian Food was below our aspirations. And in response, we invested to improve our offer in value, fresh, availability and convenience. We upweighted our rewards and eCommerce offers as well as increased weekly promotions on key family lines like bananas, nappies and chicken breasts, to provide customers with more value and more reasons to choose Woolworths first. We also added more than 350 new products to our lower shelf price program with over 800 products now part of the range. We know that fresh is the gateway to the supermarket shop, and we invested more team hours across key fresh categories to ensure the best offer was consistently onshore and to improve freshness and the customer experience. We also remained focused on improving our retail execution. We held more stock weight on key promotional lines to improve availability for customers and increase the number of store deliveries over the weekends, helping to support an improvement in out-of-stocks voice of customer, which is up 10 points compared to the prior year. In December, we unlocked $1 million more online and delivery pickup slots to provide our customers with even more flexibility and convenience in the lead up to Christmas. We also provided highly competitive offers to new customers. Turning to Slide 7. The actions that we've taken have seen improved momentum in quarter 2 relative to Q1, with a stabilization in market share. Excluding the impact of industrial action in tobacco, Woolworths Food retail sales increased 4.7% in Q2, driven primarily by item growth, and we have seen this momentum continue into H2. Woolworths Food Retail VOC NPS ended up 10 points compared to the prior year, showing a strong recovery from the impacts of industrial action in the year. In addition to out-of-stocks, which I've mentioned, values the money scores have also improved consistently over the last 12 months, up 8 points on the prior year. Turning to Slide 8. We're also transforming our digital experience to deliver the best shopping experiences for our customers. The number of customers using our digital tools to improve their shopping experience is increasing, whether this is to make the shopping experience more seamless, get the best value or track their spending. We already have over 1 million customers using digital lists to shop each week in store and online. During the half, we launched Snap & Shop, which converts handwritten shopping list into digital list. It uses AI technology to match the items to the product the customer has bought before. I'm also delighted that Olive our much-loved digital shopping assistance is set to take a major step forward over the coming months through our extended partnership with Google. As part of this, Olive will transform into a market-leading conversational shopping companion, moving beyond the search and Q&A tool. Through agentic AI, Olive will bring together the shopping journey for customers, making the weekly shop easier in-store and online. Olive will be able to tailor menus based on customer preferences, identify specials and boost products as well as build faster, more predictive baskets. Customers can interact with Olive in different ways like sharing a photo of a handwritten recipe or using voice to build your shopping list. Turning to Slide 9. As convenience continues to increase in importance for our customers. Our large store network and leading eCommerce business remains a key differentiator. A modern, well-located store network is critical to maintaining our lead in an increasingly competitive space. During the half, we continued to invest in our store network to provide the best experience for our customers looking to shop in store, pick up via Direct to Boot or order a Woolworths on-demand or MILKRUN rapid delivery. Direct to Boot is now available in around 70% of our stores in under 2 hours and has rolled out to a further 60 stores in the half and MILKRUN to a further 135 stores. We also finalized a new partnership with DoorDash, which will be rolled out in H2. On-demand options are our fastest-growing propositions as customers seek more convenience with under 2-hour eCommerce sales growing at a compound rate of over 80% over the last 2 years. Moving to the next slide. While our primary focus has been on rebuilding momentum in the short term, we have also continued to progress our longer-term strategic priorities. We know we have world-class assets across the group, which give us a unique enduring competitive advantage and significant potential. If we deliver our strategic potential, I have great confidence in our ability to deliver long-term sustainable growth for shareholders. By delivering sustainable growth in Woolworths retail, ongoing improvements in New Zealand Food and BIG W, supplemented by higher growth from our complementary businesses and services. Our ambition is to deliver mid- to high single-digit EBIT growth over the medium term, supporting our double-digit total shareholder return aspiration. Turning to our first strategic priority in Australian Food. Our ambition is to be the first choice for customers in our cornerstone food business. Food is what we're famous for and a thriving food business provides a strong platform for the group's long-term success. We're making meaningful shifts for our customers to put us first and we're determined to win in fresh, convenience and range while delivering meaningful value and executing consistently well. We've made good progress during the half, but there is more to do, and this work will continue in H2. I will call out a few highlights from the half across 5 key areas. The fresh food people promise means delivering the best quality and fresh varieties for our customers. During the half, we progressed our strategic sourcing program to increase our direct supply of Fruit & Vegetables from our best quality producers with a review complete for around half of our Fruit & Vegetable sales volume. We know we need to improve our range and value across our Everyday Needs categories like pets and baby and we have been slower than we should have been to respond to this Heightened competitive environment. In response, we've already taken action to address range and pricing gaps as well as enhanced promotional activity to provide more value to customers. We are relaunching our Little Ones, nappies and wipes in baby. And in Pets, we've refreshed our own brand pet food ranges, including Baxter's, Smitten and Petstock's owned Billie's Bowl, which will be rolled out to stores. We have progressed our long-term strategy refresh in these categories with more to come in H2, and we remain committed to improving performance across our broader Everyday Needs category. I have already spoken about our progress in expanding our eCommerce network and increasing our capacity to meet customers' demand. However, we've also made good progress on eCommerce productivity agenda, helping to deliver a 93% increase in eComX directly attributable profit. These initiatives include team picking algorithms and the rollout of improved temperature zones in vehicles with the increase in profitability also supported by mix benefits from strong growth in higher-margin on-demand propositions. Value remains critical for customers, and we remain committed to lower prices for customers and restoring a more balanced net of everyday low prices and specials. We also rewarded our customers' loyalty by providing more value through Everyday Rewards with new campaigns to drive member sales and a high single-digit increase in value returned to customers through points earned. Our retail execution has continued to strengthen, with solid improvements in productivity delivered in the half. As of today, exit gates have been added to over half of our store network, supporting improved stock loss rates relative to H2 F '25. We also remain focused on managing costs through the delivery of our productivity agenda and our commitment to becoming a lower-cost retailer. Moving to the next slide in New Zealand Food and BIG W. On our second strategic priority and is to improve the returns in New Zealand Food and BIG W. Both businesses reported solid growth during the half, supported by their transformation agendas but this momentum needs to be sustained to return to double-digit returns over the medium term. In New Zealand, we completed the rebranding of the New Zealand floor network to Woolworths and rolled out a new store team operating structure to improve the team and customer experience. We have continued to improve our own brand range to differentiate our offer and launched over 280 new products across a number of key categories, which are resonating well with our customers. In H2, we're focused on building customer momentum in a challenging and highly competitive market while continuing to progress our transformation over the medium term. We know that we can further differentiate our offer for our customers through our focus on fresh, range, convenience and everyday value. In BIG W, a more favorable sales mix supported by better execution of seasonal ranges and availability in Clothing led to margin improvements in the half through a higher mix of full price sales. New and improved ranges have supported own brand growth of 8% in H1, which gives us confidence we're taking the right steps to reposition our range to provide better quality and more affordable options. The rollout of RFID technology will also deliver improvements in stock loan and availability. BIG W Markets expanded range continues to resonate with customers, with sales more than doubling compared to the prior year. As BIG W's gross transaction value, including the BIG W Market, increased by 5.8%. We are confident the performance of BIG W can continue to improve, but we will also ensure that BIG W has the appropriate foundation to be successful. Work has begun to separate the business from the group systems, which will enable BIG W to operate on a platform appropriate for a discount department store as well as providing the group with strategic optionality. Moving to Slide 13. Moving to our final strategic priority, which is to grow our complementary businesses and services. These include PFD and Petstock as well as group-wide service businesses such as Cartology, Everyday and Primary Connect. Collectively, these businesses contributed around 1/3 of the group's EBIT growth in the half, with PFD, Petstock and Rewards & Services, making the strongest contribution. In H1, we saw strong sales of double-digit underlying EBIT growth in Petstock and PFD. Petstock completed a value reset during the half investing in key products to improve customer value perception as well as launching a new pet cash loyalty program to complement its Everyday Rewards membership. While PFD growth remain strong, a highlight was the retention of key customer contracts in the QSR channel to support continued growth. We also secured 3 new sites and commenced construction of a new facility in WA to expand our national network. Rewards & Services sales increased by 8.6%, with mobile and insurance combined customers up 6% on the prior year. Cartology also continued to drive margin accretive growth for the group. PC+ delivered double-digit earnings in the half through higher customer volumes and better utilization of warehouse facilities. Turning to Slide 14. To deliver our strategy, we know we need to get the basics right by providing the retail excellence our customers expect from us. We also need to be a simpler business and increase accountability. Last year, we made significant management changes with a more consolidated and focused leadership structure. We now have key leadership in place and embedded a new Australian food leadership team, including in key commercial roles. We are committed to retail excellence and making every dollar count. We have delivered our $400 million run rate cost savings target by December. This has helped us to deliver a reduction in CODB as a percentage of sales in the half as well as fund investment in customer value. Key areas of savings included support office roles, goods for not resale and marketing and IT spend. This has helped us reset our cost culture as we restore and always on low cost discipline across the group. However, we recognize that for productivity improvements to be sustainable, they need to be driven by improving our processes and reducing work for our teams. And our leading AI foundations are already helping us do this, which I'll talk about more on the next slide. On Slide 15, over the past decade, we've established strong foundations to leverage AI through significant investments in digital and data capabilities. We have integrated capability into every part of our business and are now focused on unlocking the next phase of AI to deliver better experiences to customers, team members and to transform our operations and internal processes. This slide shows some of the areas where AI is already making a difference. We're delivering market-leading customer experiences through customer chatbots, which has helped us to automate over 60% of customer service contacts freeing up our team to focus on more complex customer inquiries. Our personalization engine is already delivering millions of tailored offers to our customers every week and I've spoken a not our extended partnership with Google to transform Olive, our digital shopping assistant. In our operations, we've leveraged AI to optimize eCommerce fulfillment for over 0.5 million weekly orders including shortening pick paths for our team members and optimizing last mile delivery routing. We rolled out Gemini for Workspace to our support of the team almost 2 years ago, and the adoption has been incredible. Today, 2 in 3 of our support office team members are using AI tools multiple times a day to unlock greater efficiencies. But what excites me most is how AI is helping our store team. Tools like Quick Assist are already being used by over 6,000 store team members every week, helping them to prioritize the most critical actions for their upcoming Fortnight, delivering a better experience for our teams and our customers. And finally, moving to progress against our sustainability initiatives. Last year, we celebrated a decade of partnership with OzHarvest and we've reached an incredible milestone during the half, providing 100 million meals to Australians in need over the last 10 years. In December, we achieved 100% renewable electricity across our operations in support of our net zero goals. We are also on track to achieve our Scope 1 and 2 emissions reduction targets by 2030. Finally, restoring soft plastic recycling services to our stores has continued with a market-leading 600-plus stores across the network, now offering this service again for our customers. I will now hand over to Steve who will cover our financial results in more detail. Thank you. Stephen Harrison: Thanks, Amanda, and good morning, everyone. I'll start today on Slide 19 with the half 1 '26 results summary for the group. As a reminder, these results are for the 27 weeks ended the fourth of January 2026. The Group sales for half 1 increased 3.4% to $37.1 billion with all trading segments reporting growth. Group's eCommerce sales increased by 14.6% with Australian Food, New Zealand Food, BIG W and Petstock eCommerce sales, all growing in the double digits compared to the prior year. Group EBIT before significant items was $1.7 billion, up 14.4% with the group's EBIT margin increasing by 43 basis points. EBIT margin for all trading segments were up on the prior year. There are some one-off impacts that impact the comparability versus last year, primarily the impact of industrial action in the prior year, which we estimate had a $240 million impact on sales and approximately a $95 million impact on EBIT in half 1 F '25 in Australian Food and supply chain transition costs. Normalizing for both these impacts, group EBIT growth would have been 7.9%, which includes the benefits from our strong cost and productivity focus in the half. Group NPAT attributable to equity holders the parent entity before significant items was $859 million, which was up 16.4%. This reflects higher EBIT, a modest increase in net interest costs in the half, somewhat offset by higher income tax. Group basic EPS before significant items was $0.704 per share, also up 16.4%. Including significant items, NPAT attributable to equity holders of the parent entity declined by 49.4% to $374 million, with EPS also down 49.4%. Turning to Slide 20 and our group trading performance. In Australian Food, total sales for half 1 were $27.6 billion, an increase of 3.6%. Excluding the impact of the industrial action in the prior year, Australian food sales growth in the half would have been 2.6%. In Woolworths Food Group Retail, which incorporates stores and eCommerce, Sales momentum improved in Q2 with growth of 3.2%, excluding industrial action compared to 2.1% in Q1. This was driven by an improved customer offer and strong execution, particularly over the key Christmas trading period, leading to improved in-store item growth and strong eCommerce growth. WooliesX sales increased 14.2%, driven by eCommerce growth of 15.3% and 8.6% growth from media words and services. Australian Food EBIT increased by 9.9% in the half. Excluding the estimated impact of industrial action of $95 million in the prior year and incremental supply chain commissioning and dual running costs. Normalized EBIT would have increased by 3.5% in the half. Gross margins rose 8 basis points to 28.6%, primarily reflecting the mix impact of an ongoing decline in Tobacco sales. Excluding Tobacco, the gross margin declined by 14 basis points on the prior year with growth in our higher-margin complementary businesses, offset by investments in lower shelf prices, while stock inflation not fully passed on and supply chain transition costs. CODB as a percentage of sales declined by 24 basis points with productivity initiatives and above-store cost savings helping to offset wage inflation and higher online mix. There was also a rate benefit due to the impact of industrial action in the prior year. While ex DAP and EBIT was up 78.8% in half 1 with eCommerce and media Rewards & Services delivering improved profit. The increase in eCommerce DAP of 93% reflected solid customer growth, double-digit sales growth, mix benefits from growth in higher-margin propositions, efficiency benefits and cycling both the industrial action and cold chain investments in the prior year. In Australian B2B, half 1 sales increased 4.9%, driven by strong PFD, PC+ and export meat sales. EBIT increased by 14.6% with double-digit growth from both PFD and PC+, the latter benefiting from increased volumes and better utilization of warehouses. New Zealand Food sales for half 1 increased 2.8% in New Zealand dollars, driven by eCommerce growth of 13.9%. Sales in Q2 were more subdued as market growth slowed. EBIT increased by 22.4% benefiting from a combination of higher sales, supply chain efficiencies and productivity and cost-saving issues, partially offset by store wages and D&A growth. Total W Living sales increased 2.7% in half 1 and EBIT was up 186%. BIG W sales increased 1.8% with BIG W GTV, including BIG W Market, up 5.8%. And BIG W EBITDA increased by 12%, driven by the higher mix of full price sales and strong cost control. EBIT increased by 122% with depreciation below the prior year following the F '25 impairment. Petstock sales increased 13.1% and EBIT increased by 49.6% supported by the inclusion of pet food and accessory businesses acquired in half 2 last year and network expansion. Underlying performance was solid with comparable sales growth of 5.8%, eCom sales growth of 24% and double-digit EBIT growth. The other segment includes group functions such as property, group overheads and Woolworths Group's investment in Quantium. The segment recorded a loss before interest and tax of $124 million, an increase of 16.3% on the prior year, largely driven by lower gains from property disposals and a rebuild of the short-term incentive provision. In the half, the group recorded significant items before tax of $698 million, largely related to a one-off cost associated with the remediation of award covered salary team members following the Federal Court decision on the 5th of September. This includes interest, superannuation and payroll tax and is within the previously disclosed range of $450 million to $750 million. Moving to Slide 21 and our key balance sheet metrics. Average inventory days of 31.2 were in line with the prior year. Australian and New Zealand Food and Australian BIG W were down on the prior year, offset by growth in Petstock and high average inventory holdings in BIG W, which pleasingly ended the half below last year. Average payables declined by 2.4 days to 41 days, reflecting lower Tobacco purchases in Australian Food, a reduction in BIG W purchases as we reduced stock levels over the half and payment timing impacts. ROFE, which is a 12-month rolling measure, was 15.2%, up on the prior year and F '25 largely reflecting group EBIT growth in the half. Australian food ROFE declined by 80 basis points, reflecting the decline in half 2 F '25 EBIT last year and a modest increase in funds employed due to the acquisition of The Kitchenary and our investment in supply chain automation. Moving to Slide 22 and our capital management framework. The group generated strong operating cash flows in the half, which were invested in sustaining our assets, funding our dividend and investing in growth and I'll provide some more color on the following pages. The group generated on Page 23, operating cash flow before interest and tax of $3.2 billion for half 1 F '26, an increase of 4.5%. This was driven by solid EBITDA growth before significant items of 8.5%, offset by a modest working capital outflow. The net working capital outflow was largely driven by payables timing in New Zealand Food with an additional payment run prior at the end of the half and reduction in nontrade purchases reflecting our above-store cost saving initiatives. Compared to the prior year, there was also an outflow related to the cash settlement of provisions for redundancies in team member remediation. Net interest increased by 2.7% with nonlease interest up 13.3%, driven by higher average debt, partially offset by lower floating interest rates. Tax paid declined by 35% due to lower F '25 tax paid in the first half of F '26 and lower tax installments in the current year. Cash used in investing activities of $1.2 billion primarily reflects the group's CapEx spend, which I'll talk to on the next slide. The prior year number was a lot lower as it included $383 million of proceeds from the sale of our final tranche of Endeavour Group shares. Group also paid $92 million for the purchase of equity interest in subsidiaries principally reflecting the acquisition of the remaining interest in MyDeal to facilitate its restructuring and closure. Dividends of $553 million declined by 53.5% with the prior year including a $0.40 per share special dividend, reflecting a return of capital to shareholders related to the sale of Endeavour Group shares. Finally, our cash realization ratio was 95%, modestly below our ambition of over 100% due to the working capital outflow and cash tax exceeding the income tax expense in the P&L. Moving to Slide 24. Operating CapEx for half 1 F '26 was $913 million, $88 million lower than the prior year. A reduction in sustaining capital reflected lower spending on store renewals due to initiatives to lower the cost per store in the half. This was partially offset by an increase in new store investment as reflected in the 13 net new stores opened in the half. Investment in digital and eCommerce, which includes our investment in automated CFCs. Gross CapEx increased by $97 million, reflecting higher property development spend, which can be lumpy. For the full year, we still expect operating CapEx to be approximately $2 billion, stable with spend over the last couple of years. Moving to Slide 25, and covering dividends and funding. The Board today approved a final dividend of $0.45 per share, an increase of 15.4% on the prior year, broadly in line with the increase in earnings. After payment of the interim dividend, our franking credit balance will be approximately $1.2 billion. Turning to our balance sheet settings. The net debt-to-EBITDA ratio was 2.7x, modestly lower than F '25 and are remaining well within our leverage threshold. We remain committed to solid investment-grade credit ratings and have significant headroom under our current ratings of BBB from S&P and Baa2 from Moody's. In half 1 F '26, the group completed $1.2 billion of debt financing with transactions focused on extending debt tenor and reducing refinancing risk for the group. And with that, I will now hand back to Amanda. Amanda Bardwell: Thanks, Steve. On Slide 27. In summary, as we look ahead, our focus remains on continuing to provide value to our customers, rebuilding customer trust and maintaining sales momentum while making further progress on our strategic priorities. I'd like to thank and recognize our team for their incredible efforts and in particular, for helping us deliver a fantastic festive season for our customers during the half. We are determined to get back to the level of retail excellence and performance our customers and our shareholders expect of us. And I'm confident the steps we're taking will lead to an improved performance. I look forward to sharing further progress on our strategy at our upcoming Investor Day in May. I will now turn the call over to the operator for questions. [Operator Instructions] Operator: [Operator Instructions] The first question today comes from Shaun Cousins from UBS. Shaun Cousins: My question is around price trust. You noted in August that, that was the greatest priority for Woolworths. Just curious around how that's improved during the half. And maybe if you could discuss that with reference to some of the activity you've done on pricing, the more of the rolling EDLPs under lower shelf prices and then you've been quite active with more impulse at gondolas and off locations. And then what you've done with ranging. We've noticed you've introduced a sort of a black and white entry level private label offering sort of there as well. So just curious where price trust is at and how you've improved that in the first half, please? Amanda Bardwell: Yes. Thank you. Thanks, Shaun. So certainly, let me just say that we totally understand and are extremely focused on this question of price trust. It's so fundamental to customers choosing Woolworths as a place to shop regularly, and we have put a lot of focus on that rightly so in the half. If I just start by talking about the action that we've taken. First and foremost, if you look at our performance when it relates to the value for money scores. If you look at that this time last year versus where we are now, they're up 8 points and have progressively improved across quarter-to-quarter. And so whilst I would say we still have more work to do there. We've certainly seen a progressive improvement. And there's things that we've adjusted during that period, as you know, like the introduction of lower shelf prices. Now that program is very much focused on recognizing that customers are looking for good value, that they also want reliable value each and every week that they're shopping. And what we've seen with that program is it's on the big products that really matter to families baskets. And we've seen that customers have really engaged with that lower shelf price program very strongly. And we're pleased to see unit growth is a good way of, of course, measuring that engagement, continue to increase, both across our own brand products, but also in the branded products that have participated. In own brand, for example, in lower shelf prices, it's sitting in that sort of mid- to high single-digit unit growth. But for branded products, it's actually in the lower double-digit numbers. And so strong participation there, and we see that, that has certainly matched an increase in customer perception on value. And then across the half, as you know, we did adjust our promotional programs as well to reflect that what we're seeing from customers is certainly a search for even more value. So an uptick from what we've seen in previous period prior to that. And so when we look at value in that regard, promotional participation has increased, customers adding more specials to their baskets and participating more in those programs. And one of the big shifts that we made there was, again, it relates to trust making sure that when customers visit our stores, those products are on the shelf. And as you had highlighted to us as many others had, we had an opportunity in that space. And so that's a mix of having the right promotions but also making sure it's available. So I think that's contributed to an improved perception. And then when we look at Everyday Rewards, we adjusted the program across the half there, just to give more members more value actually and recognize their loyalty, which has resulted in an even stickier member and some greater uplift that we've seen in member sales across that period. And so I don't think there's any one thing that we've done there. I would say there's a mix of value levers that we've been really focused on that each one of them play an important role. And together, that's created an improved momentum for us, both in terms of sales, but also in terms of items in baskets and transactions through Woolies. Now we've got more work to do. And the more work is particularly in the Everyday Needs category. And then of course, when we're looking at range. We have made some changes on range, but there's certainly more to come. Thanks, Shaun. Operator: The next question comes from Adrian Lemme from Citi. Adrian Lemme: Amanda and Steve, congrats on the result. I was interested in the turnaround in the GP momentum within Australian Food. So this half, up 8 basis points year-on-year while last year, we saw it down about 30 basis points. I know you've broken down the factors, but the Tobacco benefit was about 20 basis points benefit in both periods, and you also talked to Cartology and services income, but that also helped last year. So I was just interested if you could kind of talk to the actual delta, I assume stock loss was a positive factor this half, but were there also a better buying terms or other factors, please? Amanda Bardwell: Yes. Thanks, Adrian. I'll give an overview, and then Steve will add to it. So yes, the 8-basis point improvement in GP, as you rightly say, the cigarettes decline does have that sort of mechanical adjustment that you need to apply as you've called out. We're really pleased when we look at the GP results, the contribution from the complementary businesses. So it's Cartology, Everyday Rewards, really contributing substantially to our performance in Australian Food from a profit perspective. So that certainly assisted in the half. And yes, it has been a very promotionally intense period and the team from a commercial perspective on balance managed that very well. When we look at how that plays through. There's some pressure in the red meat categories, which no doubt will come to later in the discussions that we've had to absorb there. So that includes the absorption of that. And then from a supply chain perspective, I didn't call it out in the opening comments, but supply chain delivered a really strong result for us in the half. Yes, we had obviously strong volume uplift but aside from that volume uplift the productivity that the supply chain team delivered is very strong. So that was helpful. And then on the stock loss numbers, yet again, pretty relatively flat on last year. So we had that increase in H2. And certainly, we've seen an improvement on those exit rates across the half. So that were the sort of big drivers. I'm just going to check with Steve, any other things you'd add to that, Steve? Stephen Harrison: No, I think they're the main ones. On stock loss, actually, we were largely stable this year on last year in the half, but certainly an improvement on our second half performance of last year. But overall, it is an underlying reduction in GP reflecting the investments that we've made, but the team has worked hard to balance the levers within margin so that it isn't a bigger impact on earnings as it was the same last year. Operator: The next question comes from Tom Kierath from Barrenjoey. Thomas Kierath: A pretty strong cost result, which is great to see. I assume that's from the cost initiatives that you've announced kind of a year ago, just thinking about whether there's any extension of that and whether as you kind of, I guess, look more closely at the cost base, whether there might be another target or just how you're kind of thinking about the cost base more broadly going forward, please? Amanda Bardwell: Yes. Thanks, Tom. As we called out, as you say, a year ago, we're really determined to build a low-cost culture across lease. And so that was why we came out last year, and we're really clear both internally and externally on the need to reduce our costs. We want to be a lower-cost retailer. That is what's helped us in the half, certainly deliver better value for customers, but also see an improved result for the business overall. So you should expect to see from us an always-on focus. We haven't called out anything particular in terms of a new program per se, but it is our strong focus going forward to continue to look for ways to reduce costs. What was pleasing in the half was we saw strong productivity as we usually do from our stores and from supply chain, but it was complemented with the improved cost performance out of our support areas, no doubt. And within our cost lines, of course, need to take into account, we've also seen a substantial increase in eCommerce, which just from a mix perspective, does put an extra pressure into the cost lines. But I'll just hand to Steve because he does like to talk about cost a lot. Any other add, Steve? Stephen Harrison: I think going back to Tom's first point, it was a strong performance on cost in the half. If we look at the group costs grew by 2% across the group. And we've got a business that's growing volume, where we've got inflation that we need to cover. We've got mixed headwinds. The ongoing focus on frontline productivity is incredibly important, and we saw that delivered in each one of the businesses. But equally, we talked to the cost-saving initiative to try to take out $400 million of above store and support costs on a 12-month run rate basis. Actually, the team -- we announced that a year ago, and the team worked very hard on that actually at the back end of last fiscal and really front-loaded a lot of initiatives to the end of '25 and the first quarter of F '26. So we delivered roughly half of that $400 million in the half across the group. So clearly, a key contribution to being able to have cost growth below sales growth, actually, in each one of the trading businesses across the group. So a good result, but it needs to be always on, and that's really where we're shifting our focus. Operator: The next question comes from Michael Simotas from Jefferies. Michael Simotas: I've got a related question to the one on costs and particularly around in-store labor. I mean your execution has improved. A lot of the feedback in the industry is that you put labor into the stores, it's not obvious when we look at the P&L, the labor investment because your branch expense growth was much lower than your admin expense growth, and I would have thought the cost out program was reducing admin expense to fund the in-store. So can you give us a little bit of color around your store labor as well as how those costs are moving through the P&L, please? Amanda Bardwell: Yes. Thanks, Michael. I'll kick off and then I'll hand to Steve. If I just start with store labor as the starting point there. Yes, we did invest more in store labor, but we were also very targeted in terms of where would it make the most difference. And so when we looked at improving availability, for example, there were targeted adjustments that we made in terms of time of day across particular days of the week. And so it wasn't across our entire network. And then just looking at -- and then we also invested in Fresh in particular. And we continue to assess that across both the quarter and, of course, into this year as well as to what is making the most difference in terms of customer experience. Ultimately, that's how we're measuring the performance. And so yes, we did invest, but we invested in a way that was quite targeted and then continue to monitor that as we move through. I'll hand to Steve and then Annette, if there's anything you want to build on. Stephen Harrison: I think, Michael, just part of your question on the change in admin expenses. That does include the significant item expense in the half. And so that's why you see that cost growing. If you actually strip that back on an underlying basis, admin expenses went backwards, which is consistent with what we would have expected given the focus on that area of our cost base. Operator: The next question comes from David Errington from Bank of America. David Errington: It really is a good morning so I'm really happy to give that greeting. Amanda, what really pleases me with this result is it's been a fantastic result with cost savings, you've really driven productivity, which is fantastic. But what really stands out for me is that you've nailed the execution. Slide 6 and Slide 5 of the slides, please, if we could refer to. Slide 6 is just phenomenally positive. And it seems to me, and where my question is, I remember talking to you at the end of August. And one thing that concerned me is that you were very slow to respond to changes in the marketplace. You were very slow, whether it be picking up trends or you're on -- you picked up the trends, but you're too slow to execute. You seem to have been able to turn that around, whether the data is better. Look, I was really encouraged to see that you seem to be on top of what the customers really want. So whether your data input is better, but you seem to be responding better and quicker into the stores, can you spell out what you've done there? Is it the supply chain benefits that you've done that's coming through? Because it's just a wonderful achievement to get such an improvement in the voice of the customer when you've driven productivity and following Michael's point, when you've driven labor harder, when you've driven your costs and your efficiencies yet to still get such a great pickup in your voice of customer, it's just a great result. Can you go into how you've been able to achieve that? Because last August, I was a bit concern because you were talking about how you were too slow to respond. So it just seems to a phenomenal turnaround. Can you go into those details, please? That would be really appreciated. Amanda Bardwell: Yes. Thank you. And thanks, David. As you know, we're always focused on what we can do better as well. But if we just go back to that period. I'd start by saying that we made very significant people and leadership changes at multiple levels across Australian Food during that period and just prior to that trading period. And so the level of disruption, which was a combination of the work that we were doing to reduce our costs, but also our focus on how do we consolidate and simplify the structures within the group and then appoint the right leaders into those critical roles, whether that's the leadership roles across Australian Food, where we have Annette leading Woolworths Retail and Amitabh leading eCommerce or the commercial roles that sit across each one of our key categories and areas. At multiple levels, we made changes and there's no doubt that there was a high level of disruption and distraction. And I in no way want to make any excuses for that. But I do think that, that was the biggest determining factor around our performance during that period. And so what I've been very pleased to see is how the team now once they enroll, focused and they're focused on delivering across multiple horizons. And so yes, we put a lot of focus, as you say, on addressing what is it that customers are needing and wanting from us right now, how do we improve transaction growth and item growth, items in particular. And so there's very much that focus on trading the business today. But also on building the future and getting clearer around how we want to evolve the proposition of our supermarkets and our retail propositions in eCommerce going forward, whilst also being really clear with the team that we do need to be a lower-cost retailer and that we should be proud about that, and we should be focused on it because it enables us to deliver better value to customers and build a better business together. And so it was a disruptive period. We've got a highly focused team right now. We're very pleased to see improving momentum. We still think there's more for us to do in terms of work across our categories and our offers. But we're focused on building now on the momentum that we have. David Errington: You're doing very well. So well done, as I said, that you seem to be using data a lot better than what you were. So really pleasing to see them with AI coming in. Yes, it's promising. Thank you. Amanda Bardwell: Thanks, David. Operator: The next question comes from Bryan Raymond from JPMorgan. Bryan Raymond: One just to follow on actually from David's question just around -- and you mentioned Amanda, some personnel changes there. I just want to focus in on Australian Food, Annette appointed Peter McNamara to lead the long-life part of the business from a buying perspective at the start of the financial year. That preceded from what we've heard from the supply base, a strategic pivot towards impulse categories in store, particularly on promotion in gondola ends, et cetera, at the start of the second quarter. I'd just be interested as to how much that's impacted your sales results that you're seeing better uplift maybe in some of those impulse areas where you've been a bit underweight in the past from a store positioning perspective? And now that's really come back to the floor from what we've heard. I'd just be interested as to how much that's important and whether that's got a bit further to run going forward? Amanda Bardwell: Yes. Thanks, Bryan. Look, what I would say is that we focus on what is it that will make the most difference to customers. And how is it that we drive item growth. We knew that we had customers still shopping in our stores. And so I just want to come back and say this, yes, we've seen a substantial improvement in our grocery performance and across, as you say, some of those impulse categories. That's, I would say, primarily driven by a more disciplined execution. We've also seen strong fresh growth, which we're very pleased to see because it's a key part of our strategy overall. And then we have a team that's very focused on one customer plan. And so we talked about a lot of the structural changes that we've made and leadership changes. That's also been about bringing together a much more disciplined approach to the way that we go to market with our one customer plan across commercial customer loyalty operations and into the supply chain. And so we're just seeing now the start of the team getting into the right rhythm and flow, which really matters in retail, as you know. We have run sharper promotions, no doubt. I'm just looking at Annette, and I know you've been deeply involved in activating a lot of these. Do you want to add some color there? Annette Karantoni: Yes. Thanks, Amanda. I think that's right. We've done a lot really focusing back on listening to the customer, listening to our store teams and really building that momentum through great offers, great lower shelf prices and a very strong focus on planning right from planning right through to execution. What that's helped really shape is some of the things we just talked about, which is good availability in stores, particularly on some of the categories that you just mentioned in categories like impulse through promotional activities, where customers may not have thought they were going in to buy something but saw something on the shelf that they were interested in, but it was broader than impulse. I mean we have seen great growth in our drinks categories. The team has been doing a fantastic job, particularly through some of the hot weather that we've had through the half, but also through pantry essentials, through our meat business. So it really has been a really strong focus on retail discipline end-to-end that has really driven those opportunities. I would say, and I think, Amanda, you've called it, there is still a lot more to do. And so we're seeing some slightly better results in some of our Everyday Needs categories. But that is, of course, another area of focus. And so I would say we have a lot of work to do to make sure we're getting consistent delivery across the business. So more to see in the next half. Operator: The next question comes from Nicole Penny from Rimor Equity Research. Nicole Penny: In light of the previous comments regarding the cost of doing business reductions in the Australian Food business, could you perhaps comment on the time frame over which any potential benefits of consolidating the New South Wales operations at Moorebank will provide further benefits, please? And just another one, Australian B2B showed some encouraging operating leverage there. How much capacity has this business got to continue to grow earnings ahead of revenue, please? Amanda Bardwell: Great. Thanks, Nicole. Yes, we've been very focused on the work to transform our New South Wales supply chain. And I'll just hand to Steve to talk through the implications of that as that flows through. Stephen Harrison: Yes. Thanks, Nicole. So we have really been spending most of the last 12 months ramping up the NDC. And so we're now doing around 2 million cartons a week. We're not fully transitioned all the volume in there, but actually, we're starting to see results in line with what we'd expect out of the national distribution center. We are very much still in ramp-up mode in the RDC. So nice to be able to take many of you through that facility pre-Christmas. I think we are at 60-odd stores pre-Christmas, I think we have about 120 stores now last couple of weeks, we've been doing about 1 million cartons bearing in mind, we anticipate at maturity getting that to 2.5 million to 2.8 million cartons. So there's still quite a bit of ramp-up to go. So I think when we've talked about this in the past, we still do expect commissioning and dual running costs to continue from -- through F '26 at similar levels to F '25 and equally into F '27 as we start to go live with the Sydney chilled and fresh RDC, which will go live in actually F '28. And so -- we do, though, expect some of those commissioning and dual running costs to start to be offset by benefits. They will progressively ramp up over the next couple of years. So -- and really be at maturity. I think we talked about this in December when we had many of you at Moorebank around '28, '29 when they start to reach maturity. So we are -- but we are encouraged by what we're seeing, but we do recognize that are going to take some time to flow through the P&L. And then on B2B, I'm happy to take that question actually because within there, the 2 main businesses are PFD and PC+. Actually, both had strong results in the half. It is just worth being clear that the PFD results does include an extra week in the current year that's not in the comparative as we've just lined PFD's reporting periods up with the rest of group, but we have disclosed in the notes the adjustment that, that would have made to earnings in the half, if you just normalize it. And in fact, both delivered strong double-digit earnings growth in the half. we would consider there being a lot more runway in both those businesses to continue to grow earnings above sales through the medium term. Operator: The next question comes from Craig Woolford from MST Marquee. Craig Woolford: Amanda, great to see the momentum improving across the group. Can I just ask a question about that sales momentum, particularly on the food segment. I guess there's 2 parts to it. One is, is there any guidance you can give on what the strike impacts may have been in the first 7 weeks from a year ago? Is that still having an effect on reported results. But more fundamentally, I'm interested in what you see going forward on price and volume. The price inflation is dropping away a little bit, which is good news for consumers, but might make it harder to maintain sales momentum? Amanda Bardwell: Yes, yes, yes. Thanks, Craig. Just when we look at those first 7 weeks, it is important to know, as you point out, that we were recovering from the industrial action last year. And when we certainly look at the 7 weeks, we didn't last year call out a specific number. And we didn't do that for 2 reasons. One is supply chain was back up and running, and we were in flow in terms of delivering to our stores and to customers. And then we also didn't want to create, to be frank, just excuses for ourselves. We're very focused on just building the momentum as we move forward. So we don't have a number to specifically call out, but it is important to note that, that is a fact. And particularly, if we look at to give you a sense, Victoria. Victoria for us, was and continue to be very softer and lagged the rest of the states across really the last 12 months. And certainly, as we've come into now the first 7 weeks, you can see that Victoria is performing particularly strongly. So there's no doubt there's some cycling benefit there. When it comes to your second part of the question around just this price and volumes, we've been and we've been really clear that for us, it's about driving unit volume, and that's what we're focused on doing. You'll see from the average selling prices that we've shared that, yes, there has been a moderation in that. But I'll just hand to Annette to talk a little bit more because there's some color as we just look at the different categories within that, Annette, that might be just worth talking through. Annette Karantoni: Yes. Thanks, Amanda. Just from a general perspective, yes, the number of price increases coming through from suppliers have slowed since the peak in July and August. There's still a course coming through, but they have a different shape and a different ask and it is category specific. So yes, we're still seeing some come through in some of the food categories. But as you alluded to earlier, Amanda, that some significant shifts in the livestock, particularly in red meat. And of course, weather impacted in fruit and veg, so it's a little bit difficult to kind of pinpoint but we are still seeing some inflation in certain categories within food and veg, like capsicums and strawberries that are all very weather-dependent. So yes, it's slow, it definitely slowed from Q1 into Q2. And so I think it will be a strong watch out for us as we get into this half. Operator: The next question comes from Ben Gilbert from Jarden. Ben Gilbert: Just wanted to sort of dig into the 7 weeks and then a little bit more on how you think about the rest of the year, notwithstanding sort of the guidance. But it feels like you've just traded the business a lot harder and you have a lot more locations and impulse, et cetera, which is great. It seems like it's really resonating. I suppose 2 parts to the question, one is how profitable is that growth? If you have to dip into your own pockets. Your run rate obviously would suggest you can print an EBIT number higher than what you sort of tightened that range up to? And then the second part is, I'm just interested in how you're going to capitalize to try and drive a broader halo of that across the rest of the business, and particularly into those Everyday Needs categories and interested in the anecdotal comment you made that you are seeing some improvement in that as well? Amanda Bardwell: Yes. Thank you. I think we've demonstrated in the half that through a really strong commercial discipline that we've been able to deliver a solid GP result in the half. And certainly, as we move forward, we would see it being broadly consistent as we move into the second half now, in terms of that question, I just want to come back and say it hasn't -- this result has been driven by a series of factors. Yes, we've been more competitive than we said we would be. But it's also being driven by improved availability, genuinely better experiences in our stores and our customers are telling us that with the ratings and the feedback that they're providing to us. And so certainly, we've been more competitive. But this result is not primarily driven just by that. And we see it as being something that is sustainable on the go forward. And that's because it's a balance of levers that we've been using. Our lower shelf price program is absolutely delivering value back to customers in a way that is good for customers, consistency, reliability, but also good for us in terms of our supply chain and the efficiencies and the way in which we manage that, the promotional program, we have been more competitive and have certainly had more market-leading offers over the last 6 months, but we've managed that within the right commercial frameworks through both ourselves and our suppliers working with us. And then when we think about the role Everyday Rewards plays, we just broadened that out to have a lot more above the line or visible opportunities for customers to earn value, and that's something that is sticky. And that's not about a short-term sales or sugar hit. That's about building long-term growth with our customers and rewarding their loyalty. And we've really been very thoughtful about how it is that we manage all of that so that we can deliver more value for customers. We can manage our responsibilities around profitability of the business and the sustainability of it going forward. When we look at your question around Everyday Needs, again, Fresh was very strong for us. Grocery was strong and Everyday Needs, we saw a gradual improvement. And I'll throw it to Annette to talk more about this, but particularly in those key categories of baby and Pet, where we needed to see improvements. We took a series of actions there. We've still got more work to do in the personal care category, I would say, the one that we haven't seen as much traction. But Annette, do you want to just add a little bit of color of what are we seeing on Everyday Needs and what some of the actions that we've taken there? Annette Karantoni: Yes, I think you've called out the key categories, Amanda. In Pet, again, it's very much looking at multiple horizons. So in the near term, just holding that competitiveness in an incredibly and growingly competitive market unit price is very important, bulk packs are very important. So you saw some changes in the way that we approached some of those items within the Pet category. We also introduced a new range in Pet food in the dog category, 95 new products came in to the range with a real focus on the balance between branded products. Again, the bulk items where we thought it was required, and of course, some really good own brand products leveraging the relationship and the partnership we have with Petstock. So Billie's Bowl, Baxter, some great things came in, in the Pet category. So you'll start to see some shifts as that rolls through. It's actually rolling through right now. So Pets starting to see some -- they're minor. We've got a lot of work to do in the category, but we're starting to see some very small shifts. In baby, again, multiple horizons, working short term on making sure we've got the right value offers for our customers. We've done some work to reset quality of our own brand, Little One's products, they will start to come through, the wipes have come through now, but the nappies will start to come through over the course of the next couple of months. And earlier in the half, we introduced Millie Moon, which was a fabulous own brand product that now has a high single-digit share of that category. So again, you're seeing shifts within the baby category. Beauty, again, very different to the previous 2. It's all about being on trend. We launched some very good products during the half. BOOIE got a lot of attention, the video that launched BOOIE had 20 million views, which is extraordinary and just shows the nature of how customers are interacting with innovation and new categories, 50% of the customers that came in to buy BOOIE were new to the category. So we're seeing new customers come in, and there were a lot of new brands that launched through that beauty category in the half. So we're seeing very different in these 3 categories, in Everyday Needs. Different plans, but on multiple horizons. Amanda, if you don't mind, I would also say just back to the start of the question, we're also seeing a lot of growth in the way our customers are eating and what they're serving at home. So at-home consumption has been a very strong trend that we've seen continue to grow. So yes, impulse has been very important for the quarter, but so has some of the biggest moves in things like coffee. And so we've seen growth in coffee from, in particular, Cafe brands like Campos and grinders coming into that category, and we're seeing some really strong, very positive double-digit growth. So yes, it's in some of those impulse categories, but it's actually right across, whether it's protein, yogurts, it's actually -- it's going -- it's more broad than just the impulse category for sure. Amanda Bardwell: Yes, great. And then just to come back to the top of your question, Ben, when we look at the guidance that we've provided and that move to an upper single digit profit growth, important just to look at that in the context of everything that we've shared today in terms of customers are looking for more value, it is a very, very competitive market. And so we're very mindful as we look forward, that we expect customers to continue to seek value, competition to continue to increase. And so we've provided the update that we have with that context as well. Operator: The next question comes from Caleb Wheatley from Macquarie. Caleb Wheatley: Congratulations on the results. I just wanted to come back to this price trust discussion, particularly revisiting some of the prior comments you've made on sort of price perception issues rather than actual pricing problem. Are you able to just talk through sort of the quantum of reinvestment that's gone into price to manage that price perception issue? And then sort of looking forward, how much more work, if any, do you think sort of needs to go into focusing or resolving that price perception issue, please? Amanda Bardwell: Yes. Thanks. And price trust, price perception has been important as we've talked about one of the ways in which we measure that is to look at our voice of customer and the value for money scores that we are receiving. And importantly, we know that customers look at that at an individual item level and are making decisions around where they shop at an item level, but also at a total basket level. And so that's also informed our decisions around how do we make sure that customers are realizing the maximum value. Again, we've used multiple levers across our promotions, our lower shelf price and everyday rewards to make sure that we create the right value for customers we know they're looking for it. But price trust is something that builds over time. And so we certainly know that we've still got work to do to improve trust in Woolworths and trust in our prices, and that will remain a focus for the next 12 months ahead. Importantly for us, this is why we committed to the lower shelf price program because that's about reliability. Customers want to be able to count on us. And so that's been an important element of the offer that we have in place, alongside reaching customers across probably a broader mix of media than we have in the prior 12 months as well. So we have adjusted the way in which we talk to our customers and reach them as well across the period, which is important when everyone is looking for value. So I would just -- there's no number that I would particularly call out. We're always investing in price, not just in lower shelf prices, but in specials as well. We'll continue to do that, and we expect to continue the need to focus on building price trust over the next 12 and 18 months. Operator: The next question comes from Richard Barwick from CLSA. Richard Barwick: Amanda, I wanted to talk about BIG W. That was a strong -- much stronger result than I think many were expecting. And you've talked about -- it's on track to be EBIT and cash flow positive. Not surprisingly, you're talking about the profitability being weighted to the first half. I think everyone would expect that. What does that mean, though, in terms of profitability for the second half? Are you flagging that you can actually turn a profit from BIG W in the second half? Or should we be expecting another loss? Amanda Bardwell: Yes. Thanks, Richard. Look, we're not giving out specific numbers -- the profit number for BIG W, but we were wanting to reinforce and just help everyone understand, as you know, it is heavily weighted due to Christmas and seasonal sales in that first half but that we are remaining committed to the commitment we gave in August around being EBIT and cash flow positive. Dan, is there anything you wanted to add in that context? We're not going to be talking about the specific numbers in terms of profit, but any other context? Daniel Hake: The only other context I would give is that the health of our sales have been much stronger in the first half, especially in categories like Clothing and Home where we flowed seasonal stock a lot better. We got in and out of inventory a lot better and those processes are maturing. And so we do expect half 2 and half 2, the improvement of the health of sales and the improvement of the shape to continue. In absence of a specific EBIT number, we do expect improvements year-on-year. Richard Barwick: So improvement second half and second half, that's helpful. Daniel Hake: Yes. We're comfortable with that. Operator: The next question comes from Phil Kimber from E&P Capital. Phillip Kimber: Amanda, just a question on -- there was a specific comment you made in the actual announcement that said heightened competitive intensity in food eCommerce. I was just wondering if you could provide a bit more color around that. Is that being led by sales being more aggressive? Or is something else going on there? Amanda Bardwell: Yes. Thanks, Phil. Yes, that was really a reference to the fact that as we know Coles launched the Ocado partnership some time ago and have been very focused in the market in eCommerce, driving a lot of activity in that space. And then as we look at the on-demand space, in particular, with different platforms, whether that's Uber or DoorDash or our own. And customers are now really focused on that on-demand to our opportunity. Certainly, we're seeing competition increase, in particular around customer acquisition. So just looking at Amitabh, can you just build in terms of some of the intense competition we are seeing, particularly in Sydney and Melbourne? Amitabh Mall: Both to add to what you said, Amanda, one is from traditional competitors, where with Coles, with our stepped-up performance and their focus with their carton boxes is actually -- they have definitely sped up in terms of competitive intensity. But I think what's more interesting in the more recent times is the growth with what I would say are formidable, global retailers, whether it is Costco already with strong presence in Australia and for the first time, offering their products online, or whether it is with Amazon having entered the fray as well. So that is -- we're clearly seeing, a lot more competitive action in the eCommerce space and we are obviously quite determined to stay competitive and to make sure that we deliver -- we are the first choice for our customers. Operator: The next question comes from Peter Marks from Goldman Sachs. Peter Marks: My question is just on Australian Food business, interested in hearing about the launch of the customer offset -- sorry, offer reset program that you've launched. And I guess the details around that, what's involved? Is it a range review program? And I guess what you're looking to achieve with that and the timing of any benefit we should expect? Amanda Bardwell: Yes. Thank you. Thanks, Peter. So the customer offer reset is something we're running across the group. So that includes Australian Food, our New Zealand food business and BIG W and particularly relates to the relationship that we have with our major suppliers that connect with us across those 3 businesses and across the 2 countries. We really wanted to first and foremost simplify the connection with Woolworths, and that's important for us and important for our supply partners and also engage in the right strategic conversations around how we reset those categories for the future so that we grow together. And so it is a new way of us engaging with our supply partners, but it is very much -- and hence the name, customer offer reset. It is very focused on what is it that customers are looking for across individual categories. and how do we work with those larger suppliers across our 3 businesses to unlock the full potential of those categories with customers in mind. And so it's a program that will progressively roll out across the next 12 and 18 months. We've started with a series of 4 key categories that are underway now. And as we've shared with our supply partners, we want to partner together with them on this. And so we will take the learnings from those first 4 categories as we then roll that out across the rest of our categories. And so it does align broadly with range reviews so that we can give everyone the appropriate time, but it's a new way of us working. Peter Marks: So the new way is, I guess, you're buying across the 3 different businesses now. Is that the right way to think about it? Amanda Bardwell: I would say that we're looking collectively together with our supply partners on the opportunities that exist in each one of the categories. Each one of those businesses has a slightly different customer base, slightly different need, but we're bringing together a shared conversation with our supply partners as to how we do business and how that plays out in each one of those businesses and categories will look and feel a little bit different. And we'll learn more across this year. Operator: The next question is a follow-up from Michael Simotas from Jefferies. Michael Simotas: One on eCommerce profitability. Your margin effectively were close to double year-on-year. And I know the first half of last year was pretty tough for the business. But the way we calculate it, it's about 3.5%, which looks like a very good outcome given that competitive dynamic and customer acquisition costs that you talked to. Can that business continue to scale and deliver leverage from here? Or do the costs become more variable? Amanda Bardwell: Yes. It was a strong performance from the eCommerce business in the half. And importantly, as we know, our eCommerce business is primarily fulfilled from stores. And so it's a really important part of our offer overall. The short answer is, yes, we do think we can continue to improve the profitability and performance of eCommerce. And there are a number of things that drove that in the half. And I'll just hand to Amitabh to add a little bit more in terms of the key drivers of that eCommerce results. Amitabh Mall: Thank you, Amanda. So the 3 things that we think have really made a difference in our profitability performance in the half. First is the proposition mix itself, where we've consistently invested in our direct-to-put capacity that has driven growth in our collections. Collections have grown at more than 20% compared to the rest of the business having grown at 15% in eCommerce. And the second is continued growth on demand, which is also margin accretive as a proposition for us. So both the propositions which are margin accretive have grown faster based on the investments that we've made both over the years as well as more recently. Second driver is the fractionalization of the fixed cost itself, which we have reached a scale in the business where with continued growth in the business, we continue to fractionalize our fixed costs, and we expect to see that benefit coming through. And finally, operational discipline in terms of just the productivity pipeline that we've had driving both our picking costs and Amanda referenced in different conversation some of the AI tools that are in place or to drive better picking -- to optimize our picking as well as in the last mile delivery cost. So all 3 have driven, and we expect all 3 to be sustained going forward as well. Stephen Harrison: Just one build, Michael, I think, in that growth in the half, there are some cycling benefits both the industrial action, but we did make a material investment in cold chain integrity last year, which we've now structurally found ways to reduce that cost and retain that integrity. So the profit growth moving forward, I wouldn't necessarily be baking in that type of expansion each half. Operator: The next question is a follow-up from Adrian Lemme from Citi. Adrian Lemme: I had a question actually on New Zealand. I understand the implemented changes in the store operating model partway through the half that significantly reduce the number of managers. Just wanted to know, is this a key driver of the lower CB margin. But then I guess, more importantly, can you talk about how the new model compares to Australia? And if it's not already on that kind of model, could Australia sort of follow down the line, please? Amanda Bardwell: Yes. Thanks, Adrian. So we did implement in quarter 2. We've been testing this in New Zealand for quite some time, a new operating model. which moved from really having that department focus to more of a functional focus in terms of the way that the operating model itself works. And during the period, it was really about implementing quite a substantial change and if anything, to be perfectly frank, it probably impacted a little bit of our performance in quarter 2. Just as we made such a large scale change across the entire New Zealand business. We think it's a great model, certainly for the future, but we want to see that continue to improve performance across New Zealand first. And so when you're looking at the implications of that from a cost perspective, certainly, we hadn't yet seen any substantial benefit from that flow through in the first half. And right now, as we ramp up that operating model, we've also got more focus. And so it will take some time for the benefits of that to materialize. I'll hand to Sally in a moment to see if there's anything else you wanted to add to that. On your question of Australia, look, right now, what we're focused on is let's see how this performs in New Zealand for us. As I say, we've been testing it for some time anyway. But when you release things out at scale, you always learn more and so we'll be focused on learning from our New Zealand business first and then determining whether or not that's the right model for us in Australia. Sally, any other reflections in terms of operating model? Sally Copland: Thank you, Amanda. Yes, absolutely. I think the model is predicated on us being able to deliver a better customer experience and actually building stronger momentum in retail and careers for the team. It was a very significant change in the New Zealand context. So 2,500 new team members, that's 13% of our frontline workforce who are new to our business, and so supporting them to onboard and be part of our team has been a very big focus. And we actually have 300 team members who are in new leadership roles for the very first time. And that's about helping really build a strong pipeline for us all the way through to store managers and beyond. So we are in the throes of embedding this model and really focused on how do we get back to basics, make sure we've got the fundamentals of our routines right and that we're in a stronger position going forward. Operator: The next question comes from Craig Woolford from MST Marquee. Craig Woolford: This might be for Steve. Just is that -- in the full year results, just about the outlook for FY '26, there was specific items called out around the Tobacco headwind. It was supposed to be $80 million to $100 million across the year, the workforce system, $60 million and then the lower shelf price of $100 million. Can you just clarify how those factors impacted the first half results? Stephen Harrison: Yes. So from a Tobacco perspective we called out $80 million to $100 million estimate. We think that's still the right estimate for the full year, but it's slightly weighted to the first half. So there's a disproportionate component in the first half. In terms of the technology investment, so there's multiple systems that were end-of-life systems that we're replacing, not just the time and attendance. We called out a $60 million estimate roughly 50-50 across the 2 halves. And LSP, we haven't specifically called out the number, but we said it would be a minimum investment of $100 million in our own brands. But obviously, we been able to get a scale that program and to get a lot more suppliers on board. So -- but broadly, if you think about we launched it in May last year, you expect roughly, it would split 50-50, maybe slightly less given the cycling impact in the second half. Operator: The next question is a follow-up from Bryan Raymond from JPMorgan. Bryan Raymond: Earlier, I think, Amanda, you might have mentioned some strategic optionality with BIG W. I'd just like to elaborate on that a little bit, if we can. Profitability has improved, would a potential exit or sale of this business beyond possible or one that you'd consider? Or did you mean something else by that strategic optionality comment? Amanda Bardwell: Yes. Thanks, Bryan. Firstly, I just want to acknowledge that it is very good to see an improved performance from BIG W and the transformation plan that the team has put in place that they've been very focused on delivering is showing some good improved performance. And so we're very pleased as is the BIG W team to see that. When we're talking about BIG W, we want to make sure that, that business and that team is super focused on their transformation. They've done a great job, and there's more to do there. We talk about the IT separation primarily because giving BIG W the independence to be able to build the right platforms that are fit for purpose is really important for a discount department store. BIG W has been deeply integrated across the Woolworths technology systems and as a result, has drawn on a lot of the food technology. We want to make sure that as the business moves forward, particularly when we look at areas like eCommerce, which is driving a lot of positive growth for BIG W that they've got the right tools and the right technologies to be able to drive that forward. So there's nothing that we would further update with regards to BIG W other than what we've already shared. Thank you. Operator: Thank you. That does conclude the question-and-answer session for today as well as today's call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Glanbia 2025 Full Year Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I will now hand over to Liam Hennigan, Group Secretary and Head of Investor Relations, to open the presentation. Please go ahead. Liam Hennigan: Thank you. Good morning, and welcome to the Glanbia Full Year 2025 Results Call. During today's call, the directors may make forward-looking statements. These statements have been made by the directors in good faith based on the information available to them up to the time of their approval of the full year 2025 results. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking information made on today's call, whether as a result of new information, future events or otherwise. I'm now handing the call over to Hugh McGuire, CEO of Glanbia plc. Hugh McGuire: Thank you, Liam. Good morning, everybody, and welcome to the Glanbia Full Year 2025 Results Call and Presentation. I'm joined on today's call by Mark Garvey. I will provide an overview of our performance for the year, and Mark will then cover the financials and outlook. At the end of the call, we will be happy to take your questions. Overall, we delivered a robust performance in 2025 with like-for-like revenue and volume growth across all 3 segments, driven by strong consumer demand for our Better Nutrition brands and ingredients, with adjusted earnings per share of $1.3493. The group delivered pre-exceptional EBITDA of $499.1 million, representing a decrease of 9.4% and EBITDA margins of 12.6% in representing a decrease of 170 basis points on a constant currency basis. With margin expansion in Health & Nutrition, offset by our contraction in margin and performance attrition as a result of elevated whey input costs. We continued our strong track record of delivering returns to shareholders by raising the interim dividend by 10% and returning approximately EUR 197 million to shareholders via our share buyback programs. The Board has authorized a further EUR 100 million share buyback program, and we will commence an initial EUR 50 million tranche of this program today. As well as delivering a strong operational and financial performance, we continue to progress our strategic agenda and we made significant progress on our group-wide transformation program, with our new operating model implemented to simplify our business and bring greater focus on high-growth opportunities. We continue to make good progress on our portfolio with the sale of noncore brands completed during the year. We also acquired Sweetmix, a Brazil-based nutritional premix and Ingredient Solutions business within our Health & Nutrition division and agreed to acquire Scicore, a manufacturing facility in India, which provides in-market manufacturing for both Performance Nutrition and Health & Nutrition with the acquisition completing post year-end. We hosted our Capital Markets Day on the 19th of November in London, where we outlined the group's growth strategy for the next 3 years, focused on 5 key drivers and our financial ambition for the period 2026 to 2028 and our confidence in driving continued shareholder return. We are pleased with the positive response and interest from attendees and look forward to delivering on our medium-term ambitions. For Performance Nutrition, like-for-like revenue increased by 4.5%, excluding the impact of noncore brands, which is driven by our 2 priority growth brands, Optimum Nutrition and Isopure and was a combination of strong category growth increased distribution and innovation. The volume increase was driven by strong growth in the online and food drug mass channels as well as continued growth in international markets across both protein and energy categories, somewhat offset by lower revenues in the U.S. club and specialty channels. We implemented price increases in our international markets in quarter 2 and in the U.S. in quarter 4 to offset record whey inflation. During the year, we also implemented some tactical price reductions and higher-margin products in the energy category, which delivered a strong volume uplift. From a regional perspective, Performance Nutrition Americas which represented 63% of revenue was down 0.5% versus last year due to the aforementioned club channel headwinds. Excluding noncore brands, Performance Nutrition Americas revenue increased by 1.3%. We are pleased with the trajectory in our flagship brand, Optimum Nutrition, which showed a sequential improvement through the period, delivering double-digit like-for-like revenue growth in the second half of the year, but continued momentum in the protein powders and energy category. Our international business, which represents 37% of revenue, performed strongly, delivering like-for-like revenue growth of 8.8% or 10.5%, excluding the impact of noncore brands, driven by volume and pricing growth in the Optimum Nutrition brand, particularly in China, India, Oceania and the U.K. Growth was supported by our global supply chain footprint, enabling in-market supply and local innovation in key regions. EBITDA for the year declined by 23.2% with an EBITDA margin of 13%. The contraction in margin is entirely as a result of record whey input costs as previously disclosed, with an improvement in EBITDA margins in the second half of the year. In terms of brand performance, Optimum Nutrition, our largest brand at 75% Performance Nutrition revenue, excluding noncore brands, delivered like-for-like revenue growth of 6.4%, comprising volume growth of 5% and pricing growth of 1.4%. ON delivered double-digit like-for-like revenue growth in the second half of the year, led by a combination of strong velocities, distribution gains, lapping of a weaker comparative in the U.S. club channels and innovation. We continue to see strong momentum in the category with an acceleration of the growth of the protein powder category in the last 12 months. U.S. consumption grew by 3.4% in the last 52 weeks, with double-digit growth in the food drug mass channel, growing ahead of the category and continued strong growth in the online channel. In the last 13 weeks, U.S. consumption accelerated to 4.6%, and ON continues to be a top driver of retail dollar consumption growth for protein powder and creatine in measured channels in the U.S. We're also seeing strong consumption growth across many international regions, and we'll continue to increase our retail distribution with distribution gains for ON across retailers in Europe and Asia Pacific and double-digit growth in e-commerce channels in China. I'm pleased to see ON deliver double-digit growth in household penetration and TDP in the U.S., reflecting strong recruitment and retention. We have an uncompromising dedication to product quality and we are operating in high-growth categories with the most trusted brands in Sports Nutrition, driven by powerful consumer megatrends. From a marketing perspective, our focus continues to be on driving recruitment and conversion and broadening the brand's appeal through increased campaign reach and education. We just launched the Optimum Advantage campaign, a disruptive campaign rolling out globally where the concept involves elite athletes revealing one thing they never want to share, the marginal gains to give them their edge. The launch features McLaren Formula 1 star Lando Norris, Rugby International's Dan Sheehan from Ireland and Mark Smith from England and U.S. Women's NBA star Cameron Brink. Early results show that the optimal advantage athlete strategy is driving both scalable media efficiency and authentic cultural relevance across channels. The AI-powered coach Optimum went live in several markets during 2025, with results showing excellent engagement rates. The protein calculator has been going from strength to strength, help the consumer realize how Optimum Nutrition can help them fulfill their daily nutrition needs with trusted high-quality products. We've also seen strong growth being driven by online channels and the success of the quick-commerce channel in India. We have a world-class portfolio of high-quality products within the Optimum Nutrition brand, and we continue to focus on innovation, in particular by expanding our usage occasions. We launched a number of products during the year across our protein and energy offerings, including multiple creating offerings, whey collagen blends, protein RTD shakes and additional smaller pack sizes, including stick packs addressing affordability through opening price points. We're particularly pleased with the performance of ON creatine, which delivered strong growth globally as we continue to cement our #1 position in this fast-growing segment. Isopure, our premium high protein, low-carb brand grounded in purity continues to do well, delivering double-digit like-for-like revenue growth in the year. This brand allows us to target an incremental consumer from Optimum Nutrition with the consumer affluent and predominantly female that values high quality and great testing solutions that they can incorporate into their daily nutrition regime. During 2025, we rolled out more of What Matters campaign with strong engagement rates, reaching more than 20 million consumers through our digital channels, educating consumers on how to integrate Isopure into their daily routines with influencers such as celebrity, Tiffani Thiessen, sharing simple baking hacks, highlighting the mixability into things like sauces and soups. Our partnership with Top Bolly with Celebrity Rashmika and Mandana, has helped deliver a reach of over 50 million plus for the brand in India. We've been expanding our distribution of Isopure across food, drug, mass and online retailers, elevating display execution and shelf placement, targeting aisles outside of Performance Nutrition to capture a broader consumer set. I'm pleased to see continued good growth in our core brand metrics with double-digit growth in ACV, TDP and household penetration. Innovation continues to be a core focus across our portfolio, and we launched several products under the Isopure brand, including protein water, stick packs, colostrum and collagen peptides in the U.K. Moving to our second growth platform of Health & Nutrition, which comprises nutritional premix solutions and flavors and focuses on priority high-growth end-use markets of active lifestyle nutrition, functional beverages and vitamin mineral supplements. This segment delivered a strong performance of 2025, delivering like-for-like revenue growth of 6.8%. This was driven by a 7.4% increase in volume and a 0.6% decrease in price. Total revenue increased by 11.5% as a result of 6.5% increase from the acquisitions of Flavor Producers and Sweetmix, which were completed in April 2024 and August 2025, respectively. And the negative impact of the 53rd week in the prior year of 1.8%. We're pleased with the strong volume performance, which was driven by good growth across both premix and flavors, underpinned by strong demand across our end-use markets. We saw particularly good growth in Europe and Asia. Pricing was slightly negative due to certain pass-through pricing of customers. Health & Nutrition EBITDA was $115.8 million, up 16.7% constant currency. EBITDA margins were 18.4%, an increase of 80 basis points versus 2024 on a constant currency basis. Margin expansion was driven by the full year impact of Flavor Producers and strong volume growth from existing customers, somewhat offset by the impact of tariffs in the second half of the year. We have a strong global footprint in Health & Nutrition with a range of technologies and solutions, targeting functional nutrition in end-use markets across a broad range of customers. We have deep customer relationships and co-development capabilities to help our customers win in their markets. We hold the #2 global position in customized premix solutions and have a strong position in natural and organic flavor systems, operating in attractive end-use markets such as active nutrition, functional beverages and vitamins, minerals and supplements. We continue to invest in innovation, capacity and new capabilities to ensure we have the best solutions to meet the growing demand for functional taste and macro nutrient needs across a broad range of formats. During the year, we announced the acquisition of Sweetmix and Scicore. Sweetmix is a high-quality Brazil-based nutritional premix and ingredient solutions business, which will allow continued expansion in the Latin America region. Scicore is a fully operational manufacturing facility in India, which provides us with our own in-market manufacturing for both Performance Nutrition and Health & Nutrition. In terms of capacity, we're substantially expanding our spray drying capabilities in the U.S. which will enable us to capture a larger opportunity in powdered flavor applications. We have also approved plans to more than double our Asian nutritional premium capacity and are also expanding our capacity in Europe. Dairy Nutrition combines our U.S. cheese and dairy proteins portfolios. This platform consists of a highly integrated manufacturing footprint with a high supply and operational interdependency and is also the route to market for our joint venture partner supply of whey and cheese ingredients. This business underpins our scale, leadership position in dairy as a leading producer of whey protein isolate and American style cheddar cheese in the U.S. We also hold exciting positions in dairy bioactives with strong demand, particularly for colostrum, targeting gut health and immunity trends. In 2025, Dairy Nutrition delivered like-for-like revenue growth of 5% in the period, driven by a 4.2% increase in volume and a 0.8% increase in pricing. The increase in volume is across cheese and protein solutions and the price increase was driven by strong high-protein solutions category demand somewhat offset by negative dairy market pricing in the second half of the year. We're seeing sustained demand for high-quality whey and non-whey protein solutions, driven by global trends in Performance Nutrition and everyday wellness. Our expertise in protein chemistry and our unique assets, combined with the ability to deliver consistent functionality and nutritional density positions us as a partner of choice for customers seeking premium, science-led protein solutions. We saw good growth in existing and new customer wins in 2025. An example of this momentum includes our novel protein solutions such as the Oven Pro series, targeting high protein breakfast and other snacking usage occasions. These solutions exemplify pleasure with purpose, indulgent products with protein content that taste good, meeting end consumer demand for great taste without compromise. Turning to whey and whey volatility. We're one of the largest suppliers and the largest buyer of whey protein Isopure globally, and we have a clear ongoing strategy on whey procurement. As consumer demand for protein continues to grow, which is driving growth in our priority brands, we also continue to see whey pricing hit record levels, driven by this strong demand. We have a lot of experience across dairy complex, but there's currently no way to effectively hedge whey protein, but we have a robust program using all available levers to manage it. As you can imagine, there will always be a lag impact on margin as we implement consumer price increases and navigate this input volatility. We have now contracted supply into early quarter 4, providing certainty on our cost base for 2026, with prudent assumptions for the remainder of the year. New global supply of high-end whey of approximately 15% to 20% has started to come on stream and is expected to expand across 2026. We continue to engage with our suppliers for longer-term supply investment. And as mentioned previously, we're also investing in our own WPI capacity within our joint ventures, which will come on stream in early 2027. We continue to take decisive action to mitigate the impact as much as possible, and we're very thoughtful on this to ensure we do it in a measured way to maintain revenue growth and protect share. In 2025, we increased prices in international markets in quarter 2 and in the U.S. in quarter 4, and we are currently implementing price increases globally for execution in quarter 2, which is supported by promotional efficiency and product mix. To date, we've seen limited elasticity from price increases in 2025, but we'll continue to monitor demand carefully, particularly as we move through the second round of price increases. We continue to review the possibility of further revenue growth management initiatives later in the year, depending on consumer reaction and the evolution of whey prices. In addition, we also carefully manage our cost base to ensure we're efficient and adjust our marketing investment appropriately to ensure we prioritize spend on brand building initiatives. We will also be pricing across our protein solutions business in Dairy Nutrition. And lastly, with innovation, we're looking to broaden our product mix from whey protein to include other protein sources, such as collagen, milk and plant proteins, while also driving non-whey innovation, as you've seen at our energy platform. We made good progress on our group-wide transformation program during the year, which is focused on driving efficiencies across our new operating model and supporting the next phase of growth through 3 focus segments. The program is expected to generate annual cost savings of at least $60 million by 2027, and we are on track to deliver approximately 40% of savings in 2026. Of these savings, we expect to reinvest approximately 50% to drive growth across our Performance Nutrition and Health & Nutrition segments. Significant progress has been made across 4 key pillars to give us confidence in delivering on the targets. New operating model is now established, simplifying our structure with Dairy Nutrition and Health & Nutrition established as new Dedicated segments and the reorganized performance of Nutrition in Americas, injecting new capabilities into the business. The second pillar is to unlock efficiencies, and we're centralizing and streamlining key activities and capabilities across procurement, engineering, planning and quality and driving operational efficiency through a mixture of automation and continuous improvement. We're also accelerating our procurement savings and leveraging our global manufacturing footprint for capacity. The third pillar is about accelerating our digital transformation, and we've expedited the transformation of our back-office functions and continues to focus on automation and the implementation of AI and analytics to enable front office growth initiatives. We are leveraging Agentic AI across the group, which is supporting marketing campaigns and new product innovation and performance attrition and analyzing customer interactions in Health & Nutrition and Dairy Nutrition, providing us with both the intelligence and the infrastructure to drive growth and improve our efficiency. The final pillar is our ongoing portfolio evaluation. We're focused on simplifying our group structure and optimizing our overall margins. And in 2025, we completed the sale of 2 noncore brands, and we also completed the acquisition of Sweetmix and Scicore, further expanding our global scale. As we outlined at our Capital Markets Day, we have a clear strategy in place to drive the next stage of growth, and we've shown evidence of this model throughout 2025. Firstly, we're focused on driving Optimum Nutrition globally and growing our portfolio of lifestyle brands. Optimum Nutrition delivered double-digit like-for-like revenue growth in the second half of 2025, and we continue to see strong momentum for the brand. We're ambitious to scale our Health & Nutrition segment as a leading solutions partner in our end-use markets and the acquisitions we've made and a commitment to capacity expansions we've outlined are core to this growth strategy. We are focused on optimizing Dairy Nutrition to maximize profits across our scale dairy operations while growing our protein solutions and bioactives business. We continue to expand internationally, leveraging our scale and global supply chain footprint. And lastly, investing in innovation to stay at the forefront of our growing categories is vital to us and the savings from our transformation program will allow us to continue to reinvest in innovation. Delivery against each of these requires focus on execution excellence enabled by our group-wide transformation program, our teams, talent and culture as well as our strong financial discipline. And with that, I will hand over to Mark to take you through the financials. Mark Garvey: Thanks, Hugh, and good morning to everyone on the call. 2025 Group revenue was $3.95 billion, up 2.3% on a constant currency basis. At the group level, volumes were up 3.7%, driven by good performance across all 3 divisions and a particular strong demand for our protein brands and ingredient solutions. Price was up 0.5%, driven primarily by positive dairy market pricing and positive pricing in Performance Nutrition. 53rd week in the 2024 comparison negatively impacted revenues by 2% and the net impact of acquisitions and disposals added 0.1% of group revenues as a result of the acquisition of Sweetmix offset by the disposals of SlimFast and Body & Fit. 2025 group EBITDA pre exceptional charges was $499.1 million, down 9.4% in constant currency, primarily as a result of higher whey input costs impacting Performance Nutrition EBITDA, somewhat offset by strong EBITDA growth in Health & Nutrition in the year. PN EBITDA was down 23.2%. H&N EBITDA was up 16.7% and DN EBITDA was up 1.7%. Group EBITDA margin was 12.6% compared to 14.4% in the prior year. PN EBITDA margins were 13%, down 380 basis points constant currency. And in Health & Nutrition, we saw good progression in EBITDA margin to 18.4%, an increase of 80 basis points constant currency on the prior year. Adjusted earnings per share for the year was $1.3493 down 2.4% constant currency on the prior year and ahead of the previously guided range of $1.30 to $1.33. The group generated operating cash flow of just over $454 million with a strong operating cash flow conversion of 91%, well ahead of our 80% target. Return on capital employed for the year was 11.3%, in line with our target range of 10% to 13%. Cash flow generation was strong in 2025 with operating cash flow of just over $454 million. Operating cash conversion was 91% compared to 88% in the prior year. Operating cash flow was enhanced by another year of disciplined working capital management. Net working capital balances at year-end were broadly in line with prior year, and net working capital outflows for the year amounted to $11 million. Free cash flow for the year was $360 million compared to $403 million in the prior year. At year-end, the group's net debt position was $526 million compared to $436 million at the prior year-end. The closing net debt balance represented a net debt to adjusted EBITDA ratio of 1.08x. Interest cover in 2025 was 13.7x. Both metrics are well within the group's financing covenants. The group has $1.4 billion in committed debt facilities with a weighted average maturity of 2.7 years with no facility due for renewal prior to late 2027. Now let me turn to our capital allocation framework. Of the $437 million deployed in 2025, we returned the majority of this capital to shareholders. In respect of dividends, the group returned EUR 102.5 million to shareholders during 2025, related to the final 2024 dividend and the interim '25 dividend. Today, we announced that we are increasing the 2025 final dividend by 10%, so that the total dividend for 2025 will be EUR 0.4287 per share representing a payout ratio of 35.9% of adjusted earnings per share, which is within our updated target payout range of 30% to 40%. As we stated at our recent Capital Markets Day, the group is committed to a progressive dividend policy. The group also returned EUR 197 million to shareholders via share buyback programs during 2025, acquiring and canceling 15 million shares at an average price of EUR 13.10 per share. In addition, the Board has authorized a further EUR 100 million share buyback program for 2026 and we are launching an initial EUR 50 million tranche of this today. In 2025, the group spent just over $51 million on strategic capital expenditure with investments in ongoing capacity enhancements, business integrations and IT investments to drive further efficiencies. In the second half of 2025, we acquired Sweetmix, a Brazil-based nutritional premix and Ingredient Solutions business for an initial consideration of $41 million that enabled Health & Nutrition to continue to expand in Latin America. Post year-end, we completed the acquisition of Scicore, manufacturing facility in India providing in-market manufacturing for both PN and H&N for consideration of approximately $16 million. We will continue to look for organic and acquisition opportunities to scale our Health & Nutrition business supported by our strong balance sheet and financing facilities. The group incurred exceptional charges after tax of just over $100 million during the year. These primarily related to a group-wide transformation program and losses on disposals of noncore brands. The multiyear transformation program was announced in late 2024 to drive efficiencies across the group's new operating model and to support the next phase of growth. In 2025, cost of this program amounted to $55 million, which are primarily people-related costs and advisory fees associated with outsourcing certain back-office functions and establishing the new Health & Nutrition and Dairy Nutrition businesses. The program is on track to deliver $60 million of annual savings during 2027, of which 40% are expected to be achieved by the end of 2026. Total cost of the program is expected to be $100 million. The noncore brands, SlimFast and Body & Fit were divested during the year, and we have recognized the loss of disposal of these businesses of $45.7 million in the current year. We've also taken a noncash impairment charge of $16.5 million related to the level of direct-to-consumer retail business. As part of the decision to exit our dedicated European D2C retail strategy, and following the sale of the Body & Fit business, we are exiting the level of D2C retail business as it no longer aligns with our strategy. Net finance costs were $29.4 million, up approximately $2.6 million compared to prior year due to the acquisition of Flavor Producers in 2024. The average interest rate for the year was 4.2% compared to 4.6% in '24. The effective tax rate for the year was 15%, down from 16% in the prior year. And for 2026, we expect the group's effective tax rate to be between 14% and 16%. Joint venture performance increased by $11 million versus prior year, primarily related to improved dairy market dynamics, including the implementation of the U.S. Federal Milk Marketing Orders program from June 1. For 2026, capital expenditure, both strategic and sustaining is expected to be between $100 million and $110 million, which includes initial spend related to the expansion of our Health & Nutrition facilities in Asia, U.S. and Europe, as Hugh has referenced earlier. These projects, which are expected to be substantially completed by the end of '26, will have a total investment of approximately $40 million and will enhance our ability to service customers in growing end markets. We are ambitious for growth and we outlined our medium-term growth algorithm at our Capital Markets Day in November. Over the medium term, we are targeting 5% to 7% annual organic revenue growth in Performance Nutrition and 4% to 6% annual organic revenue growth in Health & Nutrition. We expect to grow earnings ahead of revenue in PN and H&N supported by our transformation program that will deliver $60 million of savings annually by 2027. EBITDA margins in PN are expected to improve by 250 basis points by 2028, and EBITDA margins in H&N are expected to be in the range of 17% to 19%. Dairy Nutrition EBITDA is expected to be in the range of $150 million to $160 million. From a group perspective, over the medium term, we are targeting annual earnings per share growth of 7% to 11%, with 85% cash conversion. And we will continue to invest for growth and returns, targeting a dividend payout ratio between 30% and 40%. Our 2026 outlook is aligned with these medium-term targets. Performance Nutrition like-for-like organic revenue growth, excluding dispositions, is expected to be between 5% and 7% in 2026 and will be pricing led. As we enter '26, we continue to see strong demand for our protein products, and we are currently implementing price increases, which will be effective in Q2 to offset whey inflation. Volume trends have remained broadly resilient following prior year pricing actions, and we will continue to monitor these trends and demand responses closely as the year progresses. As whey input costs are expected to remain elevated this year, we will continue to assess the need for further revenue growth management actions in the second half of the year. We continue to utilize all levers within our revenue growth balance from playbook including disciplined pricing actions, promotional efficiency and product mix management, allowing us to manage the cost environment while maintaining competitiveness and supporting the long-term health of our brands. We have very good visibility in our cost base this year as we have contracted whey supply needs into early Q4, and we have made prudent assumptions and whey costs for the remainder of the year. New global whey supply of 15% to 20% have started to come onstream, and we expect this to continue through 2026, albeit strong demand is taking up this supply. We expect to see EBITDA margin progression and Performance Nutrition in 2026 as a result of price increases, the sale of noncore brands and our group-wide observation program. Progression is expected to be second half weighted as a result of the phasing of price increases and timing of marketing investments. Revenue in Health & Nutrition is expected to grow between 4% and 6% and will be volume-led across both premix and flavor solutions businesses, with strong growth expected across our core end-use markets of active nutrition, functional beverages and vitamins and supplements. H&N EBITDA margins are expected to be in line with our medium-term guidance of 17% to 19%. We continue to expect profitability growth across Dairy Nutrition and the group's U.S. joint venture. In Dairy Nutrition, we expect EBITDA to be in line with our medium-term guidance of $150 million to $160 million with continued strong demand for whey protein. And our U.S. joint venture will see profit after tax growth given the full year impact of the U.S. Federal Milk Marketing Order, which was implemented on June 2025. We expect to deliver adjusted constant currency earnings per share growth in the range of 7% to 11%, in line with our medium-term guidance. We also expect operating cash conversion to be over 85%, and returning capital employed to be in the range of 10% to 13%. And with that, I will hand it back to Hugh. Hugh McGuire: Our purpose is better nutrition, and we're ambitious for growth. We're operating in exciting high-growth categories with leading brands and ingredients driven by consumer megatrends. We have transformed our business, sharpening our focus to capture growth in our primary engines of Performance Nutrition and Health & Nutrition. And finally, we believe we have the right people, the right capabilities, the right portfolio and balance sheet firepower to deliver on our growth algorithm and drive strong shareholder return. And now I'd like to hand over to the operator for questions. Operator: [Operator Instructions] Our first question today comes from the line of Patrick Higgins from Goodbody. Patrick Higgins: My first question is just on whey cost, a very clear commentary there. And in terms of how you've hedged on your outlook. But maybe just to ask a little bit more color. So at the Q3 point, I think you said you hedged for H1 marginally ahead of H2 '25 levels. given the level of hedging you have in place now for this year, how should we think about year-on-year impact for your whey cost bill for '26 versus '25? And I guess the second question around this is just you flagged more new supply coming on stream as we speak today, what is your base case assumption in terms of whey prices over the course of the next year? Like are you still anticipating a normalization? Or has that changed just given how strong demand has been over the last kind of year or so? And then my last question, if I can sneak it in, is just around innovation for GPN clearly dialed up and kind of took more of a focus at your CMD in November, maybe you could just talk us through the success of some of the recent launches in H2 and some of the plans for the year ahead. Mark Garvey: Thanks, Patty. Just, I'll answer the cost question, and he will talk innovation. Yes, look, we've been managing our whey fairly closely, as you can imagine. That's why we are procured out to Q4. We've been layering in that procurement since last summer, Frankly, as you sort of look at what we're doing for this year. Costs continue to be elevated. There's obviously a 90 to 80 element to whey, and those have 80 have rising a bit more recently, I would say, 90 a bit more stable, but certainly have continued to elevate as the year has gone on. So when we look at year-on-year, we'd expect to see double-digit increase in cost of whey versus the prior year. And that, of course, will feed into the pricing conversation, as you can imagine as well. And in terms of your question on new whey supply coming on stream, as I said right now, it's been taken up in terms of the strong demand we're seeing for protein in all different formats. Clearly, we're benefiting from as in our Dairy Nutrition business and our Performance Nutrition business. But certainly, right now, that supply has been taken up. So as we look to '26, I don't think we expect to see any significant change in terms of significant reduction in whey prices. So we've assumed they'll stay at an elevated rate for the year in terms of our overall guidance to you. Hugh McGuire: Yes. Thanks, Mark. Apologies to all of you, fighting a bit of a cold that you might hear in my voice. Yes, just to add actually to what Mark said on whey at a more strategic level, we see it in Dairy Nutrition, demand is exceptionally strong at the moment across multiple formats. And we're seeing the benefit of that in Dairy Nutrition. So clearly, new supply is coming, and I can assure you that every dairy company out there is figuring out how to make more WPC and WPI given these prices. But fundamentally, it's driven by demand. I think you're going to see all categories price increase over the course of 2026 and figuring out the impact that may or may not have. But the fundamentals remain very strong for demand of whey protein. If you look at innovation, Patrick, what I'd say is what we shared with you in our -- at our Capital Markets was only coming online at quarter 4 and into this year. So we spoke to you about we're moving into blends of whey and collagen, targeting hydration and recovery so [indiscernible] The U.S. [ Clearway ] In Europe, good start there, very early. A lot of new flavor, variants of creatine. We just launched our new creatine gummies actually in the TikTok shop in the U.S. I'd be interested to see how that does. The foreground shape that we present here has just launched amino energy stick packs and we just launched new AMP preworkout as well in January in the U.S. So a lot of activity, but very early to say. But obviously, a key focus for us in Optimum Nutrition as we extend usage occasion. And lastly, just to say we are very focused on value to the consumer. So, we've launched 10 -- a lot of new opening price points, whether it be the sachets or 10-server, 14-server, and we continue to invest and support those new pack sizes to support consumer. Operator: Your next question today comes from the line of David Roux from Morgan Stanley. David Roux: Just 2 questions from my side. Just to go back to your comments on the Performance Nutrition margin for this year, you pointed out we should expect some margin progression. Now there's obviously the 50 basis points net benefit to margin in '26 from the disposals, which you had previously flagged. So should we expect margin progression beyond that? Or is this only going to be driven by that? That's my first question. And then my second is on the club channel. Can you just give us some more color here? I see there was a noticeable acceleration in like-for-likes in the second half of your food, drug, mass and club sort of segments. There's obviously the lapping of the club private label issues from summer of 2024. But our sales in the club channel specifically now above levels prior to these issues. I think any and or color on the club channel would be appreciated. Mark Garvey: David, I'll take the margin question, and Hugh will update you on the club channel. A number of moving pieces, as you can imagine, as we look to margin in 2026, and we are confident in getting margin progression in '26. You're correct, we'll expect to see a 50 basis point improvement from the dispositions. In the full year, actually, that will be 80 basis points, but we've got some dissynergies as we enter the year that are impacting that as well. But of course, the big thing for us this year as we see costs increase, we also have the pricing coming through. So we'll have double-digit pricing coming through in quarter 2. As you know, there can be a lag as pricing catches up with increases in whey cost. So we'll see that move as we go through the year. So that will have a negative impact. A positive impact then will be the transformation savings. We said we get $60 million by '27%. 40% of that will come in, in '26 and about half of that will hit the bottom line, quite a bit of that in PN. So that will help us in terms of mitigating some of the lag on the pricing side. And in the first half, you'd expect to see some more marketing investment relative to the year as we normally do that, sort of how will be second half weighted. So overall, when you put this together, I'd expect about a 50 basis point progression as we work through the year here, second half weighted. Hugh McGuire: Thanks, Mark. I suppose the first thing I'd say is very happy with performance in Optimum Nutrition, and I secure with double-digit growth in half 2 last year, particularly in -- and a reminder that we're an omnichannel business are focused across all our channels of distribution. And so I wouldn't pick out one in particular. Our Food, Drug, Mass data is very strong categories growing very well. We're growing in both categories, both our brands. So look, the club channel will always have puts and takes, just given the nature of products that go in and out as part of their test and as part of kind of their innovation focus. But from our perspective, we're confident in our revenue guide for the year, particularly driven by Optimum Nutrition and Isopure. Operator: Your next question comes from the line of Alex Sloane from Barclays. Alexander Sloane: A few questions from my side, if that's okay. I mean firstly, on Health & Nutrition, very strong organic performance in quarter 4 and really notably ahead of quite a lot of larger B2B ingredient peers. Can you give a bit more color in terms of what you think your weighted sort of end market growth was against that organic delivery in Q4? I guess what I'm trying to get is this outperformance really driven by structural mix of categories? And do you see kind of growth being sustainable in 2026? And secondly, on just to come back to whey, thanks for all the color already, just a couple of questions. Firstly, I guess, have you seen the broader peer set take similar pricing that you put through in November in the U.S. so that your kind of relative price points are unchanged. And secondly, thinking a bit longer term, so you're not assuming that whey costs come down or whey prices come down in '26 because of the strong demand regarding the sort of 250 basis point improvement target out to '28, are you embedding a normalization in whey prices in that assumption? Or can most of that be driven by organic means? Hugh McGuire: Alex, very pleased with Health & Nutrition performance, as you said, a strong quarter 4 after a strong quarter 3, I suppose, we highlighted this in our Capital Markets again, we're targeting 3 end-use segments, Active Nutrition Functional Beverage and Vitamin Supplements and they're all doing well for us. We're seeing the same benefits in Health & Nutrition in terms of the end consumer we target that we're seeing in Performance Nutrition. So I think that's the first thing I'd say. Second is that we're focused and agile business as well. It would be smaller than a lot of the peers you referenced, but we're very focused on those segments. We invest in deep customer relationships, good to see continued progress in international. So very positive there. And we're also then leveraging cross-sell opportunities across the broader group, which is an opportunity for us as well. And Clearly, Mark called out as well and as did I, we're investing in capacity expansions in Asia, Europe and the U.S., which is a positive as well. So as we laid out in our Capital Markets, we are ambitious to scale this business. Mark Garvey: And in terms of your question on whey in terms of the 250 basis points, Alex, I would say that we are expecting that we'll have a normalization or a stabilization of cost versus pricing at some point here as we get through the 3 years because this year, clearly, there's still some catch-up on lag, as I spoke to. At some point, this should normalize and not necessarily expecting a significant reduction given how sort of popular protein is, and we expect to see that in the medium term. Of course, I also have significant transformation work going on, which I know will give me margin improvement as well. So we're still confident in the 250 basis points over the period, but we are assuming that we get to a point where we have some stabilization of cost increases on pricing. Hugh McGuire: And lastly, just on your question, Alex, on whey and competition. I think I'm comfortable in saying that everybody is going to have to move on price and are moving in price given the whey price inflation we've seen over the last 24 months. We saw it first in international, we would have moved in quarter 2. We saw a little bit of elasticity for a quarter until all the competition moved. And now in fact, in international markets, some of our competition are moving ahead of us. And in the U.S. as well, we're starting to see competition move. Just given the scale of these prices. As Mark said, we're not planning for stabilization in a way at this point until we see what happens to demand and what happens to elasticity and what happens additional volume supply. So yes, we are seeing the market move. Operator: Your next question comes from the line of Matthew Abraham from Berenberg. Matthew Abraham: First on the Optimum Nutrition. Just wondering if you could provide a view as to how you see the volume outlook for Optimum Nutrition in FY '26 just relative to the positive volume momentum that, that brand reflected in the second half of the year? And then just one more question, in reference to some of the color you provided on whey costs are higher, the longer dynamic you've outlined. Can you just provide a bit of detail as to what impact you're seeing that have on the breadth of brands that compete with you? And if that's having a more adverse impact on some of the smaller, not vertically integrated brands on shelves? Hugh McGuire: Matthew, the line wasn't great there, but I think I got the first question, which is just continued ON volume momentum into 2027. Clearly, we're very happy with performance in half 2 last year. The year started well for the brand. You can see that consumption numbers as well, we'll be pricing in quarter 2. That's in train now as well. So figuring out the potential level of elasticity versus the level of price, et cetera, it's just all a hard one to call. We've seen limited elasticity to date and the price increase in November in the U.S., and we've been -- we worked through any small elasticity we saw in international earlier in 2025. So overall, positive, what I'd say is, look, our revenue guidance for PN is across the entire portfolio. So we would be ambitious for ON to be a little bit higher than that. So overall, positive as we go into 2026. And look, you can see it in the category data as well. Category growth is accelerated in powders. We spoke at our capital markets on how powders are mainstream and the different consumer benefits, mixability, higher protein content, versatility. So not just price but affordability is actually -- these are very affordable, even post price increase on a cost per serve versus other formats of high-protein products. It's a great question on whey. Look, we are effectively vertically integrated. We have a dairy business where we create insights on the protein markets and protein solutions, we manufacture on our powder. So that gives us probably we have good foresight on how the markets are moving. Like the rest of the industry, we want to always get it right, but we are -- we will have good foresight earlier than a lot of competitors. I would think the smaller competitors, if they weren't locked into some of these prices or if they weren't locked into supply, will struggle to get supply and will struggle with pricing. But I don't know anything for fact there, but just to say that it is likely if they're working to [indiscernible] And they weren't brought forward, they could struggle. Operator: Our next question comes from the line of Damian McNeela from Deutsche Numis. Damian McNeela: First one is just on the indicated CapEx increase. And can you just clarify that the increase is going towards H&N and that the planned expansion will complete this year, i.e. you'll be able to sort of start driving that factory growth or factories growth from next year? Second question is on online revenue momentum. It looked like you delivered pretty strong growth in the year, just over 10%. Can you sort of provide what are the key sort of market drivers behind that? And whether the sort of -- we should expect that to continue through '26? And then just one last one, just on marketing. Are you in a position to sort of quantify what the step-up year-on-year is likely to be in 2026, please? Mark Garvey: Damian, I'll take the CapEx question. We're a little bit ahead, you probably noticed of our CMD guidance. We said $80 million to $100 million in CMD, We're a bit ahead of that. And the reason for that, frankly, is the strength we're seeing in the Health & Nutrition business, we're just -- the volume numbers are strong. We expect to see that sustain quarter-by-quarter into 2026. So as a result, we do require increased capacity. So to your question, most of that will be done by the end of 2026. So we should be having production in 2027 in terms of our Chinese and U.S. and European expansion. So we should all -- most of that [ $40 billion ] will be spent by the end of 2026 based on our current plans. I'll pass it over to Hugh for... Hugh McGuire: Yes, maybe start with the marketing first. Damian. Yes. So look, one of the things we are -- Mark laid it out, we're pulling all levers, as you can well imagine, across the business given the current inflationary environment on whey particularly. So that will include marketing spend as per last year, but also our transformation project or cost base, our mix -- our revenue mix. In terms of marketing spend, though, to be mid- to high single digits, it will be higher than last year, but all of that increased spend will go behind the Optimum Nutrition brand. In terms of e-commerce, obviously, as I said it earlier on, we're an omnichannel business so we're pushing for growth across all our channels that we compete in. But e-commerce channel as always, an online channel is always a key channel for us as we can engage so well with the consumer there in terms of information, in terms of content, et cetera. So we continue to expand that. You can expect as well -- that's where a lot of our innovation will go online first because we can move quickest on it. So you could -- we would absolutely be ambitious for continued growth in that channel. Operator: Your next question comes from the line of Cathal Kenny from Davy. Cathal Kenny: Two quick questions. Firstly, Hugh, just on the affordability piece within PN. Obviously, you mentioned 10-server, 14-server and stick any early evidence on the performance of those formats? That's my first question. And my second question just relates to the guide for PN. I'm assuming that you're -- within that, the assumption is a high degree of elasticity on the second price increase and the price increase in Q2. They are my 2 questions. Mark Garvey: Yes, A little bit early in some the sachets were just really launching. But our 10-serve, 14 serve we launched last year and really pleased with the performance there. And in fact, what we're seeing there is it's bringing in a lot of new consumers, particularly the 10-serve online. So affordability hitting the right price point, it's a $20 price point in some instances has been important. So we continue to do that. And we see that in the U.S. and internationally as well. In terms of the guide for PN, yes, we debate this a lot, and we discussed this a bit in our quarter 3 results as well, particularly internationally, when we price increase. We saw a little bit of elasticity for a quarter. It's hard to call. We have built elasticity into our assumptions. In saying that, demand for whey protein continues to be exceptionally strong. Our categories are going very strong. Our brands are outperforming the categories in this space as well. So calling what the elasticity will be is a difficult thing to do. As you can imagine, we're very thoughtful in this and careful as we move through the year because our goal here is to continue to start to go to the brands and ahead of category. So there's lots of debates internally, but simply put, yes, you can assume we have elasticity built into our assumptions for the year. We'll keep you updated as we go through the year, how we're thinking about that. Cathal Kenny: Just a quick follow-up on creatine, obviously, you called it out in terms of very good growth. One is, is there much opportunity to scale that further and I think beyond North America? And secondly, just in terms of the pricing environment you're on creatine, could we get a little bit of color on that, please? Mark Garvey: Yes, I think I can be quite clear. When we're talking about price increases, actually, we're just talking about price increases on our protein category. It's all driven, which is a fair 65%, 70% for business. We won't be price increasing on our energy or creatine products. Two, I'd actually say, the creatine growth is low. It's across all of our markets. it was a significant double-digit growth in 2025 over 2024. We've launched a lot of new innovation, different format sizes, different flavors, but continues to do well, and the teams will continue to be -- they are the 2 that kind of energy creatine and protein or what's going well for us. Operator: Your next question comes from the line of David Roux from Morgan Stanley. David Roux: Some follow-up questions. I appreciate that is another dairy 101. But just going back to whey, supply is obviously going to react to price, right? I mean can you give us an idea how quickly producers can react to adding new WPC 80 or 90 capacity from brownfield conversions? Or does this all need to be greenfields given that, I guess, there's not been much investment into cheese over the last few years? And then the other question is on marketing. And Hugh, I promise this is a generally serious question, but can you confirm if Optimum Nutrition renewed its partnership with England Rugby, they previously had or is it only Ireland rugby that it now has like a main rugby team in the 6 nations? Hugh McGuire: I have to kind of start with that last question given the weekend, it's winner David. We sponsor a number of -- we sponsor Marcus Smith, the English rugby player but not the English rugby team. And yes, we do sponsor the Irish rugby team and a number of athletes within there as well. So the -- yes, like you know what, we could give you a thesis on this, and I know it wouldn't be fully accurate because there's so many variants in this. So the first thing I would say is we know from our own dairy plants that every dairy business is looking at efficiency initiatives to increase the output of high-end whey proteins, whether it be 80 or 90. I think a lot of dairy plants can switch between the 2. So depending on economics, they can switch between WPI and WPC 80. I think if it was an add-on, the best example I'd give you is probably our own facility where we've approved the CapEx at late next year, and that will be in place for early '27. So probably from approval of CapEx implementation kind of that probably a 15-month period, and that will be leveraging existing whey stream and they're concentrating upto 90%. If you were to build a new facility, I would obviously take that a little bit longer probably 2 years plus. I suspect everybody is running the rules over whether they build new facilities or not. The challenge always will be in the cheese whey markets as the cheese market is effectively flat. So can you sell the cheese because that's -- and then cheese prices. I think the difference now what you'll probably see is businesses -- dairy businesses start looking at kind of produce whey casing rather than just whey cheese. So not produce cheese at all, which is a different plant configuration. But given the demand we're seeing in the prices, the returns -- the returns will work. So there'll be a lot of work going on at the moment around at these prices. And with this demand, even if prices were to drop, my sense is the dairy industry be quite confident the demand will remain strong. So even if there were a drop back a little 20%, 30% for a period, they will -- that will still be enough premium there to incentivize new capacity over the next number of years. Operator: Thank you. That concludes the Q&A. I will now hand the call back to Hugh McGuire for closing remarks. Hugh McGuire: Thank you, operator. Look, just to briefly close, just reinforce our conviction from the team here that Glanbia remains well positioned for growth. We're moving at pace as we laid out at our Capital Markets Day. And just thank you for your time and look forward to connecting with you all individually over the next few days. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Centuria Capital Group HY '26 results. [Operator Instructions] I would now like to hand the conference over to Mr. John McBain, Centuria Capital Group's Joint CEO. Please go ahead. John McBain: Good morning, everyone, and thank you for joining us. I'm John McBain, Joint Chief Executive. With me today is my fellow joint CEO, Jason Huljich; and our Chief Financial Officer, Simon Holt; also Tim Mitchell and Peter Ho from our Investor Relations and Corporate Strategy team. Today, we'll cover group performance for the half, divisional execution, our financial position and our strategy and outlook. The group delivered repeatable earnings growth for the half, underpinned by both contracted and recurring revenue streams and conservative balance sheet settings. Execution during the half has improved forward earnings visibility, supporting our decision to upgrade FY '26 operating earnings guidance to $0.136 per security. I'll begin with an overview of the group's performance and our through-cycle approach to growth. Jason will cover divisional performance across property funds management, investment, real estate finance and data centers. Simon will cover the financial results before I comment on strategy and outlook. Key outcomes for the half are summarized on Slide 4. Group assets under management increased by 6% to $21.8 billion, supported by strong contributions across property funds management and real estate finance. Across the property platform, we executed approximately $500 million of real estate acquisitions during the half and are on track to exceed our $1 billion full year target. We also completed the acquisition of the Arrow funds management platform, adding $440 billion of agriculture AUM and further strengthening our private investor and family office networks. Taken together, this execution and improved earnings visibility underpins our decision to upgrade FY '26 earnings to $0.136, representing an 11.5% uplift on FY '25. This upgrade reflects underlying run rate momentum rather than one-off items. Moving to the platform overview on Slide 5, which highlights the scale and diversification of Centuria today and what matters for earnings quality and capital allocation. Virtually all verticals now exceed $1 billion in assets under management, supporting operating leverage, while preserving flexibility in how and where we deploy capital. We operate across listed and unlisted vehicles, real estate and credit and span most -- major property sectors across Australia and New Zealand. Diversification is not just about earnings volatility reduction. It allows us to allocate capital based on risk-adjusted returns and investor demand rather than being forced to pursue growth in any single product, sector or market. In the current volatile environment, that flexibility is vital. As the platform continues to scale, we see opportunities for margin expansion over time without reliance on any single product sector or capital source. Slide 6 demonstrates how diversification has supported earnings and AUM resilience through the sharpest rate hiking cycle in decades, with group AUM achieving a new record in this half. While performance fees can introduce period-to-period volatility, the underlying base of management fees, property income and credit earnings, continue to grow. This reinforces our conviction that the platform is designed to perform through the cycle, not just in support of market conditions. Turning briefly to the broader environment on Slide 7. Despite higher rates, the Centuria platform weighted average cap rate and product returns remain significantly above term deposit rates, and we continue to capture opportunities across real estate and transaction markets, many of which are showing signs of constrained supply and improving rental growth. Structural capital flows also remain supportive. These include ongoing superannuation inflows, continued SMSF growth and approximately $30 billion of capital expected to be repatriated from expiring bank hybrids over coming years. Turning to Slide 8. Private credit remains a strategic priority for Centuria and a good example of disciplined growth in a structurally expanded segment. We have been active in real estate credit since 2016, partnered with Bass Credit in 2018 and following a strong track record, we acquired a 50% interest in 2021, with the platform growing at a compound rate of approximately 36% per annum since that time. We increased our stake to 80% in 2024. And this morning, as previously forecast, we announced we have exercised our option to increase our interest to 100%. During the half, this business executed approximately $1.4 billion of total loan origination, restructuring and exit activity. Market share remains modest at around 1%, highlighting significant runway for the group within a large and growing market. Importantly, the previously announced succession and integration plan for Centuria Bass remains in place with David Giffin and Yehuda Gottlieb being promoted from within the business to CEO and Deputy CEO, respectively. We believe steps such as this support continuity and long-term sustainable growth. I'll now hand over to Jason to go through the divisional performance in more detail. Jason Huljich: Thank you, John, and good morning, everyone. Half year '26 was another consistent period of execution for the property platform, as illustrated on Slide 10. Property funds management AUM increased by 5% to $18.3 billion during the half. We executed approximately $700 million of real estate acquisitions and divestments, supported by strong engagement from unlisted investors, which has underpinned transaction execution as other sources of capital have tightened. Property fundamentals remained supportive with limited forward supply and improving rental growth across most sectors underpinning earnings visibility. Turning to Slide 11. The half was a period focused on integration and value creation. We established Australia's largest unlisted single asset industrial fund at Port Adelaide with strong participation across our investor base and significant oversubscriptions. In agriculture, we secured Australia's largest hydroponic glasshouse by an off-market acquisition and commenced capital raising ahead of settlement. Listed REITs continue to selectively recycle capital, demonstrating the ability to divest assets at premiums to book value as well as generate strong leasing outcomes to improve the income profiles of each portfolio. Slide 12. Distribution remains one of Centuria's most important competitive advantages. Calendar year '25 was a strong period for new investors joining the platform, including more than 460 investors and family offices acquired through the Arrow transaction. Early engagement with these investors is already translating into interest across additional Centuria products, consistent with the proven integration blueprint applied across our M&A activity. We saw a similar outcome following the Primewest merger where 5 years on, strong integration and ongoing engagement has resulted in approximately 50% of Primewest investors committing to other Centuria products beyond their original investment. This behavior reflects the strength of Centuria's unlisted real estate platform where investors can self-diversify across multiple strategies within a single platform. Today, we have over 15,500 unlisted investors with more than 1,600 invested in 3 or more Centuria funds and almost 10% of these invested in 10 or more funds. This depth of engagement supports capital recycling as funds mature and position Centuria to consistently repatriate and redeploy private capital. We believe this distribution capability is difficult to replicate and represents a durable competitive moat for Centuria. Turning to Property and Development Finance on Slide 13. Property and Development Finance AUM increased by approximately 9% to $2.5 billion during the half. During the half, Centuria Bass Credit executed approximately $1.4 billion of loan origination, restructuring exit activity, while also raising $200 million of gross unlisted investor inflows. The business remains well positioned for further growth beyond its current market share of around 1% of Australia's private credit market. Turning to Slide 14. We can see that growth has been achieved alongside high-volume origination, restructuring and loan repayment activity. This has been paired with a strong focus on managing the book's composition, which remains largely exposed to residential asset-backed lending. Growth has not come from stretching average LVRs or loan structures across the overall book. Centuria Bass Credit is highly operational hands-on business within Centuria, underpinned by deep in-house expertise. Since the JV commenced in 2021, we have made targeted investments in systems, processes and people to support scalable growth, while maintaining disciplined risk management. In addition, Centuria Bass benefits from Centuria's broader platform with access to specialist expertise across valuation, governance, distribution and development as required. Slide 15 highlights Centuria's track record of progressively building the platform over time, primarily through organic growth, selectively supplemented by inorganic opportunities. From a data center perspective, the key takeaway is that this represents the early stages of a long-dated disciplined strategy aligned with durable long-term demand drivers. Slide 16. To further emphasize this evolving strategy, Slide 16 highlights that data centers and sovereign AI represent long-dated strategic optionality within a market characterized by sustained demand and significant capacity constraints. Accordingly, our current focus is on progressing planning and power outcomes to maximize development optionality across identified sites. As tangible milestones are achieved, we will assess the most appropriate value realization pathways on a site-by-site basis. ResetData remains at an early stage of this strategy. Since acquiring an interest in the business, we have partnered with leading global operators, successfully launched Australia's first public sovereign AI factory and scaled internal capability following initial integration. The business is now transitioning into an early commercialization phase as customer onboarding progresses, which is expected to support improving profitability over time. Importantly, capital deployment remains return-driven, fully considers balance sheet integrity and short-term profitability is not required to meet FY '26 earnings guidance. I'll now hand over to Simon to cover the financial results. Simon Holt: Thanks, Jason, and good morning, everyone. Before stepping through the numbers, it's important to revisit the segment changes introduced at the full year '25 and carried through into these half year accounts. These changes were made to better align reported performance with Centuria's underlying economic exposure and how the platform is managed. We restructured our operating segments and adopted a proportionate consolidation approach for co-invested property assets, providing a clearer view of underlying economics. Financing costs attributable to these investments are disclosed separately as nonrecourse loans. Now turning to the result. FY '26 was another period of disciplined execution. Statutory NPAT was higher, reflecting fair value movements on co-invested property assets and operating EBITDA of $89.3 million was delivered for the half. From a quality perspective, what's important here is not just the headline result, but the mix of earnings underpinning it. The majority of operating earnings continue to be generated from recurring and contracted sources with performance fees remaining a secondary contributor rather than a dependency. This provides confidence in the sustainability of the run rate as we move through to the second half. Property funds management earnings reflects -- reflected strong activity, increased transaction volumes and performance fee contributions. Investment earnings moderated as expected due to asset recycling rather than any deterioration in asset quality or returns. Real estate and Development Finance earnings were stable across the halves. ResetData impacted earnings and our share of Centuria's share was $2.8 million at 50% and this happened during the period and is expected to be a net negative contributor to full year earnings, reflecting its current investment and early commercialization phase. Importantly, this reflects a deliberate and disciplined approach. Capital is being deployed against long-dated strategic optionality rather than short-term earnings contribution. As customer onboarding progresses, we expect this impact to moderate over time. Cost savings remained contained across the platform, reflecting disciplined balance sheet management and access to lower cost of funding. As a result, operating profit after tax increased to $54.6 million, delivering operating earnings per security of $0.066, up 6.5% on the prior period. A distribution of $0.052 per security was declared. Turning to Slide 19 highlights. This page highlights the quality and sustainability of funds management earnings. Property Funds Management is considered a core segment for the group, and as such, the majority of the business resources are dedicated to this segment. Centuria's focus on accelerating operating leverage from this segment forms part of the group's overall growth strategy, and we anticipate that margins will continue to expand as the platform scales through time. Recurring management fees remain the dominant contributor to this segment. Performance fees were booked where funds formed part of their respective testing thresholds adopted by the group. Centuria's underlying funds also retain additional latent fees, which remained unrecognized. These are expected to fluctuate in line with prevailing valuations from period to period as well as when newer vintage funds mature through the cycle. Turning to Slide 20. During the half, the group realized $133 million of cash through the sale and recycling of balance sheet assets. And gearing remains steady. Liquidity is strong, and there are no near-term debt maturities. From a capital management perspective, the balance sheet is doing exactly what we want it to do, funding growth, supporting selective investment and preserving flexibility. Asset recycling continues to be a key lever, allowing us to redeploy capital without increasing balance sheet risk. Also, the average cost of debt reduced during the half following the repayment of our listed notes, lowering our all-in margin from approximately 325 basis points to approximately 275 basis points. This supports self-funded growth while maintaining a conservative and flexible funding profile. Turning to Slide 21 and talking about the platform. Beyond the corporate balance sheet, Centuria has access to $8.3 billion of diverse lending facilities across listed and unlisted funds provided by a broad group of 24 lenders. This diversity reduces reliance on a single capital source and allows us to manage funding proactively across market cycles. Average margins improved to 1.5% -- 1.57% in the half, highlighting the benefit of stronger lender engagement and an active funding strategy. The funding profile and covenants shown reflect a conservative and flexible balance sheet position with funding cost and risk setting actively monitored across the cycles. I will now hand you back to John for strategy and outlook. John McBain: Thanks, Simon. To conclude on Slide 23, our focus remains on scaling core property funds management, progressing targeted acquisitions and continuing to build Centuria Bass Credit. Data center, [ certain ] AI initiatives will be progressed selectively and only where returns are compelling and customer demand is locked in. These initiatives provide the group with long-term strategic optionality as we go through the buildup of this business. The group balance sheet remains a strong asset and strategic asset. Our platform and deep distribution networks are unique competitive advantages, which can generate a diversified and predominantly recurring earnings base. Factors such as these provide a degree of visibility into earnings underpinning the guidance upgrade and allowing Centuria to build through cycle momentum while remaining nimble as markets evolve. Thank you. That concludes the formal presentation. I'll now hand back to the operator to commence Q&A. Operator: [Operator Instructions] The first question comes from the line of Cody Shield from UBS. Cody Shield: Firstly, just on second half drivers, can you maybe talk a little bit to what you're expecting out of ResetData and performance fees in the second half? Simon Holt: Yes. So on the performance fees, we're expecting pretty much half-on-half to be about the same and consistent with what we said at the full year results back in August at around $20 million. In relation to ResetData, our expectation is that we probably will still make a loss, albeit smaller than this half in the second half. So obviously, setting us up for future tailwinds, but slight improvement. John McBain: I think there's quite a good pipeline of demand now for our capability. But the timing of it, of locking in that demand just has to be finalized. And as those people slot in, then we'll get more visibility. But this is a very, very young business, and we've got a measured approach to it. Cody Shield: Yes. Okay. Maybe if you could just provide a little bit more detail on what was causing the flip, because it wasn't '26, I think you're going to get a positive contribution from ResetData? Simon Holt: It's just timing of signing up customers. Cody Shield: Okay. That's clear. Maybe just turning to acquisitions that are in DD or secured. Can you just provide a read on maybe what type of assets are falling into that? And also what level of divestments you're expecting in the second half? Jason Huljich: Sure. It's Jason here. On the acquisition side, look, we obviously can't go into too much detail on some of them as we're still in due diligence. But it's a mix across industrial, data center, retail and office, both in Australia and New Zealand. So it's a nice mix of geographies and asset classes. Some of that has been secured and some is in DD. But it's nice to have a really good pipeline there. On the divestments, I think we had just under $200 million for the first 6 months. As I think I said at results, we'll probably end up somewhere around $500 million full year. Operator: Your next question comes from the line of Andrew Dodds from Jefferies. Andrew Dodds: Just following on from Cody's question around ResetData. I mean, you've called out that the lease-up is expected to sort of strengthen in the second half. But I mean the drag on earnings is pretty significant. So given that you've said that you sort of expect this to be a net negative contributor this year, I mean, when can we realistically expect this segment to become at least breakeven? John McBain: I mean, Simon, perhaps go through how significant it is. It's -- our half is 2-point-something million out of a $50 million after-tax profit. Is that right, $3 or $4 million? Simon Holt: Yes, $2 million or $3 million. John McBain: So I think -- Andrew, I think we've tested that comment up to where you think that's significant. And yes, we would prefer it not to be a drag -- but of course, like all things, when it goes away, when these customers sign up, and they could sign up sooner than we think, there's a very strong pipeline of significant clients. I guess that will help us not be on -- not have these conversations. Andrew Dodds: Right. Okay. Maybe just on Centuria Bass then. Are you able just to talk around the level of bad debt you're seeing across the book? And I sort of asked this just in the context of -- I mean, there's been some recent press around your exposure to a troubled developer in Western Sydney and if that's having any impact on the business? Jason Huljich: No. Look, that's basically nothing at the moment. The portfolio is in very good shape. We deal with a lot of different counterparties in this business. We're very comfortable with the book. In particular, relationships we have with some customers, we steer more towards things like residual stock, which are very liquid and a lot lower risk than obviously development finance. But yes, look, the book is in very, very good shape. It's probably as good as it's ever been. Operator: The next question comes from the line of Tom Bodor from Jarden. Tom Bodor: I'd just be interested in seeing your comfort with look-through gearing, it's ticking up to almost 38% now. And just noting that around 1/3 of your asset base is intangibles. And what level starts to cause this comfort from a gearing perspective? John McBain: Simon, [indiscernible] [ go ahead ]. Simon Holt: Look, I think the first comment I'd make, Tom, is all of that debt that sits in property investments is nonrecourse. So it doesn't actually flow up to the head stock and vice versa, doesn't us -- require us investing back down if there is anything challenged. So look through gearing moves around from time to time. Mainly the big 2 investments that we have are CIP and cost on our balance sheet and cost gearing has moved down a little bit. So that does have an impact to our look-through gearing. But I think what's important, we use operating gearing as a measure and supports looking at the intangible value as an important part of our business. We buy organic assets through funds management and we from time to time buy inorganic transactions. So we are sitting at around that 12.5% on that operating gearing level for which it's consistent with the half year and has been consistently in that target band that we've been quoting for, I'm going to say, 2 to 3 years now, that 10% to 15%. John McBain: Yes, Tom, I know it's a metric that a lot of you guys look at, and we understand that. But I think the other submission, I think Simon touched on it, we think the intangibles on our balance sheet are worth something. We think Centuria Bass is worth something. Centuria New Zealand is worth something. Jason Huljich: Primewest. John McBain: Primewest is worth something. So it's easier to just -- the word intangible has a connotation about it that could be negative, whereas we're very proud of those businesses, and we think they're highly valued. And in some cases -- well, a lot of cases were far more than we paid for them. But look, we get the question, Tom, we understand it, respect it. Tom Bodor: Okay. And then just on ResetData, just going back to that. I mean, has any leasing actually occurred to date? And what is the revenue from that leasing on a per annum basis? Jason Huljich: Yes. Look, we have leased part of the facility. I won't go into numbers, but we've leased a chunk of the facility. We have got strong demand over the rest of the current capacity as well which we... Tom Bodor: [indiscernible] that you are talking about? Jason Huljich: Correct. Correct. So we do expect that to lease up over the shorter term, as Simon talked about. So yes, probably the big thing that we've realized it is a longer decision process, a longer sales cycle to get both enterprise and government committed. There has definitely been increased demand over the last 4 or 5 months. And we have got, as I said, a very strong pipeline. So we've done a chunk of it and demand over the rest of it, good pipeline over the rest. Tom Bodor: And is there a point at which we can think of this business as breakeven? I don't know if it's 40% of the capacity or some number that as a guide will get the business to be breakeven? Jason Huljich: Yes. Look, it obviously depends on terms, and it depends on a lot of things. The revenues can fluctuate depending on lease -- on the terms of the customer commitment, on term. So it's a hard one to actually give you a number on that. John McBain: Yes. I think -- Tom, I think if we just looked at the Melbourne facility and looked at just leasing that up, the GPU capacity, and looked at our capital and looked at our return on capital there, I think that can come to profit quite easily. It's, ResetData is a very young start-up business, and it will go -- it will require further expenditure as time goes on to grow it. And that's no different than Centuria Bass, no different than Augusta, [ no different ] than all the other businesses we've built. We do think -- we're just trying to be measured about making predictions about when that point happens, but we're certain that it will occur. And look, we do think it's a huge opportunity in the space we're in and being an NVIDIA cloud partner in Australia. But it will take time to play out. But we are excited about it. Operator: Your next question comes from the line of James Druce from CLSA. James Druce: Apologies. Another question on ResetData. I'm just curious, from an industry perspective, single-phase direct-to-chip cooling technology seems to be preferred over immersion cooling even as we move down the track from [ Ruben ] to finement chips. It just seems to be easier to handle with equipment when it's not liquid. How do you think about the 2 technologies? Why would a customer necessarily prefer immersion? Or is it more about just getting access to some compute? Jason Huljich: Look, I think it is about access. We've got something built there ready to go. It doesn't necessarily affect the customer at all. They're after compute and those high-performance chips. So as we've seen with NVIDIA and others are doing and where they're going and what's happening in the chip space and the densities, it is going to go to a sort of combined unit of direct-to-chip as the next stage. But liquid emission works very well as well. So for our existing facility that we've now built, I think it's very fit for purpose. It suits customers, and we've got a wide range of customers looking at it all the way from large enterprise to government. So they seem very comfortable with it. Future facilities, assuming we build out further ResetData facilities, may go towards more the new version of direct-to-chip. John McBain: Reset guys are very close to NVIDIA. I think we'll follow what technology they spearhead really. Jason Huljich: All the facilities -- the facilities we build are built on the NVIDIA architecture. So they have to be happy with it, and we use their design protocols. John McBain: Well, the interesting part is the sovereign nature of -- there are 3 Neo cloud partners, NVIDIA partners in the country. We're one of them. And we're the only one that's purely sovereign. And I think particularly when you're talking to state and federal government, and universities, for example, that sovereign initiative or a capability or mandate is becoming more and more important. So that's another thing that we're really looking forward to unfolding where we have a competitive advantage, but very early days. James Druce: Yes. No, on the sovereign AI. Just a follow-up. Just remind me how the chip finance works? Are you on the hook if you don't have a tenant? What are the terms there? John McBain: Yes. It really is a P&I asset finance lend that we have at the moment on 818 in particular. So it's a P&I and if you have a tenant, you're generating revenue. If you don't, you still have the cost. James Druce: Yes. Okay. That's clear. And then just on the $0.8 billion of acquisitions and DD post balance date. Can we just get a -- you might have provided this on the call, I'm sorry if I've missed it, but can you just provide some color on what sectors they're in and where the momentum is coming from? John McBain: Yes. Look, I think I said earlier, it's a mix of geographies being Australia and New Zealand and sectors. And it's got a bit of everything. So we've got industrial, we've got data center, we've got retail and we've got office. So it is a nice range of asset classes and all opportunities that we think will be well received by our investors, both in New Zealand and Australia. James Druce: Yes. Okay. That's clear. And one more, if I may. Just on the performance fees coming through, which -- and just a bit of color on the funds where they're coming from, please? John McBain: Coming -- a lot of what's coming through this year is coming through from Primewest assets. Jason Huljich: Mainly retail and industrial. John McBain: Mainly retail and industrial, yes. That would be the 2 main ones. Operator: Your next question comes from the line of Richard Jones from JPMorgan. Richard Jones: Just wondering if you can discuss the Arrow Funds Management acquisition, just maybe perhaps how that came about? And I guess how you think about organic growth versus bolt-ons? Jason Huljich: Sure. I'm happy to take. On your first question, look, Arrow, we've been talking to them for a number of years. I think Primewest we've been talking to them before we merged that business in, sort of came to a hit last year, where we worked with the owners of that business. Why we liked it? Our ag strategy is quite focused. What it does allow, we like the portfolio of 26 assets, and it got us some very strong tenant relationships in some other subsectors in ag that we like, such as poultry. I think Bard is about half their tenant exposure, a very strong company. And there are a few other subsectors in there as well. So I think it gave us a bit more diversification into ag, but into ag subsectors that we'd like. On the investor base, there's just under 500 investors. Another thing we liked was the makeup of those investors, a lot of high net worth and a lot of family offices. It's sort of been owned out of Melbourne. And a lot of the investors, substantial individuals and family offices out of Victoria, which would strengthen our investor base down in that state. So I think we've got a number of benefits out of it. Obviously, the financial stacked up, too, with synergies. We're picking up for about 5.5 multiple, which I think screens pretty well. And it's something that we think we can grow. And as we said in the presentation, we're already talking to some of the larger groups about investing into other asset class -- other products. Obviously, CAP, we've built organically, which is the other large ag vehicle. And your second part of the question, organic versus nonorganic. Look, obviously, we like to grow organically and with $800 million of acquisitions in the pipe, that part of the business is going strong. Inorganic growth, we like buying platforms that really add value to us, be it a new sector that we like, that we can scale up. Also, we like, obviously, things that are very accretive as well. But this sort of did help us scale up that ag vertical and get us through that $1 billion mark -- well through the $1 billion mark and get us into those other subsectors. Richard Jones: Okay. And then just a second question. Just a second question just on -- sorry, half on the ResetData. Just what is the likely capital deployment that business needs over the next, call it, 2 years? And can you discuss the options from a funding perspective that you guys are thinking about? Jason Huljich: Look, it really depends where we take it. As John said, we're being very measured. I think we think it's a huge opportunity. You're seeing what others are doing, some of our peers are doing at the moment and some are scaling up pretty quickly. We have chosen really to, as I said, take a measured approach, work out how it plays out in the sort of subsector of AI and data centers -- the relationship with NVIDIA is definitely a huge asset. We are very close to them. And I think it helps the other play, which is our real estate ownership of data centers as well, and does give us some optionality there. So I think it's something that we don't necessarily have to commit a lot of capital to, unless we want to, unless it makes sense. But at this stage, we're just doing the sort of measured approach and scaling up in that sort of fashion. John McBain: Yes. I think to add to what Jason said, I completely agree. It's nice to make it clear, Richard, look, we started buying data centers in 2020. Am I correct, Jason, but the Telstra one for $400 million. Back at that time, no one heard the word data center, right? And we've been adding to that. There's about just over $500 million of just real estate investments, just data center but -- with data center operators as tenants or Telstra or someone [indiscernible]. That's fine. So -- but as Jason said, that gives us -- so we're going to have an involvement in data centers whatever happens. ResetData came along, that just gave us an opportunity just to be at the leading edge. And I think some of the important things about ResetData are the NVIDIA relationship. And if we can build out where I think we're different to other people and your balance sheet question, the answer to it is probably this. We want customers to be locked in before we go out and secure some sort of debt that Simon described before. It's unlikely that we're going to try and attempt to raise a lot of debt and then hope customers arrive. So a little bit of build as they come. We are actually the only ones that have built such a big [ data ] so far outside government. And -- but less hope, more measure, more locking in clients. Once that happens, I think we can find outside sources to fund progress as we make it. Richard Jones: Just one more quick one. John McBain: Yes, sorry. Richard Jones: No, you keep going. I don't want to cut you off. John McBain: No, just -- we don't want anyone to be surprised. This space is dominated by flash releases, quick -- we just don't want any of it. This is slow -- I hope it's not too slow, but measured and deliberate and based on customer demand. And we -- it's exciting because it's a big pipeline, but we want that pipeline to be cemented and then we want to come back and tell you we've done it. Richard Jones: Just a quick one for Simon. Just the second half cost of debt, just can you tell us where you think that heads and any capacity for further margin reduction on balance sheet? Simon Holt: So obviously, this first half had the list of notes being repaid. So the weighted average cost came down about 60 bps from last full year, and it will probably come down another 60-odd bps in terms of the full second half. Sorry, what was the second part of your question? Richard Jones: So that will be 7% for second half is what you're saying? And I just... Simon Holt: Yes. Richard Jones: And the other question was any further capacity for margin reduction on the rest of the book, whether you can bring any of that forward? Simon Holt: No. Look, we've got to a point that we've got -- we've refinanced all of our corporate notes out. So at the corporate level, I think at 2.75 or 275 bps is about where we're going to land for the moment. Some of the shorter term debt may roll off, it might come in slightly, but that's where we're kind of sitting on the margin side. Operator: Your next question comes from the line of Ben Brayshaw from Barrenjoey. Benjamin Brayshaw: You previously flagged the potential for the IPO of a couple of listed entities. Just wondering if you could provide an update on that? And is that something you're still considering? Jason Huljich: Yes. Look, we are. It's subject to obviously market conditions. Obviously, the market is a little over the shop at the moment. So that window isn't there. We have done a lot of preparations. So if that window does open, we're ready to go on certain vehicles. But yes, it's totally at the mercy of the market at the moment. And look, we don't need those particular vehicles to be launched over the next 4 months to hit our guidance either. Benjamin Brayshaw: And just a question on the financials. I was wondering if there's been any development operating earnings recognized from the inventory on the balance sheet for this period? And if so, if you could just quantify those roughly, please? Simon Holt: No, there's no profit coming through from that activity. I'm just trying to remember what was in my list of inventory. Yes. So most of what was in inventory were properties held for sale as opposed to development properties. So it's just more of a classification thing under accounting standards as to why they call inventory. So yes, no, not a lot of profit coming through on this period, was 0 profit coming through from any developments on balance sheet. Operator: Your next question comes from the line of Simon Chan from Morgan Stanley. Simon Chan: Performance fee is pretty good, and you've reiterated $20 million for the year. Just the way I'm thinking about it, you started booking performance fees. That suggests to me that there are probably some funds or some AUM that's coming towards the end of their set periods, right? Am I right? And if I am right, like how big is that chunk? How much of your unlisted platform have funds coming to the end of their lives over the next, I guess, 18 months? Simon Holt: Yes. The majority still is in '28, '29, which has been there since we've purchased Primewest. And a lot of what is the unbooked performance fees relates to that particular period of time. These are just some other funds that are inside that 2-year window, that have come into that 2-year window. Some of that will because the funds expiring, some of it will because there's opportunities with investors to do different things with that particular asset that create that outcome of something likely to happen within -- in the next year. In addition, in many cases, as has been the case the last couple of years, investors choosing to extend those funds as well, even though they come into that 2-year window. So it's a mix of things that are going on. But in essence, there's a number of funds, as we said earlier, around industrial and retail that are coming into that 2-year window. Simon Chan: How big is that bucket, Simon? Simon Holt: Well, the latent performance fees of -- that are in there, it's about $70 million, isn't it? Simon Chan: No, no, I'm not talking about fee. I'm talking about the funds bucket that you're referring to? Jason Huljich: A few hundred million. Simon Chan: Yes. Sorry, Jason, did you say a few hundred? Jason Huljich: Yes, a few hundred million roughly. Simon Chan: Okay. Okay. Fair enough. And that excludes the Primewest, right, Simon? Simon Holt: No, no. That would include the Primewest assets. Simon Chan: Okay. Simon Holt: Most of what's been booked through this period is off the Primewest assets. John McBain: A big chunk of the Primewest assets got extended out to '29 upon their listing, but there was a big -- it was also a part that didn't. So they did expire earlier. Simon Chan: Okay. Cool. How is fundraising at Two Wells going? Simon Holt: It's good. So that vehicle has got a large cornerstone investor. We expect them to take a significant chunk of the equity required for that purchase, which is positive as well as new investors coming into the fund. Simon Chan: Okay. Which sector would you say was -- I mean, over the last, I guess, 12 months, you've done Logan, you've done -- well you're doing Two Wells and you've done Port Adelaide. Simon Holt: Yes. Simon Chan: Which of those 3 sectors was the easiest to get money? Jason Huljich: The Port Adelaide raise is probably the best I've ever seen, to raise sort of circa $300 million for $116 million raise, which we thought was reasonably large at that time for an Adelaide asset. We got bought over. Everyone got scaled back over 50%. We also said no to a number of offshore institutions that wanted minority stakes as well. So yes, that was definitely the most demand I've seen. Logan went well as well. That was oversubscribed. But yes, I think we've got pretty good demand across the book, particularly retail and industrial. Ag is good, but that one cornerstone is a big chunk of the demand into that fund, which they keep supporting, which is great. Simon Chan: Great. And just one last one. Can I check in on Allendale? Are you guys still holding on to some units there? Or have you managed to get it the way now? Jason Huljich: We do have a holding. It's been coming down over time, but there is a holding at this stage. Simon Chan: How big is it? That's [ alright ]. You can get back to me. That's fine. Simon Holt: We'll come back to you. Simon Chan: Yes, of course. Operator: Your next question comes from the line of Andy MacFarlane from Bell Porto. Andrew MacFarlane: Just a couple from me. Can you just talk about the level of redemptions, if any, across the various funds at the moment? Jason Huljich: Yes. Look, we only have the 3 funds that have redemptions, the -- which are the open-ended funds. So CDPF, which our diversified fund, it's a small fund, our health care fund and our ag fund. We have quarterly redemption -- limited quarterly redemption features. Now both the health care fund and the CDPF came up with their 5-year liquidity events where we go out to investors and -- we go out to investors and give them the opportunity to let us know if they do want to redeem out the fund. We then have a period of time to raise more equity, sell assets and so forth to satisfy that. CHPF, I think we reported last results, we were at over 30% of investors, put their hand up there, and we're just going through the process of satisfying those. The latest was CDPF diversified fund. Again, around 30-odd percent, put their hand up for redemptions. We've already satisfied about 25% of them, and the rest will be sorted out pretty quickly with some assets that are going through the sale process at the moment. It's not a lot. It's sort of less than $120-odd million across the board. Andrew MacFarlane: Just in the pack, you got a chart on bank hybrids rolling off and some of your peers looking at doing things as product replacements. How do you think either Bass and Centuria could play a role in finding products here, if so? Jason Huljich: Look, we think these investors are looking for yield. Our products can supply that across either the credit or equity side of things. So we think it will be a tailwind for us and obviously other managers as well. As I said earlier, we have been pretty surprised on some of our raises and the amount of demand out there. As these hybrids roll off year-on-year over time, I think that will help support demand for our sorts of products. So yes, as long as we can keep up an attractive yield and a buffer over term deposit rates, which is looking like we can do on both sides of the Tasman, our products should be pretty well received. Andrew MacFarlane: So last one, if I may. LVR, it's creeping up a little bit in the debt book. Just wondering kind of where you're happy with that sitting? Jason Huljich: On the -- in the funds? Andrew MacFarlane: Yes. Jason Huljich: Look, our funds hasn't -- I don't think it's moved too much. We sort of sit normally around that for a new fund in that 45% to 50% range. Andrew MacFarlane: Sorry, Jason, I meant, Centuria Bass, apologies. Centuria Bass. Jason Huljich: Centuria Bass. Look, a couple of percent on LVRs. But look, we put that graph on there to show it hasn't moved that much. It's been pretty stable. We stuck to about, I think, just over about 92% first mortgage. It's about 90% residential. Look, where the LVRs around where it is now is where we're comfortable. Each deal is obviously diligence on its merits on the counterparty, on the quality of the asset, but how we look at it is it's an asset [ lead ] and what is the value of what we're lending against and having the teams in-house that can really have a close look at it, a large development team, a large valves team. I think it really gives us a bit of a point of difference compared to most of the other managers out there. Operator: There are no further questions at this time. I will now hand back to Mr. Bain for closing remarks. John McBain: Yes. I'd like to thank everyone for attending this morning and for the questions. We enjoy it and send out thanks to Tim and Peter, in particular, for helping put a really nice set of documents together. Thank you. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Light & Wonder Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Rohan Gallagher. You may begin. Rohan Gallagher: Thank you, operator, and welcome, everyone, to our fourth quarter and full year 2025 earnings conference call. Joining me today in Las Vegas are Matt Wilson, our President and CEO; and Oliver Chow, our CFO. During today's call, we will discuss our fourth quarter and full year results and operating performance, where we will refer to our earnings presentation. This will then be followed by a question-and-answer session. Today's call will contain forward-looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call. For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call posted in the Investors section of our website and our filings with the SEC and the ASX. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release and earnings presentation located in the Investors section of our website. With that, I will now turn the call over to Matt to discuss the fourth quarter and full year results and operational highlights on Slide 3. Thank you, Matt. Matthew Wilson: Thanks, Rohan. Hello, everyone. Thank you all for joining us. 2025 was a pivotal year for Light & Wonder. In May, we completed the acquisition of Grover Charitable Gaming, a highly synergistic and complementary business with meaningful greenfield growth opportunities. At our second Investor Day since rebranding as Light & Wonder, we announced our long-term targets of $2 billion in consolidated AEBITDA and EPSa exceeding $10.55 by 2028. In November, we completed our transition to a sole ASX listing, and early market feedback has been encouraging. Importantly, we also resolved the peer dispute earlier this year, removing any unnecessary distraction and allowing the organization to remain focused on execution. Our results reflect the team's execution and resilience. Despite challenges along the way, we delivered within our previously guided 2025 consolidated AEBITDA and adjusted NPATA target ranges. Over the year, we strengthened our operating foundation and further positioned the business financially for long-term sustainable growth. The quality of earnings continues to improve, supported by consistent net adds in the Gaming operations installed base and $2.2 billion of recurring revenue with margin and cash flow expansion evident throughout the year. Consolidated AEBITDA and adjusted NPATA both grew in the high teens year-over-year, and EPSa increased 27% to $6.69 to close out 2025. We remain committed to advancing our growth initiatives while returning capital to shareholders. During the year, we repurchased $877 million worth of shares and have now completed 78% of our second share repurchase program. In total, we have returned $1.9 billion to shareholders since launching our initial program in 2022. Together, these highlights demonstrate strong performance and reinforce our commitment to continuous improvement across financial and operational metrics. Turning to a high-level overview of our performance on Slide 4. Consolidated revenue growth was driven by Gaming, including the contribution from Grover and record results in iGaming, both in the fourth quarter and for the year. That strength was partially offset by modest declines at SciPlay. Just as important, our continued focus on profitability translated into meaningful AEBITDA growth across all 3 businesses with 29% consolidated AEBITDA growth in the fourth quarter and 16% for the year compared to 2024. Our commitment to the comprehensive margin enhancement initiatives remained intact as we grew consolidated AEBITDA margins 500 basis points in the fourth quarter and full year 2025. The margin uplift across the organization is expected to remain largely sustainable as we continue to identify and execute key efficiency projects and further optimize our corporate cost structure. With a streamlined set of complementary businesses, we are well positioned to generate sustained top and bottom line growth, supported by an efficient R&D engine, which enables us to innovate, scale and leverage capabilities across the enterprise. As many of you may have observed from recent headlines, AI is at the center of debate across many industries, including Gaming. At Light & Wonder, we see AI as a growth enabler, another lever in creating value and helping us achieve our full year '28 financial targets. Through our strategic transformation and track record with margin enhancement initiatives, we have demonstrated the ability to adapt and capitalize on changes, and we believe we can leverage AI to further enhance our existing capabilities. You can see here on Slide 5 that we are well positioned, courtesy of our global scale, which provides us with unique proprietary data sets. By leaning into AI, we can further improve both the quality and quantum of games in a more productive manner and distribute across multiple channels, where we already hold leadership positions. Furthermore, our sizable R&D, customer relationships and incumbency in highly regulated markets is underpinned by a collaborative culture fostered by an aligned Board and leadership team, which will only further strengthen our structural moat. AI presents a significant opportunity for Light & Wonder. In fact, we have embraced this technology and commenced on our AI transformation program to drive both growth and efficiency. We are excited to be taking a leadership role in this arena, and we'll provide further details as our AI journey evolves. With that, let's turn to our business unit highlights. On Slide 7, Gaming revenue was up 17% to $602 million in the quarter, primarily driven by higher gaming operations revenue, which increased 35% year-over-year to $237 million. Drivers included higher North American installs, specifically in the premium segment, and a $41 million contribution from Grover. Growth was fueled by strong launches of our Cosmic Upright and Lightwave cabinets and other key games in hardware as showcased at AGE and G2E last year. Gaming machine sales also delivered a record quarter of $234 million, a 20% increase year-over-year on a record of 7,000 units shipped in North America. International shipments remained solid, supported by a sizable order of our SSBTs in the U.K. as previewed. Our systems and tables businesses both saw timing-related sales declines in the quarter, with systems impacted by higher sales in the prior year and tables on lower utility sales in Asia, partially offset by North American sales. We firmly expect both businesses to return to growth underpinned by targeted near-term investments and commercial strategy. Gaming AEBITDA rose 26% year-over-year to $323 million, driven by record game sales and strong gaming operations revenue growth. AEBITDA margins increased to 54% on a higher mix of gaming operations units and cost efficiencies, reflecting the team's continued execution on quality of earnings enhancements through recurring revenue and streamlined cost structures. Now for an in-depth look at our gaming KPIs on Slide 8. Our North American installed base increased 42% year-over-year to over 48,300 units. Excluding Grover's installed base of over 11,600 units, gaming operations grew over 700 units sequentially and over 2,600 units year-over-year, marking our 22nd consecutive quarter of North American premium installed base increases, which now accounts for over 53% of the total North American installed base. This strong growth was driven by the successful launch of Lightwave and the continued momentum of our Cosmic series cabinets. Average daily revenue per unit in North America increased to $47, up 4% year-over-year, driven by a richer product mix, offset by the inclusion of Grover units. Excluding Grover, our North American installed base revenue per day grew 9% year-over-year, driven primarily by stronger performance in premium and wide-area progressives. In fact, we continue to excel across multiple game categories on the Eilers charts with 11 of the top 25 index new premium leased and WAP games featuring our Huff N' Puff and Ultimate Fire Link titles. This continued momentum is a testament to the quality of our diversified game franchises with demonstrated performance not just in premium, but also in Class II, among others. Global gaming machine sales recorded another strong quarter, up 29% in unit shipments year-over-year to over 12,300 units. Replacement shipments remained strong, and our array of products enabled us to expand our presence in rolling replacement and RFP markets such as the Canadian VLTs as well as entries into the Nebraska skill-based market and Eastern European dynamic multi-game market. We continue to see progress in the latest Eilers report where Huff N' Triple Puff debuted #2 in the New Core Video Real Game Index, while Piggy Bankin' Break In remained at #3 with 3 other Light & Wonder titles in the top 10. We have an expanded and robust global hardware and content road map planned for 2026, as shown on Slide 9, driven by continued investments in our studios. 2025 was an incredible year for gaming operations as we launched the Lightwave cabinet and introduced Cosmic Sky and our stepper Landmark 7000 with Jackpot Wheel, both of which will be available to our customers shortly. Additionally, we are looking to further solidify our game sales market share with Cosmic Dual screen and Lightwave Solar with new game titles such as Jin Chan and Fiesta Caliente. We've also planned for expanded regionalized road maps for our Australia and Asia customers on Slide 10 to support and extend the momentum we've built over the past few years in these markets. Moving along to Slide 11 for an update on our prized acquisition, Grover. Since closing the deal in May, Grover has contributed $102 million of revenue, reinforcing the attractive recurring nature of the charitable gaming model. Operationally, we're seeing strong momentum in the installed base. We've added over 1,000 units since the announcement and exited 2025 with over 11,600 units installed. In the fourth quarter alone, we added 345 units sequentially across our existing operating markets, demonstrating continued demand and solid execution. We also expanded our footprint into Indiana with a successful launch in late December and are in the early stages of a disciplined deployment strategy. Initial installed locations are demonstrating strong performance consistent with our expectations, and we are continuing to see strong demand from qualified charitable partners. We are well positioned operationally to support continued expansion and remain confident in achieving our fair share in Indiana, consistent with our performance in the jurisdictions we currently operate in over the long term. From an integration standpoint, we're actively optimizing game floors by bringing Light & Wonder game mechanics, cabinets and brands into the Grover footprint. At the same time, we're investing to ensure best-in-class service and to build share as we enter new markets, including existing ones like Maryland, where we currently do not operate in, and potential future openings such as New York. Overall, Grover is performing well, scaling quickly and building a meaningful runway for profitable growth that is akin to our core gaming operations business. Turning to Slide 12. SciPlay revenue was $195 million for the quarter, with Quick Hit Slots and 88 Fortunes once again reaching record quarterly revenues, their 16th and 6th, respectively. The strong performance of these and other portfolio games was offset by a decrease in average monthly payers at Jackpot Party. I'd like to share that underlying metrics is becoming more consistent starting in December of 2025 and into the new year with engagement and retention rates returning to normal. This stability gives us confidence to lean back into UA investments, which is vital to sustainable growth. While the revamp of this magnitude takes time, we are confident in a return to prior performance levels. Player monetization remains a key focus and an integral part of the flywheel with average revenue per daily active user up 4% year-over-year to $1.10 and average monthly revenue per paying user increased 14% to over $133 in the quarter. Importantly, we continue to see significant progress in our direct-to-consumer offering, which now has grown to over 25% of the total fourth quarter SciPlay revenue or $48 million, up from just 13% at the end of 2024. We will cultivate the DTC runway as it has been a primary driver of SciPlay's AEBITDA growth, which is up 8% to $80 million year-over-year. SciPlay is an integral part of our omnichannel strategy, and we remain committed to the initiatives that we expect to drive above-market performance going forward. Moving to iGaming on Slide 13. We delivered a third consecutive quarter of record revenue of $94 million, up 21% year-over-year on continued strong momentum in North America, underpinned by first-party content proliferation in the U.S. and the expansion of our partner network. This quarter marked the fourth sequential period of global first-party content GGR growth on our content aggregation platform, OGS, underpinned by solid game performance across the Huff N' Puff franchise in the U.S. and the Pirots franchise in Europe. In fact, 8 out of the top 10 games across our content aggregation network in the quarter were first-party titles with Huff N' Lots of Puff ranking first, Pirots 4 ranking second, and 3 other Huff N' Puff family titles rounding out the top 10. iGaming AEBITDA of $36 million was up 44% year-over-year at record levels, reflecting continued first-party and third-party content growth with margins up 600 basis points versus the prior period. This margin expansion was driven primarily by profit flow-through from increased revenue and cost realignment associated with the discontinuation of our live casino business. Wagers processed through OGS grew 22% year-over-year to $29.2 billion with record volumes across all regions and content types reflecting the platform's global reach and growth potential. In addition to our aforementioned successful game franchises, we have more land-based favorites in our road map, such as Big Hot Flaming Pots Tasty Treasures and Piggy Bankin' Superlock, as you see on Slide 14. Our network scale has enabled games from various studios to reach wider audiences across North America. In fact, Elk Studio is now live in Michigan and New Jersey with Pennsylvania expected to follow. We're also excited about the recent legalization of iGaming in Maine, which is a welcome sight to the industry. With the recently passed bill in the U.K. increasing online gaming taxes to 40%, we expect an adverse impact to the business beginning in the second quarter of this year, given our meaningful presence there. We will continue to explore mitigation initiatives with key operating partners as the industry adapts to the change. International expansion continues to be an opportunity for growth. Just last quarter, we received approval to operate in the Philippines as the first licensed iGaming supplier, and we're excited to share that we are now live. We have a strong presence as a leading land-based slot supplier, and we look forward to launching our popular games in the market soon. Similar to the Philippines, we have now received approval to operate in the UAE with a launch expected later this year. This is another sizable market opportunity we're excited to pursue. Our investments in robust regionalized road maps will continue to support our team's execution in nascent and international markets, further extending our current iGaming market momentum and global presence. With that, I will now hand over to Oliver to go through our financials. Oliver? Oliver Chow: Thanks, Matt. 2025 marked a year of strong earnings growth across all 3 businesses, driven by continued disciplined execution of our strategic and operational initiatives across all 4 quarters. I'm very proud of our team's accomplishments. Let me walk you through our results, starting with Slide 16. In the fourth quarter of 2025, we delivered consolidated revenue of $891 million, up 12% year-over-year, driven primarily by 17% growth in gaming revenue, including $41 million from Grover, and record iGaming revenue, up 21% year-over-year. Recurring revenue continues to perform well, supporting earnings durability and driving strong incremental margin flow-through. For the full year, consolidated revenue was $3.3 billion, up 4% from 2024. Gaming operations increased by $170 million, driven by $102 million Grover contribution and a $68 million contribution from our diversified game portfolio. iGaming also reported revenue growth of 13% or $38 million compared with the prior year period. Given the recent successful resolution of a peer dispute, the fourth quarter reflects a $128 million settlement, along with other charges of $49 million, which includes $25 million in contingent acquisition consideration fair value adjustment related to Grover, $18 million in costs related to the ASX transition and other costs, totaling $177 million under restructuring and other. As a result, we reported a net loss of $15 million in the quarter. Absent these charges, profitability was strong, driven by consolidated revenue growth and record AEBITDA margins across all businesses. Net income for the year decreased 18% year-over-year, impacted by $219 million of restructuring and other charges described earlier. Absent the previously mentioned settlement, business segment growth was driven by strong execution of operational efficiencies throughout the year. Fourth quarter consolidated AEBITDA grew 29% year-over-year to $405 million, reflecting both top line growth and margin expansion across the portfolio, including contributions from Grover. Our consolidated AEBITDA for the year was $1.44 billion, well within our guided range, reflecting solid operational performance. Adjusted NPATA for the quarter grew 27% to $161 million and adjusted NPATA for the year grew 18% year-over-year to $567 million. Growth was largely driven by an AEBITDA increase with record margin across all businesses. On a per share basis for the year and given our restructuring and other charges described earlier, net income per share on a diluted basis decreased by 11% to $3.26 compared to $3.68 in the prior year period. Adjusted NPATA per share, or EPSa, increased 27% to $6.69 compared to $5.27 in the prior year period. The full year EPSa does not reflect the full impact of significantly higher share repurchases we made in the fourth quarter as the metric is based on an average share calculation. Our outstanding shares as of February 18, 2026, were approximately 77.1 million shares, in line with our year-end position. If you were to take our period ending outstanding share count, our EPSa would have been meaningfully higher and sets us up nicely as we move into 2026. On Slide 17, you'll see our fourth quarter consolidated AEBITDA and adjusted NPATA bridges, which reflect broad-based growth. Gaming AEBITDA increased $66 million year-over-year. Margin expansion for the fourth quarter was primarily driven by strong North American gaming operations installs, higher revenue per day led by the performance of our premium and wide-area progressive units, contributions from Grover, and record North American gaming machine sales. Going forward, we expect continued growth in our premium North American installed base, which we forecast to be over 500 units a quarter this year. Importantly, we anticipate another year of net installed growth in our North American installed base, coupled with the incremental benefit from Grover. I would also like to note that we had substantial domestic and international new openings and expansions as well as VLT units in the first quarter of 2025, which will impact comparability in the coming period. As Matt mentioned earlier, our planned hardware launch in the coming months is expected to drive performance in the second half of the year. Looking ahead, we expect our gaming AEBITDA margin to be around 50% in the first quarter on product mix and tariff impact. SciPlay AEBITDA increased $6 million, primarily supported by increased direct-to-consumer revenue mix of 25% with strategic and targeted UA investments. Going forward in 2026, we expect UA spend to ramp up further increases in DTC mix and stabilization for Jackpot Party as we continue to invest back into the business. iGaming reached new records for revenue and AEBITDA, driven by growth in first-party content and the discontinuation of Live Casino. Based on our road map, we believe there is ample runway to scale this business despite some headwinds related to the U.K. tax changes starting in the second quarter of 2026. Corporate and other improved by $7 million through margin expansion initiatives and cost efficiencies. Looking at adjusted NPATA, we delivered a $90 million year-over-year increase in consolidated AEBITDA driven by strong revenue growth and record margins across every business segment. This improvement was partially offset by several cost and expense dynamics. Depreciation and amortization increased by $8 million year-over-year, reflecting the addition of Grover units and higher success-based capital expenditures within gaming operations. Interest expense increased by $13 million, primarily due to the higher debt levels associated with the Grover acquisition and ongoing share repurchases. These repurchases mitigated uncertainty and volatility during the fourth quarter as we transitioned to our sole ASX listing. Additionally, income tax expense increased by $32 million, primarily resulting from a higher effective tax rate in the fourth quarter of 2025. From a tax perspective, our effective tax rate was approximately 24% in 2025, and is expected to range between 22% and 24% for the coming year. Turning to cash generation on Slide 18. We delivered another strong quarter and year of cash flow, in line with our commitment to our cash enhancement initiatives. Operating cash flow was $319 million in the quarter, up 58% year-over-year. Over the same period, free cash flow increased 138% to $176 million, driven by earnings growth, lower cash tax payments and lower cash interest following our third quarter financing actions. For the full year, operating cash flow was $794 million, an increase of 26% year-over-year, and free cash flow was $452 million, up 42%, reflecting the underlying strength and resilience of our cash-generative model and lower cash taxes. Importantly, cash conversion improved year-over-year progressively. Conversion rate in the quarter nearly doubled on both AEBITDA and NPATA basis to 43% and 109%, respectively. For the year, free cash flow conversion was 31% of consolidated AEBITDA, up from 26% in 2024 and 80% of adjusted NPATA, up from 66% last year. It is important to note that these figures include onetime costs of $18 million in professional services related to the ASX transition and the Grover acquisition and $75 million in litigation settlements. We continue to focus on strengthening the working capital cycles, optimizing inventory levels and maximizing capital expenditures to enhance our quality of earnings and cash conversion over time. Moving on to our capital structure on Slide 19. Our net debt leverage ratio at year-end of 3.4x remained within the targeted range on a combined basis as previously discussed. This was despite the accelerated pace of our share repurchases during Q4 as we transitioned to a sole ASX listing back in November of 2025. Given the strength of our operating model and cash generation, we expect to delever organically through 2026. The principal value of our debt at period end was $5.2 billion. Last month, we successfully repriced our $2.1 billion term loan, reducing the applicable margin by 25 basis points to 2%, which reflects our strong credit profile. This repricing is expected to generate approximately $5 million of annual interest savings. Our debt maturity profile remains long-dated and well laddered with an average tenure of roughly 4.4 years. We also extended bond maturities from 2028 to 2033 at lower rates last year. Our effective net interest rate is approximately 6.65% with a 53% fixed and 47% floating debt mix. We also maintained meaningful flexibility, ending the period with $927 million of available liquidity to support growth initiatives. As previously noted, we will continue to evaluate opportunities to optimize our capital structure as favorable market conditions arise. I will now go through our capital allocation framework on Slide 20, which remains consistent and execution focused across our key priorities. First, we will continue to reinvest in the business in a targeted and efficient manner in line with sales growth consistent with prior years. We continue to target combined R&D and CapEx at around 17% of consolidated revenue, which may vary quarter-to-quarter given timing of investments. That said, you will see ongoing investments weighted toward the first half of the year and the first quarter, in particular, related to Grover ramp and Indiana entry as well as other value initiatives. We aim to retain a flexible balance sheet, which gives us the ability to deploy capital opportunistically under the right circumstances. Over the long run and absent major capital allocation opportunities, we expect to naturally gravitate towards the lower end of the 2.5x to 3.5x leverage range over the long run on our strong operating model and highly cash-generative business. Importantly, we remain focused on capital returns. In the fourth quarter, we stepped up share and CDI repurchases to $500 million and returned $877 million at an average price of $86.80, utilizing 78% of the $1.5 billion authorization in 2025. Looking ahead, we will remain opportunistic regarding the use of buyback with consideration to our capital allocation priorities. Since the initiation of our share repurchase program back in 2022, we have returned $1.9 billion to shareholders. That equates to about 25% of the total outstanding shares prior to the commencement of our broader program. Overall, our framework continues to balance disciplined reinvestment, financial flexibility and shareholder returns anchored by a strong cash-generative model. With that, I'll pass it back to Matt to provide you an update on our 2026 outlook. Matthew Wilson: Thank you, Oliver. In conclusion, I'd like to provide a summary of the shape and growth trajectory of 2026. You can see here on Slide 22 that we anticipate another year of strong adjusted NPATA and EPSa growth with the shape of earnings to be broadly similar to 2025, reflective of our growing recurring revenue base and industry cyclicality. Importantly, strategic investments, tariff costs in gaming and legacy costs pertaining to legal matters are anticipated in the first half of the year and the first quarter in particular. Operationally, we expect all business units to continue targeting above-market growth with a particular focus on the recurring revenue parts of our business. As mentioned earlier, we expect continued installs across North American premium gaming operations and Grover with continued game sales momentum in North America off a record fourth quarter as well as improved performance in Australia, pending the cabinet launch in the second quarter. On the digital side, SciPlay is expected to continue its DTC expansion and iGaming to further expand its 1PP content. Whilst we continue to be opportunistic regarding share repurchases, from a capital management perspective, we plan to naturally delever our balance sheet over the course of the year. Lastly, we've also guided to some key financial metrics for modeling purposes and provided commentary pertaining to our business verticals in addition to an update on our progress to the various 2028 targets in the appendix. And now we will turn it over to the operator for your questions. Operator? Operator: [Operator Instructions] Our first question will be coming from the line of Matt Ryan of Barrenjoey. Matthew Ryan: Appreciate the slide that you've got on Page 5 around artificial intelligence. Obviously, it's been a huge talking point around the sector of late. I was just hoping if you could focus a little bit on the right-hand side and the structural moat that your business has. And maybe you could just talk about how that, I guess, keeps you in good stead around any competitive risk that people might be concerned about at the moment? Matthew Wilson: Yes. Thanks for your question, Matt. I'll address that directly, and then I've got Victor Blanco, the CTO of Light & Wonder, here to kind of cover off kind of the practical application of what we're doing around AI in the business, clearly a hot topic in the market at the moment. So let me give you L&W's perspective on AI. We see AI as a significant growth enabler for our business. There's probably 2 things to understand about AI at L&W, one through that kind of defensive moat lens and the other through that offensive lens. So I'll step through the moats. We do have strong and durable structural moats around this industry and around our business. We have strong established market positions. We've been building these positions for decades. We're either #1 or #2 in all the markets that we operate in. It's a highly regulated market, the gaming market. We have over 500 licenses in jurisdictions all over the world. These are developed through personal one-to-one relationships with regulators in each of those markets. So it takes time to build that scale into your business. Importantly, we've got scale and incumbency. We spent, just in '25 alone, over $562 million on R&D and CapEx. That's a huge base for us to optimize over time. And we think these AI tools will allow us to do that. If you think about our team's ability to drive these margin enhancement initiatives, a lot of that was outside of the R&D organization, but these AI tools kind of really directly help us optimize that spend. So it's a massive base that we can continue to optimize over time. We've got valuable IP and brands. So I think Huff N' Puff, Ultimate Fire Link, Dancing Drums, Journey to the Planet Moolah, just to name a few of the games that we have in our portfolio. These are the Coca-Colas of the gaming industry. Players love them. They trust them. They want to play the next variation. That's why every next version of Huff N' Puff that we launch ends up on the Eilers charts, players trust these, and they're unique to us, and they can't be leveraged by competitors or start-ups entering the space. I think importantly, we have unique data sets. So we have decades of certified math models on our archive that we use to develop games. We've got the ability to leverage OGS player session data to help inform the way we create games. We've been leveraging AB testing in SciPlay. I think that's one of the factors that's really driven the incremental successes you've seen in our portfolio. And importantly, all of these data sets are within the 4 walls of Light & Wonder. They can't be crawled by an LLM. That's unique to us specifically. I think one of the big things that's overlooked by the market as it relates to gaming is we're not a SaaS company at all. We're really this beautiful intersection between hardware and content. We launch 5 to 7 proprietary cabinets every year. We launched 7 in the last 12 months. And those things are unique and they take time to develop. So you combine that with the signage and merchandising we build, multiply that by the 500 jurisdictions we're in, that's a huge matrix of configurations and complexity that you have to deal with. And when it comes to hardware, that's really supply chains, it's procurement, it's logistics, it's storage, it's deployment, it's servicing those games in the market. This is massive established infrastructure that takes time to build. It cannot be replicated by 2 quants and an LLM in a garage somewhere. These are things that are built over time. So yes, through my perspective, we have massive structural moats around the Gaming business, and that will persist over time, and AI will be a massive opportunity for us. From a growth and productivity standpoint, this is really when we go on the offense around AI, there's kind of really 3 different areas that we're looking to leverage this. It's through technology, so accelerating new platform development, AI architecture, code generation, test automation. There's lots of opportunity with Claude and some of the tools, that Victor will speak to, that will allow us to drive some efficiencies in that space. From a content perspective, it's really nascent targeting, improving our quality and hit rate of games, by really taking a lot of the noncreative elements of the process off the table through the use of AI tools. So there's lots of opportunity there. And then finally, like every business in every industry is leveraging AI to drive business operations and the efficiencies around that. I think importantly to note for investors, we launched an AI transformation program in 2025. We intended to come to market and explain that to our investor base sometime in 2026, but we thought just given a lot of the anxiety in the market today, we wanted to give you a bit of a precursor to that. The Board is aligned around that transformation program, as is the management team, and we see significant opportunities. But I'll hand to Victor to speak about AI in practical terms. Victor Blanco: Thanks, Matt. I'm happy to share how we're advancing AI here at Light & Wonder from the technology organization. One of our key initiatives that I'm personally driving is our Carbon game development kit. A new development is, September of last year, we made the strategic decision to restart Carbon as a completely AI-led platform development initiative. This means leveraging coding assistance like Claude as our primary development methodology. We did a comprehensive reset of all of our Carbon architecture decisions, we evaluated all the latest technologies, and we looked at our current future business goals. Now building Carbon on this AI-led approach, we've effectively surpassed our prior Carbon development progress. We delivered on a new development language. We have a brand-new game engine and an authoring experience, all done in just over 4 months. Carbon is now delivering 100% game portability across land, social and web, where before we were just sitting at around 70%. So a huge difference. Our first Carbon land-based game is still on track for launch this year, and we've aggressively pulled in our first iGaming Carbon game into '26 as well, just given the confidence of what we're seeing. And now finally, because Carbon was developed entirely through AI-led methodologies, these same tools, the workflows and all the productivity gains that we're seeing in the platform are going to carry forward directly into our studios as they adopt Carbon as their basis for building games. Now with all these benefits that we walked through that we're already seeing in Carbon and many other platforms in our business, there are elements of the game design that we just can't simply replace. The first is our player experience. We know that most of our successful games are built on this intuitive understanding of that player experience. It's built up over decades of observing real player behavior across our market and demographics. While AI is able to analyze this engagement data at scale, we've struggled to figure out how to originate that creative instinct that makes that game experience feel so compelling for our player. This is still a very human-led process. Another AI challenge is creating those creative breakthroughs. AI is great at recombining patterns from existing data, but it's our game designers that are still creating the genuinely novel mechanics. All of our new bonus structures, our unique feature configurations and our progressive systems, these are the hit games that are driving our market share through these breakthrough concepts, not through that kind of pattern recombination. We're still using AI to accelerate the iteration and execution, but it's still our studio heads that are driving that spark that's making successful content. So look, I'm excited the way our games and teams are adopting this technology, and I do believe that AI is going to continue to amplify our process for years to come. Matthew Wilson: Yes. I mean Victor is right at the tip of the spear of this initiative. So we're excited to cultivate this more and then share more with investors throughout the course of 2026, but I thought it was timely to give you that update. So thanks for the question, Matt. Operator: Our next question will be coming from the line of Barry Jonas of Truist. Barry Jonas: There's been a lot of legislative activity we've seen recently in states like Pennsylvania and Missouri, which could involve VLT expansion. Just hopeful you can maybe frame the potential opportunity and likelihood of seeing that VLT expansion. Matthew Wilson: Yes. Look, we're very encouraged to see the progress here. Unregulated gray markets are a significant problem for our industry. There's tens of thousands of these skill-based games right across the states in the U.S. So it's nice to see that level of activity at the legislature around potential VLT expansion. We're very well positioned. As you know, we're a market leader in Illinois. And so to the extent that those regulations are replicated in either Pennsylvania or Missouri, our whole product suite is set up and ready for deployment. We try not to get ahead of ourselves in these markets. There's a lot of twists and turns when it comes to legislative progress. But it is exciting to see that that's spoken about. I think the AGA has spoken at length about the dearth of gray market skill-based games across the U.S. They're not taxed effectively. They're not regulated. And I think if you look at the Illinois example, regulating and taxing it can lead to great outcomes at a state revenue level. So yes, we're excited for that. We'll be ready to activate it. There's various different suggestions about market sizes. Pennsylvania, I think, is predicted at a 40,000 unit potential market. Missouri, not quite that high, but still both very significant. But we're seeing a lot of activity across the legislative front on multiple dimensions. We heard over the holiday break that New York is legislating charitable gaming. So that's an interesting incremental market for us. There's activity in Maine as it relates to charitable gaming. So positive to see some potential expansion opportunities. I'll just remind you that none of those new market opportunities sit inside our long-term guidance out to 2028. These are all discrete unique opportunities that would be kind of incremental to our plan. So watching it closely, preparing as best we can, but ready to ride the twists and turns as it relates to legislative progress. Operator: And our next question will be coming from David Fabris of Macquarie. David Fabris: Can we just focus on the Grover acquisition and just a couple of questions here. I mean, if we think about the growth prospects in your legacy jurisdiction, it looks like you're tracking kind of 300 quarterly net installs based on the 3Q and 4Q trends. Is that something we can extrapolate into '26, excluding Indiana? And then if we think about Indiana, you've started installing machines in the 1Q. So that's post balance date, obviously. Can you give us any insights into how you've been tracking for that near 2 months? And if we're thinking about fee per day as well, it looks like Grover reports about $39 per day. Is Indiana accretive, dilutive or broadly in line with that $39 trend? Matthew Wilson: Yes. Thanks for the question. We're thrilled about the Grover acquisition going very, very well. I mean, pacing well ahead of our expectations so far. I think one of the exciting things, we saw unit growth across all of our markets in the fourth quarter. So it just shows you the organic growth potential within existing markets. We entered Indiana. The market was regulated on December 30. So not our favorite time to be activating a new market. The team has worked hard over the new year, but really leaned into that. So we're, I'd say, 6 weeks into that market being live. We're going kind of door-to-door, looking at the opportunities. And Grover has always won off the back of great game performance and great service, and that's how we're going to win in Indiana, too. We're not going to chase discounting or deals in that marketplace. We want to win the right way, and that's how the team is kind of focusing themselves. We think over time, we'll get similar share to other existing markets. New markets have opened over the years. There's the initial rollout, then you get the optimization from a game performance and service perspective. So we think over the long term, we'll have similar share in that market to the existing markets. I think your fee per day is around where we are from a Grover contribution standpoint, very similar to a Class 2 type fee per day, which I know you're very familiar with. Yes, we expect Indiana, just given kind of the economic dimensions in that market, to be reasonably consistent with what we see across the board. So I think that's probably the best way to frame up the RPD opportunity in Indiana. Oliver Chow: Yes. And David, just one other add to that. I think if you remember some of the conversations we've had in previous quarters, at a base kind of run rate perspective, I think 150 to 200 units ongoing is a good starting point from a model perspective. And then yes, you'll start to see incremental adds for Indiana as that ramps up. So I think from a modeling point of view, that's how I would think about that. Operator: Our next question will be coming from Andre Fromyhr of UBS. Andre Fromyhr: Just wanted to focus on the ops business. I see in your outlook commentary, you've talked about net installs in the premium space of 500 plus per quarter. And I was wondering if you could put that in perspective of the year ahead versus the year we've just had. 2025 sort of started with Dragon Train removed from your pipeline. So how does the game pipeline compare as you start 2026 and add to that the demand that you've seen for the Lightwave cabinet? Matthew Wilson: Yes, it's a part of the business that we love. So happy to talk about it. That was the 22nd consecutive quarter of premium gaming operations installed base growth. So it's almost metronomic, the results that Siobhan and Brian Pierce and the whole team are delivering. It's our highest value part of the business. To see that level of growth is very satisfying. We added 700 gaming ops units in the fourth quarter. It was 2,600 year-on-year. So we've guided to a bit more of a modest 500 plus. We want to give you numbers that we can meet and achieve. So I would expect the 500 to be a baseline, and the team will be pushing to capitalize on all the opportunities in front of us. I think the other encouraging thing, it's not just about installed base growth, but we saw RPDs expand 9% year-on-year. So it's that combination of installed base growth, but doing it profitably. That's the best way to grow your business over time is to do it with profitable placements. This is all underpinned by incremental improvements in game performance. So Nathan's leadership over the studios, it's delivered 11 of the top 25 top-performing Eilers games in the new premium segment. That's a mouthful. But that's a real data point that suggests the games that we've been producing over the last kind of 12 to 18 months are getting better and better, and that's really a good forward indicator for future success. So we're thrilled about that. I'd say 3 new hardware catalysts in the portfolio in '26. So the Lightwave rollout. So that's been well received. We've got lots of games coming through on that platform that will optimize and continue to grow over time. We're about to launch Cosmic Sky, which is our kind of new vertical form factor with 3 very exciting games in the portfolio, led by a Huff N' Puff, which we're excited about. And then we've got a new version of our stepper, the L7000 with a Wheel. So as I mentioned in that AI precursor, that combination between great brands and great hardware is a powerful combination. So yes, we think the setup is nice for '26 as it relates to gaming operations. If you look at the Eilers future purchasing intentions, that elevated percentage of the floor that goes to gaming operations is still intact, and we don't see that trend subsiding. So yes, we feel confident in the direction of travel for gaming ops. Operator: And our next question will be coming from Jeff Stantial of Stifel. Jeffrey Stantial: Just one from us on the quarter. So another quarter here where margins were better than expected across all 3 of the businesses, similar to what we saw back at Q3. Oliver, you gave us a handful of sort of scattered data points just to help us think about the trajectory here into 2026 by segment. But maybe if we can just to tie it all together, can you help us think about how this sort of all shakes out at the consolidated AEBITDA margin level, and then even better, just given the seasonality with some of these puts and takes, just how to think about sort of quarterly cadence as we progress through the year. Oliver Chow: Yes. Thanks, Jeff. Great. Great to hear from you. So yes, obviously, we're very pleased with how we closed out the year for the quarter. But really, if you look at it from a full year point of view, it was just an outstanding result from the broader team. If you look at Q4, to your point, it was a 500 basis point increase year-over-year. And you've heard me say this a lot over the last couple of years, which is kind of this margin enhancement kind of mentality just continues to be a key focus for us. So as I kind of unpack this by line of business, I think gaming margins in the quarter was really driven by, Matt said this, the continued scaling of our recurring revenue business. So if you start to look at gaming operations installed base scaling 700 units quarter-over-quarter, you saw a 9% increase in our base RPDs, driving strong performance. On top of that, you now have the inclusion of Grover, which is recurring revenue. So certainly, as our recurring revenue scales over the period, we should expect to see kind of strong margin contributions from that point of view. To your point, there will be some quarters that there will be some mix effects associated with. So if you look at the fourth quarter as an example, you would have seen elevated global game sales in the previous year. So that mix effect will happen quarter-to-quarter. And obviously, we'll continue to kind of manage that kind of broadly speaking. If you think about -- and we flagged this at the Q3 earnings call, if you think about the combined kind of gaming ops, gaming and Grover, the combined margin will likely be in that 50% range. And that, again, based on mix, we'll have tariff impacts coming here that we talked about kind of mid- to high single-digit millions per quarter. That began in the fourth quarter, and that's going to be consistent here even with all the noise that we heard over the last week, 1.5 weeks. And so I think that's a good range for you to start to think about gaming margins as we move into next year. SciPlay, I think the margin expansion was really driven by our DTC growth and really the prudent ROI-driven UA spend that we drove. As you know, kind of Q4 CPIs are generally lower ROIs and CPIs are much higher during the holiday season. So I think as we look into '26, I would expect kind of to maintain these margin levels around kind of 2 core principles, right? One, the steady DTC progress. And then second, if we continue to see opportunity to scale UA, we'll do so. And that's going to really help us drive revenue growth across the portfolio. And then lastly, I think from an iGaming point of view, I think it was a combination of a couple of things. We had some structural and operational levers, but what you saw was a favorable shift towards our first-party content, which obviously is a higher-margin business for us. And that's off the backs of really great franchises like Huff N' Puff. I mean that was a monster game for us in the fourth quarter here in the U.S. and Pirots is just a great global game for us. So looking forward, as Matt mentioned, we'll look to drive kind of 1PP share over time. The one thing to note that we'll keep an eye on is the U.K. tax increases that start in the second quarter. We're going to work very closely with our operator partners to mitigate as much of that as possible, but we'll see how that unfolds here as we head into next quarter. But I think broadly speaking, if you look at it from a quarter-to-quarter basis, it will likely fluctuate a little bit, but this is the efficient kind of baseline of foundation that I would think about our business. And then our goal will be to then drive and enhance that profile as we move forward. Operator: Our next question will be coming from Justin Barratt of CLSA. Justin Barratt: My questions are probably more around SciPlay, just the top line result there. I just wanted to try and understand how much of that potentially reflects the issues that you had with Jackpot Party last year and I guess, somewhat of an inability to get some of those customers back. But then conversely, DTC penetration continues to ramp up really, really nicely. You've got the 2028 target of 30%, but you're already at 25% in the fourth quarter. How should we think about your ability to meet that longer-term target and potentially exceed it quite nicely? Matthew Wilson: Yes, great question. I would think about SciPlay as a portfolio of games. So we've got some very fast-growing games, Quick Hits, 88 Fortunes, Monopoly being the best example. They're kind of industry-leading when it comes to growth rates. But we had a tough year with Jackpot Party in 2025. There's no kind of skirting around that. And it's a game at scale. So when Jackpot Party wobbles, the entire SciPlay top line comes into question. We've had a few false horizons through 2025, where we thought we had fixed the issue, but I don't want to set unrealistic expectations. We are seeing stronger engagement levels through the first couple of months of 2026. And that's what we need to see to allow us to invest behind that game through UA. That's what is going to get us back to those peak levels. So Josh and the team have been working hard to kind of recalibrate the economy in that game. So players in those top tiers are seeing value in the purchasing activity. So we've seen some stabilization there, but I would think about SciPlay more broadly as a portfolio of games, some growing fast, others in turnaround mode, and that's certainly where Jackpot Party is. Yes, the team has done a fantastic job of driving that DTC mix, up from 19% to 25% in the fourth quarter, and carrying that momentum through Q1. Yes, we are pacing well ahead of where we thought we'd be as it relates to that long-term guidance around direct-to-consumer. We set the target of 30% by '28. Yes, I'd say given where we're at, logically, you could see upside to that over time. And we might come back in due course and reframe guidance around that specific number. But a testament to the team working hard. Clearly, they had a few challenging areas in 2025. I say it all the time, we've got a big and complex business. Some parts of our portfolio are fast charging and doing really well. There's others that need addressing and Jackpot Party is one of those, but we've got the right team focused on the right things, and we'll get back to growth with that game in 2026. Operator: And our next question will be coming from Kai Erman of Jefferies. Kai Erman: You guys have obviously flagged some margin impacts going into first quarter with some of those costs. But are there any other drivers that might sort of see any sort of quarterly difference in seasonality or earnings cadence throughout FY '26? Oliver Chow: Yes. Thanks. Great question. And I think just building on some of the comments that I mentioned on the prepared remarks, we will have some legacy costs that we'll work through here in corporate related to legal in the first quarter. I think it really does come down to kind of timing of kind of the broader CapEx cycle. If you look at kind of the overall mix quarter-to-quarter, it will vary in terms of Canada VLT versus the Class 3 kind of replacement cycle, which is a little bit more of a normalized cycle. So I think, by and large, you will see, I think, a fairly similar shape kind of from a '26 perspective relative to '25, and we'll kind of work through the puts and takes by quarter. But those are probably the key elements that we'll work through this year. Matthew Wilson: I'll say just one thing about investments. We haven't been holding back investments in '25 and then adding costs back into 2026. We're going to spend R&D and CapEx at a similar percentage of revenue that we did in '25 and '24. So we think that's the optimum amount of investment this business requires. You do have to front run some CapEx in markets like Indiana, where you're scaling the installed base. That does take some incremental CapEx. That's just logical, but a very high conviction way for us to invest shareholders' capital. So I would say for the full year '26, think about investments very similar to the way we invested on a percentage basis in '25 and '24. Operator: And our next question will be coming from Liam Robertson of Jarden. Liam Robertson: Just one really quickly for me on the outlook to '28. Obviously, those targets have been maintained, which is great. Can you just help us frame up the shape of how you're expecting to deliver that? Obviously, another strong period of margin expansion. I think you've already flagged AI allowing you to further optimize your cost base. I guess how should we be thinking about the contribution from top line versus further operating leverage as you build your bridge out to '28? Matthew Wilson: Yes. Clearly, we were thrilled to deliver on that long-term guidance. Back in '22, we delivered $913 million in AEBITDA. We guided to $1.4 billion. We delivered $1.44 billion. So yes, we had some different contributions, and twists and turns on that journey, but thrilled to get that chapter behind us. And now we're focused on operating momentum in '26 and getting to '28. We've built a really solid foundation. If you think about gaming operations, we added another 2,600 units year-on-year. So you carry that installed base through into '26 -- saw the fee per day increase year-over-year by 9%, so you carry that momentum into '26. A similar profile with Grover, same with iGaming. So we do expect all businesses to continue to perform ahead of market for their respective categories. That combination of growing installed base and fee per day sets us up really nicely. We see expansion in 1PP. And we talked about SciPlay stabilizing Jackpot Party and kind of building from there. But Oliver, anything you want to add from a contribution perspective? Oliver Chow: No. I think actually, we've added a new slide in the presentation in the back that kind of refers to kind of a traffic light system that, to Matt's point, all the things that he just listed, all the key drivers will kind of give a view on how we're progressing relative to those targets over the coming years. So I think that's been a consistent cadence of information that we can provide. But to Matt's point, a lot of it is in the core business growth, excluding all the market expansions that we would see, that would be incremental. So that's how I would think about it as we move forward. Matthew Wilson: Yes. But to reconfirm, strong growth at the AEBITDA line, NPATA and EPSa lines, expect that in 2026 as we get on that trajectory towards 2028. Operator: Next question will be coming from Rohan Sundram of MST Financial. Rohan Sundram: Just one from me, for Matt. Just how would you describe the slots demand environment at the moment? It looks buoyant. And how would you compare it to, say, earlier in the year amidst the tariff uncertainty? And how are you assessing the potential tailwinds under the One Big Beautiful Bill, whether it be consumer tax cuts or business tax incentives? Matthew Wilson: Yes, great question. If you go back to the second quarter last year, Liberation Day, obviously, there was a bit of concern about what is the outlook, I mean, from all of us. Everyone needed to digest what did those tariffs mean for slot demand. We saw that rebound really quickly in the third and fourth quarters. I think the '25 demand was really solid. I think the industry is holding up nicely. We're seeing continued strength in GGR, notwithstanding some softness in kind of those destination markets, but it's made up for more so in those regional markets and then the local high-frequency markets. So I think the best data point is that slot survey Eilers and Fantini put out. It's looking like a similar setup next year to -- sorry, this year to '25, so a similar market size. That's encouraging. I think the other interesting data point in that survey was 17% of respondents said that the One Big Beautiful Bill will increase their replacement rate in '26. So that will be interesting to see how that plays through. We know a few of the large corporates, you probably know the ones are talking about, who are saying they've got a big step-up in their annual spend. There's others that are saying they're going to spend consistent with '25. So all of that to say, it looks like a very buoyant market in '26, which means we just got to focus on how do we capture as much share as possible. I thought, again, that 7,000 units shipped in Q4 was enormous. And I think it speaks to the momentum and potential that we have. So yes, kudos to Siobhan and Brian Pierce, the whole sales team for making that happen, and Nathan for building the game. So yes, all that to say, it looks like the market is set up for another good year in '26. Operator: And I would now like to turn the conference back to Matt Wilson for closing remarks. Matthew Wilson: Thank you. Back in 2022, the teams were galvanized by the 2025 targets and transformed Light & Wonder into what it is today, a global games company driven by content and supported by leading platforms. To all of our employees and stakeholders on the journey, I sincerely thank you for all of your support. Thanks for tuning in today. Operator: And this concludes today's program. Thank you for participating. You may now disconnect.
Operator: Good day, and welcome to the Trex Company, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary. Please go ahead. Casey Kotary: Thank you, everyone, for joining us today. With us on the call are Bryan Fairbanks, President and Chief Executive Officer; Adam Zambanini, Executive Vice President and Chief Operating Officer; and Chris Gandhi, Senior Vice President and Chief Financial Officer. Also joining the call is Amy Fernandez, Senior Vice President, Chief Legal Officer and Secretary; as well as other members of Trex management. The company issued a press release today after market close containing financial results for the fourth quarter and full year 2025. This release is available on the company's website. This conference call is also being webcast and will be available on the Investor Relations page of the company's website for 30 days. I will now turn the call over to Amy Fernandez. Amy? Amy Fernandez: Thank you, Casey. Before we begin, let me remind everyone that statements on this call regarding the company's expected future performance and conditions constitute forward-looking statements within the meaning of federal securities laws. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see our most recent Form 10-K and Form 10-Q as well as our 1933 and other 1934 Act filings with the SEC. Additionally, non-GAAP financial measures will be referenced in this call. A reconciliation of these measures to the comparable GAAP financial measure can be found in our earnings press release at trex.com. The company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. With that introduction, I will turn the call over to Byan Fairbanks. Bryan Fairbanks: Thank you, Amy, and thank you all for participating in today's call to discuss our fourth quarter and full year 2025 results and our outlook for 2026. I know you've also seen the exciting news that Adam Zambanini will be named as Trex's next President and CEO following my retirement in late April. I'll discuss this shortly, and Adam will share a few words. But first, let's review the quarter and the year. Against the backdrop of a third consecutive down year for the repair and remodel sector, I'm pleased to report that Trex finished the year with strong fourth quarter results and year-over-year sales growth of 2% and mid-single-digit sell-through for the full year 2025. Over the past few years, as R&R spending has lagged, our focus has been developing on industry-defined product innovation rooted in deep understanding of our consumer, expanding the channel partnerships in both the Pro and home centers and continuing to drive operational excellence, efficiency and safety. Our team has higher expectations for future growth, and there are several very positive achievements in 2025 that will allow us to maintain and build on our track record of outperforming the broader market in both up and down cycles. I want to begin by highlighting the market response to Trex's new product releases. Products introduced over the last 36 months continue to show robust growth, representing 24% of our 2025 sales, up from 18% last year. This speaks to the strength of our product design and development programs, which combine new performance features with leading aesthetics that align with consumers' evolving preferences. One clear example of this alignment is our Suncomfortable heat-mitigating technology, which we extended to new decking products, bringing this very popular feature to a broader consumer audience at an accessible price point. Perhaps the most exciting highlight of the past year was the success we achieved in the execution of our multiyear railing strategy. Several years ago, we set out to disrupt the railing market as we did with decking over 30 years ago. After engineering a full line of railing products across a broad range of price points and investing in best-in-class distribution and channel partners over the past 2 years. In 2025, we achieved robust double-digit growth in railing. We're very encouraged by the recent stocking wins and displacement of competitive products in both the Pro and home center channels. The momentum built in 2025 has us on track to achieve our longer-term goal of doubling our share of the railing market by the end of 2028. Next, I want to turn our attention to the development of our Arkansas campus, which continues to deliver on its construction and start-up schedule, including on-site production of plastic pellets, reducing our reliance on more expensive external sourcing. When we made the decision to invest in Little Rock, the industry overall was approaching full capacity. And then through the growth years of COVID, it became clear that capacity to meet consumer demand would be key to long-term growth. While the industry growth curve has moderated in recent years, I'm confident that the capacity we add in Little Rock will fuel Trex's growth and result in cost optimization and margin opportunities for years to come. And lastly, we further strengthened our positioning in the Pro and home center distribution channels in 2025 and into early 2026. With expanded pro channel relationships and a meaningful increase in stocking locations at the home centers covering both decking and railing products. These wins reflect the strength of the Trex brand and the advantages of our expanded product portfolio in terms of both performance and aesthetics. Trex remains the only wood alternative supplier with a significant presence in both of the country's largest home centers, both on shelf and special order. These highlights represent the early results from increased investments we have made and will continue to make in R&D, sales and marketing, digital technologies and utilizing our capacity to drive accelerated growth. Our improved market incentives have resonated well with our Pro dealers and contractors, and we're seeing increasing commitment to Trex as they're making their early buy stocking and selling decisions. Additionally, we've seen early positive results from our new marketing campaigns and digital investments. Notably, sample program volumes and website traffic, which are early indicators of purchase intent, have increased considerably and our improved digital tools have helped to generate double-digit increases in lead generation for our contractors. We found that increases in our lead generation and website customer engagement over time correlates with revenue growth. We also made significant progress in strengthening our distribution network, which will ensure unparalleled access to our products from leading national and regional distributors in North America. Midyear, we announced the expansion of our relationship with International Wood Products, building on our success with IWP in the Pacific Northwest and California. We expanded our relationship to Salt Lake City and across the Intermountain West. Later in the year, we expanded our relationship with Weekes Forest Products, strengthening our presence in the upper Midwest, including areas in Minnesota, Wisconsin, Iowa and North Dakota. And in November, we announced that we were expanding our relationship with Specialty Building Products in Michigan, which builds on the success of the long-standing Trex SBP collaboration. As we turn our attention to 2026, innovation and strategic investments will continue to fuel Trex's growth. After rigorous testing, we were pleased to announce the launch of Trex Refuge decking in January of this year. Our code-compliant fire solution combines style and advanced fire performance with the durability and low maintenance benefits that are the hallmarks of the Trex brand. This ignition-resistant PVC decking line enables us to effectively compete in regions of the country with heightened fire safety requirements, and we are now shipping to California, Oregon and Washington State. When we look historically at periods of sustained growth for Trex, those periods saw Trex invest approximately 18% into SG&A. We recognize that branding reductions made during the growth years of the pandemic and subsequent years needed to be revisited to meet the current market conditions and the long-term opportunity. Targeted investments on programs for our customers and investments in consumer branding will provide a financial return in top line growth and market share capture as they have in the past. Closely working with our Pro channel and home center customers, we've identified the most important points of leverage and tailored programs to incentivize incremental growth, maximize product bundling, especially with railing and further shift purchasing within our portfolio to our more premium products. For the longer term, you can expect to see our branding and sales investments grow in line with revenue, while other fixed SG&A spending will be leveraged with growth. We also know where and how customers get their information is evolving. We're deploying solutions that make it easier for consumers to learn about Trex decking and railing. This includes messaging to consumers through new campaigns targeted at high-impact media, enhancing the digital experience through upgrades to our 3D visualization tool and elevating the retail experience through new point-of-sale solutions and product samples. Early marketing metrics are all up double digits and recent stocking position wins by Trex gives us confidence that we have the right plan in place. As you've seen in our releases today, I've made the decision to retire as CEO of Trex after nearly 23-year career with the company, including 6-year tenure as the CEO and 5 years as the CFO. While this is not an easy decision, I am confident it is the right one, and the Board has made an excellent choice in naming Adam Zambanini to take over the role at the end of April. Adam has been a great partner in developing and implementing major strategies over the years as well as leading a substantial portion of the overall organization in his current COO role. Adam is a strong leader and a brand builder with deep knowledge of Trex business. His passion for Trex is unmatched. Now I will turn the call to Adam to share his thoughts. Adam Zambanini: Thank you, Bryan, and good afternoon, everyone. It's been a great experience working alongside a leader of Brian's caliber. His steady guidance has made a meaningful impact on the team and the organization as a whole. We are grateful for his leadership and collaboration, and we look forward to a smooth and successful transition as we build on a strong foundation he has helped establish. As I take on the role of CEO of Trex, you can expect us to focus on execution while building momentum for the next phase of growth. Shortly after joining the company, I led the development of the launch of a game-changing technology that redefine the standards in the decking category, Trex Transcend decking. The product established a new benchmark for performance, combining scratch, stain, fade and mold resistance with refined wood-like aesthetic. This innovation marked the industry's first generation of high-performance composite decking and served as a catalyst for sustained market share expansion over the following decade. Moving forward, we will build a disciplined innovation pipeline around Trex decking that creates a durable, defensible moat and raises expectations across composite and PVC decking category while continuing the longer-term conversion from wood. Also, we will continue to capture additional meaningful market share by executing our railing strategy. Trex is the market leader in alternative railing with the broadest portfolio of products available for every residential application. Performance engineered for your life Outdoors is more than a tagline. Our decking is evolving to perform across diverse environments with heat mitigation technology, submersible marine capabilities and with the recent launch of Trex Refuge, mission-resistant solutions for dry fire-prone conditions. We want to continue to push the limits of where our products can go and be at any price point with those features that consumers expect from their project. Looking ahead, I am committed to developing new standards for innovation at Trex and take full advantage of the substantial growth opportunities we see on the horizon. Stay tuned for more on this as we move through the year. Our brand is a powerful driver of consumer appeal, and we will continue to leverage that through expanded marketing efforts to highlight the unmatched value of the portfolio of products. And as we plan for the future, we will navigate the dynamic industry landscape to build a clear road map for continued success. As you have seen from our release, and you will hear from Prit in detail in a moment, we are expecting 2026 to be another year of growth. I look forward to participating in upcoming conferences and meetings to keep our investors and analysts updated on our initiatives and to sharing additional insight into our vision of the future. Now I will turn the call over to Prit for his financial review. Prithvi Gandhi: Thank you, Adam, and good afternoon, everyone. I'll now review our fourth quarter and full year 2025 results. Please note that unless otherwise stated, all comparisons discussed today are on a year-over-year basis compared to the fourth quarter and full fiscal year 2024. In the fourth quarter, net sales were $161 million, a decrease of 4% compared to $168 million in the prior year period. Results came in approximately $17 million above the midpoint of our fourth quarter revenue guidance, primarily due to higher-than-anticipated railing sales in the back half of Q4, continuing to demonstrate the strength of our railing product portfolio. Decking shipments for the quarter were also slightly better than we had forecasted. As of the end of the year, we believe channel inventories were at 6 to 8 weeks at the low end of historical levels, but appropriate given our new level loading and inventory management program. Gross profit was $49 million, down from $71 million and gross margin was 30.2%, down compared to 43% in the prior year. This decrease is primarily the result of 2 changes in accounting methodology that Trex adopted in Q4 2025. First, we elected to change the company's inventory accounting method from LIFO to FIFO to improve comparability with other companies in our industry to more accurately reflect the value of the inventory on the consolidated balance sheet at each reporting period and to be consistent with how the company manages its business. While this change had no impact on the 2025 income statement or cash flow statement, it resulted in an upward restatement of our Q4 2024 gross margin, resulting in most of the decline in year-over-year gross margin in Q4 2025. Please refer to the reconciliation tables in Footnote 2 of the company's 10-K for further details. In addition, we changed the [indiscernible] methodology to our warranty reserve estimate, which resulted in an expense of $6 million in the fourth quarter. These changes were partially offset by plant efficiencies from higher utilization. Gross profit results included onetime start-up costs related to the Arkansas facility and onetime railing conversion costs totaling $1 million. Excluding these items, adjusted gross profit was $50 million. Selling, general and administrative expenses were $45 million or 28% of net sales compared to $39 million or 23.4% of net sales in 2024. The majority of the year-over-year increase was related to higher personnel-related costs. In the fourth quarter, onetime expenses related to digital transformation activities and the start-up of the Arkansas facility were approximately $1 million. Excluding these onetime expenses, SG&A was $44 million or 27.4% of net sales. Net income was $2 million or $0.02 per diluted share versus $22 million or $0.20 per diluted share. Excluding the previously mentioned onetime charges incurred in the fourth quarter, adjusted net income was $4 million and adjusted diluted earnings per share was $0.04. EBITDA was $20 million or 12.7% of net sales compared to $45 million or 26.9% of net sales last year. Adjusted EBITDA was $22 million. Note that the Q4 2025 adjusted EBITDA, adjusted net income and adjusted EPS do not add back the $6 million warranty reserve estimate expense. Turning to our full year results. Net sales for full year 2025 totaled $1.17 billion, a 2% increase compared to $1.15 billion, primarily due to pricing across all product categories and expansion in railing placements during the year. Net income was $190 million or $1.78 per diluted share compared to $238 million or $2.20 per diluted share in 2024. Excluding onetime charges incurred during the year, adjusted net income was $201.7 million or $1.88 per diluted share and adjusted EBITDA was $336 million. For 2025, adjusted EBITDA, adjusted net income and adjusted EPS do not add back the $6 million warranty reserve estimate expense. I want to comment on inventory levels at year-end. Our inventory level decreased by approximately $18 million year-over-year. As previously mentioned, in 2025, Trex elected to change its inventory accounting method from LIFO to FIFO, which had no impact on the 2025 income statement or cash flow statement. However, because of this change, we restated our 2024 year-end inventory balance from the previously reported $207.3 million to $257 million, which resulted in the reported inventory decline from 2024 to 2025. 2025 operating cash flow was $358 million compared to $144 million in the prior year. The increase was primarily a result of inventory reductions in the current year compared to prior year inventory build and higher collections in 2025. Consistent with our capital allocation strategy and continued confidence in our long-term outlook, we returned $50 million to our shareholders in 2025 through the repurchase of approximately 1.5 million shares of our outstanding common stock at an average price of $32.75. We also invested $233 million in capital expenditures in 2025, primarily related to the build-out of the Arkansas facility. Our Board of Directors has authorized a $150 million share repurchase program to be completed in the first half of 2026, subject to equity market conditions. In addition, we intend to continue opportunistic share repurchases throughout the balance of the year, reflecting current valuation, our conviction in the long-term outlook for Trex and the meaningful reduction in 2026 capital expenditure as the Arkansas facility is now substantially complete. Before moving to our 2026 outlook, I want to spend a minute on our approach to capital allocation. First and foremost, Trex's priority is always to create shareholder value by funding our long-term organic growth through capacity expansion that meets expected consumer demand. With the completion of the Arkansas facility in 2026, we will have the capacity to service growth for years to come and therefore, expect to generate meaningful additional free cash flow in the foreseeable future. Consequently, at this time, share buybacks will be a significant use of capital. That said, Trex is also likely to become more active in executing strategic tuck-in acquisitions to expand our growing portfolio of outdoor living products. We take a very disciplined approach to evaluating acquisitions by comparing their potential risk-adjusted returns to the return from ongoing share repurchases and moving forward only if acquisitions returns outweigh buying back Trex shares. Now turning to our 2026 guidance. For the full year 2026, we expect net sales to be in the range of $1.185 billion to $1.23 billion, representing low single-digit to mid-single-digit percent growth year-over-year in an R&R market that is expected to be slightly down to flat relative to 2025. Adjusted EBITDA is expected to range from $315 million to $340 million and includes approximately $8 million in currently expected adjustments for the full year, mostly related to digital transformation initiatives and railing conversion. These adjustments are evenly split between COGS and SG&A. SG&A expenses are expected to be approximately 18% of net sales for the full year. Interest expense is expected to be $10 million to $12 million. As a reminder, Trex has consistently been paying cash interest on its line of credit balances for the past several years. However, because of the construction of the Arkansas facility, GAAP accounting rules required us to capitalize interest expense on the balance sheet as a construction in progress item that would otherwise have been recognized on the P&L in both 2024 and 2025. With the completion of construction scheduled in 2026, we will once again be recognizing interest expense on Trex's consolidated income statement in 2026. Depreciation and amortization of approximately $85 million with approximately 45% occurring in the first half of the year and approximately 20% of the full year D&A within Q1 2026. As previously communicated, the additional depreciation is related to bringing our new Arkansas decking lines to production-ready status during 2026. In 2027, annual depreciation will be at an annual run rate similar to D&A exiting Q4 of 2026. We are projecting an effective tax rate of approximately 25.5% to 27% for the full year, and capital expenditures are projected to be approximately $100 million to $120 million for the full year. For the first quarter, we expect net sales to be in the range of $335 million to $345 million. With that, I will now turn the call back to Bryan for his closing remarks. Bryan Fairbanks: Thank you, Prit. While we've been operating in a challenged R&R space for an extended period, Trex has substantial runway to convert the market from wood and increased wood alternative decking and railing market share to Trex. We are committed to product innovation and through our marketing investments, we will ensure the continued strength of the Trex brand, making us top of mind with consumers when they're making their outdoor living decisions. These actions, along with strategic capital allocation decisions, including the $150 million share repurchase authorization through the first half of the year and likely additional purchases later this year will result in a meaningful return of capital to shareholders. We expect share buybacks to remain a key priority with a significant increase in free cash flow in 2026 and the coming years as we drive revenue and earnings growth and build shareholder value. Operator, please open the call for questions. Operator: [Operator Instructions] The first question today comes from John Lovallo with UBS. John Lovallo: The first one is on the implied growth is 1% to 5% in that ballpark in a flattish to slightly down market. I mean is it fair to think that you guys are assuming decking will be up sort of low single digits with railing being up double digits? Bryan Fairbanks: Yes. We do expect railing to be up double digit, continued driving of those share gains that we've seen this year and we expect to see in 2026 and beyond. I think that's the right way to look at it from a decking perspective as well. We do have some shelf space wins. We are seeing benefits from the new programs that we've put in place. And then the way we've ranged the guidance is at that low end, if we continue to see weak negative type R&R at the low end, if we see R&R starts to improve, especially in the back half of the year, a little bit closer to that higher end of the guidance. John Lovallo: Understood. And typically, you guys will provide sort of a next quarter sales outlook and sometimes an adjusted EBITDA margin view. I mean, can you give us an idea of how maybe you're thinking about these metrics or maybe just the shape of the year in general? Prithvi Gandhi: Yes, John, thanks for the question. In terms of the shape of the year, we gave you the full year's EBITDA range for $315 million to $340 million on an adjusted basis. For Q1, I mean, the best way to think about it is in terms of EBITDA again, as I said in my prepared remarks, D&A is about 20% of the full year. That will be about $17 million to $18 million. The SG&A in the quarter should be about 100 basis points more than it was last year, and that's the continued investment in marketing that we spoke about in Q3. And then in terms of gross margin, if you look at kind of where consensus was before the call here, we're going to be about 100 basis points below that, and that's largely because of, again, the higher growth of railing, the higher depreciation, and that's partially offset by pricing. John Lovallo: Prit, that's for the full year, that 100 basis points you're speaking of? For the gross margin. First quarter. Prithvi Gandhi: It's Q1. Operator: The next question comes from Susan Maklari with Goldman Sachs. Susan Maklari: Can you hear me now? Operator: Yes. Susan Maklari: Okay. Sorry about that. Well, first off, congrats to both Bryan and Adam on the announcements there. I'm looking forward to working with you more, Adam. My first question is, my first question is talking a bit about the outlook as you think to the spring. Can you talk to what you're hearing from your contractors as they're starting to perhaps build some of their backlogs in some of those markets, especially the ones that maybe aren't quite so impacted by weather. And you noted that you're seeing some pretty strong demand out there for samples and web traffic and just what that could imply for revenues as we look to the season? Bryan Fairbanks: Yes. So it's definitely a challenging environment as you see the flat home improvement spending. But as we look at it, we're still seeing our top-tier contractors still booked out probably in some cases, in the rougher parts in terms of weather, 4 to 6 weeks and then better weather, probably 6 to 8 weeks. So from that perspective, we feel good. And we've actually had 2 TrexPro events this year to cover our highest end of the network, and they all felt that this year was going to be better than the previous year that they had, and we did some polling on that across the contractor group. So that was good. We've also got some placements that we've picked up at retail, incremental placements when we look at the decking and the railing. And so we feel good from the position that we are as we move forward on that front. So there's a lot of signs plus the marketing metrics, as you mentioned, have been very solid this year, more than we saw the previous couple of years in terms of when you start to look at searches from contractor searches to dealer searches, some of those metrics have been a lot better here this year. Susan Maklari: Okay. That's helpful. And then turning to SG&A. You talked through those investments that you expect to make in terms of brand and sales. Can you talk to how the efforts around data and the digital transformation will play a role in that? And what that could also mean as you think about leveraging some of those costs? Bryan Fairbanks: Yes. We've done a lot of work on the digital transformation side of the business over the -- primarily over the last 12 months, but the planning for that started 18 months ago. We are starting to see some of the benefits now where we're able to better understand what those market drivers are as we're seeing volume come through our website, they're engaging with various parts of it that I consider to be sales drivers. That's going to be your purchasing of samples, contractor leads, looking for a contractor or looking for a dealer and things like that. So all of that information together and being able to derive information out of that so we can better target those customers over the long term. I'm extremely excited about the path that we have going forward from a digital transformation perspective. We've got the right people in place from a marketing perspective as well as the IT group and a lot of great things as we move forward. Operator: The next question comes from Phil Ng with Jefferies. Philip Ng: Bryan, thank you for all the help over the years and Adam looking forward to working with you more as well. I guess to kind of kick things off, John asked a question about your top line revenue guidance. Midpoint is about 3%. Can you help us unpack how much of that is via load-in because you've had some wins at home centers? And from that standpoint, any color on what price point for decking, how big of a contribution perhaps is railing? And then as well as pricing, I think you got some carryover pricing. Just kind of help us unpack the outlook you've provided. Bryan Fairbanks: Remember in the last call, we did talk about higher incentives going into the market. So our net pricing for the year is flat. While there is some pricing going in, that is being offset by incentives in the marketplace. As it relates to the guidance piece of it, from an infill perspective, we will have some benefit early in the year on that. But of course, that product needs to turn. And while there's a meaningful number of shelf spaces out there, the product infills on their own aren't that big of a number. Those products need to turn within those environments. And we have shown historically with the additional shelf space, we will see the turns on that. We've been extremely happy with the additional shelf space that we've gotten both in decking, but also on the railing side. In many cases, we're seeing our new Trex railing systems being installed on non-Trex-related decks. Big part of that is because of the quality of the product that we have going in, but also because it's readily available. It's right there on the shelf and they have the ability to immediately get everything that they need to be able to build out that rail and complete the project, whether they're a contractor or a DIY consumer. Philip Ng: Okay. Great color. And in some of the success you called out bundling railing, any other categories that stand out? I know you talked about potentially more bolt-on. Just a little more [indiscernible] there or potentially any JV opportunities with any other partners? Adam Zambanini: Yes. We definitely talk about tuck-in. Recently, we got into the fastener category in a much larger way. So that's the first area that every single time you sell, you have to attach it with some sort of fastening system. So we've seen great growth in that area. And then you've seen some of the licensed products that we have, which kind of gives us the opportunity to, I will call it, taste test or see what the preferences are in some of these categories, which lead us into maybe there's something along those lines from a tuck-in perspective. But when I think about the backyard, we want to own the backyard. So we have a fencing product line that I think is probably the best bar none in the industry. I don't think we do enough to market it. I also don't think we do enough in terms of when we look at a broad range of that portfolio, how we can compete in every segment even beyond composites, kind of like what it looks like from a railing perspective. So I think there's a lot of opportunities when I think about outdoor living and where we can go, and that can even expand to the envelope of the house as well. Unknown Executive: And Phil, just to add to Adam, the other kind of tuck-in types of things that we could look at are things that improve our cost position, things in manufacturing, vertical integration and those types of things. So there are opportunities like that as well. Operator: The next question comes from Ketan Mamtora with BMO Capital Markets. Ketan Mamtora: I want to extend my congratulations to both of you all as well and look forward to working with you Adam. Adam Zambanini: Likewise. Ketan Mamtora: Maybe just starting with -- on the PVC side, you talked about kind of first of several new products. Should we think of it as there are other products along these lines that you are looking to launch or these could be kind of other products, not necessarily on the PVC side? Unknown Executive: Yes. So I think when you look at PVC, there's really 2 parts of the [components of] PVC the most. You see it in New England and you see it on the West Coast when I see it a lot. When you get to the West Coast, a lot of times, that's around fire. And when I think about fire, I don't think we should be locked into some sort of a material set of [indiscernible] PVC. So -- when we think about that in the future of it, yes, we will be in that PVC category, and there could be other products within that umbrella. But it would be when we look at all the different segments and classifications because there's different levels of fire that are out there today, it is how can we compete aggressively to take that market share away from PVC. And that is going to definitely be on my radar screen. And the same thing when you look at New England, it's a little bit different. It's not as focused as much around fire. There's just a segment there of contractors that have been in PVC for the last decade or 2. And there's some performance features in terms of some things workability and all that, that I think that from that segment of contractors, we're going to target aggressively, and we're going to go after ways that we can convert those contractors over to WPC. Ketan Mamtora: Understood. That's helpful. And when I think about your full year guidance at midpoint, you talked about the 3%, should we assume sort of sell-through also in the similar range, meaning there are no sort of inventory changes that we should be thinking about? Bryan Fairbanks: Yes, that's correct. Operator: The next question comes from Keith Hughes with Truist. Keith Hughes: It seems like this railing initiative is having substantial success. Is this raising your attachment rate? Is it soon enough to say that it had that effect? Bryan Fairbanks: Yes. Attachment rate is notoriously difficult to calculate. That's why we are using a market share metric on it. But we are hearing through our contractors that with products that we didn't have in the past, the steel system, the entry-level aluminum system, our new T-Rail system, that they are making that conversion over from competitive products over to Trex products. So we are pleased from that perspective. We'll continue to work to try to create something that gives a better view of attachment rates, but it varies widely from region to region and trying to get really good information on that is a challenge. That's why we think market share is a better metric to use from a market perspective. Keith Hughes: And is there any holes in your railing portfolio now that you think you need to add either third party or acquisition? Unknown Executive: We have an unbeatable railing portfolio. When I look at this right now, this reminds me the decking category over 20 years ago where there used to be 20-some different manufacturers. That's the same issue when you look at railing. When we look at our #2 and #3 competitors on railing, we consider them regional competitors. So we think there's a tremendous opportunity to take market share from a significant amount of regional players that are out there, and nobody has the portfolio to contend with Trex from top to bottom. So could we do tuck-ins? We could. Do we have to? No, we don't have to. Keith Hughes: Okay. I mean not downside, but the gross margins are lower railing than deckboard. Is that correct? Bryan Fairbanks: Yes, that is correct. With the tariffs coming through, that was a significant headwind. Last year, we did take some pricing. Now we're giving that back through other incentives in the marketplace. But over time, we will be working on strategies that will close in that gap and expect over time that we can close it completely. Keith, the thing when you look at this is volume is a great thing for Trex. We manufacture a significant volume in decking. And the more volume we can get in railing, the more opportunity for continuous improvement. So we're going to be able to leverage the scale of railing over time. And therefore, the success you saw in the margin expansion on decking, we're going to take the formula that's worked with Trex over the last 15 years, and we're going to apply that to railing moving forward. So you're going to see more vertical integration on railing just like you did on decking over time. Keith Hughes: Congratulations on the [indiscernible]. Operator: The next question comes from Tim Wojs with Baird. Timothy Wojs: Maybe just my first question, Bryan, just the tone of your voice is a lot different than maybe it was 3 months ago. And so I'm just kind of curious if you could kind of maybe walk through what's kind of changed in terms of how you're kind of assessing the environment as we kind of come into '26. Bryan Fairbanks: Well, a couple of things. First, it was a considerable reset that we had in the third quarter. And I always understand how difficult those things are going to be. Everybody's model needs to change. I don't take that lightly when we do that. I think on the other part of it is related to where the marketplace is. Going into that, it assumed that there would be a further deterioration in the R&R sector during the fourth quarter. We did not see that. And as we moved our way through the quarter and now here at the end of February, we're also starting to see the benefits of some of those actions I talked about in the third quarter call. So I'd say those are really the 2 things that the key difference from last call to this call. Timothy Wojs: Okay. And I guess when you look at SG&A, I think this year, it will be somewhere like, call it, $220 million. It's up $40 million from basically '24 levels. I guess, a, what is the split there between field resources and kind of marketing? And then I guess the second question, just bigger picture. Is there any scenario where you would look at investing more than 18% of sales going forward? Bryan Fairbanks: Yes. There's carryover of additional headcount coming in from the sales team from last year. The largest piece of it is going to be on the marketing side. We're not going to get into exact splits on it. I think at this point, I don't know if Adam would add anything, I mean, from my perspective, I'd be surprised if we were to go over that number. Adam Zambanini: Yes, I don't see us going over that number. We've only done it a couple of times in our history, and if it's an opportunistic point of view in terms of the markets doing really well as we move forward and we had the ability to expand revenue, we would look at that. So I think from that perspective, could it happen? Yes, it could happen, but I don't expect us to go over it. Operator: The next question comes from Ryan Merkel with William Blair. Ryan Merkel: My first question is on gross margin. I think last quarter, you talked about down 200 basis points in 2026. Is that still the right ballpark? Unknown Executive: Ryan, thanks for the question. So look, I think, again, relative to kind of where consensus was before our announcement here, we think we'll be about 100 basis points lower for the coming year. Yes. So that's -- I mean -- sorry, one second. Yes, we'll be slightly below where the preannouncement consensus was. So I think consensus was around 37.4%, 37.5%. So that's kind of the ballpark that we will be for the full year. And the main difference is we gave you guidance today for full year D&A of $85 million. I think the Street is a little bit lower than that. Ryan Merkel: Okay. Well, just a follow-up there. I thought that gross margin comment was a 1Q comment, but it sounds like [indiscernible]. Unknown Executive: It happens to be similar -- it happens to be the same for Q1 and the full year. Ryan Merkel: I see. Okay. Thanks for clarifying that And then on the marketing spend, it sounds like you're seeing some early progress there. I'm curious what -- if you were to rank what tactics are working the best, I'd be curious what that is. And then what other milestones are you watching for through the year to see that you're getting a return on investment there? Unknown Executive: Yes. I prefer not to get into the tactics that are specifically working the best for us. But I think the way to best refer to it is that we closely watch where the spending is going. And if we see something isn't working, we will pivot off that quickly. That goes back to the earlier question about digital technologies and understanding the reach that you're having with your consumers, how are they interacting then with our channel partners that are out there. And so if we need to make a change, we make a change pretty quickly. And if we see something that is working well, we double down on that. But we're not going to try to get into the specifics of what each one of the items right now. Ryan Merkel: Yes. Fair enough. I guess maybe a follow-up, though. Are contractor conversions, I assume that's a part of the strategy. Are you seeing that yet? Or is that maybe something you'll see more through the year? Unknown Executive: Yes. No, this is the time of the year you start to see some of the contractor conversions at the beginning of the year, and those continue throughout the year. So we've definitely seen some contractor conversions. We've definitely seen some dealer conversions. We leveled up on our program on the contractor program and the dealer program, and that's been positively viewed from customers. And so therefore, we've won some people back into our camp as we move out into 2026. Operator: The next question comes from Collin Verron with Deutsche Bank. Collin Verron: Congratulations, Bryan and Adam. I just want to start with the comment in your prepared remarks, Bryan, that industry growth curve has moderated. Can you just expand on that comment and how you're thinking about the long-term growth sales algorithm for decking and railing in the industry and maybe Trex? Bryan Fairbanks: Yes. Specifically, I was referring to it moderating coming out of COVID, and then we've seen 3 down years in repair and remodel. As I look out over the long term, I'm very bullish on the repair and remodel sector. And that's because we have had 3 years of down spending along the way. There's probably some piece of there's some catch-up from COVID and there's general economic weakness out there. But homes are at a record age at this point. We know there is a large population, 40 million, 50 million decks in North America that they're aging, they're going to need place. In the past, we would see repair and remodel recover after 2 years. So the word unprecedented 3 years is used quite regularly. We're not sure where 2026 ends up. I think we're very similar to many other companies that are reporting right now. But I have no doubt it's going to come back. We're going to make sure we're going to invest in the appropriate products, marketing and our brand that when that's there, we can be driving well above market returns. Collin Verron: Great. That's really helpful color. And then I just wanted to touch on the gross profit margin bridge again. Any color as to sort of what level of inflation you're expecting in some of your cost categories and maybe how you guys are thinking about continuous improvement in 2026? And then lastly, how are you guys baking in any benefit from the lapping of the costs associated with the improvements in the enhanced deck cohorts and I guess, the warranty expense that you just called out in the fourth quarter here? Unknown Executive: So there was a lot -- a couple of things. In terms of the gross margin bridge, as we said in the last call in Q3 as well, basically, we are going to have product -- we always have productivity projects, and they do offset a lot of the decline that we see in gross margin this year. But we -- as we told you in the last call, we aren't -- our productivity and our pricing, we were able to offset some of the -- all of the additional discounting, but we also had this big depreciation headwind. And then there was the mix change in the higher growth from railing that we weren't fully able to offset. So that still continues, and that's why you see overall the 100 basis point decline in gross margin. Operator: The next question comes from Trevor Allinson with Wolfe Research. Trevor Allinson: I'll echo congratulations to both Bryan and Adam. First one on Railing, you guys talked about double-digit growth. Here, you're expecting double digits again in 2026. Given all this growth, can you size that business here for us as we're exiting 2025? Bryan Fairbanks: It is not a separate business segment for the company. So we will provide market share indicators as we move forward as we continue to grow that, but we've not broken that out as a separate business. Trevor Allinson: Okay. Understood. And then second question, going back to the revenue guide. Similar to what you guys have seen in the last couple of years, but you're ramping marketing spend this year. You've also got some wins with the home centers filtering in throughout the year. I guess the question would be, how do you expect your growth rate compares to the decking market overall in 2026? And then have you built in the tailwinds from this additional marketing spend into your number? Or would that be potential upside to your expectation should you see some really strong execution with those initiatives? Bryan Fairbanks: We've outperformed overall repair and remodel considerably over the last couple of years. I would expect our growth to be somewhat ahead of the general overall growth for the decking and railing marketplace because of those account wins as well as the marketing we're doing. Remember, part of that marketing is making sure that our name is in front of everybody for the long-term benefit of the Trex brand as well. Operator: The next question comes from Michael Rehaut with JPMorgan. Michael Rehaut: Congrats, Bryan. I appreciate working with you all your help. And Adam, look forward to the future working with you. First question just on -- I wanted to get a sense kind of big picture, how you're thinking about where the composite decking share is within the broader decking market. I mean I think last data point we had was maybe around 25%. I wanted to kind of understand if that's still the case as we close out 2025 and how maybe we should be thinking -- what's been the share gains of composite versus the broader decking market over the last couple of years, how maybe we should think about the next couple of years? Adam Zambanini: Yes. So it's about 25% when you look at wood alternative, it's about 21% in wood plastic composite. It's about another 4%, 4.5% in the PVC. And so that's why we have interest there is there's only really 2 players that are really of any magnitude in that PVC category. So we're definitely going to be looking at targeting that in addition to the wood segment, which is still the 75% share in terms of conversion there. And both the wood plastic composites and the PVC markets are both growing moving forward in terms of like projections, they're anywhere from -- the latest one was 1.7%. So 1.7% on the growth. We've been outperforming that in the last several years. Michael Rehaut: Okay. No, I appreciate that, Adam. I guess, secondly, you've highlighted some of the strength in distribution agreements in your press release and in the prepared comments. We heard from one of your competitors a couple of weeks ago around some of the challenges that they've been having with market share as well. So I wanted to kind of get a better sense of how you anticipate some of those shifts playing out over the next year or 2? And if there's any way to think about how those shared shifts might be benefiting Trex from a top line perspective? Bryan Fairbanks: I think what you're seeing in the marketplace is your best distributors in specialty building materials. And I think it's important to recognize those are the distributors that we focus on. Those distributors are focusing on the top 2 companies that have composite decking, railing type products that are out there. We're pleased with the footprint that we have today. Some of the announcements we made last year were just some fill-ins that we felt that we needed to address expanding relationships with current business partners that we had in areas that we felt that we could be a little bit stronger. But overall, very comfortable where we are and pleased with those that represent the Trex brand. Operator: Next question comes from Reuben Garner with Benchmark. Reuben Garner: Congrats, Bryan and Adam to you both. Let's see. So any -- are there any costs or were there any costs in the fourth quarter associated with the shelf space wins you had? Or do you foresee any on the way? I know in the past, you've had to kind of buy inventory in some cases. Is there anything like that embedded in either the outlook or in the fourth quarter numbers? Bryan Fairbanks: No. There's nothing in the fourth quarter number. There are some costs as we move through this year. That is embedded within the guidance. Reuben Garner: Okay. And then a question on the way it works with contractors and some of the adjustments you've made to marketing spend or incentives. Are any of your competitors or are you guys locking in any contractors with like aligned agreements that maybe some of the benefits of your changes might kind of take hold more in '27 than '26 necessarily? Is this something we could see longer-term benefits from as well? Just curious on how that works from a contractor standpoint. Bryan Fairbanks: We have a mix of contractor agreements in the markets. And I would say they're less formal when especially when you start talking about exclusivity. The contractor is working exclusively with the brand, they're doing it out of choice because they are getting the strongest support from that organization. They're getting the best products. There are incentives that come along with it. There's growth incentives and things along that -- along those lines. But a large portion do work with multiple brands. They want to keep some flexibility in the marketplace. We've got a good share of fully exclusive contractors that are in the market as well as contractors that use a variety of different brands and Trex is their largest driver of their business. Operator: The next question comes from Trey Grooms with Stephens. Trey Grooms: Congrats to both of you, Bryan, best of luck on your next chapter. And Adam, congrats on the new role, well deserved. So I guess, first, and I know we've spent some time on the guidance there. But as you kind of look at the puts and takes on the full year guide, specifically around the implied EBITDA margins, I think there's about 100 basis point difference there from the high to the low end. I guess really what gets you to the -- maybe the high end versus the low end, specifically around the EBITDA margin range for the year? Bryan Fairbanks: I mean that's going to be the strongest driver, whether it's going to be this year, we get that higher volume, that absorption is coming through. I think it's an important point to make for everybody on the call. As Trex adds volume to our existing capacity as well as new capacity, that improvement in gross margin and EBITDA margin starts coming through quickly. I think back to the early years, 2012 through 2019 time frame, I'd encourage you to go back and look at some of the margin improvement. Now some of that came through some of our own cost improvements we were doing, lower-cost polyethylene. But a big driver of that was filling existing capacity that we have here. And that is a significant opportunity for the company to continue driving that more dollars back to our shareholders. Trey Grooms: Yes. I recall back in the day, a lot of attention around utilization rates, capacity utilization and the powerful influence it can have on your margins. So that's good to hear. And then, Adam, secondly, kind of bigger picture maybe as you take the reins here, any strategic or operating changes maybe that you see here or that we should be kind of expecting on the horizon as you're entering your new role? Adam Zambanini: Yes. Great question. When you think about it, we've been working together for a long time, Bryan and I. And so we've been pretty in lockstep on the strategy. So there's no hard changes. But when I think about the leadership team, we're going to be focused on the roles that are going to kind of reshape some of the cultural things. The performance standards, I think I bring an innovation angle. Some of my philosophy is some of the hardest experiences are the best experiences. So in my mind, we need to change the game in terms of our products on decking. So a color or a streak to a deck board, that to me is table stakes these days. We need to somehow make an impactful or a dent in the market, right? And so that's what I'm going to be after is what is going to build that, I call it the durable defensible moat that we can compete in and nobody else can. And so you will see me really focus on some of those things on the high-performance innovation, and we've talked about performance engineered for your life outdoors. Now you're starting to see some of these applications, right? I believe we're the leader in heat mitigation technology. We're now focused on submersible marine applications. And then now fire is a big thing that we're really chasing going after. So I think you're going to see different forms of innovation from Trex moving forward, and that will be some of the things that will be evidenced, I think, as you look after my first year here at the [indiscernible] Trex. Operator: The next question comes from Adam Baumgarten with Vertical Research. Adam Baumgarten: Just one quick one for me. Just on the gross margin. Prit, can you just give us an actual number just because there's a lot of different consensus numbers out there. I just want to make sure we're thinking about this properly. Prithvi Gandhi: Yes, for the full year? Adam Baumgarten: Yes. Prithvi Gandhi: Yes. Again, around mid-37% gross margin against the -- our midpoint of our guide on revenue in that ballpark. Operator: The next question comes from Matthew Bouley with Barclays. Matthew Bouley: Best of luck to both Bryan and Adam going forward here. Just a question on the revenue cadence. Apologies if I misheard it. I think you guided to roughly flattish revenue in Q1 on a year-over-year basis. And maybe that suggests the second to fourth quarter would be up 4% to 5% year-over-year. So just anything to that, just timing of channel inventories, et cetera, just what would be driving that? Bryan Fairbanks: Yes. Shaping, first, from a first quarter perspective, we've talked a lot about inventories in the past. We do not want to have excess inventories in the channel regardless of how the market turns. We will have the ability to supply our customers. We've also gone through some rough weather in the past 30 days or so. So again, part of the reason not to put anything additional into the channel during the early buy period. When we look at it from a shaping perspective, roughly in line with last year from a first half versus second half, let's call it slightly lower in the first half than the second half, but otherwise, similar. Matthew Bouley: Okay. Perfect, Bryan. And then secondly, back on the gross margin. So I think if I heard you correctly around Q1, you're talking sort of a low maybe 38% gross margin. And correct me if I'm wrong, but sort of what you just said around the full year seems to [indiscernible]. Go ahead. Adam Zambanini: No, last year, I think we were about 40.5% gross margin. So about 100 basis points below that. Okay. Got it. I thought you're talking about relative to consensus. Okay. That makes a lot more sense. Well, I guess the question ends up similar. What I was trying to get at was, obviously, given the depreciation comments you gave, certainly, the headwind gets fairly larger as you go through the year, and it's a lot bigger in Q4. Is there just any other sort of positive offset to that gross margin, Q2, Q3, Q4, maybe thinking kind of your level loading production, et cetera, that might offset some of that kind of mounting D&A headwind? Bryan Fairbanks: Yes. There's always going to be opportunities. We've got a strong group that's always focused on continuous improvement. We have a significant number of projects that will enter into the system and will start generating benefits from that this year. There's always more opportunity as we go forward. That team has overdelivered the past couple of years. So we'll be looking for them to deliver on that, trying to keep the -- not assume that all of that's going to come through, but I can tell you the management team is absolutely focused on driving improvement to those numbers. Adam Zambanini: Yes. I mean we look -- we always look for ways to optimize the use of the lines and so forth. So that's always things that we look at to drive improvement. Operator: The next question comes from Steven Ramsey with Thompson Research Group. Steven Ramsey: I wanted to start with more distributors adopting the full portfolio of railing solutions. Were there certain railing SKUs that were bigger drivers in '25, such as price points or any other ways to parse that out? And do you think the same drivers help in '26? Bryan Fairbanks: I think it's really across the board. Trex competes at the lowest end against vinyl PVC rail. We've offered an opening price point aluminum rail. Then we step up into wood plastic composites and then we go back to, once again, higher-end aluminum that has what we call rod rail, cable rail, glass rail once again, nobody has this broad portfolio. And so we've seen wins across the board in every single segment because the issue with railing is there's a tremendous amount of working capital tied up to the amount of SKUs there. And if you're carrying 3 or 4 brands of railing, you generally -- your margins is hard to turn a profit on that. And so by consolidation into one brand, linear counter salespeople to only focus on Trex makes you highly profitable. So from there, the consolidation just makes a lot of sense, plus our service levels are bar none the best when it comes to this part of the portfolio. So that's another reason why you want to partner with Trex. You got the brand, the best product portfolio, the best service, why not Trex. Steven Ramsey: Okay. That's great insight. And then secondly, on incentives from a bigger picture, with Arkansas set to provide much better margins as volume ramps up, does that give you capacity to further expand incentives in the next couple of years to continue driving volume? Bryan Fairbanks: I wouldn't say that the capacity is there to drive incentives. The capacity is going to be there to support volumes along the way. I think we're in the right place from an incentive perspective. We haven't seen escalation from that perspective in the marketplace. So there was some catch-up that we needed to do. We talked about that in the third quarter. And everything that we've heard from the channel is we're in the right place. And a lot of these programs are driven by growth to be able to earn out those incentives. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Bryan Fairbanks for any closing remarks. Bryan Fairbanks: Adam, Prit and I look forward to seeing you at conferences and other meetings in the coming weeks. Thank you to everybody on the call that have supported me, both as CEO and the Trex Company as a whole. Have a great evening. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Robert Barrie: Hello, and welcome to the Freelancer Limited Full Year of 2025 Financial Results. Apologies for the half an hour delay in getting going. We had some technical difficulties here in the conference room. Not sure what happened. We had a Board meeting here last night and overnight, the machine fried itself. So we've managed to sort that out, and I do apologize for the waiting, and we'll get going now. With me in the room today, I have Chief Financial Officer, Neil Katz; Vice President of Product, Andrew Bateman; August Piao from Escrow.com; and Mas from Loadshift. Today, this is the full year of 2025 financial results as we operate in the calendar year, and I'll get going. Financial highlights. The group gross marketplace volume, which is cash to the business, was $881.5 million, which is down 7.1% in FY '24. The Freelancer GMV was up 2.3% at $133.4 million. Escrow was $748.1 million, down 8.6%. Group revenue was up 4.1% versus the full year 2024 at $55.3 million. Freelancer revenue was up slightly at $40.9 million, and Escrow.com set an all-time record of $12.3 million, up 18.8%. We recorded an all-time record net profit after tax of $2.2 million, which is up from a small loss of -- in the prior year. Escrow just completed its fifth year of consecutive profitability and is paying tax and going to its sixth year of profitability. And with Loadshift, we also achieved a maiden full year profit. We also achieved an all-time record operating profit, excluding unrealized FX of $2 million, which is up 162%. Operating cash flow was a positive $7.7 million, up 32% on PCP. Cash flow was $0.5 million versus $0.8 million on PCP, but also included a net of $1.5 million in buyback of Loadshift shares, which increased our shareholding to 73.4%. Cash and cash equivalents was $22.9 million, down 11.9% on the half year, but flat on the prior year and so forth. So we achieved a significant turnaround in profitability. I've said previously in the last quarterly calls that my goal was to do $0.5 million a month of operating profit consistently. We're about 2/3 of the way there. We have a little way to go, but we're working hard on both the revenue side of the business and also on the cost side of the business. We got -- had a pretty decent cash flow of the business at $7.7 million, I said before, up 33%. And we decided to increase our stake in Loadshift. I think this year for Loadshift is going to be a pretty transformational year as I'll describe a bit later on. So our ownership has been increased to 73.4%. Freelancer is working hard to build the Amazon services. There are many companies out there that are global marketplaces of products that are very large in terms of scale and scope, the likes of the Amazons, the Alibabas and to an extent, Shopify, which is a marketplace of marketplace of products. We're trying to do that for services, and we are in the fields of labor payments and freight. We have over 90 million registered users across all our portfolio of businesses. Freelancer is the largest cloud workforce in the world. Escrow is the world's largest online escrow company, which facilitates the secure large value payments. And Loadshift is Australia's largest heavy haulage freight marketplace. And so we have services that meet the needs of consumers right up to very, very large organizations. For the core marketplace in FY '25, we onboarded 7.32 million new users and 666,000 new projects were added to the marketplace. The average project size continued to climb and averaged at USD 413, up 19.4%. And the sustained expansion in average project size reflects ongoing shift towards higher value, more complex work across the platform and also our targeting of our customer acquisition programs. Liquidity is very strong. And in fact, in many areas, we're doing some work, which we'll explain a bit later to 10% of the liquidity because it is very, very high and nowhere else in the world is as liquid as we are for getting work done. On average, you get 54 people bidding on your project, which is up 8% on PCP and contests have exploded to a fairly ridiculous 761 entries per contest, which is up 50%. So you can see here that really since 2020, we've had a trend up in average project size and that's across both the Freelancer and the Loadshift business. In terms of acquisition, in the fourth quarter, we saw a slight decline in year-on-year performance driven by a decrease in the SEO channel. We've actually rectified that, and it's bounced back down in Q1. Volume from SEM is at record levels as of writing the report and a relatively stable return on investment. We're starting to see a lift in AI-related jobs in the marketplace, and it's still at an early stage, but it is lifting. It's starting to meaningfully contribute to GMV. It's about 5% of total marketplace volume in the marketplace. As I said before, I think we're in probably the third phase of transition of businesses, thanks to the Internet or transformation, thanks to the Internet. In 1994 to 1995, you had the Internet go mainstream in Western economies, and that led to businesses going online for that. They got web development done as they wanted their presences built out on the Internet. We then had mobile phones get deployed and you had app development. And now with AI, you have AI development. And there's a whole range of features and functionality, not the least of which being AI agents, but also using AI to personalize workflows and accelerate productivity. And we do think, as I've foreshadowed in previous quarterly results that this is going to be a very, very big category in the time to come. You get over to the same place to get your AI developed that you get your website developed and your app developed; which is small individual freelancers, small agencies, large agencies and very, very large service providing organizations; and we aggregate all of them on Freelancer. The shift with AI is creating a powerful 2-sided effect in the marketplace. We're getting an increase in new AI-related jobs from clients, but also freelancers have lifted their skills quite dramatically through using AI tooling. We think the killer combination is humans with AI. And certainly, the freelancers are probably one of the largest -- on our site are probably one of the largest and most active users of AI out there with that 90 million people rapidly adopting tooling and lifting in speed, quality and output. And so we think this is a great structural enhancement to the value of our marketplace, the competitiveness of the freelancers and the scalability of our model. We're seeing work coming quicker. We're seeing higher quality work, and we're seeing that across the whole breadth of skills that we have available in the marketplace. In early January, we successfully launched, as we talked about in previous quarters, not just audio and video calling, but client-initiated audio and video calling now before you award the job to a freelancer, so you can post your job, get your bids in and talk to some of the top freelancers over audio and video prior to awarding. We've managed to do that successfully because we have a real-time data science pipeline, which does real-time analysis on those conversations to ensure that we don't have off siding, et cetera. And so as a result, this functionality is great, not just for clients to interact with the freelancers before they make the selection, but also for freelancers to win business. And so that's also led to an increase in membership revenue there on the Freelancer side. We've also managed to automate our project review using both AI and our data science pipeline called Iris. We used to have all the listings on both Freelancer and Loadshift go through human review before they went live in the marketplace. We've now managed to pretty much almost fully automate that, which has led to a lift in conversion as projects go live quicker and don't go through delays. Our focus in the first quarter will be continuous introducing AI into the primary job posting the funnel. We're focusing not on the very top of funnel at this point in time, we're focusing more on the bidding process and to match talent more effectively and counter bid spam. Because we're in the world of AI now, any form of user-generated content out there can be enhanced through AI submissions. And so we're really now focusing on ensuring that the bids that are coming in are true representations of freelancer skills and experience and that very, very quickly, we can make recommendations. We can annotate the bids coming in to provide what freelancers or platform thinks about the freelancers and to ensure that the bids are accurate on the freelancer side. We're also working on improving our payments infrastructure. In the first quarter as well, we've also now launched a Prototyper. This is our AI-powered collaborative whiteboard enables clients and freelancers to basically prototype ideas in real time and also what we call Make It Real and generate code to interpret those drawings and turn them into software with one click. So you start with a blank canvas, you sketch the concepts using whiteboard tools, traditional things like sticky notes, annotations, images and more. And then with click to Make It Real button, we transform those white frames into clickable interactive prototypes with no coding required. And so we can replace lengthy text briefs or conversations with actual visual collaboration, and it provides freelancers clarity early on and clients clarity in terms of where their build is going. So I think that's pretty cool, and there are a lot of different directions that this can head in the future. And of course, all of this stuff is powered by the mainstream foundational models. So we plug into OpenAI and Core, et cetera, powering this back end as well. So that we always keep up to date with all the latest advances in model technology. We remain to be the #1 [ site ] building platform in the world in terms of freelancing and cloud work. We're rated now 4.5 excellent on Trustpilot from 18,000 reviews; 4.7 on SiteJabber, 20,000 reviews. Yet again, we maintain our #1 position, and we've won awards that have celebrated that from those review sites. Our Enterprise division continues to work to expand its client base and operational infrastructure. We launched Concierge services for premium customers and established a Bangalore office to drive sales and operations in that region. It's very clear to us that India is the body shop to the world and every BPO there and every large major tech company has operations there, and that's the place that they source talent. And all those BPOs don't have breadth and the depth of talent that we have across geographies and niche skill sets. So our engagements spanned technology, business services, financial services and education verticals. And we're doing some pretty exciting things where we're marshaling very large fleets of people to work in everything from AI to field services to sales to so forth. And over the course of this year, we'll probably be making a couple of announcements about that. And so we are really focusing in FY '26 on deep pools of repeatable work and workflows. And I think we're pretty excited to hand-in-hand with our office be building out some features in the enterprise product over the course of this year to enable it to happen at scale. Now second half of last year, the Bangalore office started as a sales office and operational office to service enterprise demand and global fleet across India. We've got good momentum and a good pipeline. We're pretty excited about the pipeline of opportunities we've got, and that's headed up by Gerard Christopher, who has worked for us for a couple of years on engagements such as the GitHub Packard engagement. Generative AI work continued throughout the year with projects across a variety of different languages, transcriptions, image collection, going to locations, collecting data for surveys, collecting data for -- going into foundational model training, et cetera. We've also got a new company, where we're doing field service repairs of laptops. There's a picture there of a new brand of laptop that we're repairing in Kolkata. And the project for FY '26 is to really double down in the office, scale up the delivery volumes and scale into the North American markets. On the innovation front, over the course of FY '25, we've announced previously that we were a joint winner of NASA's upscale 10-year USD 475 million NOIS3 contract. That contract is a big upscaling of NOIS2, which we were also a winner of, which went from $75 million to $125 million, now it's $475 million. There has been, over the course of the second half of last year, some delays in task orders being awarded and funded due to various government shutdowns and restarts and shutdowns task orders have started flowing recently again, and we're bidding on them, et cetera. And we're doing some pretty exciting things, everything from genome edited delivery for the NIH. We did some work for the Orion spacecraft in the compiler technology for software testing, lunar south pole navigation concept, zero gravity indicators, et cetera, and so on. We currently have a challenge live for detecting underwater explosive ordinance for the United Nations. We've also got another challenge being launched shortly to model the particle distribution of explosive devices using AI and ML techniques. In addition, our government division is progressing. We've got now, I think, a solid program that can be appealed to both state and national governments around the world around helping people come up unemployment benefits and go to the workforce. We're pioneering that. We pioneered with a few countries and now with Bahrain with the Tamkeen accelerator. I think we've got a pretty robust program that we can scale up and reapply all around the world. In FY '26, the key focus will continue to be, one, to enhance marketplace engagement, continue to improve the user experience and matching capabilities to attract activate and retain high-quality freelancers and clients. I'm pretty excited about the work we're doing here. I mean, obviously, you can address questions at the end to any of the people in the room. But Andrew Bateman, who's here, VP of Product and myself, we're pretty excited last night talking through the range of capabilities that are literally over the next 2 weeks going live to allow you to very, very effectively find great freelancers, have recommendations from the platform in real time on those freelancers, do natural language search to find those freelancers and to curate the bidding lists, the directories and notify the freelancers and so forth. In addition, we have a whole bunch of trust and safety measures cracking down on bad actors. We're also accelerating AI-driven innovation, expanding our integration of advanced AI solutions across products and services, allowing efficiency, automation, and new opportunities for enterprise growth. Our vision here is basically that we provide access to all the tooling of all the major AI tools through the platform to the freelancers. So we act as a distribution channel. As I said before, we have a very large network of users of AI. The freelancers are very active in adopting latest tooling across a range of different areas, and we think we can be a place that can really distribute those products and services to those freelancers to lift their skills and lift their earnings. And we're also expanding our financial service offerings. We're really streamlining our payments infrastructure. We're doing that in a global way to ensure that we have excellent acceptance and excellent native payment methods no matter what geography we're interacting in. And hand-in-hand with that is we have -- we're building out quite a sophisticated capability in our ability to levy taxation. Governments around the world are pretty much broke and they are looking towards platforms to, at minimum, provide reporting of earnings, but also to start collecting taxes in various jurisdictions around the world. And we're quite advanced with that in many jurisdictions. And I do think that in the future, this is going to be a great regulatory shield for us. We've already had some of the biggest $1 trillion tech companies in the world come to us who while they may be able to solve this problem, don't want to solve this problem or find it very hard when they do product innovation to solve this problem. And so they've come to us to basically solve it for them. So I think as we build a more robust offering there, that could be very, very attractive to some very, very large companies. We're also focusing on driving operational excellence strengthen platform reliability, quality and performance through rigorous internal processes. Andrew Bateman leading to a complete overhaul in the way we develop product, the way we ship product, the way we think about product and the way we think about product quality. We're also enhancing customer satisfaction and market leadership. And I've said before, I want to get sustainably $500,000 a month of operating profit every month on an ongoing basis and trend that up over time. And we've made some significant progress you see with our record profit this year in the FY '25 period, and I expect to do even better this year, doubling down on that. In terms of awards, we are recognized for our 13th Webby Awards, which is really the Emmy or the Grammys of the Internet. So we're very pleased to receive our 13th Webby and our 26th Gold Stevie. And I think it's just a testament to the hard work the team is putting in. Escrow.com has a GPV of AUD 195.8 million in the fourth quarter, up 3.8% on PCP, slightly down in U.S. dollars. Full year 2025 GPV came in at $760.4 million, 8.2% down primarily due to the lapping of a large IPV4 transaction in 2024. I'm pleased to report the Q1 numbers as well. I don't want to present them too much, but they're up a bit from here in Q1. So we're seeing a good entry into 2026. Revenue for the full year was up 18.8% to $12.3 million. As I said before, it's our fifth year of profitability entering into our sixth year of profitability, and we've used up all our tax -- deferred tax assets. So we're paying tax now, which is a good first real problem to have. So I think we've got the business into a pretty robust state. As you can see, there's a long-term trend line, which has been continuing through the business, and we hope now to not just continue that trend line, but also to start really kicking in and accelerating that. And as I said before, punching out 5 years of profit and going to a 6-year of profit now, this is a very solid and strong business and also very unique and very strategic in the fact that there has a licensing for 55 jurisdictions for payments. We're also positioned for strong sustainable growth with various e-commerce partnerships. Our pipeline is actually the best it's ever been, both for high-value transactions and also for sales. We were just actually going through the high-value transaction over the last couple of weeks. We're pretty amazed by the quality of things that we're seeing in from our broker network, but also in additionally, we have quite a wide range of new verticals that we're going into. And I think we're going to have pretty significant merchant adoption in 2026, so much so that we're building a go-to-market team as we speak. We've got heads up and in our North American sales hub, which is in Vancouver. We're building out the account management team under Tony Yan, who's been just promoted to Director of Operations as well as building out our go-to-market and our activation team. So we're really trying to -- we're really trying to copy here what Afterpay did. They had a very aggressive team going after merchants and platforms on the sales front and then they had an activation team, which really took you to market once you became a partner and integrated the Afterpay checkout solution. So we really want to use that as inspiration for how we see building out our checkout product. We continue to see strong interest from digital asset marketplaces seeking trust, fraud protection and cross-border transactions. Partnerships include Dynadot and Connexly, market leaders in domain and IPV4 transactions. We're also continuing to invest in new verticals and providing customized experiences through the flow for those verticals. We've got some great B2B electronics marketplaces and broker networks being on board. Some of these guys do very, very big volumes. One of them is over $900 million of GMV per month that they do in entirety. Now we're not going to get anywhere near that number from them, but I think we could, if we execute well, get a substantial volume from these partners. And obviously, when you're selling things like B2B electronics, you've got all sorts of trust and safety issues. Are you getting what you think you're getting? Is it the equipment in good condition? Is it not stolen? Is it not damaged, et cetera and so forth? We have also got key broker marketplaces offering escrow payments through integrated and nonintegrated solutions, sites like BrokerBin, which is the world's largest B2B electronics database broker site, secondhand electronics, BrokerForum, TradeLoop, all wholesale markets. We're doing interesting things in other international trade markets. We've got a very large agricultural transaction that's currently being set up that they should go through shortly. We've got premium luxury goods marketplace in advanced stages of integration and all sorts of other marketplaces, including regulatory marketplaces that are coming on board. And we've got some work also kicking on in automotive. New partnerships for in 2025, increased our visibility and reputation, quite a number of U.S. sort of businesses. This is for WatchFacts, a luxury marketplace that we did some partnership work with that do fine jewelry, handbags, luxury watches, et cetera. Grit Brokerage and domains Immobilium with real estate agents. We're starting to tiptoe into real estate, which is obviously the holy grail. Acquired.com, we really doubled down our relationship there in the M&A of businesses and businesses from the digital side up to medium-sized businesses. And we also just brought on Pitch Capital, which is a capital raising platform, which has secured more than USD 370 million funding for start-ups and now those transactions will start to go through Escrow for fundraising for ventures. We also presented our top Master of Domains award. We published a quarterly report on domain pricing. We're actually, I think, next week, publishing our first IPV4 pricing index, which will be a quarterly pricing index and so forth. We're also releasing next week our quarterly domain report. We did see an uplift in domain volumes. We saw a tripling into AI domains over the course of FY '25. And then while second cousin to dotcom, we are seeing a very, very big lift in volumes. It was up 189%. Is that right, Austin? Is that right, August? Almost a tripling in the volume getting to about $27 million. So we are seeing a contender come in, and we're just seeing where that continues. The other thing we did, I should mention is we completed our first transaction for straight-through financing through our Funding.com subsidiary. We've done over $670 million of vendor financing through Escrow to date in the domain space, and we've actually just completed our first straight-through financing transaction with a third-party financier. We believe Domains offer a premium form of security well and above the assets of the business because you can flick off someone's website or payments or e-mail in 5 minutes and flick it back on again. So we think that as a security for lending, it's a premium asset. We have a custody service where we hold things like domains for lease to purchase options, and we've now got financiers financing, taking advantage of that custody service. We've also now 24/7 with our customer support. That was a very important thing we wanted to do for Shopify. We've got the go-to-market team is being built out for Shopify specifically. We're onboarding more and more merchants. It's still very early days. We're not visible because we haven't crossed the 50 merchant platform threshold yet for that. But over the course of this year, we will be moving that quite rapidly. We needed to make sure we got all our ducks in a row in terms of our operational and service capabilities before we could really pump a lot of volume through this business. So we've really been working on that, and we've been making some changes in terms of the management team to be able to support that. We're also in the process of migrating the front-end technology -- it's 189% I think it's close to 189% [indiscernible]. We're also in the process to migrate the front end of Escrow to the freelancer technology stack. That's the stack that runs Loadshift, it's the stack that obviously runs the Freelancer platform. That allows some very modern features. It's a single page architecture, so it's very quick and very lovely to use. You've got real-time chat and messaging capabilities, obviously, audio and video calling capabilities, which are not available currently on Escrow. We've got AI agent capabilities, we've got whole framework there. We've got AI agents doing support and doing sales and doing operational sort of work. That will become available on Escrow as a result of doing this and a range of other features. And additionally, it also allow Escrow transactions to be available on Freelancer and on Loadshift. So we start extracting more synergies between all of those businesses. And down the track, that will also allow us to do things like upsell freight off the back end of -- sales through Escrow of products, something that's been a long time coming, but with a unified front end it will allow us to do that more easily. The other thing we'll be able to do is have a unified payments infrastructure and a unified identity service. So what that will mean is if you KYC once with any one of our platforms, you're KYC'd everywhere. So you don't have to do [ first ] in Freelancer and Loadshift potentially separately. You can just do it once and it will be done everywhere. So that's some of the synergies we look to extract this year through this unification process. The other advantage is that allow us to be a lot more nimble. We'll be able to move engineering and product and design between the businesses a lot more easily and fluidly. And so we will see a real, I think, acceleration in the product development of all 3 platforms as a result of unification of all on the same technology stack. Loadshift, I think, is starting -- is going to have a breakout year in 2026. We're obviously Australia's largest heavy haulage freight marketplace. Midweek, we get somewhere between 300,000 to 400,000 [indiscernible] on the site, which is the Earth to the Moon. And it's basically the Freelancer stack or heavy haulage freight currently, and it's currently also in Australia only, but we are looking to broaden that out and take that global and that we're starting to do some things in the back end to enable that in the later -- of this year. We had record performance in FY '25, our strongest operational and financial results to date. Revenue and GMV increased year-on-year through improved ops team, marketplace efficiency, conversion and other innovation. Revenue was up 12.4% on PCP. GMV was up 7.7% on PCP. We had an all-time record quarterly revenue consecutively in the third and fourth quarter, up 15% on PCP in the fifth fourth quarter. So you can see it's lifting. 2026, I think, will be a breakout year for us. Job postings are up, award rate was up, total jobs awarded up, delivered workloads are up. So we're starting to see that take off. The big thing that was holding back Loadshift last year was audio and video calling. The big use case difference between Freelancer and Loadshift is that the majority of the work in the heavy haulage freight business happens over the phone and not through a desktop website, for example. So we had to build out the audio and video calling capabilities. And this year, in addition to that, we'll be building out audio capabilities to interface with the app, et cetera. We're pretty excited about where this goes. Not only do we have audio and video calling now fully deployed, but we've got in real time, the conversation is being transcripted, and so we can assist with project management or trust and safety purposes. In addition to all of that, you'll be able to interact in the future with the app through voice. So you have -- if you're driving a vehicle, you don't -- you can't interact with your handset with your hands. So you'll be able to talk to your -- to Loadshift. Obviously, all the capabilities we make available for Loadshift will be available for Freelancer and vice versa. So we're pretty excited about the future of that and being able to have a fully agentic version of Loadshift in the future and where that's going to go. So yes, key innovation is obviously getting that audio and video calling app, which is an app. We also made it -- we polished it with several rounds of improvements, which allows you to use the app very nicely once you're in a call, et cetera and so forth. We're also now focusing on enhanced GPS tracking capabilities. We're pretty excited about the features and functionality there. We're going to not just have real-time tracking of all of our fleet, no matter where in the world that will be, but there's a whole bunch of features that are rolling out hand-in-hand with that around compliance, around delivery notifications, pick-up notifications, tracking of the state of any cargo to ensure that hasn't been damaged in transit. And really, it's going to be a pretty comprehensive suite of functionality over the course of this year, which I think is going to be pretty, pretty exciting. We've also got a number of enterprise -- large enterprise clients now starting to come and talk to us wanting this technology. And that ranges from companies that do equipment hire, that do auctions of automotive and storage and so forth. So we're pretty excited to see where some of those conversations go. And we're engaged with some of the largest mining companies in the country. So we've got some pretty solid client base here. So overall, at group level, we had NPAT of $2.2 million positive, which is an all-time record. There was a small loss of last year. Additionally, we had a positive cash flow of $0.5 million, operating cash flow of $7.7 million, up 33%. We had outflows of $6.9 million, primarily related to lease payments for office premises. Across offices, the costs are coming down. In fact, I think it's next weekend, we're moving into our new office in Manila. We've got some improvements. Neil Katz has done a phenomenal job. Every time we do a lease renewal of chipping down the leasing costs in pretty much every office location we've got around the world. And I will say in Sydney in 2027, we'll be moving office as well, and we'll also get a reduction in our lease costs. So that's a line item that continue to tick down. As of 31st of December, we held $22.9 million in cash and cash equivalents. It's down a bit because we did a buyback of Loadshift shares primarily. We now own 73.4% of Loadshift shares. So that's fantastic. In terms of group management, we strengthened our management team with several key appointments and promotions. Andrew Bateman was promoted to VP of Product for the group, bringing over 2 decades of technology and product leadership experience. He sits to my right. And after this call, you can in the Q&A, ask any question of Andrew, if you wish. Owen Smith is the Director of Legal Compliance and expert in regulatory affairs. He heads up our compliance team, and he's doing a great job of kind of building that out and building our capability for world's best compliance and AML. Brent O'Halloran joined us as Director of Communications. He ran the foreign news desk for Sky News. He's been a pretty serious foreign correspondent for quite a number of news organizations, and he's really lifting our communications capability across the business. Tony Yan is Director of Operations for Escrow, he is overseeing partnerships, account management, the global support team under Dean and parts of payments, and he's a scientist by background. And Trisha Epp, who runs innovation was promoted to Director of Innovation for NASA. Gerard Christopher runs our India office. And we wound down the Buenos Aires office at the end of last year on the 31st of December, which was no longer fit for function. It was supposed to be a second 24/7 premium support team for a very, very high-end account management. We've moved that to Vancouver now primarily. Instead, it was a bit hard to communicate with the time zones between Sydney and BA, as well -- they were fit for purpose. And particularly a number of the functions now we've managed to automate with AI or move to Manila as well at the back end. So instead, what we've done is we opened up an office in Bangalore, and it's a sales office and operational office that's on the front end, pointy end of working with enterprise customers. I will also say another notice went out today this morning. Neil Katz, our Chief Financial Officer, has announced his retirement. We've had a very, very good run with Neil. He's with the business for 16 years. He took us from startup to a listed entity. He was very instrumental in many parts of the business that are very, very complex on the financial side. The 55 jurisdictions we're licensed in, Neil pretty much spearheaded most of that. We took from 8 licenses in 2015 when we bought it to 55. That is a very, very, very complex thing to do. And in fact, I could not do that again from scratch if I tried. And it takes 5 to 7 years for jurisdiction to get a license. You are then audited every 2 years on average by the regulators. We've managed to go through that very smoothly, albeit it did take time because it does take time, but he did that very, very well. He went through the IPO with us. He's been through the expansion of the businesses. I don't know how long his dongle chain of bank account access tokens is, but we've got bank accounts in currencies all around the world that he controls and manages and all the treasury function and so forth, the modeling and so on. And in fact, Neil and I have obviously worked together, not just at Freelancer, but also in my prior company, where he was chief financial officer. There's been about a 20-or-so year history of this. So it's been a long track record. And I do thank Neil very much from not just the management team, but also the Board last night and the Board of Directors for his service. It's a very orderly transition. It's been well flagged for the last couple of years. We have been out there looking for -- it's a 2IC under study for some time for Neil's group. As of today, we'll be upgrading the job listing to a Chief Financial Officer search, that we are kind of well advanced in kind of succession planning and have been for many years here. Neil's notice period is 6 months. So he's going to be with us to August 2026. And he's also very graciously in the Board meeting last night, offered to potentially stay on past that and potentially in a part-time capability should the new CFO wishes and so forth. So from all the company and myself and the Board, a heartfelt thank you for Neil for his service. It's a very, very long and track record for achievement. But we're out there and we're active in the process of searching for a replacement, and we'll make notifications to the market in due course when we select the final candidate. Now I apologize again for starting half an hour late on this call. We had some technical difficulties that I'll ensure does not happen again. You may now direct questions to anyone in the room. To remind everyone of who's in the room, you obviously have myself, Matt Barrie, the Chief Executive Chairman of the business. You have Neil Katz, Chief Financial Officer; you have Andrew Bateman, who is VP of Products; August Piao from Escrow and Mas from Loadshift. We'll now open it up for questions from the audience. And if Oscar, if you could read them out if any are in the chat. Operator: Yes. First question from Ray Johnson. Have there been any tangible outcomes from the expansion of the Board? Robert Barrie: Ray asked, has there been any tangible outcomes from the expansion of the Board? The answer is absolutely yes. Over the course of last year, we added Craig Scroggie, who's the Chief Executive of NEXTDC and also Patrick Grove, who is the founder of many businesses from ICar Asia to iProperty Group and is Chairman of Catcha Group. Yes, they have certainly -- there's a whole spectrum of things we've done. One is we've improved how the Board functions in terms of just generally how we run meetings and how we -- what we talk about and the strategy and so forth. Patrick has been pretty [ inspiring ] in pitching a few ideas that we're currently evaluating. Craig has been very instrumental in the execution and thinking about the execution of those ideas and how we can actually go about organizationally implementing them. And I think the discussion has really lifted to the strategy and even the governance. We obviously had our Board meeting last night with the Audit Committee, meeting, et cetera, Craig's already led quite a number of questions of the orders, et cetera. So I think we've really lifted the capability of the Board to the next level. I'm very pleased to attract -- be able to attract to the business such world-class entrepreneurs. Craig, for example, is probably one of the hottest CEOs in town right now, obviously, running NEXTDC and building data centers pretty much anywhere there's a square meter of real estate in a city in Asia Pac. He's building data centers. And then Patrick, obviously, one of the greatest entrepreneurs that Australia has produced, having built marketplaces in property, in automotive and in media, he's got marketplaces in Latin America. Last night, he was in Panama with his latest business, et cetera. So no, it's been a phenomenal step up, I think, in the Board's sophistication and capability. Operator: Next question from Katherine Thompson. Within the enterprise part of Freelancer, could you rank the contribution to revenue from the various areas, e.g., NASA, field services, GenAI in full year '25 and '23? Robert Barrie: Yes. So we don't break them out in the financial results. They are currently fairly de minimis to be frank. We do expect a big uptick to be coming from NASA, for example, very shortly. There's been some government shutdowns that have kind of held up the deployment of capital from the NOIS3 program, but that it should start to flow. We're starting to see task orders coming in now. We are the largest company that is a winner of NOIS3. It is a joint tender, for example, but we are the largest cloud workforce capability, and that's represented in all of NASA's presentations. On the enterprise side, the focus -- we think we have a lot of work happening in terms of activity on the AI services side. We had a whole call last night with a very large major BPO that is using us actively on some small-scale stuff. The trick we have figured out is we have to build a bigger product so that we can effectively scale these workflows up to very, very large scale. The company to look at is Scale.AI. That's a company that's only a few years old that Meta bought half of, for about a $14 billion purchase. We can do everything Scale AI does and better. We have a deeper network of workers with more skills and more capabilities and greater geographic reach. And in fact, I would not be surprised if actually Scale AI. I got a bunch of freelancers from our site, to be honest, through various means. But we have to build the workflows. What -- where I think we have somewhat been misdirected with the enterprise work we've done with Freelancer is we've had pretty much every major Fortune 500 come to us looking for a contingent labor solution. They're saying, okay, what you do. We've got full-time staff in our office. We've got service providers that provide us with contractors. We've got various HR technology infrastructure that can manage those fleets of people. But what we don't have is we don't have a contingent labor capability with gig or cloud. The -- and that's the approach we have been taking is really to really react to that demand, whether it's a Deloitte or whether it's Arrow Electronics and literally all the Fortune 500 in there and try and build them like this generic contingent labor capability. Now the challenges we run into when we've discovered is even though those customers pay us, I think Deloitte paid us about USD 5 million to build their capability. It's quite complex and it's quite custom. You have to integrate with their vendor management systems. You have to integrate with their single sign-on system so that all the staff can log in and it's got the same look and feel. You've got to potentially integrate with their time tracking system, active directory, this, that, the other. And then you have to do quite a large amount of customization. While we are chipping away at the product capability to make that easier and easier and simpler and simpler to be able to deploy that for any large enterprise, really what we've come to discover is you've got to find where the deep pools of repeatable work are and really build workflows and then automate those workflows with freelancers. And I come back to my comment about Scale.AI. I think they did that very, very well and very, very efficiently in a very, very narrow niche area where they built very effective workflows, a very small number of workflows, but they did that very effectively and then they managed to rip through there with huge volumes of work. And that's really the focus we're taking now moving forward with enterprise with Freelancer is we really -- we know the pieces we need to build. We've put together a whole product plan. In fact, there's probably 8 iterations of that product plan in terms of that capability. We've got quite a number of partners that potentially might be interested in building that capability with us and financing that capability. We know what needs to be done. We're building some of the building blocks. And I'm pretty confident when we get up and running, we have a workforce that ultimately is more capable and deeper and more sophisticated and more skilled to be able to rip through that work better than anyone out there that has done it before. So there are some examples of people who have done this with workflows. They've got very big businesses quickly because it becomes very pump work through. We know what to do, and we're going to do it. At the moment, the contribution is fairly small. And -- but we are learning a lot. We're bidding on some big stuff for field services right now. There's a big satellite installation DISH capability we're bidding on. We've got another partner that we started up with field services laptop repairs. I think over -- and we've got some big things happening in field sales. I've got some big expectations, for example, with the India office and kind of what they're doing. Contribution right now is fairly small. We have learned a lot with enterprise, trying a lot of different things. No one has really figured it out globally out there. But -- and I think we have the inherent innate advantage with the largest cloud workforce in the world to be able to do it very, very well. No one's done it yet. We're working towards it. There's a $1 trillion problem to solve both at the consumer level and the enterprise level, and we're chipping away at it, but not big. With Escrow, I have said this repeatedly before, and I can feel it getting closer and closer. One of the customers we're going to onboard or partners want to onboard will do the entirety of Escrow GMV times by some multiple. There's some very, very, very big volumes that are out there in the global payment space at the high end. We had to build our capability to be able to service that. We -- for example, we have a Shopify solution to go into the Shopify ecosystem. And I do get asked by investors, well, why isn't that fully guns blazing just yet and turned on. I have purposely slowed that down because we need to make sure that the support, the compliance, the back-end systems, the payment processing, everything is as slick as possible so that we can really scale and do so reliably. So we now have 24/7 support. We now have done a complete review of all our AML controls and are in the process of automating quite a number of them. We have done a couple of team restructures in terms of making sure we've got the best structure for servicing high volumes. And we're just getting our ducks in a row. So while that business is ticking up fairly well, I do think we're going to have some really blowout years soon with Escrow, but we need to get just all our ducks in a row in terms of the capabilities and processes of the systems to be able to cater for that. But we're getting there, and it's getting closer and closer. And with Loadshift, the good thing about Loadshift is, I mean, that -- the frame industry that we focus on is extremely chunky. It's high-value loads. It's the big end of town, and we are starting to see some pretty good enterprise interest coming in. We've got a couple of proposals out for a multimillion dollar integrations that would lead to pretty significant volumes. They are relatively early days in terms of progressing, but we are now at the point where we are focusing more on enterprise in our sales process, and we are out there actively pitching proposals. We've built an enterprise dashboard, for example, which is being very well received. And I do think that very soon, we're going to have a pretty robust enterprise capability. So I know it's been a long time coming across these businesses, and I will be very open and honest about that. We have learned a lot from dealing with enterprises. We know what works. We know what doesn't work. We kind of know how to think about now structuring and building the product and the operational teams and support to be able to service these organizations. And I do think that we are chipping away the problem across all 3 businesses. Thank you for your question. Operator: Katherine asks again, in the Loadshift business, are you able to say which country you would like to enter next? And how high do you think you could get the award? Robert Barrie: Next country will be Canada. It will be Canada because it's very similar to the freight we do in Australia. We're well advanced in our planning for that, and we also have an office in Canada able to service that region. But the next location will be Canada. Operator: And how high do you think you could get the award for? Robert Barrie: For Loadshift? Operator: Yes. Robert Barrie: Yes. So I literally had a conversation about this morning. Mas is smiling. I literally went to his desk and discussed it with him. Look, I personally think -- so when you have a marketplace of whether it's Freelancer or Loadshift and to an extent when you have an account managed transaction on the Escrow, if you leave transactions alone and self-serve, and obviously, you can chip away at this over time with better product and features and so forth, particularly with AI, you can do a lot. Transactions will close will match at a certain percentage, right? And across the labor space, and you look at any of the marketplaces that are out there, so I'm just talking about -- and I've looked about 200 or so financials of marketplaces because we bought about 35 businesses over the life of this company. So I've looked at a lot of these things. The labor matching in these marketplaces match around plus or minus, they're at 30%, right? So all the jobs being posted about 30% get matched and paid and so forth. If you put a human in there and that human chaperones the transaction, so it gets on the phone and talks to the client and talks to the freelancer and you do it a market making or you kind of do it of recruiting, et cetera. And you can bump that number by plus 20% pretty much across the board. With the peak performing human doing the matchmaking and the market making and so forth, you can get up to about 65% or so in terms of the conversion on the award rate. You can burst a little bit, maybe a little bit above that, but that's kind of the peak. Above that, you have clients that just lose interest. You have -- which makes up the other 35%. You've got people posting jobs for time machines, wanting to get things done for $0.99, completely unrealistic or nonfirm, just trying get an idea or maybe in the shower, they want to be an entrepreneur one day and they put the job and the next day, they kind of get busy or whatever it may be. And so that gives you a feeling for adding a human. The same is in Escrow. When you put an account manager in an Escrow transaction, they lift it by a 20% absolute the conversion rate of a transaction closing because there's handholding. And you got to remember, Escrow plays with complex high value end of deals -- so some of these deals, there's a lot of complex negotiations [ breaking ship ]. There might be multiple sellers, multiple brokers involved in the transactions, et cetera, and so forth. But you can usually bump by plus 20% if you put a human in there. On Loadshift, I think we're doing somewhere between 27% and 31%, I think, award rate at the moment. The primary thing holding back Loadshift award rate has been the fact that most of the transactions happen by audio that happen over the phone. And so we still, to this day, still hand out all the phone numbers to the drivers because historically, when we bought the Loadshift bulletin board business, it was the bulletin board you pay $69 a month and you kind of, if someone posted a job, you saw the phone number. So that business, traditionally, that's how it operated. We managed to transform that successfully into a marketplace model, have the payments flow through us. We cleaned up the trust and safety in the marketplace. There are a lot of cowboy operators, et cetera, people that are not licensed properly, not insured properly. We cleaned all of that up. We now have feedback. We have reviews. We have a whole compliance function that we provide as a layer on top. We provided more enhanced functionality, et cetera, and so forth. But we still hand out the phone numbers. With the in-app calling, which is live, you can do audio video calling, et cetera. It currently does not bridge to the PSTN or the packet switch telephone network. So it's -- if you've got the app installed on both sides or if you're on the desktop experience and you've got the app on side, we now connect. And very shortly, we've literally got in testing, we'll be connecting to the phone network. So it will be like an Uber where the driver can call you on your phone number rather than on the app. Once we have that, we think we will be a big leg up in the award rate just simply because we've just been easy, easy as it goes in terms of transforming the business model from a model primarily to a marketplace model. I personally think that the award rate on Loadshift should be higher than on Freelancer simply because if you've got an excavator and you're posting a load to move it from Kalgoorlie to [ Whoopu ] you have the excavator or you are looking at a price check because you want to buy it. They're basically the 2 scenarios. I personally believe that the ultimate peak award rate of Loadshift should be around 85%. So I think there's a significant way to go in terms of where we can lift that, but it should be significantly north of where it is now. We've been just very gentle. We obviously took it from 0% to somewhere between 27% and 31% now. The next leg up will happen with the PSTN calling because we've obviously got to control the marketplace a little bit better, and we've got to clamp down off siding and so forth, which we've really started to do on the Freelancer side recently and -- through the audio and so forth that we've deployed. So I think we've got a big leg up there just even on existing volumes we have right now, there's significant potential for very, very large revenue growth just on the volumes we have through looking at award rate. So it is actually a great question. There is a debate kind of how high we think we can get it to. But I think that -- if you're posting a load and you want to move something, the thing that you're posting load for exists and you either own it or you're about to own it or you do a price check on it. And as opposed to on Freelancer, somebody will wake up in the morning and they want to be an entrepreneur and they post a job and then realize how hard it is to actually start a business and they kind of flake out. So I personally think the award rate on Loadshift should be higher than Freelancer in the countries. Thanks for your question. Any other questions from the audience? Apologies again for starting a bit late. I'll ensure that next time we do this, it doesn't happen. But we do have an old Cisco machine here in the conference room and sometimes it's got a mind of its own, whether the cameras are working, et cetera and so forth. But we will endeavor to ensure that, that starts on time at 9:00 next time. I'll leave it open for another 30 seconds if someone has asked a question. Normally, there's a few people who are a bit shy who've got their microphone on mute that take a little bit of time to get one in. But otherwise, if there is nothing coming in, I will shut the call down. As always, you may direct questions to myself or any of the management team at any time. If you send an e-mail to matt@freelance.com, matt@freelance.com or investor@freelance.com, we'll be happy to arrange a one-on-one with any of the team. Okay. There is another question that just came in on? Operator: Yes. From [ Doug ]. Robert Barrie: Doug you are on audio. You are on mute. Unknown Analyst: I just want to know how each of the divisions have done year-to-date. Robert Barrie: Okay. You are off mute but I can't hear you. Maybe if you want to type your question. Operator: He did ask it in the chat as well. Robert Barrie: He did. Operator: How has each division performed in Jan and February compared to last year? Robert Barrie: Yes. So we've had a -- I don't want to preempt a little bit. I think Escrow and Loadshift have been the standouts in Jan and Freelancer is lagging a little bit, and that's traditionally, I think, what we've been kind of really focusing on, and that's continued into 2026. I do think however, pretty soon, we should have a good uplift in the Freelancer numbers. We've got some very, very enhanced functionality on, I think what I think is the core thing to focus on right now to maximize the lift in revenue, which is that bidding matching experience. And I know that we've had conversations before about that, Doug. I'll be happy to go through in a one-on-one the sorts of things we're doing there. But there's a massive focus on us to really bridge that uncanny valley where it's very easy to post a job on Freelancer. It's very easy to get the bids in. And there's a moment where you kind of get all these bids in and you kind of a bit confused about who's actually good, who can actually do my work, who's using an auto bidder, who's using ChatGPT to write their bids. And we've got some -- a whole suite of measures coming in to kind of bridge that gap because once you kind of get through that and you find a great freelancer, the work is done efficiently, it gets done cheaply. It's mind-blowing and very addictive. And we see that sort of in the long-term retention curves. Once you kind of cross that valley, you kind of stick, but we've got to cross that valley. And that valley, the chasm has been widening a little bit over the last few years through automation, right? So what's been happening over the last few years is there's been auto bidding software. You've got people generating ChatGPT generated bids using that auto bidding software. Sometimes those bids misrepresent the skills and experience of the freelancer and create a negative effect. Firstly, sometimes the bids come in too quickly and you don't think they actually wrote their brief. Secondly, you kind of go, well, these bids are too good to be true and then you browse their profiles and you realize they're not. So we know how to solve that problem. I think at least make major inroads into that problem. We literally have 7 things we have going up in the next 2 weeks, something like that, both on -- give you an idea, we are going to annotate the bids on what we think the bids should say, so give you a high signal to noise ratio there. We've got a classifier looking for the people who are misrepresenting their skills and we're penalizing them. We have LLM search. We have a prefiltering step where we're separating the people we think are likely to be able to do the job from the people who are not likely, and we're surfacing relevant reviews for items, et cetera, and so forth very, very quickly. And all the testing we've done, it's a huge step forward and it should test very, very, very positive. And then on top of that, we've got some stuff that we wanted to get out last year, and we struggled to get through the AB testing through, I think, 4 different attempts, but really smoothing out the whole sign-up experience, e-mail verification, phone verification, what have you. Down funnel, it tested very positive, plus 10% on the financial metrics up funnel, it was causing some issues. We split it into 2, and we should be able to chaperone that out in the next quarter. So we could see a big lift there. But it's basically in terms of the ranking is sort of Escrow, Loadshift, Freelancer in terms of performance this year, same as last year. Any other questions? Operator: Doug says, Thanks, Matt. You've preempted my other questions already. Robert Barrie: No problem. Okay. Well, thank you, everyone. As I said before, happy to arrange one-on-ones, please send it into either matt@freelance.com or investor@freelance.com and we'll arrange for either with myself or anyone with the management team, and you're welcome at any time to come talk to us physically or online. So thank you for your time, and apologies again for the late start today.
Katariina Hietaranta: Good morning, and welcome to Kamux's Q4 '25 Results Information Session. My name is Katariina Hietaranta. I'm Kamux's Head of Investor Relations. And I'm here with our CEO, Juha Kalliokoski; and CFO, Enel Sintonen, who will present to you the results. Please go ahead, Juha. Juha Kalliokoski: Good morning. Thank you, Katariina. Let's get started. Here is our agenda for presentation. As usual, we shall first take a brief look at the market, followed by a review by country. Enel will then dive deeper into the financial development, including our outlook for 2026. She will also present the dividend proposal and the extension in our share buyback program that was announced this morning. As usual, we will take the questions at the end. 2025 was a tough year for Kamux, and obviously, we are not satisfied with the results. Last year was the first year in Kamux's 22 years of history that the volumes and revenue decreased. The reason behind the 13% revenue decrease is a combination of volumes and average price. While volumes were stable in Sweden and Germany, they declined by 10% in Finland. The rest of the revenue decrease came from the lower average price. Despite the decrease in gross profit, gross margin improved to 8.7%. Margins were better in Finland and Sweden. During this market, we have wanted to ensure that the keys are in our own hands, therefore, focusing on strong cash flow. We have seen that many in the industry have had issues with their cash positions. We focused heavily on inventory turnover and our inventories decreased by 23%, which is 10% more than the revenue decrease. At the moment, we are in a position to start increasing our inventory again towards the spring and summer season. Revenue from the integrated services was EUR 13.3 million with Kamux Plus at the previous year level. I'm very happy about the customer satisfaction improved throughout the year. Our long-term target is 60 and we beat that in the fourth quarter with NPS at 65. At the year end, NPS was as high as 66. Despite the disappointing volume development, we maintained our position as the market leader in Finland, selling the most used cars, both in the fourth quarter and over the whole year. New car markets were subdued in Kamux's operating countries last year, affecting the inflow of trading cars. We can already see that the car park of 1 to 5 years old cars is decreasing in all our operating countries, which means even tougher purchasing market. This may lead to higher prices of used cars also. There were no major changes to our showroom network during 2025. In Finland, our showrooms in Jyvaskyla moved to new purpose-built premises during the last quarter. Earlier in the year, we closed the showrooms in Mantsala and Savonlinna. There were no changes in network in Sweden. We have -- where we had closed altogether 6 showrooms in 2024. In Germany, we opened a new showroom in Schwerin, near Lubeck and Rostock in the Northeastern part of Germany. To improve our efficiency in the capital region in Finland, we have decided to close 2 showrooms. The Malmi showroom closes by end of February and Herttoniemi by end of March. The cars and most of the sellers will move to other showrooms in the capital area. The Seinajoki showroom will relocate by end of March to better premises. Moving to comments per country. In Finland, the competition continued tight. Consumer continued to prefer affordable cars, which were not so easy to source, as many dealers were after them. The volume development was disappointing, but the good news is that despite the decline, we maintained our position as the market leader in terms of number of cars sold. Revenue was impacted by volumes and lower average prices. Volumes were down by 10%, and the rest was due to lower average price. Gross margin developed positively for the third quarter in a row, although margin per car was slightly down. Adjusted operating profit decreased mainly due to volumes. Insurance penetration increased to 66%. The decrease in Kamux Plus penetration rate is largely explained by the lower average prices of cars sold. Our showroom in Jyvaskyla moved to new premises during the quarter. This is one of the few premises that we own ourselves. Customer satisfaction improved further and was 65 for Q4. On a full year basis, NPS was 62. And then we will move to Sweden. In Sweden, we have made good progress into the right direction during '25, but obviously, there is still a lot of work to do. The market did not help us in Q4, and our volumes stayed at the previous year level. Revenue decreased as the average price of cars was lower than in the previous year, and fewer cars were exported to Finland. It's also good to keep in mind when thinking about the full year volumes, that in the first half of '24, we had 6 showrooms more than in 2025. 3 showrooms were closed at the end of July '24 and another 3 by end of December '24. We took active inventory management measures during the quarter, which impacted the margin per car. Despite this, gross margin continued to improve, but gross profit decreased due to lower average price. Kamux Plus penetration rates have increased quite nicely and the finance and insurance penetrations rates have remained on a good level. Customer satisfaction has developed well also in Sweden, and there is a significant improvement in NPS. It was 56 in Q4 '24. And now in Q4 '25, it was already 64. I'm also happy to say we announced the appointment of Niklas Eriksson as the new MD of Kamux Sweden yesterday evening. He will begin in the MD role in mid-April, but joins the company a little bit earlier. In Germany, our challenges continued. In Q4, did a lot of inventory cleaning by lowering prices and selling cars also to the other dealers. As a result, the number of sold cars grew compared to Q4 '24. This was at the cost of the margin, leading to a weaker gross profit and gross margin and also with an impact on financing services. Adjusted EBIT was also affected. The good news regarding Germany is that also in there, our customer satisfaction has improved. NPS for the quarter was as high as 70, and even the full year 62. And now I hand over to Enel for more details on the figures. Enel Sintonen: Thank you, Juha. Summarizing our financial performance in the quarter. Sold volumes and revenue declined. And despite slowing decline in Q4, current volumes do not meet our ambition and we continue to work to turn it. Gross margin improved for the third consecutive quarter. Looking at financial performance per country. Finland and Sweden are moving step by step to the right direction. In Germany, we continue to face challenges, noted also by Juha earlier. And we work intensively and with discipline to turn it to the right direction. In response to headwinds in sold volumes, we have prioritized the right size and health of inventory. Inventory is adjusted to EUR 100 million level, unlocking a significant amount of cash. Inventory turnover has improved. Right steps towards capital efficiency have been done and will continue. Balance sheet ratios are at healthy level, net debt is at historically low level and equity ratio is 53.5%. And as a summary, at the time, we continue to have headwinds in volumes, we ensured right size and health of inventory, healthy financial and liquidity position. Here are our financial ratios. Revenue declined by 13 percentage points and key drivers were underlined earlier. Gross margin was 8.7% and improved slightly. Driven by lower volumes, operating result was negative. Items affecting comparability included termination of CEO contract costs. Adjusting operating result was negative. Inventory turnover, that we talk a lot in our business, has improved and we continued activities to gain further improvements in this area. Equity ratio has improved and is at over 50% level, as said earlier as well. After this year, volume is our key area to improve. We are looking our financial position. We are better equipped to go for volumes. Our inventory is at the right size and fit. Here we can see trend in volumes. Volumes declined in the quarter, but less than in recent quarters, mostly due to profitability focus and with impact from lower showroom network. In Q2, we sold about 3,800 cars less compared to the previous year same time. In Q3, about 2,800 cars less. And in Q4, we sold about 1,000 cars less than in previous year same quarter. So the decline has somewhat slowed down. We can see revenue and adjusted operating results trend here. Looking recent 4 quarters, adjusted operating profit trend was to the right direction in Q2 and Q3. However, low volumes impacted heavily to Q4 results. At the end of the fourth quarter, our cash position was EUR 18.5 million. In Q4, we paid back EUR 12 million of revolving credit facilities that can be withdrawn later when needed. Cash position and unused credit facilities gives us a good position to build up inventory and volumes. Our integrated services revenue development was hit by lower volumes. We are not satisfied with this trend, even though the share of integrated services has slightly increased to total revenue. And here is a visual representation on how our net working capital developed. We can see EUR 30.8 million reduction in net working capital, driven by decline in inventory. Our inventory is in a better fit from both structural and price points perspective. Outlook for 2026. Kamux expects its adjusted operating profit for 2026 to increase from the previous year. And dividend distribution. Based on the dividend policy, Kamux aims for a dividend payout of at least 25% of the profit for the financial year. This year, the result has been negative. However, the Board of Directors proposes dividend of EUR 0.05 per share to be distributed for the year 2025. In this morning, we have announced also an extension to our share buyback program. The program that was initially launched in November, has progressed well and Board of Directors decided to increase the number of shares to be bought. The new totals are: acquire at maximum 2 million shares, and this means extension of 1 million shares compared to initial launch. The maximum amount to be used for the repurchase of shares is EUR 4.5 million. The program will end April 16 at the latest. And back to you, Juha. Juha Kalliokoski: Thank you, Enel. So a few words about long-term targets and strategy. In terms of our long-term targets, we have progressed well in customer satisfaction, where we have already achieved our long-term target of 60. The group level NPS for Q4 was 65. Our task is to keep it there. We have also progressed well in terms of employee satisfaction in the last 6 months, and the eNPS has risen to 15. This is obviously still below our target, but an important improvement nevertheless. On the financial side, as we have shown earlier today, we are not where we want to be. However, we are still standing by our long-term targets. Here is our current management team, to which there will unfortunately be some changes this spring, as Johan and Joanna will be leaving us. We are progressing well with their replacements, however, and we have just announced that Niklas Eriksson will join us in April as Kamux Sweden's new Managing Director. This is a reminder of our focus areas in improving productivity. During Q4, we worked especially hard on managing our inventory in preparation for 2026 and ensuring that we have a solid cash position. There is still a lot to do and we continue to work on these on daily basis. Our strategy remains unchanged. In 2025, we made good progress in advancing customer satisfaction in all our operating countries, as seen in our NPS results. The group's NPS improved from 55 to 65. We have also progressed in improving our operational efficiency, but there is still a lot to do. 2026 is the last year of this current strategy period and we will review our strategy during the year. Our vision also remains unchanged, to become the number one used car retailer in Europe. Katariina Hietaranta: Thank you, Juha. Thank you, Enel. It is now time for questions. And we will begin by questions from the teleconference, if there are any. Operator: [Operator Instructions] The next question comes from Joonas Hayha from OP. Joonas Häyhä: It's Joonas Hayha from OP. So a couple of questions, starting from the inventory actions in Q4 that you did. Could you provide some additional color on what was the reason? Why did you need to clear inventory? Was it too low turnover or perhaps unsuccessful purchases or what? And how are you expecting metal margins to behave going forward? Juha Kalliokoski: When you speak of inventories, it's always so important to remember about the inventory turnover. If the inventory turnover is too low, it means that you are getting all the time old stock, which means losses. And that's why we focused last year to turning the inventory in just the right level, but also that we can achieve our target, the inventory turnover. And as I mentioned that now we are in a situation that we are possible to increase our inventories towards the summer and spring season. And it's easier to manage lower inventory compared to EUR 30 million higher inventory. And as we saw Q1 '25, what was the impact over there. Joonas Häyhä: Okay. And then regarding operating expenses, those seem to have increased somewhat in Sweden and Germany in Q4. Was there anything specific behind those developments? And can you elaborate the drivers a little bit? Enel Sintonen: Yes. So I would say that we had very operational Q4 in that sense. So operating costs were slightly bigger in Sweden and Germany. I would say that nothing special in there. Joonas Häyhä: Okay. And then can you update us on your store network plans for each of the countries? You talked a little bit about the plans in Finland, but what about Sweden and Germany? Juha Kalliokoski: If you start from Sweden, as we said after Q3 or Q3 presentation that we are -- we have 17 stores in Sweden and we are happy about that. But of course, it can't -- it doesn't mean that we don't change the places where we are or the buildings where we are. And there is possible to use 2,000 cars in our places what we have. It means that we pay rents 100%, but we use capacity only 60%. And we are in the same situation in Germany that we have stores there, and we are not opening the new stores for both of those countries before we are making a profit in both countries. And as I mentioned earlier, it means that we must turn the inventory in the right level and then we can expand our inventories higher. Katariina Hietaranta: Thank you, Joonas. There seems to be other questions on teleconference as well. Operator: The next question comes from Rauli Juva from Inderes. Rauli Juva: Yes, Rauli from Inderes here. Just a question on your outlook, if you can a bit elaborate more kind of the drivers behind the earnings growth expectation and the volume development and the margin development and what are the measures that will enable those? Enel Sintonen: What a difficult question, difficult to answer. So as said by Juha, our long-term target remains the same, 100,000 cars. What we have seen in 2025, both operating environment, but also our own operations have seen some challenges. So when looking ahead, we have made a number of steps to improve our own operational daily routines, also putting in place better inventory, inventory in better fit in better structure. So this is why we see that we improve in profitability. However, as seen, it has been tough. And we are -- it also sees in our outlook that we have given. Juha Kalliokoski: And maybe if I continue shortly. If you think about the building, you must first -- if there is something broken, you must first building the ground of the house. And we did that in last year in many ways. And now we think that we are better positioned to start to also grow. Rauli Juva: All right. All right. Yes, so it's mainly kind of based in your own, let's say, processes or so, so no big changes expected in the markets or perhaps in your market share on the cost side as such? Juha Kalliokoski: Of course, we are taking -- as we mentioned about the showroom network in Finland, we are taking off about the property costs a little bit and share the costs and people to the newer stores. And also, we don't believe a big change in the consumer confidence in this year. Of course, we heard something about the positive feedback from the market, but we don't calculate about the big number of that. Katariina Hietaranta: That was all questions from the teleconference, if I'm correct. Very good. Before we take questions here from the audience, there's a couple sort of related but perhaps expanding a little bit, particularly on the outlook via the chat. So questioning, again, the volume assumptions within the outlook. If there's any sort of ideas behind that in terms of unit number or year-on-year growth range? And whether the profit improvement is thought to be more volume-driven or gross margin expansion? And maybe also related to that, to the guidance is that are there some uncertainties that could prevent us from achieving it? And how should that be interpreted? Enel Sintonen: So when looking at the -- I will start with the inventory level we entered the year. So we have a much lower inventory level compared to last year when starting there. And this was also our target to enter the market with this level when we -- and this is the base where we start. Our thinking is that we build up volumes and inventory accordingly, but we do it very -- in a conscious way. So no quick fix in volumes in that sense. So we have been quite, how to say, conscious and cautious with volumes in our thinking behind the outlook. What we still think is what is the right balance between profitability and volumes. We still aim on -- continue to aim on profitable deals, healthy business. So we expect margins to remain or improve in that sense. Anything to add, Juha? Juha Kalliokoski: That was a good answer. Katariina Hietaranta: Okay. Thank you. I'll take a couple of more questions here from the chat. And there's 2 that I'll try to combine. They are related to the purchasing organization. There's a question that the purchasing organization, is it partly outsourced or 100% in your own hands and with reference to the purchase of webcasts. And then also asking how are the sourcing channels evolving today and whether we expect to have an impact of the sourcing channels in '26? Juha Kalliokoski: The purchase side and sourcing side, it's all inside the company, our own employees. You can't outsource that. We have the purchase organizations in all countries with purchase just the cars what needed in the Finnish market, in the Swedish market, in the German market. And then we have the cooperate between the countries and they have the meetings and try to share about the packages, what are the market can we share those or are we interested in Sweden, cars which are in Germany and so on. And when we speak about the channels, it depends a lot of the market. If we start about Germany, it's very much business-to-business how we purchase the cars. And in Sweden, it's totally different way. Most of the cars, what we purchased, we purchased from the private customers or business-to-consumer business and try to increase about trading cars, and we are improving over there, and it's important. And Finland, it's the highest rates about the trading cars, over 50%. And we buy locally from the private customers, but also from business-to-business inside the country, but all over the Europe also. Katariina Hietaranta: We've been speaking quite a bit about the car park development in countries and particularly in Finland and I believe also in Sweden, suggesting that due to the new car market being so slow, so the number of available used cars is getting lower, which means that particularly to Sweden and Finland, there needs to be more imports. Anything you'd like to comment on that? Juha Kalliokoski: Yes. In Finland, it means more imported cars. In Sweden, it means that, of course, the crown is now stronger compared to a year back or 2 years back. It means that it's not so easy to export cars from Sweden or import from Sweden to Finland. And that's why in the Swedish car park, it's not so much out of Sweden. But many, many, many years back, there is 100,000 cars per year what moved from Sweden to other European countries. Katariina Hietaranta: Okay. One more question from the chat and then we'll move to questions from the audience. How far are you from your normal sales levels -- normal sales level? And how much of the gap is due to the weak economy versus increased competition? Juha Kalliokoski: How far away we are, of course, we cannot set our budgets, but as we said earlier, it's very important to increase hand by hand the inventory turnover, what means to sales and the inventory levels. If you do so that you increase the inventory, of course, it's very short-term good impact. But after the 3 months, there is coming a lot of bad things on the table. And that's why we are very carefully about increasing the inventories and the sales speed coming with the inventory increases. Katariina Hietaranta: Very good. Thank you. Any questions from the audience here? Maria, please, you get the mic, just a second. Maria Wikstrom: Yes. Maria Wikstrom from SEB. I had 3 questions. I'll take them one by one. I'd like to start asking like who is winning share given that, I mean, your number of cars in Finland you sold was down 10%. The official statistics show about a percentage drop in the Finnish used car volumes. So who is currently gaining share? Juha Kalliokoski: If you look about the last year numbers, there is both Rinta-Jouppi, K-Auto and Bilar99. Those are the strongest companies which grew last year. Maria Wikstrom: And if I may expand a little bit here that, I mean, you probably have analyzed the situation, I mean, with the Board. What do you think has been like the winning recipe then in 2025? Juha Kalliokoski: Of course, if you open -- if you start somewhere and you open new stores and new locations, hire more people and increase the inventory, it means automatically -- not automatically, but it's easy to grow. But if you are the market leader and you have tough situations as we had Q4 '24, Q1 '25, then you must take -- make a choose where you want to win. And we -- as Enel mentioned, that we made decisions that we are taking a margin, healthy inventory, good cash positions. Maria Wikstrom: There have also been some, I mean, news articles about like Finnish customs having an investigation on certain car dealers for their practices of importing cars and I guess, I mean, paying for the VAT. Are you part of these investigations? Katariina Hietaranta: Maybe I'll take this one. So we haven't been contacted by authorities. Of course, we look at the news and follow the situation, but no contact -- they have not contacted us on that. Maria Wikstrom: And then finally, on Sweden. So what kind of mandate you have given -- I think his name was Niklas, the new country Head of Sweden. So is that more like a growth or profitability mandate that you gave him when he's taking the helm in Sweden? Juha Kalliokoski: I would say that in Sweden we need the growth that you can achieve the profit also. It's not so -- now in Sweden that we only need the margin. We need both of the margin, but we need also the growth. It's hand by hand. Maria Wikstrom: And if -- one follow-up there. So would that be more, I mean, growing the number of cars in the inventory? Or have you given him a possibility to start increasing the number of locations as well? Juha Kalliokoski: As I said earlier, we don't open -- and we were very clear about Niklas that we said we don't open any store before we are taking place -- use all the places what we have in our Swedish stores and store networks. And it means that we can grow our inventory, but not open any stores before we are profitable there. Katariina Hietaranta: Any further questions? Unknown Analyst: [ Jussi Koskinen ] Kamux's story was competitive advantages through or based on scale, financial services, database management and so on. So what has happened to those competitive advantages you told me to us a couple of years back? Have they disappeared? And can we somehow enhance those or get some new competitive advantages? Enel Sintonen: The areas that you mentioned are still there. The competition is more tough on those because when you go first with the competitive advantages, your competitors are very eager to copy those. So what we are -- have started already is our strategy update process. We look into those areas very carefully and our strategy overall and also competitive advantages as part of it. Juha Kalliokoski: If I continue shortly, maybe also the size of the store network, especially in Finland and Sweden, those are still in our own hands. We have our own tailor-made ERP CRM system, Kamux management system. And we know many competitors which works in many countries, and they have several different systems what they use, and it's quite tough. And of course, the brand. We are still 22 years old company and the best known in -- especially in Finland. Unknown Analyst: Is it possible to execute those old advantages more efficiently or find some new advantages? Juha Kalliokoski: We believe that we can find also some new when we are updating our strategy in this year. And also, we need strength about those advantages what we have. Unknown Analyst: I'm not sure if I remember right, but at some point of time, there was discussion that you would like to have more stores in capital area, and now you are closing 2 of those. So has the situation somehow changed or? Juha Kalliokoski: Yes. We look about how many cars we can set or put in our stores in the capital region. And now we had so many places and the sales were not as good as needed and we didn't have so many cars what are possible. And it's not okay in a financial perspective to use the place where we can -- where we couldn't make a good business. Katariina Hietaranta: Then we have questions from Davit, please. Davit Kantola: It's Davit Kantola from eQ. I have a question on the inventory cleaning or decrease you did in Q4. Could you elaborate, was it done during the quarter evenly or was it at the beginning or at the end of that? Juha Kalliokoski: I would say that we made systematic work the whole quarter. And the level where we are at the end of the year was very near about the target what we set when the quarter started. Katariina Hietaranta: Any further questions? Sorry, Maria, I was typing, replying. Maria Wikstrom: No worries. Yes, I have a few more follow-up questions, which I mean, today, when I walked here, the sun is shining and that typically means that the high season is ahead of us. And given your inventories were quite low at the end of Q4, so have you been able to source attractive used cars, I mean, ahead of the high season or are the next explanation for lower volumes being that, I mean, there were everybody in the market sourcing for attractive used cars? Juha Kalliokoski: As I mentioned, we are in a situation that we can start to grow our inventory and we started it. Maria Wikstrom: And then I think you mentioned in your CEO notes that one of the like weak points in '25 was high employee turnover. And I guess, I mean, that's probably following the lower used cars -- number of used cars sold, which then I mean reduced the compensation for the sales employees. So how you are going to tackle this in 2026? And is it possible to tackle it with the current model? Juha Kalliokoski: Yes. We started -- you can continue after me. We started the program for the leaders, I mean, store managers and the area managers start of this year to give more tools for them to handle the purchasers and the sellers and take better care of the employees. And as we see that we are on the right track when we think about the eNPS, what happened last year, the second half of the year, but we have still a lot to do. And of course, it's also how much the sellers can earn, how much they can sell, what is the margin of the cars. And it's one reason, of course. Maria Wikstrom: And I think, I mean, given that I followed you guys, I mean, quite a long time, and I think we talked about the quality of data that you have in your database. And I mean, now the AI is a big theme everywhere and I would assume that, I mean, with the AI tools, I mean, the kind of information that you previously perhaps have held by yourself is easier to accessible to other players as well. So how would you see the impact of an AI to your business? Enel Sintonen: This is something we discussed about in our strategy work as well. But of course, we have discussed many months, at least since I have been here. We see in many areas, of course, first, you mentioned that maybe competitors who doesn't have their own database have an advantage. But at the same time, we see it as an advantage as well because we own the data that we have and we can do a lot with that with IA. Also, of course, we see customer journey -- very, very traditional areas, customer journey, inventory management. It's -- the development is so fast in IA, and we also are in the journey with the development. So this is something we really work on and continue in 2026 and particularly within our strategy work. Katariina Hietaranta: Any further questions from the audience? There's at least one more via the chat. So we'll take that. How many cars do you have to return for repairs after you sell them? And how does that affect your bottom line? So after costs. Juha Kalliokoski: I would say that 70% of the costs coming when we speak about the repair cost or maintenance costs coming before the sales. It means that 25% to 30% coming after the sales. And of course, we have the ticket system. We see all the tickets. How many claims we have, how fast we handle those and what are the cost of those. Maybe that's the answer. Katariina Hietaranta: Any further questions? If not, then we thank the audience online and the audience here at Flik Studio and wish everyone a good day. Thank you. Juha Kalliokoski: Thank you very much. Have a nice day.
Operator: Thank you for standing by, and welcome to the FINEOS Corporation Holdings Plc Full-Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Michael Kelly, CEO. Please go ahead. Michael Kelly: Hello, and welcome, everybody, to the FINEOS' FY '25 Results Presentation. I'm joined here today by our CFO, Ian Lynagh. And between the 2 of us, we're going to give you an overview of the results presentation that we published on the ASX this morning. So, I'll kick on to Slide 2. And this slide really covers off our playbook, mission, vision and purpose. And it's what gives FINEOS the real clarity and alignment within our team in terms of our focus on life accident and health and in terms of our vision, in terms of protecting people from illness, injury and loss and making that accessible to everybody. And of course, our purpose, working with our carriers and employers to help them care for the people that they serve through the delivery of superior insurance technology. And more and more, we see in the life accident and health world, a move from just being insurance and protection and giving payments to more caring in terms of return to work and helping people recover from illness, but also prevention and trying to keep people healthy before the kind of the situation where they need protection even eventuates. So, we're seeing more and more of that trend of prevention in the marketplace from our own carriers. And indeed, we see that as a very positive situation. I'll turn now to Slide 3 and cover the highlights for FINEOS last year. So, subscription revenues have grown to EUR 75.6 million, and that's up 8.2% on FY '24, representing 54.6% of our total revenues. And our ARR coming into this year was EUR 78.3 million at the 31st of December, up 10% from the EUR 71.2 million on FY '24. And then total revenues was up 3.9% on FY '24, total revenue of EUR 138.4 million. But on a constant currency basis, it's up 6.3%, and it would have been EUR 141.7 million if we had reported on a constant currency basis. So, slightly above the midpoint of our guidance that we gave last year. And the gross profit of EUR 105 million. Again, gross margin, 76.2%, which is really healthy. Gross profit is up 5% on FY '24, and the gross margin is up from 75.4%. And really, we're operating at a really good gross margin level, and that's part of our target for next year, which I'll talk about at the end. Our EBITDA was EUR 30.4 million, and the EBITDA margin was 21.9%, again, representing a healthy jump of 50% up on FY '24 and the margin being up 15.2% in FY '24. And our cash position at the end of the year was EUR 27.8 million, and that was up again by over EUR 8 million. Positive free cash flow within that was EUR 6.4 million. And obviously, there's no debt in this company as well. On the EUR 6.4 million, there was an extra cash received from share options that had converted as well towards the end of last year. So, added to the EUR 6.4 million is the EUR 1.6 million in the note at the end of the page there, which brings us up to the EUR 27.8 million. Turning to the next slide, Slide 4. We're looking at the operational highlights. And of course, the free cash flow is something we promised the market in November 2024 when Ian and I came down and we did a roadshow. And we're delighted we've come through with that and a very healthy number it is, too. But we're also thrilled that we've hit a net profit as well. And we didn't promise that to the market in FY '25, but we're certainly very, very pleased with it. And really, what we're seeing in our business is we're demonstrating higher margins from the cost efficiencies and the growth that we're generating out of the business. So overall, very pleasing in terms of this business coming back into free cash flow and profitability as we move forward. Last year, we won 4 new name North American carriers, licensing the FINEOS AdminSuite for claims and Absence. I just want to stop here and point out that we have rebranded our products because as of 25.4 release of FINEOS, we actually released the full AdminSuite to all of our clients in the cloud. However, most of them are still only using claims and Absence. So, what we decided to do to make sure that our clients fully understood that underneath the water, you might say, even though they're using claims and Absence today, but underneath the covers, they have the full access to the full AdminSuite when they license the product, which is phenomenal really to be able to give them that opportunity with no pre-integrated or no big SI project that they can just switch on extra components of FINEOS. And their users and their IT people are seeing a multiplier effect out of that. So, we won 4 new names last year, albeit a little bit later than we would have liked. And certainly, the conservative nature of our industry and just what has been going on in the markets over the last 12 months or so, the deals were a little bit slower coming in. But again, we're delighted. And every deal we win is a very long-term contract. So, we signed our clients up for 5 years, and we end up doing business into the long term and actually expanding and cross-selling across the customer base. So, there's really growing evidence that FINEOS is market-leading in this employee benefit space. Group voluntary and Absence is our real key focus, and that's why we're winning the deals. Two existing U.S. clients also contracted to upgrade from the on-premise version, the old version of FINEOS Claims to the FINEOS AdminSuite for claims. And one of those was a top 10 group carrier. So again, a sizable deal for us in terms of the uplift and the momentum on both of those is going really, really well. So again, we're feeling our carriers really leaning in and increasing their commitments to us. And really, what we're doing is replacing very old infrastructure that they have with a modern core platform, cloud native, embedded AI and so on. And I'll talk about that as I go through. So, we're seeing that significant momentum growing into a lot of activity in terms of go-lives, upgrades and so on within our services and our product groups. And all of these things are moving much quicker for us as we drive the efficiency in our business and really deliver the benefits of that to our clients. So, we've also built the AI -- sorry, the SI partnerships. And we're increasingly seeing the SIs now coming up to speed and actually delivering customer success with us -- with our customers. So, you probably will see some publicity over the next few months where we'll try and bring our SIs into some of the [ PEA that ] audit we do on customer success with FINEOS and so on. So, that's going nicely. And again, we're looking to our SIs in North America now to give us the introductions and help us build relationships with our SI partners in other markets. So again, we've built that kind of confidence with our SIs, and they're very happy to lean in and work with us. You would have seen recently an announcement with PwC, where we work with EY, we work with Capgemini, and we work with other SIs as well, Deloitte's and so on. So, all of this is coming to fruition in terms of us moving more to becoming a product company. And then we're gaining a real multiplier effect from embedding AI in our product. So, we have a kind of a head start on anyone in terms of people in the industry doing proof-of-concepts and stuff like that with AI. We have a real system with a huge amount of data underneath it, which is kept real time. It's all compliant, it's secure. And therefore, when we put our agents to work on FINEOS, we're seeing the results very quickly. And our carriers don't have to spend any additional time and money looking around the corners or trying to build stuff themselves. So more and more, we feel that the embedded AI in FINEOS is going to help carriers kind of relax and go forward. But we are in a very regulated environment, and our carriers are quite concerned about AI as well in terms of not automating decisions and stuff that need to be taken by humans. And maybe causing any issues with the regulators or indeed with their clients. So, AI is definitely something that we are seeing as a huge asset for FINEOS, and we're going to basically grow the business off the back of that as we keep embedding. On the next slide, Slide 5, this one covers our people. And I won't go through this one too much, except to say that high numbers of utilization, very high employee retention rates and we're down to 1,009 people at the moment. And 16.9% of those are actually contracted in. So, we've kept flex in our workforce, which means we can cut back on our workforce or grow our workforce depending on how things go and so on. But we are in a very strong position with contractors and with partners who supply resources to us, and they've skilled up on FINEOS and are very dedicated to us. So, a good story there in terms of the people side. Slide 6 is the revenue breakdown. And again, no surprise really that North America is our biggest region. And indeed, 80% of our revenues are coming out of North America. We've had some nice wins at the end of the year, and our customers are increasingly doing more business with us in that region. However, we are very keen to look at other regions and to start the work around building ourselves up in the other regions. The EMEA region, we did lose a legacy customer, a smallish customer by U.S. standards, but still we lost that. So the revenue went down in the U.K. But again, that customer was non-strategic to us. They've been around for a long, long time with us. And services revenues, we're not aiming for a big growth in our services revenues. We're really aiming for the growth on the product side. So, they've kind of leveled off as well. So, that kind of concludes my section for the moment. I'm going to hand over to Ian, who will cover off the financial slides with you. Thank you. Ian Lynagh: Thank you, Michael, and welcome, everybody, to this full-year briefing of FINEOS. And what I'll do now is give you a bit more insight into the financial performance of the company. So if we move now to Page 8. With respect to the revenues, obviously, as Michael just said that our focus is very much on that product revenue subscription fees, growing that ARR. We've signaled to the market repeatedly over the last few years that we see services remaining reasonably flat. Didn't expect to be quite as flat as that EUR 62.2 million versus EUR 62.2 million. So, spot on the same. But the subscription revenue, what's driving that is those 4 new customers. We signed up 2 of them at the end of Q2. We signed up another 2 at the end of Q4. So, they didn't fully contribute to the growth, but they were a factor in terms of that growth. The 2 migrations, one of them was quite significant, as Michael said as well. That's going from on-premise to the cloud. And then we had the traditional upsell with customers, including indexation of pricing and some have moved up a level in terms of what they're consuming for us. So, we're very pleased with that growth in the subscription fee, which in turn gave us an ARR growth of 10%, which is very, very positive. As stated before, the initial license fee, you can see a year-on-year reduction in that. Initial license fees pertain singularly to our on-premise customers. So any time they require new licenses, then we charge a fee for that. But we have less and less of them. We have less and less activity there. So, you can see consequently the revenue going down. And as we move forward into FY '26, I don't see it getting any higher than that. I see it going down, snitching again, but it is progressively declining. So, that's the revenue side. Cost of sales, we've seen an improvement in that compared to FY '24. We did have some software costs increases. And we also had to make a provision for an estimated software spend. And just to explain what that actually means because that actually also impacted the NPAT number we gave within this presentation. And that's with our main platform provider, Amazon AWS. Back in December 2022, we signed a 5-year contract with them with a committed spend. Any of you that are familiar with the way they contract, the more you commit to, the bigger the discount you get. We made a commitment. But due to the efficiencies we've been driving over the last few years, we're spending less than that was originally anticipated. So, that's meant that when you look at the full duration of the spend, it means we're probably going to spend less in the 5 years than we originally estimated. So, we had to make a provision for that in the accounts, but the plan is we go back and renegotiate with Amazon AWS for another 5 years, sometime during the course of this year. But to comply with accounting practices, we just had to put that provision in. The full size of that provision is about EUR 2.7 million. And of that EUR 1.0 million is allocated against cost of sales. So really, that's what's impacted the cost being there. In terms of overall operating expense, our initiatives around driving efficiency, around labor being in lower-cost regions, looking at better automation through the application of AI as well as just getting economies of scale has seen the ongoing OpEx going down. So, you see a good positive outcome there year-on-year in terms of approximately EUR 5 million reduction, 6.3% reduction. And then EBITDA, very positive move on that, over EUR 10 million increase compared to the previous year. That brings us up to a margin of 21.9%. And as you know, we've committed to the market to achieve 25% in FY '27. So, we're well on track. If you go back to FY '23, that was around 9% last year, 15.2%, 21.9%. So, you can see we're really focused on trying to drive those numbers through. And as Michael said, ultimately, we've got a net profit after tax of EUR 1 million. We never signaled that to the market. We weren't targeting that directly. We were very, very focused on achieving the positive free cash flow. But needless to say, we're delighted with that and we only see that trajectory improving year-on-year. And that's a massive turnaround, obviously, from a EUR 5.8 million loss that we incurred in FY '24. Moving on to the next page. Another commitment that we made was to keep on increasing that annual subscription fee. You can see the CAGR now is at 12.3%. As I mentioned in the previous slide, we've increased our ARR by 10%. So, that's the key figure that we're looking at as well. And then, of course, we've got the big increase in terms of subscription fees. So, we increased the percentage of that. And to achieve the targets that we're talking about in '27 and '29, we need to keep on increasing that percentage. So again, we're extremely focused on that, whereas we're not as focused on revenue in terms of generating that. That's not because we don't want service revenues. It's because we want to work with the Sis. They will invoice directly. The more sophisticated we make the product, the less services are required for some of our very large customers who are going to generate even larger recurring revenue for us moving forward. They want to take on self-service capabilities rather than get the service from FINEOS for obvious reasons in terms of their cost management. So, all those things impact service fees, but for the right reasons. We had signaled back in November 2024, that kind of trajectory, that kind of scissor movement where revenues will go up and costs go down, and we flagged that we're going to see that crossing over. We're almost a touching point there in FY '24, but you can see the crossover in FY '25. And obviously, that's why we're able to relay a profit as well as a positive free cash flow situation. So, we expect to see that margin continue to increase. That trajectory is not going the opposite direction moving forward. It's going to keep going that direction. If we move on then to Slide 10, just looking at the OpEx, which you saw the headline, up above. If you look at all the line items there, excluding research and development, which I'll come back to in a moment, we can see a decrease in costs. Common theme is with respect to the headcount and where they are actually located. But there are some other elements there like on the G&A, we also see FX movement. There was a share option charge increasing it or decreasing the cost, but that was offset by an increase in software costs. And we had to get more software in the organization to run our business. And some restructuring costs that we incurred is another theme you've seen there, which is one of the consequences of moving some of the workforce to lower-cost regions. Our overall headcount year-on-year is reasonably consistent. It's just the work is getting done in different regions without degrading the quality of the work. That's been really important to us. So as we've said before, we've had overlap of resources to make sure handovers work pretty well. We have a high demand environment where customers expect an excellent service and excellent outcome. So, we've got to make sure we've been managing that very tightly, and we have. With respect to R&D, we've seen some higher software costs, which includes the provision. So, there's another EUR 0.8 million put against that in terms of that provision that I mentioned earlier on. Slightly lower capitalized R&D costs but only slightly lower, and we had restructuring costs. Most of the restructuring that we did in FY '25 related to our R&D teams. We have resources in higher cost regions, and we decided that we would look to relocate those roles into lower-cost regions. So consequently, the restructuring cost was also higher with respect to the R&D team. We, as always, reserve the right, and we will signal if events dictate that more investment is required in R&D. We are a technology company, then we will look to do that. But still in all, if we move on to the next slide, what you can see is that R&D as a proportion, and this excludes overhead costs. This is people costs. R&D as a percentage of the overall revenue is continuing to improve. We've signaled that in FY '27, we're looking to get that down to 30%. So, you can see the trajectory there is moving in the right direction. Last year was at 37% -- sorry, the year before last at 37%. And last year was at 34.7%. So, we see that continuing to improve and getting more into industry norms in terms of that percentage. We're still going to invest heavily in R&D. And as we've signaled before, we will continue to invest in the AdminSuite. There's always capabilities customers will require, particularly those customers that need to move off legacy may require some extra functionality to enable the FINEOS system to take on that business, which makes perfect sense for us in order to increase the annuity fee. But progressively, we're investing more in AI and digital capabilities and capabilities to enable better self-service and better onboarding onto our product set. So it's really exciting that we can actually switch that focus to allow customers to move on to our product set in a more effective way. So, I don't expect to decrease the amount of money we're spending in R&D, but certainly as a percentage of revenue will decrease as we've signaled and as has been evidenced here. We move on now to Slide 12. I don't want to dwell too much into the balance sheet. The next slide is going to talk about cash, and I'll talk about cash there. So, development expenditure, that's really the capitalized R&D spend is a little bit ahead of amortization. We expect that to balance out maybe in '27. It will be similar figures. There's a bit of catch-up taking place there. We've seen a slight increase as well in trade accruals, but that's really due to an increase in payroll, share option exercise gains, et cetera, and a little increase in deferred revenue, again, because of the fact that we're signing up subscription fees. So, we have some new name customers signed up towards the end of last year. So, they will be put in there along with other provisions. And there is a provision, EUR 2.4 million in relation to the software spend -- apologies, so EUR 2.7 million earlier on, I believe, it's EUR 2.4 million. So, moving on now to Slide 13. So the net cash generated from operation activities, a vast improvement there, EUR 38.6 million versus EUR 18.8 million due to the increased revenue, decreased costs. We're very, very positive. We've got some additional cash in from share options that are exercised at EUR 1.6 million. As Michael mentioned earlier on, if you add in the EUR 6.4 million, which is the positive free cash flow, we generated EUR 1.6 million on top gives you that EUR 8 million difference at the bottom line there, which is a 40.4% increase. So, we're very proud of that. We knew that, that was very important to the market. Very important to us, too. Prior to IPO, we were always a profitable company. It's very much in our DNA. We made the [Technical Difficulty] recurring revenues and getting back to a positive cash generative situation, which we plan to continue to improve on as the years go by. So, that's it from me. I'll pass back to Michael for the outlook and key priorities. Michael Kelly: Thank you, Ian. Okay. I'm going to switch over to Slide 15. And I'd just like to mention that we won a very prestigious award for our embedded AI in the FINEOS AdminSuite from the Irish Technology Association. This was an award, which was competed for by all comers. We have a lot of multinationals from the states, particularly in Ireland. It's a hub for EMEA, but also local companies. And we were really called out for the kind of thoughtful way we put the AI into the system and how it was agentic and assisted in terms of driving better outcomes and presenting users of FINEOS with an opportunity to really improve the -- I suppose, taking the CRUD out of the back office and driving more positive outcomes for customers and clients. So, we were delighted with that. That was towards the end of last year. In terms of key priorities, though, going forward, we're still very focused on Guardian who are ahead of schedule in terms of their own goals that they set for themselves. We'll continue to drive new business onto the system and make sure that everything goes on this year. But also, we're starting the migration from the middle of the year. And we're excited about that because we're in the business of legacy system retirement, and they have a multi-billion book that's going to come across to FINEOS. We're going to continue to scale and upsell large customers and again, with a focus on benefit realization of the product they have, but also looking at legacy migration and taking their legacy systems out, which with some of these carriers, the scale that they're at is a multi-year project. We've been at it now for 3 or 4 years, but we've still got some time to go. But as they grow their business on FINEOS, our fees increase. And I want to point that out in this call out, our fees are not based on per seat SaaS-type fees. Our fees are basically aligned with our customer success. So as our customers grow their business, we grow our business. And we're very much in partnership -- in a long-term relationship with these clients. We'll also increase new business sales. And our partners are starting to work with us now to identify opportunities where they think our product can fit. And so we're going to see more activities with the Sis. And as we progressively embed AI in the FINEOS platform, we're going to continue to see improved platform performance. And already, the feedback is very positive. And let's put it this way, we're in very early days in this. We're in a regulated environment, highly regulated with very conservative insurance carriers. They take years to make decisions. So, you can imagine when you bring something like this in that they're very, very keen to make sure that it's all compliant and it fits with the regulator. So again, this is going to take a few years over -- in the coming couple of years, but we're getting our customers more comfortable with this. And we have a couple of big customer meetings in March in Sydney and also in New York, and we'll be talking about this a lot more with them. We're going to continue to drive internal efficiencies through the usage of AI. And I think every company is adopting AI and taking advantage of that across the whole spectrum of the business. And then pipeline in terms of deal conversions of FINEOS Absence for employer. We have actually done a lot of work in this area in terms of making the product deployable with employers in a much simplified fashion. But we're also talking to some of our carriers about partnership around this and how we could work together because our primary goal is actually the carrier market and to make Absence a real part of the employee benefits industry. Turning to the last -- or the second last slide, I think it's Slide 17. So, revenue guidance for this year, we're going to put it out there at between EUR 147 million and EUR 152 million. And this is really supported by the strong pipeline we have in, albeit, as I said last year, we saw that pipeline. It just took a long time to get negotiations and decisions and so on done, but we're very optimistic about this year. We continue the strategy of driving operational efficiency within FINEOS, and we're going to continue to drive up that positive cash flow and profitability in the business for this year. We're also continuing to drive sales in North America, but we're actually looking to expand our product outside of our target market of North America. And we do see some opportunities to do that, particularly with the multinationals in different countries. And so we're looking at that as well at the moment. And the pipeline remains solid and very much FINEOS being the market leader in employee benefits in North America today. So switching to my last slide, Slide 18, Subscription fees. Ian and I put these guidelines out in 2024, and we're still confident we'll make these guidelines in terms of subscription fees moving up to 65% of the total revenues in FY '27 and 75% or thereabouts in 2029. R&D investment will decrease, as Ian said earlier, to 30% next year and 25% in 2029. And again, as Ian said, we reserve the right to expand that R&D if we see new opportunities. But that's the way things are trending in terms of percentage of total revenue for R&D spend. And then the gross margins and EBITDA. They're almost where we said they'd be back in 2024. They're almost there now, as you can see from last year's results, but we'll drive them on and we'll get them up to 80% for gross margin and 40% for the EBITDA. So, making FINEOS a very strong company in terms of future growth. I just lastly would like to point out the Slide 19. We have an investor roadshow, which we'll be hosting on the 25th in Sydney, and all the details are made available. And if you contact Howard or Jacque and Automic, you can get all the details. We're looking forward to it. So, that's it for me and from Ian. I think a positive year, looking forward with a very positive attitude in terms of the future. And we're open for questions now. Thank you. Operator: [Operator Instructions] Your first question comes from Tim Lawson with Macquarie. Tim Lawson: I just had one main question. With your subscription mix targets for FY '27, I won't worry about the '29 ones, just the FY '27 ones. If you look -- if you think about the sort of revenue guidance you've provided today for 2026, and I appreciate that's an overall revenue guidance rather than calling out any sort of subscription versus services number. It just seems to imply a very significant acceleration in the calendar year of '27 to hit those targets. Can you just sort of help us unpack your assumptions behind, both that near term and then the sort of medium-term number, please? Michael Kelly: Yes, Tim. Thanks for the question. I'll start off, Ian, on that one. But the way that this business is set up is, as I said, long-term contracts with milestone events in terms of things we have to do with customers as they grow their business with us. Our focus through '26 and '27 with our existing clients is going to be very much on migration and growth of their use of our product, plus the cross-selling as well. So, we've kind of got locked in revenues and foresight of events in the next year that should give us a nice lift in terms of our subscription fees into 2027. And we've got a nice pipeline as well, some of which we didn't convert in 2025, but we will convert in 2026 and beyond. So, we're feeling comfortable about the 65% revenue -- sorry, percentage next year. Do you want to add to that, Ian? Ian Lynagh: Yes. So what you're seeing there in terms of what we report in '25 was a higher contribution, almost a 5% increase year-on-year in terms of the recurring fee, subscription fee. So, we're looking to see steps continue to move as we move forward. We've also seen that the subscription fee percentage as a proportion of revenue has increased, and we expect that percentage to increase in terms of year-on-year growth on the annuity to grow in '26 as we move into '27. So, we definitely see '26 as being a stepping stone to achieve. It's not all going to be laid on '27, Tim. Secondly, to Michael's point there, we still see a significant contribution of that growth coming from existing customers. And as they upsell and a lot of them are getting very significantly through their programs of reducing legacy systems and some are really starting to get very engaged around and pushing us hard. Michael mentioned earlier on about Guardian starting halfway through the year. We have other very large customers out there pushing hard to make that happen. So, we see that as a big factor in terms of that growth. So, we do have line of sight. And the way we put our plans together is very much on a bottom-up basis as we look at the individual transactions for customers. So, we recognize that it is a significant growth, but we do have line of sight of it. It's not 100% guaranteed, but it's still there to be had. Tim Lawson: So, maybe just on that, are you sort of seeing across there for the '26 year an acceleration throughout the quarters? So, are we thinking that sort of -- obviously consistent with what you've given as guidance for in FY '26. But is the fourth quarter, for example, or second half even materially accelerated versus the first half? Ian Lynagh: I think the caveat you'd have to put in there is that these customers move at their own pace. We certainly have plans in place to close business in the first half of this year and we believe that will materialize. But it could get pushed out a bit. But firstly, if it closes in the first half, then that gives a lift to the second half automatically. And so if that second half, obviously, will get an automatic lift, and we do see more business closing in the second half as well. So, we see both halves contributing, but the first half contribution helps the second half. So just by mathematical calculation, the second half will have a better revenue outcome than the first half. Tim Lawson: Yes. I was trying to think that -- I'm trying to think about that split effectively. If you were to annualize the second half, are we going to be effectively materially -- well, I expect we will be, but like significantly above on an annualized second half, what your guidance range is because that's sort of the math that need to work to hit those '27 targets unless you have an acceleration in '27 itself, of course. Ian Lynagh: You want to? Michael Kelly: Yes. We do have both. I mean, we have big bumps in '27 as well, which we've already got locked in, in terms of our revenue forecast with existing customers, but we have them coming in, in the second half of '26 as well. And as Ian says, pipeline, we're closing now. So, you'll see more deals coming through in the first half as well. So, we're coming off the back of a good ARR, Tim. 10% growth on that, and we still see deals closing in the next couple of quarters. And then we see the second half getting even better in terms of the upside. But next year is going to be another opportunity for growth with existing customers. So, we don't make these forecasts, willy-nilly, based on a lot of new name wins and potential and so on. We're very much looking at our customer base. We're growing large chunks of business on FINEOS with these large carriers. So, we're able to be a bit more comfortable in terms of predicting. These guys are like oil tankers. They take their time to move. But once they get going, it's very hard to turn them. So you know where they're going. And we can predict that in terms of our numbers with that growth that we're seeing on our platform. Operator: Your next question comes from Richard Harrisberg with Canaccord Genuity. Richard Harrisberg: Michael and Ian, congratulations on really great result. I also just had a question on the revenue outlook. I was just curious you kind of touched on it before as sort of an existing growth in your customer, their own sort of book, which drives your revenue going forward as opposed to being on a per seat basis. How much of that sort of future revenue growth is underwritten by that, which I guess is a question on how much you expect general insurance premiums to increase on average based on historic? Michael Kelly: Yes. Well, we're expecting -- Richard, nice to talk to you again. Thanks for your question. But we're expecting by the volume of business that's coming across in terms of migrations we're working on, we're expecting their usage of the system to grow and their volume on FINEOS as in their premiums on FINEOS to grow. And that basically gives us a clip of the ticket every time we can crash through a milestone tier in our pricing. And so that's where -- that's what gives us that kind of stickiness and that long-term confidence. These are 5-year contracts with these carriers. So, they're really locked in. And to be honest, they put us under enormous pressure to get the product into shape so that they can get this migration done because their legacy systems are creaking and they know they're not going to carry them into the next world that we have with AI and so on. So, that's kind of given us the confidence in terms of the growth that we can see coming on the platform. And we also see cross-sell and up-sell to existing clients. And again, we have some of the biggest customers in the segment, the main we have in the States. So again, we'll see upside there. They won't buy a cross product until they feel that they're over the line on the products that they've already got as in it's already done and they've got everything over and so on. So, that's one thing that we've kind of been sitting patiently to kind of wait for. There's no point in selling or sending sales guys into them when they're in deep throes of migrating to FINEOS. So that kind of gives us, again, the confidence that, like, we're all positive in terms of the focus. So the system is a large system of record, very complex in terms of what it does, highly regulated. And these carriers need to get off the junk that they have in the back office, large 50-year-old mainframes wrapped up with a lot of technical debt. So, they're as motivated as we are to get them over to the cloud-native FINEOS platform. Richard Harrisberg: Yes. That makes a lot of sense. I guess maybe a different way to ask the question, just purely based on growth in volume of existing customers and excluding cross-sell, up-sell or sort of new customers signed. Is that growth what sort of gives you the confidence to get to the EUR 147 million on the lower end of the guidance? And then on top of that, the reason for the range in the guidance is the strong pipeline you guys are seeing there? Michael Kelly: Probably a good way to look at it. I'll let you answer that, Ian. But that's -- we've been conservative how we've managed expectations in the market. We don't want to upset anybody. So, we've left a range. And we are confident in terms of the projections and stuff like that, that we do put out. Do you want to answer that in any kind of other way, Ian? Ian Lynagh: Yes. I think, Richard, and Michael also, a large proportion of our confidence is derived from existing customers scaling on the system. 40%, 50%, our confidence will be around that singular element of those. So more we stay focused on those customers, the more we deliver the capabilities. We want more, we collaborate with them and Sis to help them migrate across, that provides a very strong bedrock for us in terms of how we move forward. In terms of the range, I mean, there are other factors in the range as well. We both alluded to the fact that opportunities can slide up and down. We see that. They don't often go away, by the way, but they do slide up and down in terms of time line. So, that's one of the reasons why we'll be giving a range. And another reason would be that when we look at the opportunity profile, sometimes you've got a small deal, a medium-sized deal or a large deal. And the size of those deals in terms of the revenue they can generate for FINEOS can be quite significantly different. So, that's another reason why you give a variance in terms of the range. I think the other area as well, the last one I'll mention is just around the services fees. We work on a particular deal with an SI, and they want to take on a much more expansive role. And we're looking at some of our SIs like PwC, for example, whose skill sets progressively growing so they can take on more work. So on particular day, they may take on more work than we had originally anticipated or may have performed last year. And then that can have an impact in terms of service revenues we obtain. But as long as that's contributing towards the growth in subscription revenues, we can work with that. So, all those factors contribute towards that range. Richard Harrisberg: Really appreciate all the extra color there. Maybe I'll just ask one more question. It was great seeing the operating leverage come through and especially with some of the cost efficiencies you've been putting through the business. Just looking forward to FY '26, do you think those costs are sort of expected to remain around these levels? Are there sort of further areas you can squeeze out there? Or what's the right way to think about that? Ian Lynagh: Yes. I'll take that one, Michael. I think for your planning, as you're doing you are modeling yourself and the rest of the analysts on the call and investors, I think you should be thinking about our cost overall, perhaps increasing in the range of 3% to 4%. I referred to Amazon AWS there earlier on in the conversation about driving efficiencies. We've driven a lot of those efficiencies through the product set at this point in time. So as we expand our footprint with customers, we will see the cost of sales going up with respect to that infrastructure bit. So, that's happening. Unfortunately, like everybody else, we're suffering from third parties increasing costs, and we've also put through some salary reviews. But I would plan out about 3% or 4% increase in overall costs. But internally, we're still looking at ways of driving even that down. But from a planning point of view, I'd look at it that way. Richard Harrisberg: Congrats again on an inflection year in the business. Ian Lynagh: Thank you. Michael Kelly: Thanks, Richard. Operator: Your next question comes from Siraj Ahmed with Citi. Siraj Ahmed: Can you hear me okay? Michael Kelly: Yes. Siraj Ahmed: Just first thing, maybe I missed this. Just the split between subscription and services that you're expecting next year. Can you just help us with that? I think the revenue guide that is. Yes. Michael Kelly: We guided next year. We set a set of targets for next year where revenues would -- or sorry, subscription revenues, product revenues would be 65% of the overall total revenue, meaning services is 35%. Siraj Ahmed: Sorry. For FY '26? Michael Kelly: For 2027. Siraj Ahmed: Yes. Sorry, I got that, Michael. Michael, just trying to think about next year, right? Can you give a split maybe just on the revenue next year, just between subscription and services? Ian Lynagh: I think if I could just jump in there, Michael. I think as I said, deal size can vary a bit. But I guess if you look back in time, we were approximately 50% in terms of subscription fee 2 years ago, last year, 55%. We've got to get to 65% by FY '27. You can kind of make your own assumptions of what we're trying to target as a stepping stone to get there. But we do see some variability about it. We've given guidance on total revenue, but we have to see what happens. But this year it has to be a stepping stone to getting towards FY '27. Siraj Ahmed: Okay. The reason I'm asking is maybe just a follow-up to that is, so ARR of EUR 78.3 million, right, at the end of the period. I'm guessing it's a bit lower now because of FX? Or is it still the case at EUR 78.3 million? Michael Kelly: Everything is lower, including the service. So, everything gets hit by FX. So it's kind of -- the percentages will still hold. But yes, revenues are going to go up and down in real terms based on FX. Siraj Ahmed: Sure. Yes. So the reason I'm asking is, let's say, EUR 78.3 million, it seems like -- so let's say, services is flat to slightly up. You sort of need to get closer to maybe EUR 85 million of subscription revenue, especially the step-up that you're talking about for next year, right? When you're starting at EUR 78 million, that will be like a 108% sort of conversion, right, above this versus EUR 105 million this year. So is that just confidence in the pipeline, Michael, like you mentioned that your pipeline is quite strong and you think quite a few of them will close? Or is it like you mentioned, quite a few customers are going live and so the volumes just organically picked up? Just keen to understand that conversion, right, from ARR to subscription revenue? Michael Kelly: I think it's mostly growth that we see on the platform in terms of volumes, which will lead to subscription thresholds increasing. That combined with some cross-sell is mainly what we see in front of us in existing clients, Siraj. And then, obviously, the new business, new names are kind of gravy on top as they start converting. Now, we're hoping to see a better kind of uptick in terms of new name as well, particularly in our domain market in North America. I think I have flagged in the past that because of some disastrous attempts for core system replacement from some competitive core systems vendors who came in from other domains, carriers really got burned and it kind of caused a lot of angst in the market and made it difficult for carriers to come back out again and to look to do a major migration of their legacy. We have just taken the brunt of that in terms of the backlash of that is that the carriers will freeze because they have to reset. A lot of them have gone back to legacy, those carriers that had those disasters. But they've learned a lot. And I think the next time they come out, they'll recognize a vendor that is purpose-built and ready to go for them. And of course, as we keep doing things with our own carriers, we're proving out the product and proving out that our carriers are getting good efficiencies on the product. So again, it's a slow-moving industry. It's a very big product. These projects are big. But it's very sticky on long term. And that's what's, I suppose, something that we want to call out as well. It moves slow, but it's very solid. Siraj Ahmed: Got it. Last one, just on gross margin. So, you're just clarifying, so the full year gross margin this year had a negative impact from the provision, right, which sort of unwinds next to next year from sounds of it. So, you're already at 76%. FY '27, you've retained 75%. I think that should be going up, isn't it? Just trying to understand whether there's something I'm missing. Ian Lynagh: We would expect a slight improvement in gross margin as we go through this year. But we don't want to go ahead of the target we set for FY '27, albeit we've already achieved it. But keeping around about that mark for this year, we expect it to be reasonably consistent with last year with perhaps a slight improvement. Operator: Your next question comes from Jules Cooper with Shaw and Partners. Jules Cooper: Michael and Ian, can you hear me? Michael Kelly: Yes. Jules Cooper: Yes. Absolutely. And great set of results and outlook. Michael, I just wanted to sort of dive into -- I think it was on Slide 16, the third tick mark there where you talk about a focus on legacy system migration. Now, there's a huge opportunity in the industry and particularly with your customers given their scale and I suppose, the small footprint today that you've got with those customers and you're making good progress. As we think about AI, we are hearing from lots of different vendors and customers that the improvements in velocity that they're seeing in real time, and it's only going to get faster. Do you think that -- and I know when you're migrating a book, it's not just about the speed of coding, there is all the people side and the project, the change management, et cetera. But do you sort of see this as a real moment where you can kind of unlock those legacy books that before the cost and the risk was just prohibitive and held people back? Just like to sort of get your perspective on that, if I could. Michael Kelly: Thanks, Jules. Yes, I do actually see it as a kind of moment of truth for these carriers. For years and years, they've been reluctant to take those big back-end systems out of those systems of record that they have. They've gone through the dot-com. You would have imagined they would have wanted to reinvent them so that they were totally Internet-type systems, but they did. They built front end. They've gone through the mobile phone and they built front-ends to do mobile phone transactions and a lot of technical debt around the old back-end systems. They've gone through the cloud, and some of them have been innovative enough to port from a mainframe to a cloud, Amazon or Microsoft or whatever they've done, but it's still the same old system. But the AI revolution is basically going to really threaten those old systems because AI performs on data and having the data in a real-time full kind of rich sense is what AI will drive on. And also having a modern system with the kind of workflow automation that you would expect in a modern system really gives AI all the tools that it needs to perform and move on. So in the future, we see the back office. The work in back offices is being reduced, all that paperwork and all that kind of CRUD work, I call it, that's going to be reduced. And it's going to give people more time to focus on the customer and more time to do other services as well for the clients. So over the next few years, I think AI is really going to change the industry. And being a system of record that we have today as a modern cloud-native one, we're ready to go in terms of the AI operating with us. We are in a regulated environment. So, we'll have to go as quickly or as slowly as the regulators allow, and also what's comfortable with carriers because a lot of them are very ethical and they don't want to mess around with customers. We will not be making decisions about claims. We will not be turning down underwriting opportunities for any kind of bias reasons, and we have to be really careful in terms of how things are done in FINEOS. But we're at one with our carriers. They all feel the same about this, but they all do realize that the world doesn't stand still. And those old workhorse systems that they've had for many years, they've basically gone past their sell-by date. Those who still think that they should keep them and work away are probably the ones that will disappear in the future. And the others that modernize and go forward will actually have the revenues and margins and so on to be able to buy those books of business. That's my own opinion. So, I just want to put that out there for how we think about it. Jules Cooper: Yes, you painted a really good picture there of like the pressure to migrate and move those books of business. I guess my question was more in the mechanics of it, the things that have held them back in the past as they've gone through all these. Michael Kelly: Okay. Yes. Okay. Jules Cooper: Is it sort of making it easier -- mission at the Board table to go, hey, we could actually do this now half the cost and half the time and with half the risk? Michael Kelly: So like, we've introduced AI, believe it or not, on to the back-end books of business that they've got and our SIs are working on that. So, we're using LLMs to basically stack and get ready, employers that are going to come across to FINEOS. We've been building out then on our side, tooling to allow us to validate and read all of that in. So, that will make it easier as well. And we've been working with one of our big carriers on that in partnership, and that is going well as I said of tooling. And then last but not least, you know we put a lot of money into building out the full suite and making it easy to onboard on FINEOS. In other words, that it's purpose-built and the carriers can easily put business over. We don't have a huge big project at the front end of every time we do an implementation, which is what those carriers who failed ended up doing, having to build software with those vendors. We don't have that. So, we're making it much easier to onboard, upgrade, integrate and migrate to FINEOS. And so the time has never been more crucial for them to move, but it's also never been easier in terms of our industry and the domain we focus on. Is that what you were getting at? Jules Cooper: Yes. Operator: Your next question comes from Sinclair Currie with MA Moelis Australia. Sinclair Currie: Just had a question about competition. There's been some movements among your competitors in the M&A. And I was interested maybe a little bit of an overview of how you see the competitive environment? And if you could throw in any statistics maybe around what percentage of RFPs you've been successful with or something like that, just to bring that to light, that would be really interesting? Michael Kelly: Yes. Sinclair, so look, the competitive environment within the employee benefit space, core system space in North America, it's kind of leveled off a little bit in terms of the core vendors. You would have seen that Vitech was acquired by Majesco. Majesco has kind of multiple systems that they've acquired over the last several years, addressing multiple variants of the markets across all kinds of insurance, P&C and whatever. Now, they've added pensions and the pensions book to their business. Vitech has largely retreated from the group benefits market over the past 12, 18 months, and they're really trying to focus in on their pensions portfolio. So that Vitech-Majesco, it was a merger rather than an acquisition, I believe, and purely kind of at an agreement between the 2 PEs that own the business that they would basically collaborate. So, obviously, that takes one competitor out when it comes to RFPs and stuff like that. But we kind of had seen Vitech. We hadn't seen them in the market much anyway. And look, 5 years ago, they would have been the guys that were up and coming because they're coming out of the pension space and into the group space with their admin system. And 5 years ago, we weren't ready because we were still hard at it with New York Life. Going back to what I said to Jules. We migrated 6 books of business of old systems for New York Life to give them a EUR 4.5 billion book of business on FINEOS AdminSuite for group, and they went live with voluntary this year as well. And Absence, that's the only carrier that has fully eliminated legacy. And they're still standing on the FINEOS platform for the last 3 years running that full book. So when we talk to clients, they kind of get great confidence out of that, and they do talk to New York Life and so on. And they're a good reference for us and a good client, a good partner. But a lot of our other carriers on the big end of the market are also in the process of migrating as well, and they're moving quickly to the platform. So, I think momentum is building. So, we're not seeing other vendors really of any significance in the space. But again, we see tool set P&C type vendors coming in and out, and it depends. It depends on the carrier. Some carriers get very excited about really techy, techy type software. But that tends then to be a big project build, and that's going to cost them a lot of money. So it's not necessarily the best outcome for them. But look, everybody makes their own decisions. So, I think as a mainstream vendor now in our space, we've got market dominance in terms of a big slug of the employee benefits market, and we're kind of getting the new business deals as well, and we're getting the cross-sells. But we still see several years ahead of us, where we really want to become that true partner to the employee benefits industry, that big system of record. But like with the AI and everything else, that's going to change into much more intelligent and automated system for the future carriers that will go on our system. Operator: We have a follow-up question from Siraj Ahmed with Citi. Siraj Ahmed: Michael, somewhat linked, can you just touch on the whole agentic stuff that you're trying to demo in late March? How do you think about pricing this thing? What's the economic model you're thinking in terms of this? Michael Kelly: Sorry, Siraj, I'm finding it very difficult to hear you. Can you hear that, Ian? If you can, go ahead and answer. Ian Lynagh: Is it the economic model with regards to AI? Is that what you're referring to, Siraj? Siraj Ahmed: Yes. For the agentic features you're rolling out, right, in late March that you're announcing? Ian Lynagh: Yes. I mean, the pricing model we have for our core systems is based on the premium income that the customer has with regards to all core systems, except for apps, which is based on the number of employees. The agentic AI is bolt-on add-ons that's sitting on top. Depending on the nature of it, it will be charged in different ways. So for example, we do document intelligence, document summarization. So the pricing of that is based on the number of documents that you summarize and provide intelligence on. So it's going to be very much on a unit price volume based. We're giving customers the opportunity as well to decide, for example, if I just talk about documents, which documents types, which cases they apply it against? So, they can pull the lever up and down and decide to what extent they want to use that AI capability. We also have case intelligence. So, that will be the agentic AI capability. And again, they can decide the cases or the customers, et cetera. But it will be very much on a volume basis with the opportunity for the customer to pull the lever up and down, a bit like a fuel pump. You decide how much petrol you want to put in the tank. Michael Kelly: Yes. And just to mention, we're not putting a huge emphasis on charging for all of this because we see it as built in. It's embedded. And so we really will -- it's a usage-based model, but we're not looking -- like we have to keep modernizing and keep bringing a more compelling platform to our clients. They're already paying us good money for the product. So, we'll continue to look at opportunity to increase our fees by cross-selling and up-selling. But we'll also deliver modernization within the platform continuously. And that goes back to the R&D program that we have. So, we're looking to really make a sticky long-term relationship with these carriers so that they feel very comfortable with us as partners. Operator: There are no further questions at this time. I'll now hand back to Mr. Kelly for closing remarks. Michael Kelly: Thank you, Darcy, and thanks, Ian, as well for today and coming along on this call. I appreciate all the questions from the analysts and indeed, everybody who's listened to us today. As I said, we're feeling pretty positive about this year and next year. And we're looking forward to the opportunity to present to everybody at the end of March. I think it's the 24th of March. So, please come along to that if you can, and there will be a few of us down there at the time. So it's an opportunity to meet some of us as well in-person. Thanks, Darcy. Ian Lynagh: Thank you. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to Tabcorp Holdings Limited Half Year Results 2026. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Gillon Mclachlan, Managing Director and CEO. Please go ahead. Gillon Mclachlan: Good morning, everyone, and welcome to our results for the first half FY '26. I'm Gil Mclachlan, and I'm joined on the call by CFO, Mark Howell. I'm going to take the presentation as read and talk you through the key areas. Start on Slide 2. We released our revised game plan a year ago, and I believe we're executing on that plan. The numbers today reflect the progress we've made, and we're steadily building a culture of doing what we say we will do. And for me, that's critically important. I want to stress that we're midway through our turnaround plan, and there's still work to do. We're not yet at the level I want us to be, but I'm pleased we're on track against our FY '26 objectives, and we made good progress in the first half. Our improved execution continued with AFL Miss-By-One and Mega Pot during the footy season. We showed up strongly through the Spring Carnival with TAB Takeover and TAB Time continue to sell out. The Spring Carnival, however, was a customer's carnival. Yields from September and November were historically low because of an unusually high number of favorites winning major races. Despite those challenges, the diversification of our business allowed us to deliver a pleasing result. It was a company-wide effort, cost and capital discipline and improved omnichannel customer offering and growth in MAX. These are the outcomes of creating a better company with greater capability. If you look at Slide 6, we continue to execute our best pillar of the appointments of general managers to lead retail, MAX, marketing and strategy. People are everything, and these appointments are part of our continuous journey of improvement. I'll now refer you to Slide 7 and our second pillar. We are going to deliver a national Tote and our target remains the end of this financial year. One pool will increase liquidity of partners and in time, create new product opportunities. Australian racing also have a greater global reach and potential for more world pools, which will better connect us to a global calendar. I want to acknowledge the principal racing authorities in each state are working collaboratively on this opportunity. Our in-play product, TAB Live, is progressing. And we recently received ACMA clearance, and we are now working to build our launch plans in New South Wales. Discussions with other states are advanced. On this slide, I also want to call out our Integrity Services business MAX. With a consistent and growing business, and our key partnerships are renewed in the half, and we're looking at opportunities which could expand our footprint. And now I'll push you to Slide 8. The core pillar of our game plan is to deliver unrivaled omnichannel experiences. We continue to innovate with new products and a better looking field to create a greater, genuine racing and sports entertainment offering. TAB Time was the first to launch and a sell out every week since the project commenced. Sold out in a record 3 minutes on Sunday. TAB Takeover highlights how all of our assets coming together to deliver something unique in the market. We're delivering exclusive in-venue generosities that incorporate both racing and sport, encouraging more people to attend venues. We have a strong product and generosity pipeline for both AFL and NRL seasons which we launched in venues this week. Pushing to Slide 9 now. And the TAB brand is becoming more youthful, sports-oriented and experiential. Turnover among 18 to 24 year olds was up 14% in the first half '26. I want to touch on Liv Golf and Superbowl as an example how we're talking to a new cohort of sports fans. We know customers want live experiences and attention spans are getting shorter. Story sales and brand connection is increasingly more important. Tentpole assets like Superbowl and Liv Golf are examples how we are delivering in this space. We'll be activating our brand and entertainment propositions across these assets and showcasing these activations on TAB-owned channels. We'll be visibly branded more than just raced. Flemington and Randwick will continue to be our flagship properties, and we know we also need to connect with more sporting audiences. On Slide 10, some numbers there, and this refreshed offering is delivering. Digital and venue turnover increased 12% in the half, including growth in sport of 26% and 42% growth in the 18- to 24-year-old cohort. Looking ahead, next-generation EBT will commence rollout in July, and in conjunction with TAB Live will further differentiate our offer in the market. Slide 11. Our fourth pillar has been delivering growth underpinned by a sustainable retail channel. To this, we'll invest in retail, we're redirecting generosity, developing new products and rolling out modernized betting terminals to attract customers and grow turnover for benefit of TAB and our venue partners. This enables us to create a structurally profitable channel that is sustainable. This drives a new commercial model that improves alignment with our partner venues and simplifies the existing framework. Finally, Slides 12 and 13 showcase our media business. I said in August, the look and feel of scale will be different during the Spring Racing Carnival and the team delivered. We introduced new content, evolved our talent and overhauled our magazine programs to remain contemporary. Our leading tipsters have a permanent place in the home page of the TAB app. Every partner can access the tips with prefilled bets, continues our evolution to a true omnichannel experience. We have also strengthened our core rights portfolio, including Victorian media rights domestically and internationally. Our focus remains on enhancing our core offering and content and expanding distribution both in Australia and internationally. I'll now hand over to Mark to talk you through the detailed financial results. Mark Howell: Thanks, Gil. Good morning, everyone. As Gil mentioned, the growth in earnings in the first half '26 reflects a modestly improving turnover environment, strong strategic execution and cost and capital discipline. We have delivered a pleasing set of results given the impact of below-average wagering yields and have responded to the revenue environment with continued focus on cost control and disciplined capital investment. This has led to earnings growth, margin expansion and a reduction in our leverage ratio to 1.5x net debt to EBITDA at the end of the calendar year. Before I run you through the results in detail, there are 4 key aspects I want to call out. First, domestic wagering revenue pre-VRI impact fell by 2.5% despite modest growth in turnover due to below average yields during the half. The reduction in yield versus longer-term averages was due to run of customer-friendly results during the NRL AFL finals and through the Spring Racing Carnival. Some of these softer yield was recovered through the back end of November and in December when yields were very strong. We estimate the net yield impact across the period was around 15 basis points or about $10 million of net revenue when compared to longer-term averages. Second, the benefit of the reform Victorian wagering license applies for the whole 6 months, on the half versus only 4.5 months in the PCP. We estimate this delivered an incremental $12.2 million of EBITDA in the first half '26. Third, we continue to focus on improving cost discipline across the business. OpEx adjusted for the reform Victorian license decreased by 3.7%. This, together with some modest revenue growth and some benefits from Phase 1 of the new retail commercial model helped us deliver operating leverage and a 190 basis point improvement in EBITDA margin to 16.2%. Fourth, we continue to focus on efficient investment and capital. In the first half '26, CapEx reduced by 11% on the PCP to $51 million. This provides additional capacity to invest in growth for the second half including the rollout of new modernized betting terminals in retail venues to support an improved customer experience in venue and support our omnichannel strategy. Our leverage ratio reduced to 1.5x, providing us with significant balance sheet flexibility as we deliver our strategy. So now moving on to the results. Slide 15 sets out the first half '26 group financial results. Group revenue grew 1% to $1.34 billion, variable contribution increased 4.3%, while reported OpEx decreased 1.1%, delivering 14.3% growth in EBITDA to $217.4 million and 18.9% growth in EBIT to $110.2 million. Net interest expense decreased due to the reduced net debt as we continue to delever. As discussed in prior Tabcorp results, the high effective tax rate in P&L was driven by nondeductible weak license amortization and the interest discount unwind. And finally, NPAT before significant items, grew at 61.5%. An interim dividend of $0.015 per share has been declared, representing a 56% payout ratio and a 50% increase on the PCP. For the remainder of the presentation, I'll focus on 3 areas: the drivers of EBITDA growth, cost control to deliver operating leverage and a strengthened balance sheet. So turning to Slide 17, you can see the drivers of the 14% EBITDA growth delivered during the half. We are pleased to deliver this level of earnings growth in line with modest turnover environment, which, as I've already discussed, was also impacted by unfavorable yields. The incremental earnings uplift from the reform Victorian wagering license contributed an incremental $21.7 million to VC, which was offset by $9.5 million of costs to deliver a net benefit to EBITDA of $12.2 million. As discussed earlier, this was partly offset by the impact of VC of the low average wagering yields. Other benefits to earnings include the increase in Integrity Services VC as a result of the annual CPI increase as well as increased project work and some benefit to VC from Phase 1 of the new retail commercial model. Underlying costs improved by $13.5 million, which I'll turn to now. Slide 18 demonstrates the focus on costs, which we have had over the last 18 months with first half '26 OpEx benefiting from the annualization of actions taken in F '25 as well as the continuation of cost discipline on discretionary costs. Cost inflation remains an ongoing headwind, particularly in technology. So we have more than offset this for $13.9 million of cost reductions and a further $10.5 million of cost benefits relating to A&P timing and some other smaller cost-related actions. Looking forward in the second half, we continue our ongoing focus to offset inflation. We also expect to incur additional advertising and promotion spend of around $5 million in relation to the 2026 FIFA World Cup. Slide 19 demonstrates a continued focus on capital discipline with CapEx for the first half '26, reducing 11% to $51 million. Together with the increase in profitability, this has driven a 360 basis point return -- basis point improvement on return on invested capital relative to the prior corresponding period. Our F '26 CapEx forecast remains unchanged at $120 million to $140 million, implying an uplift in the second half run rate related to the rollout of the modernized betting terminals under the new retail commercial model. Turning to Slide 20 and cash flow. Underlying cash conversion was 86%, impacted by the timing of some large payments in the first half. This is in line with expectations and similar to the first half of last year. We continue to expect that on a full year basis, cash conversion to be between 90% and 100%. One point to note is that cash interest expense of $54.6 million includes $24.9 million of interest relating to our annual payment each August for the Victorian license. This will not reoccur in the second half. So all things being equal, the cash interest in the second half should be closer to $30 million. On to Slide 21. In November, we issued $300 million under a new Australian medium-term note program. The notes carry competitively priced fixed coupon of 5.99%, and a tenor of 5.5 years. The AMTN delivered on our 3 objectives being to diversify our funding sources, extend our average maturity, which now stands at 5.4 years and increased liquidity. The strong AMTN outcome reflected the significant improvement in the company's prospects over the last 18 months. Slide 22 shows that our balance sheet remains strong and provides us with the necessary flexibility and funding capacity to pursue with our strategy. At 31 December, leverage is 1.5x, well below our target range of less than 2.5x through the cycle. As I remarked at the outset, overall, this is a sound result, and we continue to deliver on our strategic agenda. I'll now hand you back to Gil for some closing remarks. Gillon Mclachlan: Thanks, Mark. I believe the company continued to improve over the last 6 months. Our turnaround plan is on track. Earnings have increased. We continue to deliver meaningful cost savings and our balance sheet is in good shape. We are focused on executing our strategic agenda of the remainder of FY '26 and beyond, and we're going to be relentless in executing it. We expect the wagering turnover environment in the second half to be similar to the first half, and I'm pleased with the progress and happy to take your questions. Operator: [Operator Instructions] First question comes from Andre Fromyhr from UBS. Andre Fromyhr: First, I just wanted to focus on the turnover environment. You called out in the second half, you're expecting similar conditions or the outlook looks similar to what you've seen in the first half. Is that a comment technically around sort of the level of growth in terms of like a year-on-year growth rate? Or are you talking more in overall dollars of turnover. And I'm wondering as well if you can distinguish between the cash environment and the digital environment because it looks like cash has outperformed in both the turnover growth and yield perspective in the half year just reported. Mark Howell: Yes. Thanks, Andre. It's Mark. We're talking about growth. So I think we talked about turnover growth for the half -- first half being around 0.3%. We have seen in that a range of what we call modest growth, and we sort of see that continuing. We don't -- I mean, in terms of the dissection between digital and cash, I'm probably not going to give you a forecast on that. But obviously, we're just sort of pleased with good trends we've been seeing as we've sort of exploited, I suppose, our omnichannel assets. Andre Fromyhr: Maybe another way to ask that, like in terms of the mix of your cash business versus digital like how much of a role is that playing? Because it looks like racing as a category was weaker than sport, but also is this part of the strategy playing out that you're having more success through building participation in retail venues? Gillon Mclachlan: Yes. Thanks, Andre, it's Gil. We certainly see -- we're very confident in our retail strategy. We see obviously the DIV off low basis, the digital venue going up. Cash is in positive growth. And with some of the strategic things we're announcing today, whether it be the approval from ACMA or different -- the success of different products in retail, it's central to our strategy, and we see underpinning our numbers. Andre Fromyhr: Maybe just last one for me and following up on the retail strategy. I understand Gil, you sort of launched the new framework with your venue members late last year, doesn't come into effect until the middle of this year. But what's been the reception so far? Is it right to assume that there are some venues that are going to be better off immediately versus worse off immediately? And are you expecting any sort of attrition in your venues as you transition to the new model? Gillon Mclachlan: Thanks, Andre. I mean we are -- we put retail at the center of our strategy, and we've called out the cash numbers and I called out the digital venue numbers that's been strong. The model is simplified. We're going to invest more in the network than the changes and we're working through that. We think broadly speaking, we're on track to deliver that new commercial model, and we're actively engaged with the venues through that period and comfortable where it's at. Operator: Next, we have Matt Ryan from Barrenjoey. Matthew Ryan: I was just interested in some of the comments around TAB Time and some of the growth that you're seeing from your younger cohort. And if you could just provide any color on and what you're seeing there? Obviously, that's the pretty strong numbers, the benefits that that's giving to your business? Gillon Mclachlan: I think, Matt -- so it's Gil. I think the standout number in the deck is the fact that across the board of total turnover, the 18- to 24-year-old category grew by 14.2% -- over 14%. And that's what I feel when we're talking about our push to talk to sport as much as racing to be younger and more experiential and activate all our assets in that energetic way, whether it's TAB Time or TAB Takeover or whatever, that number is the one that jumps off the page, I think what it means to us is some different numbers in retail specifically. But 14% across the board, not just in retail in terms of the turnover increase, I think is one that says our brand repositioning is trying to get some traction. And it's early to talk to , I called out -- sorry, Matt, I've called out for the experiential part of that and that sort of energetic piece, but those products through omnichannel through retail that are obviously, I think, are important in all that, which I think you're calling out, certainly, that's my perception of your question. Matthew Ryan: Yes. That's what it looks like. I was going to also just ask about Phase 2 of the new retail commercial model. I think you mentioned that EBT may be arriving in the middle of this year. If you could just I guess, talk about what the key features are of that Phase 2? And any comments around phasing or timing? Gillon Mclachlan: Yes, we'll start rolling out the first week of July. EBTs are in production. I think what I'd say to this, they obviously aesthetically functionally compliance or all significant improvements. They facilitate the use of cash, clearly, but also tap and play functionality. There's -- I think on a compliance basis, we are future-proofing what we can do that to be a safe and compliant retail network. Not only new hardware, but all the software is being replaced and redeveloped so that ultimately, any changes -- well, first of all, the EBTs, you interact, there will be the same functionality and same look and feel as the TAB app on your phone. So -- and then any upgrades and product development that plays out through the phone will play out through the terminal. So there'll be -- so if we talk about having a seamless TAB experience, that will play out both in venue and cash in the same way is using your phone. I think that's significant progression. So not only how looks and feels, it's all of the side of the product, the fact that it's digital and cash and as obviously, have some compliance benefits as well. And it would talk to the future state of the full maximization of our license. So we think it's a very critical part of it. And we'll still start rolling out nationally first week of July. Operator: Next, we have David Fabris from Macquarie. David Fabris: Can I just start off with in-play betting. Great to see you've got the ACMA clearance now. Are there any more hurdles that we need to think about? And can you provide a time line for the rollout across all your jurisdictions? Or is this more just a New South Wales piece upfront? Gillon Mclachlan: Thanks, David. I think it's -- you can draw the line that we want to be in lockstep with regulators. And we have the approval in New South Wales, and we're obviously well engaged with all state regulators. But the ACMA sign-off was important. So we've paused because we don't want to be out of step with anyone. With that approval coming through and being confirmed yesterday, it means now we will actively start rolling out in New South Wales and then get the work through the approvals in each state. So the timing of those, I don't know, will be, but obviously, we're ready to go in New South Wales. I'm confident given the discussions we've had that we're now, with the ACMA approval that will play out, and we'll push ahead quickly. Does that make sense? David Fabris: Yes. No. Crystal clear. That's fine. I appreciate that. The next question, I don't know how you'll take this one, but just curious to understand the place of BetMakers. I mean are you signaling that there might be some shortfalls in your tech stack that BetMakers may have been helpful with? And I'm curious to unpack that piece because if we think about BetMakers, they've got retail terminals and a global tote. So any commentary there would be helpful. Gillon Mclachlan: Thanks, David. I'll make some comments. First of all, I don't believe we've been in the position for the last -- I mean whether it is 17 or 18 months. I don't think we've been in a position, and we've been clear with you guys that our primary task was to get fit and get our house in order. And I think the fact that we are working through that phase, and I do believe we are now organized in a position that if there was a corporate opportunity, we're in a position with our balance sheet and our operating model to look at that. I would say to you that we are still focused on growing our business operationally and executing on the strategic initiatives in front of us. If any corporate opportunity presents itself, it would have to be absolutely on strategy and any opportunity we will be absolutely disciplined about price and about how we look at it. With respect to BetMakers, we haven't made any comment. I know BetMakers did. I would say I don't think you should draw a line. The fact that it was a tech sale necessarily. There'll be some tech advances and other broader strategic opportunities in why we had to look at that. But ultimately, it didn't make commercial sense to us because we're going to be disciplined about things and they have to really stack up, absolutely. And I think there'll be other stuff around that people want to put to us from a position to talk to people, but you guys need to know it will have to be a great strategic fit, and we'll be disciplined about anything we look at. I would add, David, there in terms of the tech piece. I want to commend the work that our CTO has done in the last year and the stability of our platform and the way our tech environment is working both with an app and across retail and what we're able to do functionally and the upgrades and the controller set, I feel we made great progress on our technology. And I'm just adding to your specific question. Operator: Next question comes from Justin Barratt from CLSA. Justin Barratt: I just wanted to follow up on the TAB Live question. I appreciate you're developing the launch and rollout plan for New South Wales. But I just wanted to try to get an indication of how soon that could potentially start rolling out? And I guess whether that is included in your FY '26 CapEx guidance, if you think it can be commenced in the next few months. Gillon Mclachlan: Yes. So the TAB -- I'll let Mark talk to the CapEx guidance, but there is obviously EBTs in there, and they are -- they do have the functionality to do with TAB Live, but they are broader than that. Obviously, I think we're well progressed and positioned with state-based regulators. I don't want to preempt how long that would take. But I would say that we've been progressing our operating and operational plans for the rollout of TAB Live, confident in our position with ACMA, which was endorsed yesterday, and I think we're well advanced. And there'll be -- Mark might talk to the capital provisions. Mark Howell: Yes. Thanks, Gil. Yes. So the answer is yes. Within the -- on the life of the $120 million to $140 million, there is an allowance for terminal spend and having play stations in the second half, which will be rolled out into next year. There will obviously be some spend next year that will need to be incurred that I'll provide some guidance on that at the end of the year. And what I'd say to what my speaker notes earlier was that the uptick in run rate from a capital spend into half 2 will be largely driven by that terminal spend for the new -- to support the new retail and commercial models. Justin Barratt: Yes, fantastic. Okay. And then, Mark, just while I've got you, I just wanted to see if you could divulge a little bit more around the cost reductions that you saw in this first half. I appreciate some of that has been the annualizing of processes or cost out from the prior year. But I was just wondering if you could actually split it out and help us understand what potentially came from initiatives introduced in this financial year to date, please? Mark Howell: Yes. Most of it is -- the vast majority of it comes from -- Justin, from actions we took in FY '25. Obviously, the biggest one was the zero-based design that we did towards the back end of the financial year that's fine through this year and will play into half 2 as well. There's also some other smaller, call it, structural cost benefits that we took that part of that $13.9 million that we called out in the OpEx bridge. And then the other part, the sort of $10.5 million is really around sort of tighter spend on some discretionary costs. We've talked about some benefit from A&P timing and some of that A&P spend, as I called out, will be incurred, about $5 million of that will actually come into half 2 to support the 2026 FIFA World Cup. Justin Barratt: Yes, okay. So let me just to follow that up. I mean in terms of the A&P spend, is this a new baseline for us to sort of think about A&P spend going forward? Or is it just the timing event this half that sort of drove that cost reduction? Mark Howell: Yes. So about half of that $10.5 million was the A&P and that, as I said, that will go into half 2. So I think across the year, you'll see it sort of -- you should be able to work out then what that brings based on spending patterns. Operator: Next, we have Kai Erman from Jefferies. Kai Erman: First one is a bit of a follow-up from David's question earlier. You mostly flagged a sort of your CapEx reduction yet in the first half and given CapEx guidance for the full year, you'll likely continue to delever this year and you're below your target gearing? Excluding any sort of M&A, how should we think about uses of capital balance sheet, capital management going forward? Gillon Mclachlan: Thanks, Kai. Look, I think what I've sort of said to help you decide. There are a number of relatively sizable payments in the first half that impacted cash flow. So to call a couple of out, a big license is the $30 million value-add contribution where the liability is paid in the first half and then some sponsorships are weighted into first half as well. So -- and then I've given you sort of the capital envelope for the second half. So that's sort of as you think about cash and cash flow, and I suppose the other piece of the puzzle is we've said that we expect cash flow conversion to be in that 90% to 100% range. So I think that should give you sort of all of the building blocks as it relates to sort of capital allocation for the year. Kai Erman: And then as a follow-up, the sort of trend of sports outperforming racing has seemed to continue. Based on your turnover numbers, do you guys think you're sort of outperforming the market in those categories? Or that's pretty reflective of what the market has sort of done in the last half? Gillon Mclachlan: Well, I think it's hard to know that. We just focus on what we are doing. I think everyone will have a better idea over the coming days, but there's also a lot of numbers out there that no one gets to see. So we're just focused on being better and growing our business. I'd say also that sports outperformed racing is leveling out and stabilizing, which I think is pertinent. Operator: Next, we have Rohan Sundram from MST Financial. Rohan Sundram: A question on the national tote. Apologies, Gil, if you already touched on it, but how -- it looks like everything is progressing in terms of time lines, how would you describe the industry discussions and engagement to date? And maybe if you can just reiterate the upside for customers and for Tabcorp in achieving this? Gillon Mclachlan: Thanks, Rohan. I think I called out in my commentary that I'm appreciative of the support of all the PRAs and the ability to lean into this. There is -- it is change and we've had strong support. And I think there is a mandate to go to a national tote, it's unequivocal now. Our tech development is largely complete and getting regulatory approval in most jurisdictions. We think we've got a commercial model that could take us through. And so there's some executional stuff to play out, but we feel actually we're on target to deliver in this financial year in terms of what that brings. I think the liquidity that will bring will actually generate its own additional liquidity, and that's also important here. And with that, then that hopefully, we're confident will then also bring the opportunity for product development and broader international co-mingling and liquidity opportunities. So it will -- the liquidity will actually drive, I think, broader liquidity. We will develop products and hopefully not just products for racing, but also sports and also there is international co-mingling opportunities. So I think it's a very important thing for us. I'm pleased with where we are in a very difficult thing, both sort of politically, technically and commercially to get done. I feel we're going okay. Operator: I see no further questions at this time. I will now hand the conference back to Gillon for closing remarks. Gillon Mclachlan: Thank you. Thank you all for your questions. Thanks for dialing in. I think I'll just reiterate where I finished, we are operationally going better every day, but we've got work to do. We're very comfortable with our strategic plan and where we're going and we've got high conviction on that and I think certainly across the business, I think we're starting to see some of that come through in our numbers, whether it's younger customers or what's going on in retail. We've got a lot of initiatives on the boil that we need to get done. We've confirmed where we think the market is going, and we're pleased with but not overconfident. We know we've got lots to do, but happy to be where we're at, at the half. Thanks for your support ongoing. I look forward to seeing you guys out over the coming days. Appreciate it. Thanks, everyone. Operator: This concludes today's conference call. Thank you for participating.
Operator: Good day, and thank you for standing by. Welcome to Tabcorp Holdings Limited Half Year Results 2026. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Gillon Mclachlan, Managing Director and CEO. Please go ahead. Gillon Mclachlan: Good morning, everyone, and welcome to our results for the first half FY '26. I'm Gil Mclachlan, and I'm joined on the call by CFO, Mark Howell. I'm going to take the presentation as read and talk you through the key areas. Start on Slide 2. We released our revised game plan a year ago, and I believe we're executing on that plan. The numbers today reflect the progress we've made, and we're steadily building a culture of doing what we say we will do. And for me, that's critically important. I want to stress that we're midway through our turnaround plan, and there's still work to do. We're not yet at the level I want us to be, but I'm pleased we're on track against our FY '26 objectives, and we made good progress in the first half. Our improved execution continued with AFL Miss-By-One and Mega Pot during the footy season. We showed up strongly through the Spring Carnival with TAB Takeover and TAB Time continue to sell out. The Spring Carnival, however, was a customer's carnival. Yields from September and November were historically low because of an unusually high number of favorites winning major races. Despite those challenges, the diversification of our business allowed us to deliver a pleasing result. It was a company-wide effort, cost and capital discipline and improved omnichannel customer offering and growth in MAX. These are the outcomes of creating a better company with greater capability. If you look at Slide 6, we continue to execute our best pillar of the appointments of general managers to lead retail, MAX, marketing and strategy. People are everything, and these appointments are part of our continuous journey of improvement. I'll now refer you to Slide 7 and our second pillar. We are going to deliver a national Tote and our target remains the end of this financial year. One pool will increase liquidity of partners and in time, create new product opportunities. Australian racing also have a greater global reach and potential for more world pools, which will better connect us to a global calendar. I want to acknowledge the principal racing authorities in each state are working collaboratively on this opportunity. Our in-play product, TAB Live, is progressing. And we recently received ACMA clearance, and we are now working to build our launch plans in New South Wales. Discussions with other states are advanced. On this slide, I also want to call out our Integrity Services business MAX. With a consistent and growing business, and our key partnerships are renewed in the half, and we're looking at opportunities which could expand our footprint. And now I'll push you to Slide 8. The core pillar of our game plan is to deliver unrivaled omnichannel experiences. We continue to innovate with new products and a better looking field to create a greater, genuine racing and sports entertainment offering. TAB Time was the first to launch and a sell out every week since the project commenced. Sold out in a record 3 minutes on Sunday. TAB Takeover highlights how all of our assets coming together to deliver something unique in the market. We're delivering exclusive in-venue generosities that incorporate both racing and sport, encouraging more people to attend venues. We have a strong product and generosity pipeline for both AFL and NRL seasons which we launched in venues this week. Pushing to Slide 9 now. And the TAB brand is becoming more youthful, sports-oriented and experiential. Turnover among 18 to 24 year olds was up 14% in the first half '26. I want to touch on Liv Golf and Superbowl as an example how we're talking to a new cohort of sports fans. We know customers want live experiences and attention spans are getting shorter. Story sales and brand connection is increasingly more important. Tentpole assets like Superbowl and Liv Golf are examples how we are delivering in this space. We'll be activating our brand and entertainment propositions across these assets and showcasing these activations on TAB-owned channels. We'll be visibly branded more than just raced. Flemington and Randwick will continue to be our flagship properties, and we know we also need to connect with more sporting audiences. On Slide 10, some numbers there, and this refreshed offering is delivering. Digital and venue turnover increased 12% in the half, including growth in sport of 26% and 42% growth in the 18- to 24-year-old cohort. Looking ahead, next-generation EBT will commence rollout in July, and in conjunction with TAB Live will further differentiate our offer in the market. Slide 11. Our fourth pillar has been delivering growth underpinned by a sustainable retail channel. To this, we'll invest in retail, we're redirecting generosity, developing new products and rolling out modernized betting terminals to attract customers and grow turnover for benefit of TAB and our venue partners. This enables us to create a structurally profitable channel that is sustainable. This drives a new commercial model that improves alignment with our partner venues and simplifies the existing framework. Finally, Slides 12 and 13 showcase our media business. I said in August, the look and feel of scale will be different during the Spring Racing Carnival and the team delivered. We introduced new content, evolved our talent and overhauled our magazine programs to remain contemporary. Our leading tipsters have a permanent place in the home page of the TAB app. Every partner can access the tips with prefilled bets, continues our evolution to a true omnichannel experience. We have also strengthened our core rights portfolio, including Victorian media rights domestically and internationally. Our focus remains on enhancing our core offering and content and expanding distribution both in Australia and internationally. I'll now hand over to Mark to talk you through the detailed financial results. Mark Howell: Thanks, Gil. Good morning, everyone. As Gil mentioned, the growth in earnings in the first half '26 reflects a modestly improving turnover environment, strong strategic execution and cost and capital discipline. We have delivered a pleasing set of results given the impact of below-average wagering yields and have responded to the revenue environment with continued focus on cost control and disciplined capital investment. This has led to earnings growth, margin expansion and a reduction in our leverage ratio to 1.5x net debt to EBITDA at the end of the calendar year. Before I run you through the results in detail, there are 4 key aspects I want to call out. First, domestic wagering revenue pre-VRI impact fell by 2.5% despite modest growth in turnover due to below average yields during the half. The reduction in yield versus longer-term averages was due to run of customer-friendly results during the NRL AFL finals and through the Spring Racing Carnival. Some of these softer yield was recovered through the back end of November and in December when yields were very strong. We estimate the net yield impact across the period was around 15 basis points or about $10 million of net revenue when compared to longer-term averages. Second, the benefit of the reform Victorian wagering license applies for the whole 6 months, on the half versus only 4.5 months in the PCP. We estimate this delivered an incremental $12.2 million of EBITDA in the first half '26. Third, we continue to focus on improving cost discipline across the business. OpEx adjusted for the reform Victorian license decreased by 3.7%. This, together with some modest revenue growth and some benefits from Phase 1 of the new retail commercial model helped us deliver operating leverage and a 190 basis point improvement in EBITDA margin to 16.2%. Fourth, we continue to focus on efficient investment and capital. In the first half '26, CapEx reduced by 11% on the PCP to $51 million. This provides additional capacity to invest in growth for the second half including the rollout of new modernized betting terminals in retail venues to support an improved customer experience in venue and support our omnichannel strategy. Our leverage ratio reduced to 1.5x, providing us with significant balance sheet flexibility as we deliver our strategy. So now moving on to the results. Slide 15 sets out the first half '26 group financial results. Group revenue grew 1% to $1.34 billion, variable contribution increased 4.3%, while reported OpEx decreased 1.1%, delivering 14.3% growth in EBITDA to $217.4 million and 18.9% growth in EBIT to $110.2 million. Net interest expense decreased due to the reduced net debt as we continue to delever. As discussed in prior Tabcorp results, the high effective tax rate in P&L was driven by nondeductible weak license amortization and the interest discount unwind. And finally, NPAT before significant items, grew at 61.5%. An interim dividend of $0.015 per share has been declared, representing a 56% payout ratio and a 50% increase on the PCP. For the remainder of the presentation, I'll focus on 3 areas: the drivers of EBITDA growth, cost control to deliver operating leverage and a strengthened balance sheet. So turning to Slide 17, you can see the drivers of the 14% EBITDA growth delivered during the half. We are pleased to deliver this level of earnings growth in line with modest turnover environment, which, as I've already discussed, was also impacted by unfavorable yields. The incremental earnings uplift from the reform Victorian wagering license contributed an incremental $21.7 million to VC, which was offset by $9.5 million of costs to deliver a net benefit to EBITDA of $12.2 million. As discussed earlier, this was partly offset by the impact of VC of the low average wagering yields. Other benefits to earnings include the increase in Integrity Services VC as a result of the annual CPI increase as well as increased project work and some benefit to VC from Phase 1 of the new retail commercial model. Underlying costs improved by $13.5 million, which I'll turn to now. Slide 18 demonstrates the focus on costs, which we have had over the last 18 months with first half '26 OpEx benefiting from the annualization of actions taken in F '25 as well as the continuation of cost discipline on discretionary costs. Cost inflation remains an ongoing headwind, particularly in technology. So we have more than offset this for $13.9 million of cost reductions and a further $10.5 million of cost benefits relating to A&P timing and some other smaller cost-related actions. Looking forward in the second half, we continue our ongoing focus to offset inflation. We also expect to incur additional advertising and promotion spend of around $5 million in relation to the 2026 FIFA World Cup. Slide 19 demonstrates a continued focus on capital discipline with CapEx for the first half '26, reducing 11% to $51 million. Together with the increase in profitability, this has driven a 360 basis point return -- basis point improvement on return on invested capital relative to the prior corresponding period. Our F '26 CapEx forecast remains unchanged at $120 million to $140 million, implying an uplift in the second half run rate related to the rollout of the modernized betting terminals under the new retail commercial model. Turning to Slide 20 and cash flow. Underlying cash conversion was 86%, impacted by the timing of some large payments in the first half. This is in line with expectations and similar to the first half of last year. We continue to expect that on a full year basis, cash conversion to be between 90% and 100%. One point to note is that cash interest expense of $54.6 million includes $24.9 million of interest relating to our annual payment each August for the Victorian license. This will not reoccur in the second half. So all things being equal, the cash interest in the second half should be closer to $30 million. On to Slide 21. In November, we issued $300 million under a new Australian medium-term note program. The notes carry competitively priced fixed coupon of 5.99%, and a tenor of 5.5 years. The AMTN delivered on our 3 objectives being to diversify our funding sources, extend our average maturity, which now stands at 5.4 years and increased liquidity. The strong AMTN outcome reflected the significant improvement in the company's prospects over the last 18 months. Slide 22 shows that our balance sheet remains strong and provides us with the necessary flexibility and funding capacity to pursue with our strategy. At 31 December, leverage is 1.5x, well below our target range of less than 2.5x through the cycle. As I remarked at the outset, overall, this is a sound result, and we continue to deliver on our strategic agenda. I'll now hand you back to Gil for some closing remarks. Gillon Mclachlan: Thanks, Mark. I believe the company continued to improve over the last 6 months. Our turnaround plan is on track. Earnings have increased. We continue to deliver meaningful cost savings and our balance sheet is in good shape. We are focused on executing our strategic agenda of the remainder of FY '26 and beyond, and we're going to be relentless in executing it. We expect the wagering turnover environment in the second half to be similar to the first half, and I'm pleased with the progress and happy to take your questions. Operator: [Operator Instructions] First question comes from Andre Fromyhr from UBS. Andre Fromyhr: First, I just wanted to focus on the turnover environment. You called out in the second half, you're expecting similar conditions or the outlook looks similar to what you've seen in the first half. Is that a comment technically around sort of the level of growth in terms of like a year-on-year growth rate? Or are you talking more in overall dollars of turnover. And I'm wondering as well if you can distinguish between the cash environment and the digital environment because it looks like cash has outperformed in both the turnover growth and yield perspective in the half year just reported. Mark Howell: Yes. Thanks, Andre. It's Mark. We're talking about growth. So I think we talked about turnover growth for the half -- first half being around 0.3%. We have seen in that a range of what we call modest growth, and we sort of see that continuing. We don't -- I mean, in terms of the dissection between digital and cash, I'm probably not going to give you a forecast on that. But obviously, we're just sort of pleased with good trends we've been seeing as we've sort of exploited, I suppose, our omnichannel assets. Andre Fromyhr: Maybe another way to ask that, like in terms of the mix of your cash business versus digital like how much of a role is that playing? Because it looks like racing as a category was weaker than sport, but also is this part of the strategy playing out that you're having more success through building participation in retail venues? Gillon Mclachlan: Yes. Thanks, Andre, it's Gil. We certainly see -- we're very confident in our retail strategy. We see obviously the DIV off low basis, the digital venue going up. Cash is in positive growth. And with some of the strategic things we're announcing today, whether it be the approval from ACMA or different -- the success of different products in retail, it's central to our strategy, and we see underpinning our numbers. Andre Fromyhr: Maybe just last one for me and following up on the retail strategy. I understand Gil, you sort of launched the new framework with your venue members late last year, doesn't come into effect until the middle of this year. But what's been the reception so far? Is it right to assume that there are some venues that are going to be better off immediately versus worse off immediately? And are you expecting any sort of attrition in your venues as you transition to the new model? Gillon Mclachlan: Thanks, Andre. I mean we are -- we put retail at the center of our strategy, and we've called out the cash numbers and I called out the digital venue numbers that's been strong. The model is simplified. We're going to invest more in the network than the changes and we're working through that. We think broadly speaking, we're on track to deliver that new commercial model, and we're actively engaged with the venues through that period and comfortable where it's at. Operator: Next, we have Matt Ryan from Barrenjoey. Matthew Ryan: I was just interested in some of the comments around TAB Time and some of the growth that you're seeing from your younger cohort. And if you could just provide any color on and what you're seeing there? Obviously, that's the pretty strong numbers, the benefits that that's giving to your business? Gillon Mclachlan: I think, Matt -- so it's Gil. I think the standout number in the deck is the fact that across the board of total turnover, the 18- to 24-year-old category grew by 14.2% -- over 14%. And that's what I feel when we're talking about our push to talk to sport as much as racing to be younger and more experiential and activate all our assets in that energetic way, whether it's TAB Time or TAB Takeover or whatever, that number is the one that jumps off the page, I think what it means to us is some different numbers in retail specifically. But 14% across the board, not just in retail in terms of the turnover increase, I think is one that says our brand repositioning is trying to get some traction. And it's early to talk to , I called out -- sorry, Matt, I've called out for the experiential part of that and that sort of energetic piece, but those products through omnichannel through retail that are obviously, I think, are important in all that, which I think you're calling out, certainly, that's my perception of your question. Matthew Ryan: Yes. That's what it looks like. I was going to also just ask about Phase 2 of the new retail commercial model. I think you mentioned that EBT may be arriving in the middle of this year. If you could just I guess, talk about what the key features are of that Phase 2? And any comments around phasing or timing? Gillon Mclachlan: Yes, we'll start rolling out the first week of July. EBTs are in production. I think what I'd say to this, they obviously aesthetically functionally compliance or all significant improvements. They facilitate the use of cash, clearly, but also tap and play functionality. There's -- I think on a compliance basis, we are future-proofing what we can do that to be a safe and compliant retail network. Not only new hardware, but all the software is being replaced and redeveloped so that ultimately, any changes -- well, first of all, the EBTs, you interact, there will be the same functionality and same look and feel as the TAB app on your phone. So -- and then any upgrades and product development that plays out through the phone will play out through the terminal. So there'll be -- so if we talk about having a seamless TAB experience, that will play out both in venue and cash in the same way is using your phone. I think that's significant progression. So not only how looks and feels, it's all of the side of the product, the fact that it's digital and cash and as obviously, have some compliance benefits as well. And it would talk to the future state of the full maximization of our license. So we think it's a very critical part of it. And we'll still start rolling out nationally first week of July. Operator: Next, we have David Fabris from Macquarie. David Fabris: Can I just start off with in-play betting. Great to see you've got the ACMA clearance now. Are there any more hurdles that we need to think about? And can you provide a time line for the rollout across all your jurisdictions? Or is this more just a New South Wales piece upfront? Gillon Mclachlan: Thanks, David. I think it's -- you can draw the line that we want to be in lockstep with regulators. And we have the approval in New South Wales, and we're obviously well engaged with all state regulators. But the ACMA sign-off was important. So we've paused because we don't want to be out of step with anyone. With that approval coming through and being confirmed yesterday, it means now we will actively start rolling out in New South Wales and then get the work through the approvals in each state. So the timing of those, I don't know, will be, but obviously, we're ready to go in New South Wales. I'm confident given the discussions we've had that we're now, with the ACMA approval that will play out, and we'll push ahead quickly. Does that make sense? David Fabris: Yes. No. Crystal clear. That's fine. I appreciate that. The next question, I don't know how you'll take this one, but just curious to understand the place of BetMakers. I mean are you signaling that there might be some shortfalls in your tech stack that BetMakers may have been helpful with? And I'm curious to unpack that piece because if we think about BetMakers, they've got retail terminals and a global tote. So any commentary there would be helpful. Gillon Mclachlan: Thanks, David. I'll make some comments. First of all, I don't believe we've been in the position for the last -- I mean whether it is 17 or 18 months. I don't think we've been in a position, and we've been clear with you guys that our primary task was to get fit and get our house in order. And I think the fact that we are working through that phase, and I do believe we are now organized in a position that if there was a corporate opportunity, we're in a position with our balance sheet and our operating model to look at that. I would say to you that we are still focused on growing our business operationally and executing on the strategic initiatives in front of us. If any corporate opportunity presents itself, it would have to be absolutely on strategy and any opportunity we will be absolutely disciplined about price and about how we look at it. With respect to BetMakers, we haven't made any comment. I know BetMakers did. I would say I don't think you should draw a line. The fact that it was a tech sale necessarily. There'll be some tech advances and other broader strategic opportunities in why we had to look at that. But ultimately, it didn't make commercial sense to us because we're going to be disciplined about things and they have to really stack up, absolutely. And I think there'll be other stuff around that people want to put to us from a position to talk to people, but you guys need to know it will have to be a great strategic fit, and we'll be disciplined about anything we look at. I would add, David, there in terms of the tech piece. I want to commend the work that our CTO has done in the last year and the stability of our platform and the way our tech environment is working both with an app and across retail and what we're able to do functionally and the upgrades and the controller set, I feel we made great progress on our technology. And I'm just adding to your specific question. Operator: Next question comes from Justin Barratt from CLSA. Justin Barratt: I just wanted to follow up on the TAB Live question. I appreciate you're developing the launch and rollout plan for New South Wales. But I just wanted to try to get an indication of how soon that could potentially start rolling out? And I guess whether that is included in your FY '26 CapEx guidance, if you think it can be commenced in the next few months. Gillon Mclachlan: Yes. So the TAB -- I'll let Mark talk to the CapEx guidance, but there is obviously EBTs in there, and they are -- they do have the functionality to do with TAB Live, but they are broader than that. Obviously, I think we're well progressed and positioned with state-based regulators. I don't want to preempt how long that would take. But I would say that we've been progressing our operating and operational plans for the rollout of TAB Live, confident in our position with ACMA, which was endorsed yesterday, and I think we're well advanced. And there'll be -- Mark might talk to the capital provisions. Mark Howell: Yes. Thanks, Gil. Yes. So the answer is yes. Within the -- on the life of the $120 million to $140 million, there is an allowance for terminal spend and having play stations in the second half, which will be rolled out into next year. There will obviously be some spend next year that will need to be incurred that I'll provide some guidance on that at the end of the year. And what I'd say to what my speaker notes earlier was that the uptick in run rate from a capital spend into half 2 will be largely driven by that terminal spend for the new -- to support the new retail and commercial models. Justin Barratt: Yes, fantastic. Okay. And then, Mark, just while I've got you, I just wanted to see if you could divulge a little bit more around the cost reductions that you saw in this first half. I appreciate some of that has been the annualizing of processes or cost out from the prior year. But I was just wondering if you could actually split it out and help us understand what potentially came from initiatives introduced in this financial year to date, please? Mark Howell: Yes. Most of it is -- the vast majority of it comes from -- Justin, from actions we took in FY '25. Obviously, the biggest one was the zero-based design that we did towards the back end of the financial year that's fine through this year and will play into half 2 as well. There's also some other smaller, call it, structural cost benefits that we took that part of that $13.9 million that we called out in the OpEx bridge. And then the other part, the sort of $10.5 million is really around sort of tighter spend on some discretionary costs. We've talked about some benefit from A&P timing and some of that A&P spend, as I called out, will be incurred, about $5 million of that will actually come into half 2 to support the 2026 FIFA World Cup. Justin Barratt: Yes, okay. So let me just to follow that up. I mean in terms of the A&P spend, is this a new baseline for us to sort of think about A&P spend going forward? Or is it just the timing event this half that sort of drove that cost reduction? Mark Howell: Yes. So about half of that $10.5 million was the A&P and that, as I said, that will go into half 2. So I think across the year, you'll see it sort of -- you should be able to work out then what that brings based on spending patterns. Operator: Next, we have Kai Erman from Jefferies. Kai Erman: First one is a bit of a follow-up from David's question earlier. You mostly flagged a sort of your CapEx reduction yet in the first half and given CapEx guidance for the full year, you'll likely continue to delever this year and you're below your target gearing? Excluding any sort of M&A, how should we think about uses of capital balance sheet, capital management going forward? Gillon Mclachlan: Thanks, Kai. Look, I think what I've sort of said to help you decide. There are a number of relatively sizable payments in the first half that impacted cash flow. So to call a couple of out, a big license is the $30 million value-add contribution where the liability is paid in the first half and then some sponsorships are weighted into first half as well. So -- and then I've given you sort of the capital envelope for the second half. So that's sort of as you think about cash and cash flow, and I suppose the other piece of the puzzle is we've said that we expect cash flow conversion to be in that 90% to 100% range. So I think that should give you sort of all of the building blocks as it relates to sort of capital allocation for the year. Kai Erman: And then as a follow-up, the sort of trend of sports outperforming racing has seemed to continue. Based on your turnover numbers, do you guys think you're sort of outperforming the market in those categories? Or that's pretty reflective of what the market has sort of done in the last half? Gillon Mclachlan: Well, I think it's hard to know that. We just focus on what we are doing. I think everyone will have a better idea over the coming days, but there's also a lot of numbers out there that no one gets to see. So we're just focused on being better and growing our business. I'd say also that sports outperformed racing is leveling out and stabilizing, which I think is pertinent. Operator: Next, we have Rohan Sundram from MST Financial. Rohan Sundram: A question on the national tote. Apologies, Gil, if you already touched on it, but how -- it looks like everything is progressing in terms of time lines, how would you describe the industry discussions and engagement to date? And maybe if you can just reiterate the upside for customers and for Tabcorp in achieving this? Gillon Mclachlan: Thanks, Rohan. I think I called out in my commentary that I'm appreciative of the support of all the PRAs and the ability to lean into this. There is -- it is change and we've had strong support. And I think there is a mandate to go to a national tote, it's unequivocal now. Our tech development is largely complete and getting regulatory approval in most jurisdictions. We think we've got a commercial model that could take us through. And so there's some executional stuff to play out, but we feel actually we're on target to deliver in this financial year in terms of what that brings. I think the liquidity that will bring will actually generate its own additional liquidity, and that's also important here. And with that, then that hopefully, we're confident will then also bring the opportunity for product development and broader international co-mingling and liquidity opportunities. So it will -- the liquidity will actually drive, I think, broader liquidity. We will develop products and hopefully not just products for racing, but also sports and also there is international co-mingling opportunities. So I think it's a very important thing for us. I'm pleased with where we are in a very difficult thing, both sort of politically, technically and commercially to get done. I feel we're going okay. Operator: I see no further questions at this time. I will now hand the conference back to Gillon for closing remarks. Gillon Mclachlan: Thank you. Thank you all for your questions. Thanks for dialing in. I think I'll just reiterate where I finished, we are operationally going better every day, but we've got work to do. We're very comfortable with our strategic plan and where we're going and we've got high conviction on that and I think certainly across the business, I think we're starting to see some of that come through in our numbers, whether it's younger customers or what's going on in retail. We've got a lot of initiatives on the boil that we need to get done. We've confirmed where we think the market is going, and we're pleased with but not overconfident. We know we've got lots to do, but happy to be where we're at, at the half. Thanks for your support ongoing. I look forward to seeing you guys out over the coming days. Appreciate it. Thanks, everyone. Operator: This concludes today's conference call. Thank you for participating.
Operator: Good afternoon, and welcome to TransMedics Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Laine Morgan from the Gilmartin Group for a few introductory comments. Dorothy Morgan: Thank you. Earlier today, TransMedics released financial results for the quarter and full year ended December 31, 2025. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call, including during the question-and-answer portion of the call, that include forward-looking statements within the meaning of federal securities laws. Any statements made during this call that relate to future events, results or performance, including expectations or predictions are forward-looking statements. All forward-looking statements, including, without limitation, are examination of operating trends, the potential commercial opportunity of our products and services, the potential timing, benefits or outcomes of new clinical programs and our future financial expectations, which include expectations for growth in our organization and guidance and/or expectations for revenue, gross margins and operating expenses in 2026 and beyond are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. Additional information regarding these risks and uncertainties appears under the heading Risk Factors of our 10-K filed with the Securities and Exchange Commission on February 24, 2026, and our subsequent SEC filings and the forward-looking statements included in today's earnings press release, which are available at www.sec.gov and our website at www.transmedics.com. TransMedics disclaims any intention or obligation, except as required by law, to update or revise any financial projections, expectations, predictions or forward-looking statements, whether because of new information, future events or developments or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 24, 2026. And with that, I will now turn the call over to Waleed Hassanein, President and Chief Executive Officer. Waleed Hassanein: Thank you so much, Laine. Good afternoon, everyone, and welcome to TransMedics' Fourth Quarter and Full Year 2025 Earnings Call. Joining me today is Gerardo Hernandez, our Chief Financial Officer. I'm thrilled to be here tonight reporting our fourth quarter performance, capping off an outstanding year for TransMedics as we delivered our best operational performance to date. These results were achieved despite external challenges earlier in the year that were designed to distract and disrupt our sustained and transformational growth. I'm extremely proud of the resilience of our team and our business. In addition, I'm grateful to our global clinical users for their continued partnership with TransMedics and their trust in our OCS NOP program throughout the year. Based on our performance in 2025 and our continued investment in expanding the caliber and the breadth of our team, I am growing exceedingly confident in TransMedics' ability to overcome future challenges as we continue to innovate and disrupt antiquated and inefficient transplant processes in the U.S. and around the world. We are highly motivated and inspired by our mission to expand the utilization of available donor organs for transplantation while aiming to deliver the absolute best possible clinical outcomes for transplant patients worldwide. We strongly believe that TransMedics is just getting started, and we have our sights focused on new peaks, which we will share with you on today's call. Now let me proceed with discussing our business performance. On our last call, we stated our expectation that 3Q seasonality in U.S. transplant activities would be transient and that we should recover in 4Q. Today, we're excited to report that 4Q results that validate our views. 4Q 2025 was a banner quarter for our business and allowed us to conclude 2025 on a very high note. Here are the key operational highlights for 4Q 2025. Total revenue for 4Q '25 was $160.8 million, representing approximately 32% growth year-over-year and approximately 12% sequential growth from 3Q 2025. U.S. transplant revenue grew approximately 11% sequentially to $155 million, while OUS transplant revenue grew approximately 33% sequentially to $5 million. Finally, we delivered an operating profit of approximately $21.3 million in 4Q, representing approximately 13.2% of total revenue for fourth quarter while making substantial investments to fuel our growth. Now let me provide the financial results for the full year 2025. Total revenue for the full year 2025 was $605.5 million, representing approximately 37% growth year-over-year. We delivered operating profit of approximately $108.6 million, representing approximately 18% of total revenue for the full year 2025. Importantly, we ended the year with approximately $488.4 million of cash and cash equivalents. Shifting now to TransMedics transplant logistics infrastructure and performance. TransMedics transplant logistics service revenue for 4Q was approximately $28.6 million, up from $21.7 million in 4Q 2024, representing approximately 32% year-over-year growth and up from $27.2 million in 3Q, representing approximately 5% sequential growth. Throughout 4Q, we owned and operated 22 aircraft. In Q4, we maintained coverage of approximately 80% of our NOP missions requiring air transport, compared to 75% in the same period in 2024. We are very pleased by our strong performance in 4Q and full year 2025. That was fueled by growing OCS case volume and increased clinical adoption. Importantly, as we predicted, our performance enabled growth in overall U.S. liver and heart transplant volumes for the third consecutive year, driven primarily by OCS NOP cases. This is really unprecedented and frankly, humbling. As we do every year, I would like to share full year OCS transplant volumes and overall U.S. transplants per order. Here are the key highlights. For the third consecutive year, we grew the total OCS transplant volume. As of February 2022 -- 2026, our internal company data and UNOS database recorded records show that there were 5,139 total U.S. OCS transplants performed in the full year 2025. Let me repeat this. As of February 22, 2026, our internal company and UNOS database records show that OCS was responsible for 5,139 transplants performed in the full year 2025, up from 3,735 U.S. OCS transplants in 2024. The overall transplants represented approximately 26% of the total 19,833 U.S. transplants for the year for heart, lung and liver in 2025 and up from 20% of the 2024 U.S. transplant volume for the same organs. Importantly, for the third consecutive year, we saw growth in overall U.S. liver and heart and lung transplant volumes. For the full year 2025, there were 19,833 liver, heart and lung transplants, up from 18,894 in 2024. We strongly believe that the OCS NOP once again played a key role in driving overall liver and heart market growth due to the increased use of DCD and DBD donors in the U.S. Since 2022, U.S. national transplant volumes for liver, heart and lung grew at a rate of 25%, including OCS NOP transplant volume. Without OCS volume, national volumes for the same organs would have declined by approximately 1% over the same period. Please allow me to repeat this. U.S. transplant volumes for liver, heart and lung grew 25% with OCS NOP and would have declined by approximately 1% without OCS NOP case volume. Based on these facts, we believe that we are delivering on our vision of growing the overall U.S. market. Said differently, we are expanding the overall market, not just taking share. Now let me discuss our clinical adoption per organ. For liver, in 2025, OCS Liver transplant represented 4,197 transplants or 36% of the overall liver transplant volume in the United States. That is up from 26% in the same period in 2024. For heart, OCS transplant represented 854 cases or approximately 18% of the overall heart transplant volume, modestly up from the 17% seen in 2024. For lung, the numbers are small. OCS Lung transplants represented only 88 cases or approximately 2%. These are very small numbers, and we will discuss below how we are planning to address this particular topic. These results underscore the significant remaining greenfield potential for OCS NOP cases across all 3 organs. Specifically, we are focused on the ENHANCE Heart program to drive increased use in heart transplantation across the donor types. Finally, our DENOVO Lung clinical program will focus on reinvigorating the OCS Lung market segment in the U.S. while driving much needed expansion of the utilization rates for donor lungs. Both programs have been cleared by FDA and are in various stages of trial activation and enrollment in the U.S. We're looking forward to reporting the progress of these 2 crucial programs at the upcoming ISHLT in late April. Now let me move on to discuss our 2026 plans and guidance. As we stated before, we're excited for 2026 as we believe it will represent another critical and transformative year for TransMedics business given our focus on few, wide -- few wide-ranging and far-reaching catalysts for near, mid- and long-term growth for our business. Let me share with you a summary overview of all the growth catalysts we are focused on in 2026. First, OCS ENHANCE Heart program. Simply stated, Part A of this program is designed to move cardiac transplantation beyond preservation and into functional enhancement of donor hearts. Importantly, it was designed to significantly expand the time and distance limitations currently imposed on the 4-hour DBD heart transplants preserved using cold static storage. Initial feedback is promising, but we are still early in the process. Now let's talk about Part B. Part B of this program is designed to allow OCS to gain a potential new clinical indication in DBD Heart Transplant segment that are sub 4 hours preservation by demonstrating superiority of outcomes in a head-to-head comparison to current cold static storage modalities. Progress in Part B has been slightly impacted by our competitive dynamic as it relates to a cold storage arm of the trial. Specifically, there is a hesitation amongst competition to a head-to-head comparison between OCS and their static cold storage modality. We are confident in our ability to overcome this competitive dynamic that we somewhat expected. Importantly, we are committed to conducting this important part of our heart program with the highest level clinical evidence and robust protocol and randomization scheme. If successful, one or both parts combined, could dramatically increase the use of OCS Heart in the U.S. and should have a huge impact on our transplant volume and top line revenue growth. Next is OCS DENOVO Lung program. As I've stated before, in our humble view, this is the last real chance for lung transplant community to experience the benefits of machine perfusion and integrated NOP services in lung transplantation in the U.S. If successful, this program would resurrect a sleeping giant of lung transplant market and would add significant lung clinical adoption and top line revenue growth for TransMedics. Next is bringing the NOP model to Europe and rest of the world. This program is actively launching in Italy and few other European countries have expressed strong interest in exploring the NOP model in their local geography. This program has the potential to significantly grow our OCS market adoption in Europe. Expanding our commercial activities in Europe has the potential to nearly double our transplant total addressable market for TransMedics. We are actively engaged in building our European NOP transplant air and ground logistics network while also expanding our European clinical support infrastructure. Next is the OCS Kidney program. This represents our next frontier and will be the first organ to launch on our OCS Gen 3.0 technology platform. OCS Gen 3.0 will have a completely redesigned technology and perfusion systems that is smaller, lighter and with a much lower part count. Importantly, it's designed for automated assembly and was designed to operate with a high degree of reliability. There are currently more than 20,000 deceased kidney transplants in the U.S. annually and an additional 8,000 to 9,000 kidneys that are discarded annually in the U.S. for only prolonged ischemic times. To our knowledge, the OCS Kidney system will be the first and only warm perfusion oxygenated kidney platform for kidney transplantation, used from the donor to the recipient. Currently, the development program is running in full gear throughout 2026 to get the platform ready for FDA trial by early 2027. Next is OCS Gen 3.0 for liver, heart and lung systems. This program is running in parallel to the kidney program to upgrade our current liver, heart and lung system and help grow our clinical adoption rates and scale our operations. Finally, we are exploring the potential to capitalize on the U.S. transplant modernization initiatives, driven by HRSA, CMS and U.S. Congress. Specifically, we are exploring if TransMedics can be a more integrated contributor to the national transplant ecosystem in the U.S. The goal is to maximize donor organ utilization for transplantation and continue to save more American lives and save significant health care dollars. As you can see, these are significant potential short, mid- and long-term catalysts for our business, and we are laser-focused on ensuring successful execution of these initiatives throughout 2026. That being said, we're also cognizant of a few operational challenges that could influence the pace and timing of these initiatives. First, as stated, we are still building out our logistics infrastructure in Europe, which could moderate the initial pace of our EU NOP launch as we ensure we have the right foundation in place. Second, timing of the full DENOVO trial accrual will depend on how long and how the lung transplant market adopts machine perfusion and NOP, which remains to be proven. Third, timing of ENHANCE Part B completion will be influenced by some of the inertia created by competitive dynamics for the cold storage arm in the marketplace. Fourth, the -- very common and now, I hope, well understood annual phenomena of potential Q3 seasonality in U.S. transplant market that temporarily slows down transplant activities. And finally, ramping our infrastructure and clinical staffing to meet the growing demand for OCS NOP will be critical to achieve our full growth potential in 2026. With all this in mind, we are setting our revenue guidance for full year 2026 between $727 million and $757 million, representing approximately 20% to 25% growth over full year 2025. With that, let me turn the call to Gerardo to cover the detailed financial results for the quarter. Gerardo Hernandez: Thank you, Waleed. Good afternoon, everybody. I am pleased to share TransMedics Fourth Quarter 2025 Results. Please note that a supplemental slide presentation with additional details is available on the Investors section of our website. As Waleed highlighted, we sustained strong momentum through the fourth quarter, closing the year with solid performance following an expected seasonally softer third quarter in U.S. transplant activities. As discussed in our Q3 call, our rapid growth in prior years often marked the natural seasonality in the U.S. transplant activity. At our current scale, those dynamics are more visible. However, as we have seen, these fluctuations tend to normalize over the full year. Total revenue for the quarter was approximately $161 million. U.S. transplant revenue was approximately $155 million, up 33% year-over-year and 11% sequentially. By organ, liver contributed with $127 million, heart [ $26 million ] and lung $2 million. International revenue was $4.8 million, up 24% year-over-year and 33% sequentially. Revenue by organ was $3.9 million in [ heart ], $0.2 million in lung and $0.7 million in [ liver ]. Growth was primarily driven by liver and heart. While we continue to make progress in our international expansion plans, the business remains at an early stage and quarterly variability is expected due to reimbursement and market dynamics. Product revenue for the fourth quarter was $100 million, up 34% year-over-year and 15% sequentially, reflecting continued momentum across both liver and heart programs. Service revenue for the fourth quarter was $60 million, up 29% year-over-year and 8% sequentially. The primary driver of growth was logistics revenue, which increased 32% year-over-year and 5% sequentially, reflecting continued expansion and strong utilization of our aviation fleet compared to 2024. Together, these results reflect strong order utilization, continued OCS adoption and increasing leverage of our integrated logistics platform. Total gross margin for the quarter was approximately 58%, down 110 basis points year-over-year and 70 basis points sequentially. The year-over-year decline primarily reflects higher clinical service costs associated with the expansion of our NOP program, increased logistic discounts and higher freight expenses. The sequential decrease was mainly, driven by inventory-related charges, associated with our year-end inventory procedures and higher freight costs from expediting shipments to replenish our costs. Total operating expenses for the fourth quarter of 2025 were $72 million, up 14% year-over-year and 18% sequentially. The year-over-year growth was mainly driven by increased R&D investment to advance our innovation pipeline and expand product development capabilities, including targeted additions to our technical and development teams. SG&A growth reflected continued IT infrastructure expansion, strategic growth initiatives and selected headcount investments to support scale. Sequentially, the increase was largely driven by higher R&D investments related to development and testing activities as well as incremental SG&A investments supporting growth and expansion initiatives. Operating income for the quarter was $21 million, 146% year-over-year and down 9% sequentially. The sequential decrease was primarily driven by higher operating expenses associated with increased investments during the quarter. Operating margin expanded to 13%, compared to 7% in the fourth quarter of 2024. Net income for the fourth quarter was $105 million, a significant increase both year-over-year and sequentially. Net profit included an income tax benefit of $83.8 million, compared to an income tax provision of $0.1 million in 2024, mainly related to the release of the valuation allowance. The release of the valuation allowance on our deferred tax assets is not merely an accounting adjustment, but a strong indication of our confidence in the sustainability of our long-term profitability grounded in continued growth and scalability. This decision follows a thorough and rigorous evaluation under applicable accounting and tax standards. Earnings per share were $3.08 and diluted earnings per share were $2.62 for the fourth quarter of 2025. We ended the year with $488 million in cash, up $22 million from September 30, 2025, driven by strong operating cash generation and continued disciplined working capital management. Overall, our fourth quarter performance reflects another quarter of strong execution, operational efficiency and continued advancement across our clinical programs. As we operate at a greater scale, the TransMedics team continues to demonstrate focus and discipline, investing in growth while maintaining strong financial and operational performance. Now let me summarize our full year 2025 results. Full year revenue reached approximately $605 million, representing 37% growth over 2024. Growth was led by liver, which grew almost 49% and continued strength in heart at almost 15%. Lung revenue was lower compared to 2024. U.S. transplant revenue reached approximately $585 million, reflecting a 38.6% growth year-over-year. Our international transplant revenue ended the year at $16.7 million, representing a 9.3% year-over-year growth, primarily driven by liver and heart. Breaking it down by categories, product revenue totaled $372 million, while service revenue contributes with $233 million. Breaking it down by organ, liver revenue reached $461 million, heart revenue reached $126 million and lung reached approximately $15 million. Flight School revenue for the year was $4 million. Gross margin for the full year was 59.9%, up from 59.4% in 2024, reflecting logistics efficiencies and scale benefits. A portion of these gains was strategically share with customers through logistic discounts enabled by our integrated network. Margins also reflects incremental costs related to our double shifting programs and higher expedited hub replenishment expenses. Total operating expenses were $254 million, up 13% year-over-year. The increase was primarily driven by a 23% increase in R&D investments, reflecting continued investment in our innovation pipeline and product enhancements. SG&A grew almost 10% year-over-year, reflecting ongoing expansion of our IT infrastructure and investment in strategic growth initiatives. Operating margin expanded from 8.5% in 2024 to 18% in 2025. A significant achievement in a year where gross margin improved only modestly. This performance demonstrate that the primary driver of margin expansion in our model is operating leverage as revenue scale, supported by a strong discipline to cost management. Net profit for the year was $190 million, compared to approximately $36 million in 2024. Results benefit from strong operating performance as well as the previously mentioned onetime income tax benefits recognized during the fourth quarter related to the deferred tax assets. This performance positions us well as we enter 2026 with continued growth momentum and a strong financial foundation. Earnings per share was $5.60 and diluted earnings per share was $4.87. Now turning to our total revenue guidance for 2026. We anticipate revenue growth of 20% to 25% over the full year of 2025, which translates to a full year revenue range of approximately $727 million to $757 million. Growth is expected to be driven primarily by the increased order utilization, continued OCS adoption and expansion of our service revenue. In 2026, we expect similar seasonal dynamics in the U.S. transplant activities consistent with prior years. In terms of gross margin, we expect overall margins to remain around 60% over the long term. This outlook reflects factors influencing both product and service margins beyond mix alone. As we expand internationally and continue investing ahead of growth, we may experience some near-term pressure. However, we expect this impact to normalize as volumes scale across markets. In terms of capital allocation, our focus remains on driving long-term value. We are concentrating our investments in 3 key areas: first, fueling growth through continued R&D investments, strengthening our NOP network and targeting expansion into selected international markets. Second, building a stronger foundation by implementing systems to simplify and optimize processes across the business, improving efficiency as we grow. And third, enhancing our infrastructure and strategic optionality, including our planned move to a new global headquarters to accommodate growth, ongoing upgrades to expand our manufacturing and project development capabilities and our continued evaluation of strategic opportunities that could further strengthen our platform for the future. Collectively, these initiatives are preparing TransMedics for its next stage of expansion as we move beyond the 10,000 transplant milestone. We continue to make progress on our double shifting pilot program to improve fleet utilization and expect to see early results in the first half of 2026. These insights will help us determine the rightly sized and utilization model to maximize capital efficiency. We achieved our goal of owning 22 jets by the end of 2025. While there are no current plans to increase the fleet in 2026, we remain open to acquiring additional aircraft when the right conditions are in place, whether to enhance U.S. capacity or to support international expansion. In 2026, we plan to meaningfully increase investment and with particular focus on advancing our clinical programs, completing the final development phase of our OCS Kidney program and continued development of our next-generation OCS platform. It is important to note that approximately half of the incremental investment is transitory in nature and as these initiatives are completed, expense levels should normalize, allowing us to capture additional operating levels over time. Based on the current revenue guidance for 2026, we expect operating margins to be up to approximately 250 basis points below 2025 full year levels, primarily reflecting the timing and scale of these investments. As investment levels normalize and the business continues to scale, we would expect operating margins to resume expansion. We continue to expect operating margins to approach 30% by 2028. As shared in previous quarters, we may see some fluctuations as we expand international and invest ahead of growth. However, we remain confident in the long-term direction and scalability of our model. As we look ahead, we see meaningful growth opportunities from multiple sources beyond continued organ utilization and OCS adoption including the expected impact of our clinical programs, advancement OCS kidney program and ongoing international expansion efforts. Together, these initiatives expand our addressable markets and reinforce the long-term growth potential of our platform. With a proven track record of delivering on what we set out to do, we are well positioned to continue creating long-term value while expanding access of transplantation and giving more patients as second chance at life. And with that, I'll turn the call over to Waleed for closing remarks. Waleed Hassanein: Thank you so much, Gerardo. Overall, we're very proud of our 2025 results as we delivered 37% year-over-year growth and achieved positive cash flow from operating activities. We did this while investing in our pipeline and continuing to build our infrastructure to capitalize on our highly differentiated OCS technology and service offering. We are now laser focused on executing in our initiatives in the potentially transformative 2026 year and are excited about what's ahead. In conclusion, we are humbled and proud of the significant life-saving impact of our OCS technology, NOP service and dedicated team and remain committed to our mission of expanding access and improving clinical outcomes to patients in need of organ transplantation worldwide. With that, I will now turn the call to the operator for Q&A. Operator? Operator: [Operator Instructions] We will take our first question from Allen Gong from JPMorgan Chase & Company. K. Gong: Thanks for the question. Congrats on the really good quarter to end the year. I guess my question is going to be on guidance if I'm limiting it to one, you're guiding a step above TheStreet even after factoring in being the quarter when we think about the midpoint of the range. You clearly have a lot of moving parts next year between underlying growth in liver and heart and the enrollment of the clinical trials and you also have Italy in the back half. So when it comes to those 3 dynamics, can you talk broadly about your expectations for those and how that factors into your guidance philosophy? Waleed Hassanein: Thanks, Allen. As always, we take guidance very, very seriously at TransMedics and we have huge opportunities ahead of us as we outlined, Gerardo and myself. But also we have a few challenges -- a few moving dynamics. So in our guidance, we factored in all of the above and issued what we believe is a realistic guidance that would enable us to execute and let the execution and performance dictate what do we do if we need to revisit the guidance. So we feel confident in the guidance that we are putting forth here. And as it bakes in all the uncertainties or the opportunities and uncertainties in front of us. So again, we would go and execute, and we let the execution and the results and the performance dictate if we need to revisit the guidance as we move forward throughout the year. Operator: We will take our next question from the line of Josh Jennings from TD Cowen. Joshua Jennings: Great to see the strong start to the end of the year. I appreciate the breakout of the catalyst late in 2026. I was hoping to ask a question on OCS Liver. Waleed, you've talked publicly about a registry publication coming up in the near term that it could be a huge catalyst for liver adoption. I know you can't front run the results here, but I was wondering, one, just -- I mean, could we see some cost effectiveness data published in the near term and just thinking about that element of OCS Liver as new competition is coming into place? And just are you seeing any competitive headwinds out there that are new in 2026 for the OCS Liver franchise? Waleed Hassanein: I think -- let me address that question in 3 pieces. The first piece is there are health economic data on liver transplant that's already published, many of them for the last 2 years, single center experience. So that's already in the print. But what's coming is really the unequivocal drop-the-mic statistical superiority in the most important outcomes after liver transplantation, which would justify and support all the evidence that's been built in having more than 14 or 15 publications now already in print out there. Those publications that are coming, they are aggregated of thousands of cases, they're coming out of our registry and many of them are already under review. I cannot comment when are they going to come out, because obviously, I cannot interfere with the review process, given that these are very high impact journals. The last piece, the comment about competition. Listen, we're very cognizant of everything that moves in the field of organ transplant. We are not seeing competitive dynamic impacting our ability to execute in 2026 and beyond. And I will leave it at that. Operator: Our next question comes from the line of Bill Plovanic from Canaccord Genuity. Zachary Day: It's Zachary on for Bill. Just a quick one on can you provide more details on NOP Connect 2.0? I believe you talked about that in the last earnings call saying it would provide you operational efficiencies. Can you talk about what you've seen early on so far? Waleed Hassanein: Thank you, Zach. We've seen a lot. We've seen -- it's now at the platform. I would say the vast majority of our cases are now coming through the NOP Connect 2.0, and we're seeing efficiency in the management. We're seeing efficiency in the billing. But again, these are early days, early quarters. We are -- as we look forward, we see continuous improvement and expansion of our digital ecosystem, this is our -- this is going to be our second legacy after the OCS. This digital ecosystem is now fully integrated, fully supporting significant portion of the national transplant volume in the U.S. And our commitment is to continue to support it, continue to expand it to provide the best service for our customers, but the best and the broadest transparency about the status of the organ, the management of the organ as well as the financial billing around TransMedics services. So we're very, very encouraged by what we're seeing, and we're going to continue to make strategic investments in the digital platform to continue to expand and efficientize our market adoption of OCS. Operator: Our next question comes from the line of Suraj Kalia from Oppenheimer & Company. Suraj Kalia: Waleed, Gerardo, Tamer, Nick, excellent quarter. Can you hear me all right, Waleed? Waleed Hassanein: We can hear you loud and clear, Suraj. Suraj Kalia: Perfect. So Waleed, forgive me, I'll just kind of quickly sneak in 2. It seems like you guys gained about 400 bps of liver share in Q4. Why was that? And Waleed, your comments about Part B of ENHANCE, look, the numbers are suggesting you guys are going to exit FY '26 with approximately 6,300 organs. But if I parlay your clinical trial commentary, it means like you're not expecting a lot of contribution. You all must have put in some safeguards in place if Paragonics or others threw a wrench in the control arm, could you share some additional color on how do you keep the ball moving in Part B? Gentleman, congrats again. Waleed Hassanein: Thank you, Suraj. The first part of the question about the liver execution. Listen, this is a testament to the outcomes of the OCS Liver. This is a testament to our clinical leadership of the liver program. This is pure TransMedics execution excellence, period, full stop. So that answer Part 1. Part B, listen, we were not -- this is not our first rodeo. We are the company that have supported and completed the largest number of randomized and single-arm trials in the history of organ transplant. None of these cold static storage technologies have ever seen one FDA randomized or non-randomized trial. So we were prepared and we somewhat expected this. We will execute Part B, and it will be, hopefully, a significant success for TransMedics. It might take a few extra months to navigate through this dynamic, but the bottom line is we're extremely confident in our strategy, in our design, in our technology. And it says a lot when the control arm is worried about randomizing against OCS. So again, we're humbled by it. We're not letting that distract us from the task at hand. And as we committed, we are going to complete the study with the best protocol and the best randomization and with the control arm. Operator: Our next question comes from the line of Ryan Daniels from William Blair. Matthew Mardula: This is Matthew Mardula on for Ryan. Congrats on the quarter. And I kind of want to piggyback on that question, but I want to focus on the feedback you have received regarding the heart clinical trial. Given that you have already mentioned doing a handful of heart transplants for the trial, and I know it is still early in the process and ongoing, but I'm curious to hear what transplant surgeons feedback has been on the trial as they progress. And I kind of believe you previously mentioned in meeting all expectations. So I'm curious how that has trended? And is there anything in particular, transplant surgeons have called out regarding the device and maybe express more interest in using the device more in the future. Waleed Hassanein: If I tell you -- if I answer that -- it's a great question, Matt, and I appreciate the question. But if I answer that question, I might as well have seen the results. The trial is just early in the process. It's good feedback. It speaks to the value of everything we're trying to execute. I would leave it at that, and I hope to have more meaningful presentations by users of the technology, not by TransMedics, at the ISHLT symposium. Operator: Our next question comes from the line of David Rescott from Baird. David Rescott: Great. Congrats on the results here. I wanted to ask -- I've been hopping around a bit. So I'm not sure if it's been covered yet, but the CMS' proposal on some of the OPO changes. There's obviously a lot of stuff going on just on the OPO front in general. So wondering if you could give us some updated thoughts on the state of affairs, just on the broader OPO environment and whether or not there's any benefit that you could see or if this is building out some of the thoughts on the OCS service in general and how we should think about this potentially over the longer term? Waleed Hassanein: Thank you, David. All I could say is organ transplant system in the United States has gone through really significant transformation, hopefully, to the positive. We are supportive of the CMS language, proposed language. We're supportive of Senator Wyden's proposed bill to open up the historical closed transplant system to more competition, more transparency, more efficiency, more high standards of execution and metric -- performance metrics and we are going to try to play a bigger role to support the vision, the growth in overall transplant in the United States, saving more American lives, delivering cost-effective therapy to patients in need, that's costing CMS billions and billions of dollars, but also support existing OPOs in their missions. So we look at our role as -- it's a win-win opportunity for TransMedics to play a bigger role, but also support existing OPOs. That's all I can comment on at the moment. Operator: Our next question comes from the line of Daniel Markowitz from Evercore ISI. Daniel Markowitz: Congrats on the quarter. I wanted to ask on the operating margin guide for 2026. It sounds like the gross margins may see some volatility as you expand internationally, and then OpEx as a percent of sales is expected to increase as well to get to that 250 bps of contraction year-on-year. I guess, can you give us the breakout of how much of the margin contraction is coming from some expansion dynamics that weren't really areas of investment yet in 2025, things like international expansion, the trial spend that are kind of, I guess, onetime in nature. And with so many exciting investment opportunities, what are you looking at that tells you that it will make sense to get the business back to significant margin expansion in 2027 and 2028 as opposed to continuing to bring money into investments. Gerardo Hernandez: Right. So the big drivers of almost 50% of the incremental investment that we have in 2026 is driven by really 3 elements. One is our -- the completion of our clinical programs, OCS ENHANCE and DENOVO. We have -- the second part is the completion of our OCS Kidney development. And the third one is the continued development of our OCS Next Generation or 3.0 as we are calling it recently. Those 3 elements account for -- I think with more than half of incremental investment. And those, by nature, are transitory. So once we complete those elements, that's what gives me the confidence that spend should normalize and then we should be able to start capture an operating leverage as we continue to grow. I hope that answers the question. Operator: Our next question comes from the line of Mike Matson from Needham & Company. Michael Matson: Yes. So just wanted to get some clarification on your comments on the Part B of the ENHANCE trial around the competitive issue that you called out. So I guess the competitor is static cold storage. So does that -- I guess I would have assumed that was just putting the organ on ice, but does that really mean one of these cooler type technologies that's out there? And then is the competitor sort of trying to prevent their product from being used in the trial or being enrolled in this trial, is that the issue? I guess I don't completely understand what's happening there. Waleed Hassanein: Yes. That's exactly what's happening. Not everybody is using ice. Static cold storage boxes using face changing elements are being used. And the makers of that styrofoam box is refusing to randomize their technology to ours. Michael Matson: And I mean, I guess, how do you plan to kind of work around that or address that. Waleed Hassanein: Wait and see. Yes. I mean we have to -- we had hoped that this won't be the case, but we are kind of somewhat expecting it. So we have a plan to bypass that. And at the end of the day, it's the transplant programs that need to take control of the trial and TransMedics will support them with the right control arm that would be acceptable to FDA. Anymore questions? Operator: Yes, Mr. Hassanein, we have our next question coming from the line of Chris Pasquale from Nephron. Christopher Pasquale: Waleed, you had a really nice quarter in liver, but heart and lung were both a little bit lower than we expected. Was there anything that you noticed in those segments of the business around the end of the year? In particular, I'm wondering if the trials, which got going a little bit slower than expected might have caused any disruption or if there are any other dynamics there that would sort of explain the deceleration we saw? Waleed Hassanein: The lung -- Chris, as you know -- thank you for the question. The lung as you know, it's a rounding error for us. So really, I wouldn't read too much into the lung dynamic. I think most -- frankly speaking, most of the lung centers were waiting to see the FDA approval to start launching into DENOVO. The heart, I would say, has a similar impact, but also there has been a couple of other activities in trials wrapping up in the second half of 2025 that may have played a role. One is the cold perfusion trial, but that's wrapped up. And then the other one is a couple of centers decided to do something -- that they are doing organically. And that, again, we will address all these dynamics at the ISHLT symposium. As we sit here, we don't -- any of these dynamics, we believe, wholeheartedly, it's transient in nature. And all that's going to get washed with ENHANCE firing up and DENOVO hopefully getting initiated here pretty soon. So we're looking forward to seeing the impact of ENHANCE Part A and Part B. And hopefully, we can reverse these dynamics throughout '26 and then to '27. Anymore questions, operator? Operator: No, sir. We don't have any further questions. That concludes our question-and-answer session. I will now pass it back over to our CEO, Waleed Hassanein, for closing remarks. Waleed Hassanein: Thank you all very much, and looking forward to speaking again to report on Q1 results. Have a wonderful evening, everyone. Thank you. Operator: The meeting has now concluded. Thank you all for joining. You may now disconnect.