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Operator: Hello, and welcome to the Geron Corporation Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the call over to Dawn Schottlandt, Senior Vice President, Investor Relations and Corporate Affairs. You may begin. Good morning, everyone. Welcome to the Geron Corporation Fourth Quarter 2025 Earnings Conference Call. Before we begin, Dawn Schottlandt: Please note that during the course of this presentation and question and answer session, we will be making forward-looking statements regarding future events, performance, plans, expectations, and other projections including those relating to our 2026 financial guidance, the expected benefits and other impacts of our strategic restructuring plan, our current Rytelo commercialization strategy and related opportunities, the therapeutic potential of Rytelo, other anticipated clinical and commercial events and related timelines, the sufficiency of our financial resources, our ability to access additional debt financing, and other statements that are not historical fact which, of course, include risks and uncertainties that cause actual events, performance, and results to differ materially from those contained in these forward-looking statements. Therefore, I refer you to the risks and uncertainties described in today's earnings release, under the heading Risk Factors in Geron Corporation’s most recent periodic report filed with the SEC which identify important factors that could cause actual results to differ materially from those contained in these forward-looking statements, and future updates to Geron Corporation’s risks and uncertainties including in its upcoming annual report on Form 10-Ks. Geron Corporation undertakes no duty or obligation to update its forward-looking statements. Joining me on today's call are several members of Geron Corporation’s management team, Harout Semerjian, Chief Executive Officer; Ahmed ElNawawi, our Chief Commercial Officer; Doctor Joseph Eid, Executive Vice President of Research and Development and Chief Medical Officer; and Michelle Robertson, our Chief Financial Officer. With that, I will turn the call over to Harout to review Geron Corporation’s progress and strategy. Harout Semerjian: Thank you, Dawn, and good morning, everyone. The strategic alignment work we completed in 2025 positions Geron Corporation for growth in 2026 and places us on a path to becoming the hematology powerhouse in the long term. In 2025, we made deliberate choices to evolve the company into a more commercially minded organization. We strengthened our leadership team, developed a more focused commercial strategy, and improved financial discipline by aligning our financial resources and people to our growth priorities. Rytelo's growth strategy is built on three initiatives—two commercially driven and one medical affairs driven. From a commercial side, we are continuing to increase awareness and education for Rytelo amongst U.S. health care professionals with a refined engagement plan to help identify appropriate second-line patients faster, and complementing our field force efforts by increasing our in-person and digital presence in hematology forums through accelerated investment in our surround sound approach. From a medical affairs perspective, we are expanding our research partnerships and IST programs with the U.S. hematology community to grow our knowledge and real-world experience with Rytelo. Ahmed and Joe will discuss these initiatives in more detail. As for our Q4 2025 and full-year results, Rytelo's fourth quarter net revenue was $48,000,000 in line with our expectations. For the full year 2025, we delivered Rytelo net revenue of $184,000,000, a meaningful number for a hematology drug in its first full commercial year. Total operating expenses for the full year 2025 were approximately $255,000,000 in line with our previous guidance of $250,000,000 to $260,000,000. Looking ahead, we are laser focused on operational execution and delivering for patients. Our Rytelo net revenue expectations for 2026 is $220,000,000 to $240,000,000 with the underlying assumption of driving consistent quarter-over-quarter demand growth. Our 2026 total operating expenses are projected to be between $230,000,000 and $240,000,000, roughly a $20,000,000 year-over-year reduction at the midpoint. This guidance reflects a streamlined company aligned to create near and long term growth and value. The market opportunity for Rytelo is clear, and it is validated by the IMerge data, Rytelo's FDA label, and the NCCN guideline. We are confident in our Rytelo revenue growth strategy and our ability to execute. With that, I will turn it over to Ahmed to provide more details on Rytelo's commercial performance and execution. Ahmed ElNawawi: Thank you, Harout. Rytelo’s performance in 2025 establishes a solid base for us to execute our commercial strategy and further grow demand in 2026. In the fourth quarter, we achieved 9% demand growth for Rytelo compared to the third quarter, and a 13% increase in prescribing accounts, expanding our footprint to approximately 1,300 accounts. First- and second-line patient starts on a rolling twelve-month basis were approximately 30%. Based on our analysis, we believe market conditions for Rytelo in second-line lower-risk MDS are favorable. The movement of luspatercept into the first-line setting has further clarified the second-line opportunity for Rytelo in appropriate patients, which is well positioned based on the IMerge data, NCCN guidelines, FDA label, and the growing real-world experience. Our commercial strategy is designed to ensure that Rytelo reaches more eligible patients at the right point in their treatment journey and when they are most likely to benefit from Rytelo. Our commercial execution is focused on three core initiatives. First, targeted engagement with high-volume community accounts. We are prioritizing centers that treat earlier line and second-line patients with our field force engagements, as we continue to engage with lower-volume accounts, or those primarily treating salvage patients, through digital tactics. Second, we are increasingly investing in the most effective marketing channels. This includes a strong emphasis on digital, non-personal promotion, and third-party educational platforms to create what we describe as a 3D surround sound for Rytelo, ensuring consistent high-quality messaging across multiple touch points. And third, we are executing cross-functionally through effective account management, leveraging data presented at ASH 2025 to proactively address cytopenias and highlighting the potential association with response while positioning Rytelo as the standard of care in appropriate second-line patients regardless of their RS status. In terms of patient opportunity, our primary commercial focus in 2026 is on eligible second-line lower-risk MDS patients, which we currently estimate to be approximately 8,000 patients in the U.S. Rytelo's broad label supports treatment of earlier and later lines of therapy, but second line is where we believe Rytelo has the potential to make the biggest impact on patients’ lives. For us, this patient segment aligns with Rytelo's therapeutic profile and NCCN guidelines, and represents a meaningful market opportunity for Rytelo. We believe our commercial investments are well aligned to drive impact, and we remain disciplined in deploying resources where we believe they can generate the greatest return. I now turn it over to Joe to discuss our medical and scientific engagement. Joseph Eid: Thank you, Ahmed. Our medical and scientific efforts in 2025 played a critical role in increasing Rytelo's share of voice within the hematology community, and we plan to continue to engage closely with the community throughout 2026. Educational activities at meetings such as SOHO and ASH translated into increased awareness, with more healthcare providers sharing positive feedback as they gain experience treating appropriate patients and observing meaningful clinical benefit. This growing confidence is reinforcing Rytelo's role in the treatment landscape. IMerge is a data-rich trial with analyses beyond the primary endpoint continuing to inform the field. Data presented at ASH 2025 highlighted insights suggesting treatment-emergent cytopenias are consistent with on-target activity, helping to deepen understanding of treatment effects, inform clinical practice, and further strengthen engagement across the hematology community. We also expanded our engagement with academic centers to support the high interest in imetelstat to initiate more ISTs, and we are also seeing increased interest in community centers wanting to contribute to preclinical, clinical, and real-world evidence data generation. We have aligned to support over 10 ISTs and real-world evidence efforts spanning mechanistic studies, combinations and sequencing, early-line use, and new settings. We are seeing increasing interest from both academic and community centers to participate in evidence generation, and we expect initial real-world evidence data to be available in 2026. In addition to large scientific congresses, as we move into 2026, we are placing increased emphasis on smaller, peer-to-peer medical meetings such as the Aplastic Anemia MDS International Foundation, SLASCO meetings, and other similar forums. These settings allow for more detailed clinical dialogue and practical discussion among health care professionals, which we believe is particularly important for a therapy like Rytelo, as physicians and other health care providers refine patient selection and treatment sequence. Our presence at these meetings supports more meaningful education, facilitates experience sharing among peers, and further amplifies Rytelo's visibility and credibility in the hematology community. We view this targeted engagement as a valuable complement to larger meetings and an important driver of sustained awareness and adoption. Finally, our fully enrolled IMPACT MF trial in relapsed/refractory myelofibrosis is projected at this time to reach the interim analysis death event trigger in the second half of this year. Overall survival is the primary endpoint and our confidence in this endpoint is supported by encouraging survival outcomes observed in the phase 2 IMbark trial which informed the design of the IMPACT MF trial. While our base case from a planning perspective remains progression to the final analysis in 2028, reaching the interim analysis represents an important milestone as we continue to advance imetelstat's potential beyond lower-risk MDS. An earlier positive outcome would represent an upside scenario to our planning. I will now hand it over to Michelle to walk through the financials. Michelle Robertson: Thank you, Joe, and good morning, everyone. For more detailed results from the fourth quarter and full year, please refer to the press release we issued this morning, which is available on our website. Q4 and full year 2025 reflect both the progress we made with Rytelo and the financial discipline we exercised to manage operating expenses and provide the flexibility to make the best investments that have the potential to drive near and long term value. In the fourth quarter, total net revenue for the three months ended 12/31/2025 was $48,000,000 compared to $47,000,000 in 2024. For the full year 2025, total net revenue was $184,000,000 compared to $76,000,000 for the full year 2024, reflecting a full year of Rytelo commercial availability. Gross-to-net deductions increased to 17.7% for the twelve months ending 12/31/2025, compared to 14.5% for the same period last year. As volume increased, there was wider 340B utilization and expanded GPO contracting, which we foresee going forward as the business matures. For 2026, we expect gross-to-net to be in the high teens to low 20s. Research and development expenses for the three and twelve months ended 12/31/2025 were $16,000,000 and $74,000,000 respectively, compared to $23,000,000 and $104,000,000 for the same period in 2024. The year-over-year change was due to lower clinical trial costs and manufacturing expenses as we began to capitalize inventory after the approval of Rytelo. We expect our research and development expenses to decrease slightly in 2026, primarily due to lower labor costs driven by a decrease in headcount as a result of the workforce reduction in December 2025, partially offset by higher clinical trial costs related to our potential ISTs. Selling, general and administrative expenses for the three and twelve months ended 12/31/2025 were $42,000,000 and $159,000,000 compared to $43,000,000 and $146,000,000 for the same period in 2024. The full year 2025 increase was primarily due to an increase in sales and marketing full-time employees and additional investment in marketing programs. We expect our selling, general and administrative expenses to decrease in 2026 primarily due to lower G&A labor costs driven by a decrease in headcount as a result of the workforce reduction in December 2025, partially offset by higher marketing costs due to continued investment in our Rytelo commercialization strategy. Total operating expenses for the full year 2025 were $255,000,000 in line with our previous guidance of $250,000,000 to $260,000,000. The strategic restructuring announced in December 2025 has been completed, and we accounted for substantially all the expenses associated with the reorganization in Q4 2025. As of 12/31/2025, we had approximately $400,000,000 in cash, cash equivalents, restricted cash and marketable securities, compared to $503,000,000 as of 12/31/2024. Our balance sheet remains strong and was further strengthened in the recent amendment to our Pharmakon loan agreement, extending potential access to an additional $125,000,000 in capital through 07/30/2026. Also, as a matter of corporate housekeeping, we plan to file a new shelf registration and ATM with our 10-K on February 27. The strategic actions we took in 2025 positioned Geron Corporation for a year of growth in 2026. We are reiterating our 2026 financial guidance. We expect Rytelo net revenue of $220,000,000 to $240,000,000 with a greater portion of growth anticipated in the back half of the year. Our total operating expense guidance of $230,000,000 to $240,000,000 reflects strong financial discipline and investment to support our commercial strategy. With that, I will turn the call back to Harout for closing remarks. Harout Semerjian: Thank you, Michelle. Building on a year of strategic alignment across the organization, and energized engagement with the hematology community, we enter 2026 with a clear opportunity in second-line lower-risk MDS, a commercial strategy designed to reach the right patients at the right time, a European approval that gives us the ability to engage ex U.S., and a strong balance sheet that gives us flexibility to opportunistically innovate. Our priorities for 2026 are clear: drive U.S. commercial growth, pursue pathways to bring Rytelo to patients outside the U.S., and remain financially disciplined to evaluate opportunistic innovation as we build Geron Corporation into a leading sustainable hematology company. Thank you again for your time and interest in Geron Corporation. Operator, we are now ready to start the Q&A session. Operator: Star 11 on your touch tone phone and wait for your name to be announced. Our first question comes from Tara Bancroft with TD Cowen. Tara Bancroft: Hi, good morning. I know you have emphasized the growth inflection that you expect in the second half of the year to meet guidance. Could you go into more specifics on the commercial or physician behavioral milestones that we should watch for in the first half of the year to gain confidence that the inflection is on track? And which of these factors most underscore your confidence in guidance? Thanks so much. Harout Semerjian: Thank you, Tara. Great point. As we enter 2026, we are very focused on our executional plans. A lot of the difficult decisions and realignments we had to take in the back half of last year are behind us, and we are starting the year with a very energized team. I would say the Q4 demand growth of 9% is an important metric for us because it is forward-looking. We are not going to comment on Q1, but what we have seen from IQVIA and others is in line with our expectation. That is why we are reiterating guidance of top-line growth between $220,000,000 and $240,000,000 versus the $184,000,000 we delivered in 2025. That is meaningful growth, and we are excited about it. We are seeing certain green shoots, but at this point, let us leave it at that. The team is focused on execution with refined messaging and refined targeting on high-volume accounts, making the second-line opportunity more of a reality. Operator: Our next question comes from Gil Blum with Needham and Company. Gil Blum: Good morning, everyone. Thanks for the update, and thanks for taking our questions. You mentioned a focus on the second line. Do you have any insight as to how many second-line patients you currently have? What is the proportion to the third-line patients? Is there any information you can share there, even qualitatively? Harout Semerjian: Good morning, Gil. We have shared a few things that can help with your question. We estimate about 8,000 patients in the second-line setting that we are targeting. In lower-risk MDS the total pool is much bigger, but our focus is on patients who move from frontline—more and more with luspatercept—and then into second line. Unfortunately, those patients are not getting cured; they are going to move into a second line. With the recent update to the NCCN guidelines, with Rytelo becoming a preferred second-line agent ahead of HMAs—which pushes HMAs into later lines—that really opens the opportunity in second line. So approximately 8,000 patients we believe can benefit from Rytelo in the second-line setting. We have also shared on this call that, now that we have mature twelve-month data, around one third of our patients are coming from first and second line. These data points indicate why we are focused there and where we stand on first/second line versus later lines. There will always be later-line patients, but our focus, efforts, energy, and funding are squarely on second line. That is the secret sauce for our growth strategy. Gil Blum: Thank you. Very helpful. And you mentioned 9% demand growth and about a 13% increase in prescribing accounts in the fourth quarter. What do you think the cadence is to see that translate into the revenue side? Harout Semerjian: These go hand in hand with different timings. You have gross-to-net, and there are catch-ups and true-ups we have to do. Demand growth is really the key for us—getting more patients on therapy and getting more accounts that have not ordered before to start ordering, which is another 150 accounts we added in Q4. With the refined strategy of focusing on high-volume community accounts, in addition to the academic medical centers we have always focused on, we believe this will drive consistent quarter-over-quarter demand growth as we progress in 2026. Operator: Our next question comes from Emily Bodnar with H.C. Wainwright. Emily Bodnar: Hi, good morning. Thanks for taking the questions. On ordering accounts, you have been increasing the cadence pretty consistently quarter over quarter. How many accounts do you think there potentially could be at peak? How many are there in total for these approximately 8,000 second-line patients? And then on the expense side, your guidance suggests potential to breakeven later this year. Is that something you are reaching for? And could you discuss profitability in general? Thank you. Harout Semerjian: Sorry, Emily. Can you repeat the second question? I was having a hard time hearing it. Emily Bodnar: No problem. Just on the expense side—with your guidance for revenue and expenses—it looks like you could potentially break even in the second half of the year. Maybe comment on your thoughts on profitability. Harout Semerjian: Got it. Michelle, maybe you can take the second half of the question, and I will take the first. Michelle Robertson: Sure. Thanks, Emily. We definitely see a path to profitability, but that is not our focus in 2026. We reduced our operating expenses in the fourth quarter and reduced our operating guidance for 2026. But we also want to invest in the commercial strategy as well as additional investments in ISTs. So we do see a path to profitability, but for 2026, with our strong balance sheet, we are focusing on making the right investments to have the biggest impact short term and long term. Harout Semerjian: Thanks, Michelle. And for your first question, Emily, there is a long way to go. If you look at those 8,000 patients clearly in second line—the bull’s-eye of our focus in lower-risk MDS—this is a community disease more than an academic medical center disease. Typically, about 20% are in AMCs and 80% in the community. We want to make sure we are making inroads in the community, especially high-volume accounts. Part of what Ahmed and his team have done is retool our marketing mix to complement what the field is doing with our 3D surround sound efforts so we can reach more prescribers—deeper with high volume, and broader through digital and non-personal promotion—in a cost-effective and meaningful manner. Operator: Our next question comes from Corinne Johnson with Goldman Sachs. Corinne Johnson: Good morning. You mentioned that you have approximately 30% of patients in the first- and second-line setting currently on therapy. Could you help us think through what that needs to be to reach your guidance for the year? And you also mentioned a 13% increase in prescribers quarter over quarter. Could you speak to any patterns with respect to converting a new prescriber to a repeat prescriber, and what you are seeing there with respect to depth metrics? Harout Semerjian: Thank you, Corinne. Our guidance assumes we need more centers to use Rytelo for the first time and more repeat use within existing accounts. Adding 150 accounts is good for breadth, and our focused efforts to support high-volume accounts drive depth per prescriber. We actually need both—breadth and depth—not one or the other. Our efforts are tailored accordingly and customized to customer needs, and we are focused on both. Operator: Our next question comes from Stephen Willey with Stifel. Stephen Willey: Good morning. Thanks for taking the questions. To what extent are you seeing ESAs as a second-line competitor? There is a lot of discussion around Rytelo being placed ahead of HMAs, but do you have any insight as to the portion of patients who are failing frontline luspatercept and then getting treated with an ESA? Joseph Eid: We are seeing a shift in the treatment paradigm. Where it was a sequence of ESA then luspatercept in the past, now luspatercept is becoming more dominant in the first line. Biologically, ESAs do not work as well post luspatercept, and that is why, from physician feedback and KOLs, we are seeing a move from luspatercept to imetelstat as a preferred second-line drug—not ESA. That is a very important shift in the market as far as we are concerned. Not only are we focusing on the patients we can help the most, but market shifts are also to our advantage. It is no longer about competing with luspatercept on the same patient; it is about making sure patients get the right treatment in the front line. If you are using luspatercept in the frontline, you are not going to use the same mechanism again in the second line, and ESAs after luspatercept are not showing compelling data, at least the ones we have seen. With HMAs moving further out with the recent NCCN guidelines, that really opens the door for the second-line patient population. That is why we have streamlined our messages—regardless of RS status—and are focused on those patients, because we believe FDA approval and NCCN guidelines are very helpful for the patients we are focusing on. Stephen Willey: That is helpful. And then just curious if there is anything you can say about what the plans with the European approval might be going forward. There is a lot of discussion around MFN pricing. Have you crystallized that ex U.S. strategy at all? Harout Semerjian: Great question. We do have a European approval, which is derisked and great, but approval without funding is more limited. We need to understand the HTA piece and, increasingly, the impact of MFN. That means we need to be careful and thoughtful about how we move forward. One thing that has not changed is that it is about the number of patients we can help and at what price for innovation we can negotiate in large countries such as Germany and France. Our current focus is on making inroads into understanding and synthesizing the HTA processes and the ability to command the premium we believe Rytelo deserves, and in parallel having conversations with like-minded partners. We are assessing between doing some of that work ourselves—which is increasingly pressured for U.S. biotechs—and engaging with partners who see the opportunity as we do and are not afraid of negotiating for innovation with large payers. That work is ongoing and takes months. Regardless of who commercializes the asset, you need a good HTA understanding. That is why we say we will be opportunistic about Europe while remaining super focused on our U.S. growth as we have those conversations. Operator: That concludes today's question and answer session. I would like to turn the call back to Harout Semerjian for closing remarks. Harout Semerjian: Thank you, everyone, for joining our call. We look forward to updating you on our progress over the next several quarters. Thank you very much for joining today. Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
Operator: Good morning or good afternoon, and welcome to the Hippo Holdings Inc. fourth quarter 2025 earnings call. My name is Adam, and I will be your operator today. I will now hand the floor to Charles Sebaski to begin. Charles, please go ahead when you are ready. Charles Sebaski: Good morning, and thank you for joining Hippo Holdings Inc.'s fourth quarter 2025 earnings call. Earlier today, Hippo Holdings Inc. issued an earnings release announcing its fourth quarter and full year 2025 results and a financial results presentation which will be webcast during today's call, both of which are available at investors.hippo.com. Leading today's discussion will be Hippo Holdings Inc. President and Chief Executive Officer Richard McCathron and Chief Financial Officer Guy Zeltser. Following management's prepared remarks, we will open the call for questions. Before we begin, we would like to remind you that our discussion will contain predictions, expectations, forward-looking statements, and other information about our business that are based on management's current expectations as of the date of this presentation. Forward-looking statements include, but are not limited to, Hippo Holdings Inc.'s expectations or predictions of financial and business performance, conditions, and competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and/or from our forecast, including those set forth in Hippo Holdings Inc.'s Form 10-K. For more information, please refer to the risks, uncertainties, and other factors discussed in Hippo Holdings Inc.'s SEC filings, in particular in the section entitled Risk Factors in our Forms 10-Q and 10-K. All cautionary statements are applicable to any forward-looking statements we make whenever they appear. You should carefully consider the risks, uncertainties, and other factors discussed in Hippo Holdings Inc.'s SEC filings and not place undue reliance on forward-looking statements, as Hippo Holdings Inc. is under no obligation and expressly disclaims any responsibility for updating, offering, or otherwise revising any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During this conference call, we will also refer to non-GAAP financial measures such as adjusted net income. Our GAAP results and a description of our non-GAAP financial measures with full reconciliation to GAAP can be found in our fourth quarter 2025 earnings release, which has been furnished to the SEC and is available on our website. I will now turn the call over to Richard McCathron, our President and CEO. Richard McCathron: Thank you, Chuck, and good morning, everyone. Thank you for joining us. Once again, I am pleased to report that Hippo Holdings Inc. delivered a very strong performance in 2025, continuing to advance and strengthen our business, building on our technology-native insurance platform. For the year, we generated over $1.1 billion of gross written premium for the first time, an increase of 24%, and we are just getting started. Net written premium for the year of $422 million was up 13%. This growth was achieved while improving our combined ratio by 25 percentage points, helping deliver net income of $58 million for the year. These results underscore the strength of our model and our ability to drive consistent improvements across the core drivers of our business. Guy will discuss more details when he reviews the financials later. We entered 2026 with positive momentum and increased confidence in achieving and exceeding our 2028 targets of over $2 billion in gross written premium, $125 million of adjusted net income, and an 18% adjusted return on equity by 2028. Our continued evolution aligns squarely with the three strategic pillars that guide our business and position Hippo Holdings Inc. for long-term profitable growth. Strategic diversification. We continue to broaden our premium base across both personal and commercial lines, building a more balanced and profitable portfolio. Unlocking market growth. Our programs deliver a differentiated technology-driven customer experience that sets Hippo Holdings Inc. apart and expands our reach into attractive markets. Optimize for risk management. We are leveraging our diversified portfolio and deep risk management capabilities to continuously optimize performance across market cycles. Now I would like to provide updates on our main lines of business. First, in homeowners, our largest and original line of business. In 2025, we wrote $379 million of gross written premium, down approximately 10% from the prior year, as we prioritized profitability over growth given the heightened competition in E&S. However, we believe the line performed well, having achieved an average renewal premium increase of approximately 15% in our HHIP business, which we now view as rate adequate. Consequently, we have turned the corner in homeowners and expect this business to return to growth again in 2026, driven by two key developments. First, through our Baldwin partnership, we are now actively quoting business with more than 50 homebuilders nationwide, up from six prior to the sale of our homebuilder distribution network. Second, following the completion of improvements to our homeowners product outside the builder channel, which included an advanced rate filing process, revised terms and conditions, and improved claims handling, I am pleased to report that we have relaunched writing traditional new policies with selected partners. Turning to our renters business, which produced $175 million of gross written premium for the year, a 19% increase year over year. As one of Hippo Holdings Inc.'s most seasoned programs, it continues to grow while maintaining attractive profitability. We are pleased to support this program and its continued innovation in the renters market. Now turning to our most diversified portfolio of risk, our commercial lines business. Commercial multi-peril delivered a very strong year of growth, increasing 75% over 2024 to $265 million of gross written premium, making it our second largest line of business after homeowners. Fundamental to our program strategy is supporting programs we know well or have had a long track record of performance, and this is exactly where this year's growth originated, specifically programs with five years operating histories and consistently attractive underwriting results. Our casualty business experienced even faster growth, increasing 92% to end the year with $264 million of gross written premium, just slightly behind commercial multi-peril. Importantly, this growth came from a well-diversified group of programs with relatively modest limits profiles. Consistent with our strategy of supporting long-tenured programs, our risk retention levels in casualty was only 3% for 2025. However, as these programs were well supported by the reinsurance market and as we continue to deepen those partnerships, we expect to increase our retention levels over time. Given the growth in our partner program business, we wanted to provide additional insight into how we manage this platform, which is likely a bit more engaged than some may realize. When launching new lines of business with program partners, we follow a rigorous diligence process. Together, we establish the underwriting guidelines the program will operate under, an approach we believe is critical to our long-term success. For instance, over 70% of our liability policies have limits under $300,000, and our portfolio has an average liability duration of approximately two years, which is generally considered short-tail exposure. We remain highly engaged with our program partners through the underwriting and claims once new programs are operational. For example, if a program wants to write a policy that falls out of its established underwriting guidelines, it must request an exception. Today, we are well under 1% of quotes requiring such an exception. Claims management is also critical to underwriting outcomes, and we are actively involved in that process as well. We set claims authority limits on third-party administrators and proactively review claims that approach those thresholds. Today, our claims team reviews more than 800 files per month. While we currently have 38 programs in operation, not all have performed as initially expected. In those cases, we will place a program into runoff to protect the overall underwriting performance. I am very pleased with how our team has managed the program business, driving growth, maintaining oversight, and exiting when necessary. This disciplined approach is clearly evidenced by our 54% gross loss ratio in 2025, which includes the impact of severe California wildfires in early 2025. Overall, I am very pleased with Hippo Holdings Inc.'s position today and confident in our prospects for 2026 and beyond. Now I would like to turn the call over to our Chief Financial Officer, Guy Zeltser, to walk through the highlights of our fourth quarter and 2025 financial results and our expectations for 2026. Guy Zeltser: Thanks, Rick, and good morning, everyone. In the fourth quarter, we once again delivered strong top-line premium growth, improved underwriting, and increased profitability. Gross written premium in Q4 grew 40% year over year to $288 million and, for the full year, grew 24% year over year to over $1.1 billion. Growth in both the fourth quarter and for the full year was driven primarily by strong performance in casualty and commercial multi-peril lines and slightly offset by modest contraction in homeowners, as we continue to prioritize underwriting discipline over premium growth in that line of business. I will now highlight a few additional details of this gross written premium growth. Casualty grew 169% compared to Q4 of last year, grew 92% over full year 2024, and accounted for 24% of 2025 gross written premium. Commercial multi-peril grew 58% compared to Q4 of last year, grew 75% over full year 2024, and also accounted for 24% of 2025 gross written premium. And homeowners declined 5% compared to Q4 of last year and 10% versus full year 2024. For 2025, homeowners accounted for 34% of gross written premium compared to 47% in 2024, demonstrating our ongoing portfolio diversification. Net written premium in Q4 grew 23% year over year to $97 million and, for the full year, 13% to $422 million while also getting more diversified. Renters grew 227% compared to Q4 of last year and grew 311% over full year 2024. Commercial multi-peril grew 36% compared to Q4 of last year and grew 127% over full year 2024. And homeowners declined 3% in the quarter and was down 17% for the year. Homeowners accounted for 65% of net written premium in the quarter and 60% for the full year, both down from approximately 82% in each of the prior year periods. In Q4, net loss ratio improved 12 percentage points year over year to 46%, driven by favorable trends in both cat and non-cat loss experience. Cat loss ratio improved seven percentage points to negative 1%, driven primarily by a very low level of cat losses during the quarter and by positive development from earlier quarters in accident year 2025. Non-cat loss ratio improved five percentage points year over year to 47%, reflecting continued rate actions, refined policy terms and conditions, enhanced underwriting processes, and stronger claims operations. In Q4, net expense ratio increased four percentage points year over year to 53.5%. This was fully driven by the sale of our homebuilder distribution network in 2025, as our expense ratio in Q4 of last year benefited from five percentage points of profit from these agencies in that period. Together in Q4, net combined ratio improved eight percentage points to 99.4% compared to Q4 of last year. For full year 2025, our net loss ratio improved 17 percentage points to 60%, driven by improvements in both cat and non-cat loss experience. Non-cat loss ratio improved 11 percentage points year over year to 45%, reflecting the same previously mentioned actions. Cat loss ratio improved six percentage points to 15% compared to 2024. Our net expense ratio for 2025 improved eight percentage points year over year to 53%. This was driven by the scalability of our platform, which enabled us to grow top line significantly faster than our fixed expenses. Together, the improvements in our loss and expense ratios resulted in a combined ratio of 113%, a 25 percentage point improvement compared to 2024. Q4 net income attributable to Hippo Holdings Inc. was $6 million or $0.23 per diluted share, compared to $44 million or $1.71 per diluted share in the prior year quarter. The year-over-year decline was primarily due to the $46 million gain from the sale of a majority stake at First Connect in the prior year period, which more than offset the improvement in underwriting performance over the same period. Q4 adjusted net income grew 20% year over year to $18 million or $0.67 per diluted share. For full year 2025, net income attributable to Hippo Holdings Inc. was $58 million or $2.22 per diluted share, representing a $98 million improvement year over year. This improvement was driven by continued top-line growth, materially stronger underwriting performance, and an incremental $45 million in net gain from asset sales in 2025 versus 2024. Full year 2025 adjusted net income was $18 million or $0.68 per diluted share, a $38 million improvement year over year. This was driven by the same underlying factors that drove the net income improvement, with the exception of the net gain on the sale which is excluded from adjusted net income. Total Hippo Holdings Inc. shareholders' equity at the end of the quarter was $436 million or $16.97 per share, up 17% from $362 million or $14.56 per share at year-end 2024. The increase was driven primarily by the gain on the sale of the homebuilder distribution network and better underwriting performance, which more than offset first quarter operating losses from the California wildfires and a share repurchase executed in the third quarter. Looking ahead to 2026, we expect gross written premium to grow between 27%–36% to a range of $1.4 billion to $1.5 billion. This reflects our expectation that growth in our newer lines of business will continue and, as Rick mentioned, our homeowners business will return to growth in 2026. We expect net written premium to grow between 19%–28% to a range of $500 million to $540 million. We expect net combined ratio to improve between eight and ten percentage points to a range of 103% to 105%, driven mostly by the operating leverage and scalability of our platform. This outlook assumes a 13% cat loss ratio, a slight reduction versus 15% actual cat loss ratio in 2025, which includes the Los Angeles wildfires. This reduction is supported by our continued diversification into less cat-exposed lines of business. And finally, we expect adjusted net income of between $45 million and $55 million, compared to the $18 million in 2025. While we are no longer providing net income guidance, we are now guiding to stock-based compensation and depreciation and amortization expense and expect these line items to total approximately $41 million in 2026, down from $50 million in 2025. And with that, operator, I would now like to open the floor to questions. Operator: Of course. As a reminder, if you would like to ask a question on today's call, please press star one. The first question today comes from Thomas McJoynt-Griffith from KBW. Thomas, please go ahead. Your line is open. Thomas McJoynt-Griffith: Hey, guys. Good morning. Thanks for taking our questions. Yes, my first question is just about the relaunch of the homeowners book outside of builders. Could you talk a little bit about your go-to-market strategy and maybe comment on what the competitive environment looks like there as you are looking to increase the distribution? Richard McCathron: Yes. Good morning, Tommy. This is Rick. Happy to answer that question. As you and the listeners know, it has been quite a while since we wrote traditional homeowners business. We have spent the last two years retooling that product line, a combination of reducing some of the volatility in a more geographically area. We have taken considerable rate on that product line over the last few years. We have improved our terms and conditions. We have changed some of the coverage languages as it relates to deductibles and roof schedules. And we have gotten the product that we believe is extremely rate adequate and one that we are very bullish on its profitability. As we have opened that product line, we have done it in a thoughtful way, in a number of states with very few strategic partners in order to ensure both competitiveness and profitability. We are accelerating that throughout the year. We will continue to open in other states as well as expand the partnership roster, inclusive of some direct-to-consumer play. But we are very excited about it, and we are excited to share the results as we start to develop them quarter. Thomas McJoynt-Griffith: Got it. Thanks for that. And then looking at another line of business here, the casualty side, you have seen some nice growth there, both on a gross basis and retaining a bit more through a net basis. Can you unpack a little bit as to what sort of business actually underlies that casualty business? What is the tail risk there? And then can you talk about your maybe timeline to continue to increase retention there? I understand gross is growing, but there is obviously room for the retention side to increase as well. Richard McCathron: Yes, Tommy, I appreciate the question given this is a newer endeavor for us. Predominantly, it is combined as some cyber insurance, some commercial GL, predominantly for small business. Construction projects, some commercial auto. It is a fairly diverse portfolio of commercial exposure. We take a very small percentage in aggregate; think for 2025, we took about 3% of the exposure on that portfolio. And our average exposure per account is $300,000, so nothing that is extremely large. We also think the time to settle claims is two years or less, which is still fairly short-tail in nature. As we have said previously, we typically only take risk participation with partners that we develop a longer-term relationship with and have great conviction that they understand what they are doing, that we have proper controls in place, both from a pricing perspective, a claims handling perspective. We would expect that to increase over 2026 and beyond, but we are doing it in a very partner-by-partner selective way. We find ourselves wanting to participate, but we are still concerned a bit about tail exposure or larger limits exposure. There are ways to protect that with third-party reinsurance over our share. So we are taking risk, we are increasing the risk participation, but we are doing it in a very thoughtful, slow way. Operator: Thanks, Rick. Thanks, Tommy. The next question comes from Andrew Andersen from Jefferies. Andrew, please go ahead. Your line is open. Sid (for Andrew Andersen): Hi. Thanks. Good morning. This is Sid on for Andrew. Just curious if you could discuss what drove the reserve development in the quarter? Guy Zeltser: Hi, Sid. Good morning. This is Guy. I will take the question. So to answer your question directly, it was mostly driven by one large loss. Actually, in our homeowners business, it was a liability claim. First of all, if you just look at the prior accident year, we tend to look at it on a full-year basis. On a full-year basis, we did release about $10 million. So the view for the full year has been positive for us. And then also, specifically, when you look at only Q4, you arrive that from the prior accident year, there was one point of adverse development. But we did see about three points of positive development from earlier quarters in accident year 2025. So even if we just focus on Q4, it was a positive quarter, and this is why we are, generally speaking, feeling pretty good about where we stand from a reserve perspective entering 2026. Sid (for Andrew Andersen): Okay. Thanks. And then maybe you could just discuss how you are expecting the premium increases in homeowners to trend moving forward relative to the 15% in 2025? Guy Zeltser: Yes, absolutely. So as we mentioned, we achieved about 15% in 2025. Obviously, that was way above the loss cost trends in 2025. Given what we just said, that we feel very good about the rate adequacy for the book, we do not expect another year of 15%, but it will still go up, given that in addition to some rate, we have the annual—essentially, we are automatically catching up with inflation. So we do expect premium change increase in 2026 to continue. And we also expect it to still come ahead of loss cost, which is another reason why we are very, very bullish about the new partnership that we launched and growing outside the builder channel, given that, again, we are not only rate adequate, but we do expect the average premium change next year to trend faster or slightly faster than loss costs. Richard McCathron: Listen. If I can, this is Rick. I just want to add one very important component. As we accelerate and grow in our own HHIP homeowners program, we are only writing business where we expect the loss ratio to be profitable. So our partners will not even see quotes for business that we are not excited to write. Operator: Final call for questions, star one. You have no further questions, so I will hand the call back to the management team for any closing. Richard McCathron: Great. Well, thank you so much for joining us this morning. We are excited about the year and quarter we just posted and very excited to be sharing additional progress in the coming quarters. Thank you very much. Have a great day. Operator: This concludes today's call. Thank you very much for your attendance today.
Operator: Hello, and welcome, everyone, to the St. James's Place 2025 Full Year Results Q&A session. [Operator Instructions] I will now hand over to Mark Fitzpatrick, Chief Executive Officer, to begin. Mark FitzPatrick: Thank you, and good morning, everyone, and thank you for joining us. Unfortunately, Caroline is unable to be with us this morning due to a family bereavement. Instead, I'm joined by Charles Woodd, our Finance Director. Before we open for questions, I'd like to briefly reflect on a year of strong delivery and execution for St. James's Place. We delivered growth in new business, growth in funds under management and growth in underlying cash result, while at the same time, delivering strong returns for our clients. Drawing out some of the results, which are new today, the underlying cash result of GBP 462 million, up 3% year-on-year and 4% ahead of consensus. Underlying cash basic EPS of 87p per share, up 6% year-on-year. We're returning 50% of the underlying cash result to shareholders through ordinary dividends and buybacks and a total of GBP 313 million to be returned to shareholders for 2025. Alongside delivering a strong operational and financial performance, we made good strategic progress. Our simple comparable charging structure implementation went live smoothly in late summer. The new structure puts our investment performance on a fully comparable footing with the wider market and enabled the successful launch of Polaris Multi-Index. This has broadened client choice and grew to over GBP 1 billion of FUM at year-end, just 2 months after launch. Our review of historic ongoing service evidence continues to progress. Based on our experience in the second half of the year, we have released a further GBP 25 million from the provision today, taking total releases to GBP 109.5 million for the year. We are now deep into the operational delivery phase and are on track to complete the program in 2026. Our cost and efficiency program also made good progress. For example, we completed the transition to our new organizational design during the year, and we remain on track to remove around GBP 100 million per annum from our addressable cost base by 2027. These achievements give us the confidence in the strength of our business and our prospects, which has enabled the Board to update our shareholder returns guidance going forward a year earlier than originally anticipated. So from 2026, we intend to increase our payout ratio to 70% of the underlying cash result. We anticipate that this will comprise ordinary dividends, which will make up at least 40% of the total shareholder returns and the buybacks will make up the difference. A different way of thinking about is that dividend is expected to be at least 28% of the underlying cash result and buybacks the remaining 42%. That's how you get to 70%. Our priorities for 2026 are completing our remaining transformation programs, expanding the range of technology tools, including those which are AI-enabled and making those available to our advisers with the goal of helping them to work as efficiently as possible. This will give them more time to do what they do best, which is building trust, deepening client relationships and delivering personalized, high-quality advice. We see technology deepening the human relationships between clients and advisers, not replacing them, accelerating elements of Amplify, where we have the capacity to do so later in the year, and we will focus on refreshing our cash proposition and enhancing our high net worth proposition. We look to the future with confidence. We have already made changes to the business, and we're focused on strengthening and growing SJP over the long term. This means we are well positioned to capture the structural market opportunity ahead and deliver for all our stakeholders in 2026 and beyond. With that, I'm very happy to turn to questions. Operator: [Operator Instructions] Our first question comes from Andrew Lowe from Citi. Andrew Lowe: I wanted to ask on AI and how you see the potential threats from your business. So I'd love to hear a little bit more about what makes you comfortable about the potential threat to growth and pricing power from competitors, including D2C platforms who in time might be able to offer AI-led financial advice. As sort of corollary to that, it would be really helpful to hear a bit more color on the AI tools that are operational today, what we might expect in the next 12 months? And how much this could improve your adviser productivity going forward? And the second question was just on the adviser numbers, which fell by 0.4% in the second half of 2025. Could you please give a little bit more color on the productivity of your departing managers? And just any comments on the outlook for adviser numbers going forward would be really helpful. Mark FitzPatrick: Andy, thank you for those questions. In terms of technology and AI, I think the way that we see technology is really it's an opportunity to strengthen our face-to-face advice led model. So what we've observed over time, I think, is that while a lot has changed in and around the competitive landscape, what has been central, actually, is the [ primacy ] of the adviser client relationship and the longevity of that relationship because research tht we have done and that we talk about in the accounts and research that others have done effectively emphasize that actually people still value human engagement in making financial decisions. They seek personal advice, whether it's around retirement, tax planning and various other things, et cetera. And I think when we also think about AI, I think it's also important to bear in mind that advice in the U.K. is a highly regulated and a high trust service area. And therefore, it requires the personalization, the suitability and the accountability and human judgment is absolutely core to that where we see AI can play a very, very positive role is in enhancing adviser productivity and client experience. You'll have seen in the presentation earlier on this morning that we're really using some AI tools to give advisers back time. And I think that's where the deep vein is going to be for the next few years for our advisers, for us and for the whole profession. I think the more we can give time back to advisers to really focus with their clients is going to be absolutely key. I think by virtue of our size and scale at St. James's Place, we've got the opportunity and the connectivity, and we are talking with some of the very biggest players on their thoughts and on what we are doing and how we can simplify and how we can make what we do even better and even more efficient. And bear in mind as well that of our 5,000 advisers, the vast majority of these folks are phenomenal entrepreneurs, not just in being great advisers, but also in terms of finding solutions in their own businesses and how they make themselves more efficient. So within our 5,000 advisers, we have some of our businesses where they have actually created and built their own technology to improve some of their efficiency on how they do things. And through our oversight and through our listing of data protection and everything around that and security, we're making those and facilitating those to be available to far more partners within St. James's Place. So the great thing is the innovation isn't just happening at the corporate level. It's also happening within the adviser community, where they're eating, sleeping, drinking this 24/7. So some really, really good ideas coming from them. What we're doing is making sure we can protect the data, protect the integration and really make sure it plugs and plays properly with the rest our kit. So at the end of the day, I think AI will enable greater productivity. It will enable advisers to get back to what they really enjoy doing. And it's not the admin they enjoy doing. It's actually being in front of clients. It's finding new clients to serving clients. It's being there for clients when they truly matter. Sorry, I'm repeating on, but I'm conscious that this is a big topic. And therefore, I'm probably going a little bit fuller in the answer just to kind of give everybody a little bit of color. In terms of some of the features that we have today, et cetera, along the way, we have a number of tools that we're using, whether it's advice assistant, which kind of harnesses the data in the sales force and can produce suggestions on planned wrappers, investment amount fund selections and various other things, a rules-based engine based on our Advice framework, which has been trained on thousands of recommendations made previously by SJP clients. And we've seen a very strong take-up from advisers around that. whether it's preparing meetings or whether it's summarizing and listening into meetings with clients, summarizing, converting the meetings into notes that get sent to the client, notes that get sent to the admin actions to be done. Those are things that we have trialed extensively, and we're now in the final stages of looking to roll those out across the partnership as a whole during the course of this year. And then we have something particularly innovatively called ChatSJP, which covers a whole lot of the documents in our Advice framework and business submission guides and the like. And what that does is enables the power planners and the admin teams, et cetera, just to check in on some of the advice that might be given and some of their thinking and some of the plans just to make sure everything is aligned. And what that does is that saves huge amount of time for every query that otherwise might be done through a call center and enables the call center operators to really focus on considerably more complex matters. So we're trying to -- we're not trying. We are introducing technology throughout the organization because I do see that the technology providing us with different hands in terms of what we do, but it's not going to change the face of Advice. And then, Andy, your final question on adviser numbers, yes, adviser numbers declined modestly in the second half of this year. I said back in February last year that we'd be embarking upon an initiative. And what you saw in the second half of last year was the outworkings of some of that activity. I think it's fair to say that the advisers that have left us as a result of that, their productivity was significantly below average productivity on both gross flows and from a FUM perspective, which is why you haven't seen any real shift in productivity. If anything, productivity, and I can get to that later on, but productivity has been significantly stronger during the course of this year. But Andy, thank you for those questions. Sorry, I'll try and be brief for the next few questions. Operator: Our next question comes from Andrew Crean from Autonomous. Andrew Crean: Just a couple of 3 questions. Firstly, can you say anything about trading so far in Q1 '26? Secondly, your liquidity -- free liquidity targets. I just wanted to explore this a bit more. Do you have any targets for group liquidity? And the reason I ask is because if I looked at your doubling of profits in 2030, one is talking about somewhere retaining, if you pay out 70%, you're talking about retaining somewhere between GBP 240 million and GBP 270 million of profit, which is in line with the amount of group liquidity you currently have. I suppose that poses the question whether up the line, once the earnings really get going, whether the 70% is too low and you will just build excess liquidity over time? And then a third question is client growth. I think plant growth was about 3% this year or last year. Could you give us a sense as to what you anticipate client growth to be like over the next few years? Mark FitzPatrick: Okay. Thanks for those questions. So trading -- first off on trading, we put out our Q4 trading update less than a month ago, and I think the team provided a little bit of color about the fact that flows were normalizing. We were seeing flows normalize over that period. So I'm not minded to give necessarily a month-by-month running update. But what I would say is we've seen that continue. And the partnership is in exceptionally good health. They're all working incredibly hard at the moment. This is a very, very busy time and with tax year-end 5 weeks away. So there's a huge amount of activity on the go, which is very encouraging. From a liquidity perspective, so some new disclosure for everyone in the world of liquidity and how we think about liquidity. I think it is important for us to be able to make sure we have an appropriate degree of liquidity at the center to support the capital allocation framework. The liquidity levels that we have, we will be considering them on a regular basis, and we will be making our determinations as regards what we do with that liquidity based on facts and circumstances at the time. And if we see an inappropriate buildup, then we will -- it will get activated through the capital allocation framework along the way. The 70% payout ratio that we've effectively indicated for the time being, bring it forward a year, I think, is dripping with signaling of confidence in the business and how well the business is performing and the great progress that we have made. So we're very pleased to announce that a year really. We're very pleased to have increased the level of the payout. We think the composition, the 2 sectors of it in terms of dividend and buyback are important and are weighted appropriately. And if -- and as and when that number builds in the fullness of time, as I said, facts and circumstances will dictate. We would expect -- you should expect to see the [ GBP 271 billion ] number grow as the business grows. We are a growing business and [ GBP 271 billion ] for a business with 220 billion and 1 million clients under management feels appropriate for this size and the scale. In terms of client growth, really interesting one, Andrew, because client growth is going to become a little more complex as during the course of '27 and onwards, we have a stronger push towards high net worth because with high net worth, it's going to be less about pure client numbers, and it's going to be a real focus on getting clients with larger funds under management and our advisers doing more with them and therefore, needing to spend a bit more time with them. So that's something that we're thinking about internally. But what I can say is the vast majority of our advisers when we did a survey with them at the back end of last year indicated they are expecting client numbers to grow. And as is often the case and has been the case with us for some time, the vast majority of our new clients are word-of-mouth referrals, which I think contributes to a very, very high client retention level and very, very sticky relationships, which is a great business to be in. But thank you for those questions. Operator: Our next question comes from Nasib Ahmed from UBS. Nasib Ahmed: Three questions from me. Just firstly, following up on AI. You had the charging structure change last year. You had an opportunity to update your tech stack. I know there's different tech solutions that you're using across the piece. But I guess the question is, is your tech stack nimble enough to add on these AI LLM type models? Because, of course, you've got the scale, but with bigger companies, sometimes you've got legacy tech that can't really cope with this. So question number one, are you kind of happy with the way your tech stack can adapt to these new models? Secondly, on complaints, I saw kind of new open complaints first half '25 were still high relative to history, they're kind of stabilizing but to a high level. When do you expect them to come down? And is that putting pressure on kind of your complaints team at the moment? I know you recruited quite a lot of people recently. And then finally, on kind of regulation, D2C simplified advice. What are your thoughts around here, targeted support as well within that? And would you kind of look to acquire a business and move into D2C as a result of that? Mark FitzPatrick: Nasib, thank you for those questions. AI, the simple comparable charging out of [indiscernible] have tried to weave in all sorts of other changes to what undoubtedly was the largest tech change program that we've had in the history of St. James's Place. So on the tech stack, bear in mind that we have a tech stack that includes Salesforce, that includes Snowflake, that includes some really, really modern tech that gets updated on a regular basis. So it's through that, that we're able to kind of plug and play and interact and indeed with one of our adviser firms who's been working on some great kit and has got some great AI kit that helps facilitate and improve efficiency. We very recently plugged that in and got that working well with Salesforce. So having done that, we'll be able to roll that out to other elements. And that's given us the confidence that we can plug and play modern kit into our stack. So not particularly worried about that component. On complaints, BAU complaints, so business as usual complaint levels are down. What we're seeing is there's still some activity in terms of the historic evidence review, et cetera, from some claims management companies, but much, much lower levels, inordinately lower levels. And dare I say we are doing more checks and balances in terms of whether the complaints that come in are legitimate complaints. We have some complaints that come in when we write out to the client, they say, yes, I spoke to them, but I didn't want to complain. So it's not a legit complaint, and others kind of aren't even our clients. So we've had a -- we've got a lot of noise in the system. But on the substance, we're comfortable that BAU level complaints are coming down and are coming down to a more normalized level. On rates, the government, I think, is -- and both the government and the regulator are comfortable that there's a lot coming down the road in terms of the Mansion House reforms and really want to see how well these land. So my discussions with treasury and with the FCA is they are very focused on ensuring a successful launch of targeted support. In terms of disclosure regimes, they're trying to make things simpler, et cetera. The retail investment campaign, they're really focused on trying to get more people investing. So it seems a lot more joined up than it might have been in the past. Targeted support isn't really going to be for us by virtue of the nature of how that's going to work. I think targeted support is going to be very difficult if a human has to get involved because a human can't unhear what they've heard and a human is likely to pick up something that might throw it out of the decision tree that is effectively so key to targeted support. Simplified advice. We are expecting some consultation papers from the regulator on simplified advice later on this year. We have been in contact with them. That is likely to be a lot more relevant to us. A key component of that is ensuring that if and when simplified advice comes out, it's done in a way that is economically viable for an adviser to be able to engage with somebody without doing a full fact find. So there's still quite a lot of issues that need to be worked through. But the encouraging thing is that the regulator has demonstrated and government has demonstrated a willingness to engage with industry and listen and with trade bodies and take views on. So I'm cautiously optimistic that if this comes through, it should come through in a good guys, but there's lots to do around that particular patch. As against D2C, if you think of what our underlying purpose is, which effectively is to provide invaluable advice. Therefore, I don't think kind of a pure D2C play is something that's on the strategy. When you think that only 9% of the adults in the U.K. take advice today, the market opportunity is so big for all of us in the U.K. I truly believe it is one of the really few growth areas in financial services in the U.K., the element of wealth getting people to invest. So if government, the regulator, we, all the players in the sector, D2C or otherwise, are getting people to invest rather than save, that's going to be fantastic because there are 3 big gaps in the U.K. economy. There's an advice gap, there's effectively investing gap and there's a retirement gap. And we've got too much saved, underinvested. We have too few people taking advice. And we all know we're in a DC world rather than the DB world. And I don't think society has truly understood the risk that they are taking on themselves and their need to prepare for their retirement in a more fulsome fashion than they're doing today. So I think there's lots of opportunity for us all to actually grow very, very successful businesses. And I think we're going to stick to our knitting in terms of the advice piece. Operator: Our next question comes from Ben Bathurst from RBC Capital Markets. Benjamin Bathurst: I've got questions in 3 areas, if I may, as well. Firstly, Mark, in your prerecorded remarks, you mentioned you'll be looking to improve reporting of financial performance. I think you said before half year 2026 or half year 2026. I just wondered if you could give more details on the scope of that project and if it's going to extend to making changes to the underlying cash disclosure. Then secondly, on flows, you saw fit to comment that outflows have normalized at the end of Q4 and into Q1. Just to clarify, does that mean a return to the levels of outflows as a percentage of AUM that you saw in the first 3 quarters of FY '25? And then sort of related to that, but just on the pensions flows outlook, we're obviously edging towards the 2027 date for pensions to fall into the net for inheritance tax. I wondered if you started to see any differences in the typical advice that you're delivering to older clients around keeping funds in the pension wrapper. And we should really expect withdrawal rates from pensions to tick up over the next year or 2 in light of those changes? Mark FitzPatrick: Ben, thank you. Three really interesting questions. For the first question, I'm going to hand over to my partner in crime, Charles Woodd. Charles? Unknown Executive: Ben, very good to chat about this. Yes, this has been an exciting project that we've been doing over the course of the last year. You'll have seen some of the output emerging. So we streamlined our financial review at the half year. We've done that again at the end of the year, and we've introduced new capital and liquidity metrics, a new section on that. And hopefully, that answered a number of the questions that were rising. The implementation of the simple comparable charges, which happened in late summer, that was another important building block. And so building on that, we've been sorting out what the reporting should look like. And we are expecting to share that with you, certainly for the half year and expect to share that with you all probably later in Q2, possibly May might be the right sort of time for doing that. Mark FitzPatrick: Charles, thank you. Ben, in terms of flows, I don't think I've necessarily changed your models based on what we saw in Q3, Q4. I think I'd look at more the long-term element in terms of flows. And in terms of pensions, I think from memory, about -- historically about 4% of individuals just across the market paid inheritance tax. And I think the ONS in light of the changes the government brought about thought that, that might go up by 1.5%, maybe 2%. So call it 6%. So it's not for everyone, thankfully. But what we are seeing, I think, is that investment bonds becoming a lot more attractive now. Pensions still being an incredibly valuable vehicle for people to invest in up to a certain level and -- while they're working. And what we're seeing is people now starting to utilize their pensions rather than considering them as a pure investment vehicle that they might have had as a generational wealth transfer vehicle. So the advice is shifting. It's a very, very complex area. I know our team are deeply engaged with government and the regulators working through how those changes need to come through and making sure the changes don't cross over with one another. But we do expect actually pensions to continue to be important. But for those older clients, we expect to see them drawing down on pensions probably in a slightly stronger way than they might have originally. But then I would expect them to be leaving some of the other investments alone, and we might start to see some of those withdrawal rates start to improve along the way. So it's going to be fluid. We need to see how it pans out. My big request of government of late is when the next budget comes up, please make sure that you are proactive in saying, we're not looking to change pensions again because we cannot have a third year of further speculation. So get out of the blocks and just try and close that down early as possible, please. Operator: Our next question comes from Enrico Bolzoni from JPMorgan. Enrico Bolzoni: So sorry to go back again to the AI topic, but I have one follow-up question, if I may. So I think there is no pushback on the argument that AI can dramatically improve adviser productivity and do wonders internally in terms of reducing costs, so on and so forth. I guess my concern, which I suspect is shared by a portion of the market is more what the impact is going to be on perhaps the future cohort of clients. So maybe those that in theory would pick up advice in 10 years from now, let's make an example. In the U.K., the majority of people pick up financial advice when they are approaching their retirement age. So I suspect people that are in their 50s. So the concern I have is if these people that now are using B2C platforms, which is an area where, by the way, you don't want to go, will be gradually see the benefit of AI in their existing B2C usage. Is there not a risk that these clients when they reach the age where in theory, they should pick up and historically, they would have picked up financial adviser when they're in the late 50s, might decide not to do it because by the time that's going to happen, it's going to be in 10 years' time, they will just have like an amazing AI proposition within their B2C platform. So are you concerned by that? And would you consider be a bit more explicit in guiding your adviser to recruit or to use that additional capacity freed by AI to recruit younger clients or get them when they are very young to avoid this risk of not getting them at all? So that's my first question. And the second question is on the Polaris Index range. I was wondering if you can give us maybe an update, some color in terms of what the appetite has been if you're seeing clients perhaps switching out of their active proposition and into passive or if mainly this is appealing to clients that put fresh money into the passive range and they don't really switch from their existing investments into passive. Mark FitzPatrick: Enrico, good to chat to you again. Really interesting point in terms of your scenario in terms of AI. Just a couple of useful facts just to share with you. By -- I think by virtue of the fact that our average advisers considerably younger than the average adviser in the market. Actually, what we're finding is the average age of our new clients is actually coming down. So over 1/3 of our new clients are under 40 years old, which is fantastic. So we are effectively -- the advisers are effectively ahead of this issue and building in a fantastic pipeline of future relationships by engaging with clients at a younger age because it's not just about the -- what do I do when I retire and how do I prepare for decumulation. It's getting them to do the right things and getting the right behaviors in places my 17-year-old son said that, SJP, it sounds like you guys are financial PTs, financial physical trainers. You get people to do what they should do when left on devices, they may not do it. So I think the element of -- we're getting more and more younger clients, our advisers younger, which is helpful and also very helpful in terms of their comfort around using new tech as well. And I think we see that quite a few of our clients actually have business with D2C as well as having business with us. So share of wallet has grown a little bit over the course of the last year. On average, I think we're about 50%, 55% or thereabouts. But it's -- so it's not 100%. People have money in D2C, but they understand what they get from St. James's Place, what they get from the adviser, et cetera. And in time, what we see is actually more and more of that money coming in. The longer somebody is with St. James's Place, the more money tends to come in to St. James's Place and the share of wallet tends to grow rather than stagnate because they just see the value of what's there. And to some extent, I talked to a little bit of Polaris and Polaris Multi-index. Effectively what it is, is providing clients with a broader range of options where there is something that is a little bit different from the conventional Polaris. What we're seeing to date is we're seeing new clients, new money coming into that. We are also seeing a little bit of switching from the existing funds into Polaris Multi-index. And I think the reason a number of folks like that is they like the ongoing asset allocation, the ongoing rebalancing that happens along the way at an incredibly attractive price point for the client. So it's early days in Polaris Multi-index. It's very similar to what we saw on the main Polaris when that launched, we saw a lot of switching initially, and then we saw a lot of new money coming in as actually the investment performance kicked in and people just had more and more confidence about it. I am delighted at what the guys have done. I think it's fantastic to -- in the first 2 months, have gathered effectively GBP 1 billion worth of assets into Polaris Multi-index and really looking forward to seeing the growth of that because we can now offer clients a broader range of product across the way. But thank you for those great questions, Enrico. Operator: Our next question comes from Gregory Simpson from BNP Paribas. Gregory Simpson: Two questions on my side. Firstly, wondering if you could share any comments on how you're seeing advisers and clients behave with the new fee structure and if you're seeing any differences versus the old model in terms of inflow, gross inflows and productivity, just aware that Q4 is a bit unusual with the budget in terms of reading anything into the flows. That's the first question. Secondly, can you provide a bit more of an update on the high net worth push? What's the kind of time line? Would you have advisers that are more directly employed by SJP in this model? And what do you need to add on the product and investment proposition side? Mark FitzPatrick: Greg, thanks for those questions. In terms of the new fee structure, I think speaking to clients, they are candidly wondering what all the big fuss was about. From their side, they're seeing it very much in line with everything else that's out there in the marketplace. So they think it's -- from a client side, they think it's a lot simpler. The advisers, as I mentioned, I think, earlier on, are incredibly busy engaging with clients. So they are absolutely connecting very, very busy. Case count is very strong at the moment. So it's all looking that the fee structure is -- the old fee structure is in the history books. We're now kind of level-pegging with everyone else. In terms of the high net worth push, the high net worth push, I think, is one where I'm really, really excited and really interested for us to spend more time, more energy in. The element of the high net worth aspect is that we -- later on this year, we are looking to make even more impact on it. We've recruited some new talent. We're looking to streamline and improve the service that is available for both our advisers and clients in this area. We have, I think now as at year-end, 10% of our FUM is effectively in the high net worth segment, so a slight increase on last year. It is -- the team are working very closely with some of our advisers who specialize in the high net worth area. We've had some off-sites exploring what do we need to do about product range, what do we need to do about service, what do we need to do about our brand. So we're clear on what we need to do. We're now just getting things done. We're recruiting, as I said, additional people, and we're equipping the people in that regard. And I'm quite excited about what we might do around this space. I think there are a lot of our advisers who are very interested in being more engaged in this space. A lot of them are very engaged in the space. I think if we can provide them with greater support, they'll be able to do even more in and around this space. And they're all looking to grow their businesses. So I think that's probably the route in rather than us trying to kind of think we're going to have our own employed advisers focusing on the high net worth space. So I'm excited about it. In reality, I think it will be the second half of this year that we really start to lean into it even further. It is part of the amplify phase of the strategy, but wherever I have capacity, I'm looking to try and apply it to the high net worth opportunity because I think it is so real. So you've picked on a real topic. Operator: Our next question comes from Larissa Van Deventer from Barclays. Larissa van Deventer: Three questions from my side as well. The first one, Vanguard announced yesterday that they are launching a new model portfolio solutions product in conjunction with Wellington. How do you see St. James's Place product range as differentiated relative to the other model portfolio solutions available in the market and perhaps specifically referencing the Polaris Multi-Index that you mentioned in your presentation? Second question, on the historic ongoing service evidence review, you mentioned that you will complete that in 2026. Does that mean that we can completely put it to bed in '27? Or is there a set of limitations that needs to run before you will be able to finalize how much of the provision is needed? And then the last one, AI, a very topical sort of questions this morning. But with Polaris Multi-index being a lower cost offering and with AI potentially lowering costs, do you see future growth coming from maintaining margins? Or do you believe that margins may be compressed? And would you be looking to grow mainly from increased customer volumes? Mark FitzPatrick: Okay. All right. NPS products that are out there. There are a number of NPS products that are out there. So Polaris and Polaris Multi-Index are fund of funds, so not really the same as a model portfolio service. So rebalancing in an NPS will effectively crystallize capital gains tax, and that wouldn't happen in a fund of funds, hence, less frequent rebalancing in the NPS as against the rebalancing that we can do in the Polaris and Polaris Multi-index range. So we're more dynamic. And therefore, we believe in a world that is changing as rapidly as it is, we think that is an advantage for Polaris and PMI. It looks like the latest NPS is out there has kind of got a mixture of kind of active and passive, et cetera, along the way. And effectively, at the moment, Polaris is kind of -- we have Polaris where there is some kind of systematic activities in normal Polaris and Polaris Multi-index works through 14 index funds. So as a blend is probably at a more attractive price point. Ultimately, I think in terms of product innovation, what our team have been able to demonstrate is a great ability to innovate, come up with solutions that work well for clients. So there's a real client adviser demand and pull. It's been great to hear some advisers saying, Mark, my clients have been at me for ages to have something like Polaris Multi-index. It's great that we have it now, and it's great that I can talk to them about it. In terms of the ongoing service evidence review, you'd recall one of the reasons we put a limit on our time period of going back to 2018 was effectively linked to statute limitations. And that has stood up from challenge from all sorts. So I think at the end of 2026, we should be done now. There may be somebody who wants to take it to false and complain about XYZ, et cetera, and that might draw the process out. But for all intents and purposes, I expect us to be done. The team know my ambitions to have it done this year. And I'm certainly not on this call going to let them off the hook on that front. In terms of AI and in terms of future growth and margins and the like, candidly, when I look at margins, I think there are 3 elements to our margin. There's a margin for advice, there's a margin for the platform and there's a margin for the fund manager piece. The fund manager piece is all as you know on the phone, [indiscernible] the pressure that's under. In terms of platforms, we see the fixed -- the cost base from that tends to be a little bit more fixed. And therefore, as we grow in size and scale, and I think we've mentioned this before, we would expect to give back some of that increased profitability and share that with clients at a later stage. In terms of the advice, advice is really interesting because there are so few advisers in the U.K. The regulation is very high in the U.K. vis-a-vis advice. And therefore, we don't see there being a huge amount of downward pressure on that component. So I think our growth is going to come through growth in terms of both clients and in terms of funds under management because as I mentioned earlier, as we do more in the high net worth space, that might give rise to slightly fewer new clients but larger FUM with that more sophisticated, more challenging needs and therefore, a bigger role for the adviser to play rather than speaking to a client maybe once a year, it's speaking to the client maybe once a quarter or more regularly than that. So I think I'm looking, especially in this market where there's 9% of U.K. adults take advice. We have so few advisers in the U.K. An interesting stat I saw is that SJP contributes 52% of all new advisers in the marketplace through the academy. So it's really, really important that we have a thriving advice profession. And we need to make sure like other professionals, they are appropriately paid and rewarded for the fantastic work they do. Operator: Our next question comes from Fahad Changazi from Kepler Cheuvreux. Fahad Changazi: Only got just 2 left. Could you give an update on your target of doubling the 2023 underlying cash results by 2030? I know it's only 2 years in, but in terms of underlying assumptions on costs, AUM, et cetera, where you are standing now versus the target? And finally, just a follow-up on AI. We have controllable costs increasing by 5% in 2026. Could you remind us again what these are and if AI will help this underlying growth rate in the long term? Mark FitzPatrick: Fahad, very interesting question. So firstly, on the ambitions that we set out as part of our strategy, we remain very comfortable with the doubling of the underlying cash between 2023 and 2030. I'm not minded to rebroker that this early on because while we have had a much stronger start than I think we all thought and we all expected, I am conscious that markets are not linear, and there's quite a way to go between 2030, et cetera, along the way. From controllable costs, the controllable costs, by and large, cover people, cover property, cover tech. And in time, I would expect as we get smarter in terms of how we use some of our tech that, that may give an impact or provide an impact in terms of what happens with our controllable expenses. The key thing to remember is that our main admin provider, SS&C, that cost base is not in controllable. So a lot of the AI functionality will sit in there or sit in the advisers business. There will be some that will sit in us. But at the moment, our focus is in terms of trying to make our advisers as productive and supported them as possible, one; two, make client interactions and adviser interactions with the corporate and the admin as smooth and as simple and as standardized as possible. And then three, we'll be working out right, how do we use AI within the corporate, et cetera, along that way. But I'm being very deliberate in that sequencing because I think the biggest bang for buck is making the advisers' lives as easy as possible so they can spend more time with their clients. Second is looking after the client interaction and all the admin processing, making that standard as simple as possible. And then third will be the element of how we actually simplify what we do internally here at the corporate and the role that AI can play. I know that folks internally do use AI and AI is part and parcel of kind of what a lot of us use. But at the moment, I think we are all experimenting with it, getting more comfortable with it as against it being necessarily a major drag or reduction in our controllable costs at this stage. Thank you. Operator: Our next question comes from David McCann from Deutsche Bank. David McCann: So,,yes, 3 for me, please. So first one on the capital distributions and the new policy there. Can you just give us some color as to what the thinking was with the bias towards the buyback, the 40-60 in favor of the buyback? What was the thinking there rather than a more dividend biased amount? That's the first question. Secondly, thanks for the new disclosures on the liquidity that potentially is quite useful. Just wanted to know that where -- yes, how you're still thinking about the business in terms of the actual capital? Historically, you've sort of focused towards MSP and the surplus around that as being the preferred metric rather than Solvency II. But if we're thinking about the actual capital and the free capital in the business, how should we be thinking about that today? And kind of what is the level? Because I think that disclosure doesn't appear to be in the statement anymore. And then finally, sort of looking forward a bit more, clearly, the business is in much better shape than it was when you came into the business, Mark, and a lot steady and the ship has been done, which is great. Looking at the business going forward, do you -- your predecessors really focused entirely on organic growth in a different environment and with different levels of organic growth to what you're seeing, I guess, now. So are acquisitions still firmly sort of off the table, off the agenda? Or is it something that you might consider more now the business is in better shape again, a lot of things have been clarified and you're kind of moving forward, the cash generation that's coming through and so forth. But just curious as to how you're thinking about that. Mark FitzPatrick: David, thank you. Good to talk to you. Let's take them in order. In terms of distribution, the 40% cash, so of this kind of 28% of the return is going to be cash dividend. That's a minimum. The balance of 42% is effectively the buyback. We felt at these share prices and the value enhancement to the market to shareholders of having a stronger buyback rather than the cash dividend was important. I think if you look at consensus numbers for 2026 and you model out the new distribution, it shows a healthy uptick in both cash dividends and in the buyback. So we -- the Board was comfortable that, that would respond to people who are very interested in dividend and also people who recognize that actually a buyback has become a much more accepted tool in the U.K. market and can be very powerfully deployed, and we were keen to deploy it on an ongoing basis rather than a discrete basis. On capital, the -- there's a reference to the management capital coverage assessment, which I think is a new fancy word for what was the MSB. And I'll let Charles cover that in a moment. But I think the data is contained within the data book around the capital and where we're at. Charles? Unknown Executive: Yes, that's right, Mark. Yes. Look, David, I think you're sort of referencing the fact that we are an insurance group, and therefore, we do have reporting requirements under Solvency II and that type of thing. But I think we would suggest that the new disclosure is designed to make clear that really that's not the sort of the limiting factor in terms of how we think about capital and about shareholder distributions, but really the focus is on liquidity. That's what we focus on and what we'd like you to focus on to. As Mark noted, the management solvency buffer, the MSB, which have been replaced by the MCCA, still lives and it features in our capital and liquidity disclosures. So it is part of the bridge from our total liquidity down to the free liquidity. But capital solvency suggests that's not the key thing to focus on. We would encourage you to focus on those new liquidity disclosures. Mark FitzPatrick: And David, on your third question, you are right that I was very clear that inorganic was not something we were going to consider, especially given the share price of old. I think there is such a strong organic opportunity ahead of us. That's where all our focus and attention is. We have seen when players aggregate up other folks, it creates huge disruption and huge distraction. There's a lot of distracted and disruptive players in the market. We plan on looking at that very carefully and seeing if there's opportunities for us to lift our teams, et cetera, from some of our competition, given that they are potentially somewhat discombobulated over recent events. Operator: Our next question comes from Charles Bendit from Rothschild & Co Redburn. Charles John Bendit: One on AI and one on cash monetization, please. So I just wanted to take a different tack away from how AI might change the customer experience and focus on the adviser experience. I'm just keen to understand if you think AI might drive adviser head count to shift at an industry level between the restricted and independent channels. So my question would be, how do you assess the risk that third-party AI-driven adviser productivity tools could make it easier for independent advisers to operate outside of the SJP ecosystem? So if IFAs can now run more efficient practices and potentially capture a larger share of the value chain through higher advice fees or by offering clients lower all-in fees at the expense of platform charges, what aspects of the SJP restricted model remain most critical in retaining advisers? Is it primarily brand, the broader support and compliance infrastructure, your succession framework? Or do you just believe that AI solutions in the open market will never really be able to replicate the depth and the integration of your own tech stack? And then my second question is just wondering if there's any update on your plans to further monetize idle client cash via arrangement with Flagstone. It feels like the FCA is no longer scrutinizing retained interest. So just wondering if you see an opportunity to expand margin there. Mark FitzPatrick: Charles, thank you. Two really, really interesting questions. On the AI piece and adviser experience, et cetera, I think a few things stand out, and this is kind of what advisers who come to us and advisers have been with us a while say stands out. A is the element of the scale, capital, the resources we have to deploy. So bear in mind that we announced 18 months ago that we are deploying approximately GBP 260 million back into our business to improve our technology, use of data, broaden our client offering, focus on client segmentation, all of those kind of components. There's nobody else in the market that's putting that kind of money into the business, into any business. If anybody is putting money in it to buy businesses, it's not necessarily to improve them. And those who are buying are talking about synergies and taking costs out, not putting investment in on that side. Brand and reputation is very, very important. The technical support, just given the complexities of pensions and other things, the technical support that we have. And then also, we provide an advice guarantee for clients and for the advisers effectively saying that we guarantee the advice that they give as a part of St. James's Place. That's before you get to the element of actually the frequency with which rates change and everything else like that for IFAs is becoming incredibly difficult, which is why I think you're seeing more and more getting consolidated up and aggregated up, et cetera, and why you're seeing kind of small boutiques really struggling to kind of grow and cope with the weight. And if you're going to do technology properly, you need a checkbook. And we have a checkbook. And because of our size and scale, the big players come and talk to us. They want to know what we're doing, what we're thinking, how they can help. They're generally not coming around to the local shop. So effectively, our big offering for clients and advisers is that we give them the best of both worlds. We give a client the local long-term relationship from somebody who lives around the corner, who kids might go to the same school as your kids, but that person is backed by the power and strength and the brand and reputation of St. James's Place. And an IFA just can't do that. As for the cash piece, the -- to use your phraseology, the idle cash. The Flagstone level has continued to increase. So we have seen an uptick in terms of the number of Flagstone is GBP 5.7 billion in Flagstone. Just to remind everybody that is not included in our FUM number. We are working with Flagstone, we are pursuing other opportunities as well in terms of what we might do in terms of cash to try and get that money to be more broadly invested. We know from speaking to our advisers that while clients have money at Flagstone, there are a whole bunch of clients who have money elsewhere. So step one for us is to get some of the money elsewhere into something like a Flagstone or a company like Flagstone. And then secondly is to actually get it more easily transferred across into St. James's Place. At the moment, it's a very clunky going from a deposit account to a holding account to your own personal account to an SJP account and then to get invested. Most people give up the world to live during that journey. What we're looking to do is to streamline that so that can be a single click across from savings to investment because there I say, as we all know, I think people are over saved in the U.K. as in the U.S., and we need people to invest more and be less worried about timing the market and more focused about getting the money in the market so we can benefit from the compound effect. So there's quite a lot of time and attention focused on how do we work that better and how do we help our clients be more effective. They've worked hard to make those savings, how do we convert them into sensible investments. Thank you for those questions, Charles. Operator: We currently have no further questions. So I'll hand back over to Mark for closing remarks. Mark FitzPatrick: Thank you very much, everyone, for your questions and for your engagement. Really, really good questions today. Three key takeaways, if I could leave you from our results today. Firstly, was that 2025 was a year of strong delivery and execution for St. James's Place. We delivered strong operational and financial results while making significant strategic progress. We're delighted to have updated our shareholder returns guidance going forward a year earlier than originally anticipated, and we move forward with an increased payout ratio of 70% of the underlying cash. And thirdly, we look to the future with confidence. We've already made changes to the business. We're focused on strengthening and growing SJP and the partnership over the long term. This means that we are well positioned to capture the structural market opportunity ahead and deliver for all our stakeholders in '26 and beyond. Thank you very much, everyone, and have a great day. Thank you. Operator: This concludes today's call. Thank you all for joining. You may now disconnect your lines.
Beat Romer: Good morning, ladies and gentlemen. It's a great pleasure to welcome here to welcome you to our full year results conference here at the Hotel Widder in Zurich. Present from our side are our CEO, Andreas Muller; our CFO, Mads Joergensen; our Head of Investor Relations, Anna Engvall; and myself, Beat Romer, Head of Global Communications. Andreas and Mads will guide you through the key operational developments and also the financial performance of 2025, share our outlook for 2026 and provide you an update on the priorities of our Strategy 2030. Following the presentation, my colleague, Anna will moderate the Q&A session. We will first take questions here from the room and afterwards then from the participants in the webcast. Afterwards, you are warmly invited to join our lunch buffet here in the back or in the room adjacent. With that, I would like now to hand over to Andreas to begin the presentation. Thank you. Andreas Müller: Thank you, Beat. Also from my side, a warm welcome, and thank you for joining us this morning. Let's start on Slide 3, highlights of the year. 2025 was marked by the largest transformation in our corporate history. With the divestment of Casting Solutions, GF has become a pure-play Flow Solutions business, focused on the buildings industry and infrastructure end markets. I would like to thank the entire GF organization as well as external stakeholders for their support during this time of significant change. With a solid foundation in place, global footprint, broad offering and innovation capabilities, we are excited about the journey ahead of us, and we focus on executing Strategy 2030, establishing ourselves as the leader in Flow Solutions. Coming back to our 2025 results. Overall, our performance in Flow Solutions was solid given persistent geopolitical headwinds and a challenging macro environment. Infrastructure continued to demonstrate strong momentum. Industry, however, was impacted by muted demand in general as well as continued project delays for semiconductors. The European construction market remained mixed, while the U.S. market weakened in the second half. In addition, we faced adverse tariffs and currency effects impacting our industrial U.S. business. It is important for me to emphasize that we will -- that while we performed well in certain areas, our overall result did not fully met our expectations. As an organization, we are capable of achieving more. As such, we are swiftly moving forward with a new effectiveness and efficiency program called Fit for Growth, which will take out CHF 40 million this year, of which most will be secured already by end of Q1. Along with an expected recovery in key end markets in the second half of the year, we expect low single-digit organic sales growth and a comparable EBITDA margin of 14% to 16% in 2026, which corresponds to 10.5% to 12.5% at the EBIT level. Let's now take a look at some of the key metrics for 2025 on Slide 4. Sales for Flow Solutions came in at CHF 3 billion with 0.6% organic growth, more or less in line with guidance. Comparable EBIT margin for Flow Solutions was 10%, excluding items affecting comparability, which was slightly below our expectations. Including these items, the reported EBIT margin stood at 8.9%. The comparable EBITDA margin was 13.4%. The proposed dividend per share is CHF 1.35, in line with last year's level, subject to approval at the Annual Shareholders' Meeting in April. Moving on to Slide 5. With geopolitical issues escalating through 2025, we leveraged our global footprint and local-for-local presence, which limited but not eliminated our exposure to tariffs. We also benefited from diversification with certain markets and segments compensating for others. The Americas is nearly CHF 1 billion business today and grew 3.5% organically. Our Building Flow Solutions business outperformed an increasingly challenging construction market, and our industry business performed well. We continue to invest in our U.S. business and inaugurated a new 15,000 square meter facility in Shawnee, Oklahoma. By doubling our capacity, we are now in a position to better serve our customers in the important and growing natural gas sector. Europe was weaker, down over 2% organically with strong growth in infrastructure, partially offsetting weaker performance in industrial end markets and buildings. A key development last year for Building Flow Solutions was the start of the expansion of Hassfurt into a Central European warehouse. By streamlining our logistics setup, we will make distribution both more efficient and also faster for our customers. APAC performed well, driven by momentum in marine, chemical processing and various industrial segments, offsetting weakness in semiconductors. Building on our long-term presence in the region, Asia remains an important and attractive market. Last year, we opened our new customer experience center in Shanghai, bringing the GF experience to our customers, in particular, localized industrial solutions for the Chinese market. Moving on to Slide 6, which summarizes the many steps which have shaped our transformation. While progressing the Machining and Casting Solutions divestments, we also took important steps to enhance our Flow Solutions business with the acquisition of VAG, which brought mission-critical metal wealth technologies to GF. Going forward, GF is uniquely positioned to capitalize on its broad Flow Solutions expertise across industry, infrastructure and buildings. Moving on to Slide 7. The integration of Uponor, which was, of course, the initial catalyst of our transformation is also progressing well. We further reduced portfolio complexity in 2025, optimized our production footprint and began harvesting customer and channel synergies. For example, we strengthened our presence in the fast-growing MENAT region with an end-to-end portfolio of integrated Flow Solutions for large-scale projects across buildings, industry and infrastructure. We expanded into the U.S. renovation segment through a partnership with Home Depot. We also combined Uponor AquaPEX with GF's ChlorFIT to deliver complete domestic water solutions for commercial buildings in North America and as well launched the Uponor S-Press portfolio in Switzerland to address the attractive hot and cold water and heating applications. In total, we achieved run rate synergies of CHF 29 million in 2025, which compensated for multiple adverse cost impacts, including ForEx, utilization, wage inflation and therefore, allowed us to maintain last year's profitability level in Building Flow Solutions. Looking ahead, we remain on track to reach CHF 40 million to CHF 50 million by 2027. As mentioned in the beginning and shown on Slide 8, we have launched a new effectiveness and efficiency program in late 2025 called Fit for Growth to drive profitable growth. With this program, we will take out CHF 40 million of costs in 2026 by reducing noncustomer-facing roles and external expenses. We will also continue to optimize our production footprint and rightsize our corporate functions. In total, approximately 600 employees will be affected by the program. We started in Q4 last year and have made strong headway already. The majority of measures will be secured by the end of Q1. Importantly, Fit for Growth will allow us to continue to invest in our future, specifically our strategic priorities, which underpin Strategy 2030. We expect to reinvest a part of the achieved savings in our sales organizations to ensure effective and superior customer service. We also have started a net working capital initiative to enhance the performance of our net working capital. Let's move to Slide 9. With our transformation, sustainability has become even more closely linked to our business and strategy, and we remain fully committed to our ESG journey. I'm very proud to confirm that we successfully delivered on key targets of our 2025 sustainability framework. We expanded our portfolio of products with social and environmental benefits to reach our target of 77%. We also reduced Scope 1 and 2 CO2 equivalent emissions by 51% compared to our 2019 adjusted baseline and increased our number of carbon-neutral sites to 12, including Sissach and Seewis in Switzerland. Very important, we also reduced accidents by more than we have targeted. Moving on to Slide 10. Overall, Industry & Infrastructure Flow Solutions, I&I Flow Solutions grew sales by 1.9% organically, driven by the strong momentum in infrastructure in Europe as well as gas distribution in the U.S. Organic sales growth in H2 was 2.2%, up from 1.6% in H1. Demand in industry in the U.S., Middle East and Northeast Asia also remained solid. In Europe, geopolitical tensions weighed on our customer willingness to invest. Demand in certain end markets such as chemical processing and mining remained muted. Semiconductor-related sales landed below expectations at minus 16%, driven by persistent project delays, especially in the U.S., Europe and China. Looking to 2026, we see an improved outlook for semiconductors driven by AI-related infrastructure, high-performance computing and memory demand. We have secured key projects and are well positioned with advanced new technologies such as the SYGEF Ultra, where we are setting new purity and performance standards for ultrapure water systems. We also anticipate demand for data center cooling solutions to accelerate, albeit from a relatively low base. Sales tripled to around CHF 30 million in 2025. Comparable EBIT margins for I&I Flow Solutions declined to 10.9%, driven primarily by unfavorable product mix given lower semiconductor-related sales, ForEx, but also tariffs. The ForEx impact at EBIT level was clearly nearly CHF 19 million. Moving on to Slide 11. As we highlighted at our recent Capital Markets Day, liquid cooling for data center presents an attractive growth opportunity. With 7 pilot projects, more than 30 proof of concepts commissioned as well as more than 20 initiatives currently in advanced discussions, we are seeing encouraging signs of polymer-based solutions gaining traction in the market. We are particularly excited to be working with Rittal as the provider of a complete cooling piping infrastructure for Netmountains' new data center in Velbert, Germany, covering the facility water system, the technology cooling systems and room cooling. This is the first project where we have supplied the entire polymer-based cooling loop from chiller free cooler to the chip, including all components. Behind the products and systems, GF was also responsible for the entire design and engineering work as well as the prefabrication, which enabled fast project execution. We also brought a few of these products and the ones which haven't been with us at the Capital Market Day. We brought our new energy valve, which is a balancing valve, which controls the flow when it goes into the racks to ensure the most efficient removal of heat. We strongly believe that in the generations to come of data centers, the liquid as being water will take over glycol-based systems as we see them as per today. The polymer solutions offer multiple advantages, which I will not stress at this point of time. But looking up here, GF is also outside the building, which is the facility from the compressor to the cooling distribution units, the CDOs, which serve then the cooling liquids to the individual racks. And GF offers a comprehensive and complete solution in polymer, and we're going to see an advantage in water over glycol in the years to come. We will launch this energy valve, the balancing, the Delta T balancing in the months to come. Moving on to Slide 12. To support growth in broad range of industry and infrastructure applications, including liquid cooling, we have invested in our Seewis plant in Switzerland, the Canton Grisons. Following the upgrade, Seewis is a world-class facility for production of ball valves and actuators with high levels of automation and increased efficiency in all areas, ranging from production to logistics to energy use. Moving on to Slide 13. On the infrastructure side, we are capitalizing on strong market momentum by helping customers upgrade their water networks and minimize water loss. Together with VAG, we were uniquely positioned in the market as a one-stop shop solution provider. Our high-performance DMA Flowise chambers enable installation in 1 to 2 days instead of weeks. And with industrial like prefabrication, the high quality reduces water loss, improved pressure management and provides faster response through continuous network monitoring. Moving on to Slide 14. The acquisition of VAG made us uniquely positioned in the market as a one-stop shop solution provider. The integration after the closing in Q4 is well on track, and our plans are executed to drive commercial synergies. I think one of the great examples is this so-called DMA district metering area pressure control chamber. Such a chamber is being used 50 times for approximately 20,000 inhabitants. What does it do? It keeps the pressure in the network always constantly on the same level to ensure, first of all, that when you open the faucet, you are not getting splashed or you don't have any water at all. But it is much more important in terms of keeping the network well intact with a good thought through pressure management, you're going to reduce the exposure and the aging of a network by more than 75%. GF uniquely positions throughout the Uponor infrastructure integration, which produces this kind of special Weholite chambers. With our existing product portfolio of couples to multiple systems with a pressure retaining valve, which is only 1/3 in terms of complexity compared to conventional technologies, we offer a very easy-to-install solution. Such a chamber can be between CHF 30,000 and CHF 40,000. And as I said, on a 20,000 population city, you most likely would deploy some 50 of these chambers. The prefabrication makes it so unique due to the fact that you have a control quality within this chamber. Our teams join forces across Europe already today. We have focused with the VAG integration on a few countries. And we have done so far good progress already also here in Switzerland and the customer feedback to have a first-time one-stop solution when it comes to urban water infrastructure systems was well appreciated. Let's move on to Slide 15, Building Flow Solutions. The business declined by 2.7% organically. Adjusting for discontinued product lines, the organic decline was 1.8%. On a quick note, in Switzerland, we have been able to grow by around 5% in that market, also due to the fact that we have launched new products from the Uponor range into the Swiss market. Europe remained mixed during the year, down 2.1% organically. Adjusting for discontinued product lines, Germany held its ground amid a slow market recovery. Residential building permits were up 11% year-over-year in 2025 after several years of decline, indicating positive momentum in construction activity beginning towards the end of 2026. Switzerland, Benelux, Iberia, Poland and some of our key European markets were in positive territory. U.S. and Canada also proved resilient in a slowing market. Our collaboration with Home Depot to expand in the U.S. do-it-yourself market got off to a good start with our presence increasing to 30 stores on the West Coast. The comparable EBIT margin remained stable at 8.7%, supported by the value creation program. The currency effect at the EBIT level was minus CHF 6 million. With the measures implemented, we are confident that we have set the base to achieve our target margin. Moving on to Slide 16. As we increase our exposure to the renovation market, innovations such as Siccus 16 underfloor heating system play a key role. By 2030, nearly 16% of the EU's building stock will require renovation due to energy performance standards introduced by the EU. Our Siccus 16 underflow heating system enables energy-efficient comfortable heating as well as cooling with fast installation times. The system also combines seamlessly with our Smatrix AI wireless control system, which intelligently adjusts room temperature for maximum comfort and efficiency. Looking at Slide 17, Siccus 16 and Smatrix are compatible with both traditional systems and heat pumps, connected via pipes such as the next-generation GF Ecoflex VIP 2.0. With its superior thermal performance, flexibility and fast installation times, Ecoflex is a natural fit for every new heat pump installation and our offerings perfectly match the need for efficient heating and cooling. Driven a push towards energy security, decarbonization and affordability, heat pumps have overtaken over traditional energy sources and are expected to grow at a CAGR of 15% until 2030. Supported by this momentum, the Ecoflex range was one of our best-performing solutions in 2025. Allow me quickly to reflect on what will come along with the exchange of conventional thermal fossil systems in housing. A heat pump allows you simultaneously to make benefit of cooling. And this is something which is largely and highly appreciated by many of the households and being obviously also considered in new build. We offer not only refurbishment solutions, what you see here with ceiling cooling systems, which can nicely then be connected to heat pumps. We also offer systems which can go in new build, but also the smart control, which allows them to make best use of the heat pump, where we also have interfaces to control the heat pump through our Smatrix systems, especially when it should be used in combinations with cooling and not only heating. So we see -- we have set the ground with the solutions, not only Ecoflex, but also our indoor climate control systems, a good base to profit from this trend in the market. With this, I will now hand over to our CFO, Mads Joergensen, to go through our financial performance. Mads Joergensen: Thank you very much, Andreas. The transformation obviously has had quite an impact on our financial report. To provide transparency, we present our income statement in discontinued and continuing operations. The discontinued contains 12 months on Casting Solutions and 6 months of Machining Solutions until the closing of the sale, which was on the 30th of June 2025. We also have certain one-off effects from the divestments, including noncash book gains and losses, which I will elaborate on later. Starting on Slide 19. Here, we provide an overview of the net sales of the GF Group. Net sales were CHF 4.1 billion, down from CHF 4.8 billion, primarily driven by the deconsolidation of Machining Solutions, the foreign exchange effects. Organically, group sales were down 1.7%. Focusing on our Flow Solutions business. Industry & Infrastructure Flow Solutions was up 1.9% organically, and Building Flow Solutions was down 2.7% organically for the reasons Andreas mentioned earlier. And Casting Solutions consolidated for the full 12 months declined over 8% organically, driven by a continued weakness in the European automotive market. These movements are broken down on the bridge on the next slide. And looking on Slide 20. Sales were down CHF 74 million organically, driven by Building Flow Solutions, Casting Solutions and Machining Solutions. The foreign exchange effect had a negative impact of CHF 153 million. I'll come back with more detail in a bit. The consolidation of VAG from October 1 added sales of CHF 54 million and the deconsolidation of Machining Solutions lowered sales by CHF 492 million. Moving to the full income statement of the GF Group on Slide #21. As a reminder, continuing operations reflect our Flow Solutions business, although with certain one-off effects this year. Discontinued operations include Casting Solutions and Machining Solutions, as mentioned earlier. Gross value added of the group declined as a result of the sale of Machining Solutions. Continuing operations increased primarily driven by the book gain on the divestment of Machining Solutions of CHF 143 million. Personnel expenses declined for the group. For continuing operations, they increased slightly to CHF 841 million, driven mostly by new employees joining from VAG. The personnel cost ratio increased to over 28% from 27% in the prior year. Reported EBIT of the group was CHF 326 million and a margin of 7.9%. This includes impairment charges for Casting Solutions of CHF 83 million shown in discontinued operations. The net financial result amounted to minus CHF 136 million for the group, including additional value adjustments of CHF 83 million on the affiliated Casting Solutions business. Note that this CHF 83 million is in addition to the CHF 83 million mentioned just before, so that the total is CHF 166 million for 2025. Income taxes decreased slightly for the group. The corporate tax rate was temporarily elevated at around 40% as a result of the nonrecurring taxes and other one-off effects. It will likely remain elevated in 2026 due to the divestment-related effects before normalizing in 2027 at around 26%. Finally, net profit to GF shareholders declined to CHF 103 million, including all items affecting comparability. For the continuing business, the net profit increased to CHF 196 million, including the machining book gain. I'll elaborate more on the net profit in a moment. Looking at comparable EBIT on Slide 22. The margin declined to 7.6% for the group. As can be seen, this decline was driven by the lower profitability of I&I Flow Solutions, Casting Solutions and Machining Solutions. BFS remained stable at 8.7% despite a weaker top line, benefiting from synergies achieved via the value creation program and including SKU rationalization from plant closures that we did in Italy and Turkey as well as procurement savings. Slide 23. Overall, our core Flow Solutions grew 0.6% organically for the year and 1.2% organically in the second half. As mentioned earlier, the decline in Industry and Buildings was offset by strong growth in Infrastructure. The comparable EBITDA margin declined to 13.4%, while the comparable EBIT margin fell to 10%. This was due to the unfavorable product mix and due to lower semiconductor-related sales as well as adverse FX effects and tariffs. Slide 24, which provides details on the items affecting comparability. At the EBITDA level, these items include CHF 44 million of restructuring and other expenses. The purchase price allocation impact of CHF 3 million refers to the inventory step-up that we did on the VAG acquisition. The deconsolidation refers to the CHF 143 million book gain that we did on Machining Solutions and the total on EBITDA level is CHF 96 million. Including impairment charges of CHF 83 million relating to Casting Solutions and value adjustments of CHF 83 million, the total impact on net profit is minus CHF 71 million. And on the right-hand side, important note for 2026, the EBIT and EBITDA will be negatively impacted by a divestment-related CHF 180 million, mainly noncash loss from recycled currency translation effects, also CTA called and goodwill. This is also being communicated, but it affects the 2026 accounts. Let's now take a look -- closer look to the EBITDA bridge on Slide 25. Starting from 2024 with a comparable EBITDA of CHF 618 million. The organic impact was minus CHF 64 million and FX effect was minus CHF 34 million. The divestment of Machining Solutions and VAG acquisition led to CHF 53 million lower EBITDA contribution, resulting in a comparable EBITDA of CHF 467 million. Reported EBITDA was CHF 564 million. On Slide 26, yet again, we saw significant adverse currency effects in 2025. Almost all major currencies, particularly the U.S. dollar, developed negatively against the Swiss franc. The total effect on group sales was around CHF 153 million and an EBIT minus CHF 29 million. Given the significant one-off effects, we show an adjusted net profit on Slide 27. Adjusting for the book gain of Machining Solutions of CHF 143 million and the impairment charges and value adjustments relating to Casting Solutions in total CHF 166 million as well as one-off taxes and other effects, we arrive at an adjusted net profit of around CHF 147 million. Moving on to the asset side of the balance sheet on Slide #28. Our cash and cash equivalents decreased to CHF 569 million, reflecting free cash flow development and M&A activity during the year. Overall, total assets decreased to CHF 3.6 billion, down from CHF 4.3 billion, driven by the divestment of Machining Solutions. As for the liability and equity side of our balance sheet on Slide 29, our current liabilities decreased by more than CHF 600 million, driven by proceeds from the divestments and the total equity decreased to CHF 41 million. Now to the free cash flow on Slide #30. Reported EBITDA, which includes the book gain on Machining Solutions was CHF 564 million. Net working capital increased by CHF 86 million, driven by the increased inventory levels to improve service levels at I&I Flow Solutions. Please note that the net working capital will also be addressed as part of the Fit for Growth program through supply chain optimization and other measures. The interest paid decreased as a result of the repayment and the refinancing of the Uponor-related acquisition debt. Deducting the noncash Machining Solutions book gain, cash flow from operating activities declined to CHF 268 million. CapEx remained elevated, driven primarily by investments in Casting Solutions for production facilities in the U.S., of which approximately CHF 40 million has been repaid by the new owner. Excluding M&A, free cash flow declined to CHF 21 million. I would now like to highlight a few additional figures on Slide 31. Net debt was around CHF 1.7 billion at year-end, including approximately CHF 300 million cash proceeds from Casting Solutions and the building in Biel, it was CHF 1.4 billion. Net debt to EBITDA was 3x at year-end, in line with expectations. The equity ratio has decreased now to 1.1%. As already mentioned, the 40% tax rate was temporarily elevated in 2025 for the reasons explained before, and it should return to a normalized level of 26% in 2027. Now turning to my final slide, #32. The proposed dividend is CHF 1.35 per share, in line with last year's level. Now I'd like to hand back the word to our CEO. Andreas Müller: Thank you, Mads. Let's turn to Slide 34. After a challenging 2025, we saw a significant escalation of geopolitical tensions, we are seeing certain tentative signs of improvements in our end markets with momentum expected to accelerate in second half of the year. In the construction market, building permits have ticked up in markets such as Germany and the Nordics. In industry, we expect semiconductor-related sales to accelerate based on our growing project pipeline, while infrastructure is expected to remain strong on the back of aging water investments. Meanwhile, we have started the year with a streamlined corporate organization and lower cost structure based on already secured Fit for Growth metals. And we are fully committed to achieving the full CHF 40 million with the majority already secured by end of Q1. Overall, we expect organic sales growth in the low single digits and a comparable EBITDA margin of 14% to 16% for 2026. Before we wrap up, I would like to take a few minutes on Strategy 2030 and our key priorities for this year. Our vision or North Star is clear. We want to be the global market leader in Flow Solutions in our 3 business areas: Buildings, Industry and Infrastructure. Let's move to Slide 37. Strategy 2030 provides a path to get there. Based on our 4 strategic thrusts, we want to maximize our core business and grow with new applications and innovative solutions to drive growth and margin expansions towards our 2030 targets. In the near term, we intend to double down on certain key market opportunities, which offer accelerated growth. I would like to highlight 5 in particular. Importantly, these are not only new bets. We are in these businesses with the right solutions and sometimes even with significant sales already. Now we want to take them to the next level. With data center capital expenditures estimated to reach USD 1.7 trillion until 2030 and performance standards continuing to increase, we see a tipping point in the industry in favor of polymer solutions over the midterm. With our innovative and complete solutions, which are based on water as the ultimate coolant, we aim to grow this business to CHF 300 million in sales over the next 5 to 6 years. Based on current customer acceptance levels, we believe we are on the right track. Liquid cooling for HVDC high-voltage direct current converter stations for example, renewable energy, we offer unique capabilities, which our customer value. We are well positioned to further expand this portfolio and grow regionally to expand in this very attractive segment. Driven by multiple megatrends, including AI and digitalization in general, the global semiconductor market is set to reach USD 975 billion in sales in 2026, up 27% year-over-year. To capture this growth, we continue to innovate to set new purity and performance standards. In December, we launched SYGEF Ultra, our next-generation purity PEEK piping solutions for the efficient transport of hot ultrapure water, expanding the boundaries of purity. We alluded earlier to indoor climate and the potential we see given the rapid growth of heat pumps. With our superior solutions from the heat pump to climate management in the building, we are well positioned to benefit. Finally, on urban infrastructure, we can now offer a unique one-stop solution based on the combined offerings of GF, Uponor and VAG. We have received the first custom orders for pressure regulating chambers and see great potential in continuing to help customers upgrade their networks. It is important to acknowledge that water scarcity will only continue to become a more pressing topic over time. I firmly believe that GF can make a difference as a one-stop shop for urban water infrastructure with our cutting-edge technology and solutions. All in all, these growth opportunities, combined with our value creation and Fit for Growth programs are a feedstock of achieving Strategy 2030. With that, it's time to move on to our Q&A section. I will hand over to Anna to moderate the Q&A session. Anna Engvall: Thank you, Andreas, and good morning, everyone. We would now like to move on to the Q&A session. As Beat mentioned, we will first take questions from the room and then from the webcast. If you have a question please raise your hand and make sure to wait for the microphone so that people on the webcast can also hear you. I think we are first here in the right corner. Mr. Iffert, please go ahead. Joern Iffert: It's Jorn from UBS. Two questions, and I go back in the queue, please. The first one is on the cost saving program, the CHF 40 million and you are freeing up the 600 headcount. Is this also changing your processes and your structure? Or is it really pure headcount reduction and processes and structures including go-to-market strategies will remain unchanged. This is the first question. And the second question, just a technical one. On the net working capital program you have launched, what are you doing exactly? What do you expect is the contribution to the equity free cash flow? And then also in general, what do you see in terms of equity free cash flow generation in Flow Solutions in 2026 after maybe a more muted '25? Andreas Müller: Thank you very much, Mr. Iffert. I would like quickly to elaborate on our Fit for Growth program. The Fit for Growth program, as I said, is not only taking out headcounts or costs. So we're going to focus on OpEx, but also on our employees' cost. And it is a structural adjustment in a few areas, but it is also in a few areas an adjustment to a new volume and optimization of processes. We also will leverage obviously, new technologies to allow GF to become more efficient. So it's a largely efficiency increasing program. Mads Joergensen: In terms of net working capital, the increase in inventory was mainly to increase the service level of I&I Flow Solutions. To counter that, we have set a target of a reduction of inventory of 5% for the end of the year. The measures will be SKU rationalization. So product pruning, have to go back to the basics as well as supply chain optimization, which could involve some changes of the layout and how we do our warehousing and production day out. In terms of free cash flow guidance for 2026, we aim at CHF 175 million to CHF 200 million for the Flow Solutions business. Anna Engvall: Thank you, Mads. Next question here, if I saw correctly, go ahead, Mr. Fahrenholz. Tobias Fahrenholz: Yes. Tobias Fahrenholz from ODDO BHF. Speaking about the margin weakness in '25, the 10% adjusted, which you achieved versus 10.5% target at the lower end of the range. Can you provide a little bit more color on the reason for the deviation? So what has been the deviation impact of semi market currencies, tariffs? That would be my first one. Andreas Müller: Thank you very much. As we have alluded, we had a severe impact of the ForEx. So the currency effects have been quite substantial, but a minor effect of the tariffs. But overall, we had a mix change in terms of what we have sold. So the infrastructure business is attractive, but it is not as attractive as, for example, the semiconductor business. As you might have seen, the semiconductor business has been affected by minus 16% in the year under review, so was the industrial business subdued across Europe. So it's more or less a mix, which has largely affected also our profitability next to the currency effect and the tariffs. Tobias Fahrenholz: Okay. And looking ahead into '26 and your guidance, why is the range so wide? And would be the base assumption to reach the middle? Andreas Müller: The base assumption to reach the middle would be obviously the growth being at the upper range of our guidance. And I think we feel good in terms of executing on our Fit for Growth program, but also that certain end market subsegments need to develop favorably. Anna Engvall: Okay. Let's go to the middle of the room. Yes, please go ahead. Dominik Feldges: It's Dominik Feldges from Neue Zurcher Zeitung. 600 employees you've mentioned will have to -- that's a reduction of your workforce. Can you a bit elaborate a bit on where that is going to happen, especially how much the headquarter, I think you mentioned also corporate functions. I think how much it will be affected here, the workforce here in Switzerland. And then you've mentioned the construction market, I think, in the U.S., which is becoming increasingly challenging. What is happening there? And if you may allow one more question, tariffs. You've mentioned that there was an effect, a minor effect you said, but how much in terms of tariffs did you have to pay? And will you now try to reclaim these tariffs? Andreas Müller: Thank you very much, Mr. Feldges. The headcount reduction, which is broadly in line with the efficiency increase program is approximately 5% of the global workforce. It is more or less equally spread with a slight overweight across Europe. Switzerland will be also affected with approximately 10% of the addressed 600 people. And yes, you're absolutely right, we will also realign our central functions, but not only on the corporate central functions also on the divisional central functions. Coming to the U.S. construction market, I think, yes, we have seen a weakening towards the end of the year. We are confident that we will outperform the market, particular that we have -- we also outperformed the market in 2025 compared how the last quarter has been developed. I think we have been slightly negative, but only slightly organically negative in the U.S., clearly less than the overall market. We believe with our new solutions, I have mentioned the combination of AquaPEX and our ChlorFIT to allow also move into more commercial applications, but with the do-it-yourself market entrants to address the very important refurbishment market, which we haven't addressed in the years before, at least to this extent. Talking about the tariffs, as we mentioned, we had a minor effect, but it had an effect. So it was clearly above CHF 5 million. So it was a bit between CHF 5 million and CHF 10 million and how to reclaim, I think we are rather wait and see what is now the ultimate solution on the most current developments. We are obviously now will go for our rights, but we would first wait and see how the whole thing will actually turn out. Anna Engvall: Okay. Yes. Mr. Bamert, go ahead. Walter Bamert: You have given us the sales figures for Industry and Infrastructure separately. Can you also give us the adjusted EBIT figure? And will you continue to do that in the future? Mads Joergensen: For the split of Industry and Infrastructure. Walter Bamert: Yes. Mads Joergensen: For the reported figures, we have, let's say, a consolidation system that we have 2 divisions. The split is an approximation. We have set strategic targets, and we will continue to provide updates on how the separate businesses will go also on a profitability. We're not prepared for this meeting. Walter Bamert: Not at this meeting, but from half year figures. Mads Joergensen: We have also said. Walter Bamert: We can expect to get 3 divisions or you will also... Mads Joergensen: We do not provide 3 divisions. We provide 3 business areas. Walter Bamert: EBIT and top line. Mads Joergensen: Remember that these profitabilities are because of the way the accounting system is put together is an approximation. Walter Bamert: Okay. And you also split the building business between Europe and North America that will continue only on the top line? Or will also add a split of profitability there? Mads Joergensen: It's a good question. We have not decided fully on our segment reporting in the new setup. Walter Bamert: Not also regarding the top line reporting. Mads Joergensen: We have not decided yet. Walter Bamert: Okay. Yes. And then material cost, you should have some tailwind from the lower material prices. How does that translate over time into your profitability last year and this year and the future? Mads Joergensen: On the material cost, it's correct. We had seen some downward trends on a number of the resin prices about CHF 600 million of the Building Flow Solutions business as well as CHF 300 million of the I&I Flow Solutions business is linked to this lower material cost. So it's actually priced on a daily basis and therefore, also priced into the market, which means that we have followed partly also the decreasing material costs, which leads to, for instance, in BFS, there we were able to compensate a bit. But overall, the price effect overall for both BFS and I&I Flow Solutions has been very little in 2025. Anna Engvall: Okay. Next question. Yes, let's go here to the front. Alessandro Foletti: Alessandro Foletti, Octavian. Can I ask you a couple of questions? Maybe a quick one, if you can provide order -- organic growth for the order intake in the 2 Flow divisions. Andreas Müller: Mads? Mads Joergensen: The organic growth for the order intake in the 2 Flow -- for the whole year in -- for the Flow Solutions business. Overall, it was for I&I Flow Solutions, we're looking at an order intake growth of and not over the growth, so about 2% order intake for the full year. And for BFS, we had a decline in the order intake also in the area of 2.5% decline. Alessandro Foletti: Great. And then on the one-off cost or let's say, the Fit for Growth program. But I'm a little bit surprised you mentioned in the slide that it will cost you CHF 15 million. Oftentimes, when companies do this restructuring, the ratio is between cost and savings is more closer to 1:1. So maybe you can explain why you'll be able to do it with less money. Andreas Müller: I think our Fit for Growth program, as we have also alluded to, has stressed in the last year more on the portfolio optimization, which normally comes along with higher charges in terms of restructuring expenses when we have, for example, closed down our -- one of our Turkish operations and consolidated multiple places across Europe. That came along with higher restructuring costs, whereas the program to go is focusing, as I said, on OpEx, operational expenditures, but also on efficiency activities in our headcount functions. And yes, here, we talk about severance payments. Alessandro Foletti: Okay. And maybe last one. Can you give an indication on the expected leverage, net debt to EBITDA for '26? Andreas Müller: I think end of the year will be below 3, end of 2026. It will be below 3, yes. Alessandro Foletti: But that also means, for example, not around 2.5. Andreas Müller: No, we will be closer to 3. Anna Engvall: Great. Yes, let's go here. Ingo Stossel: Ingo Stossel from UBS. Regarding your M&A guidance to reach your midterm top line targets, do you have any update here? I think you probably need to buy quite a bit to get to the range which you have. And are there any gaps in your current portfolio which you see, especially in your focus areas? Andreas Müller: Our focus areas are very comprehensive solutions at this point of time, I have to say. I think when we talk gaps, we talk regional gaps. We have front-loaded our M&A activities with the acquisition of VAG already in the year 2025, which gave us the opportunity to combine our mission-critical wealth technology with our existing offering. So I think we are well on track in terms of our M&A pipeline. But nevertheless, talking about M&A, we will see more activities in the years beyond 2026 and not in the year 2026. Ingo Stossel: And to follow up on that, what would your leverage guidance look like after 2026 if -- you say you probably will buy something. Mads Joergensen: We have said that if we follow the plan completely, it would be at the end of 2030, our leverage will be below 1. But since we are planning on acquiring companies, we would estimate that we will be around 2 net debt EBITDA at the end of 2030. Anna Engvall: Great. Next question. Martin Flueckiger: Martin Flueckiger from Kepler Cheuvreux. I've got 2 questions, and I'll go back in line afterwards. First one is on, I think, Andreas' statement regarding the development in the semiconductor business. If I remember correctly, minus 16% organically was already the number for H1. Now you're saying, if I understood you correctly, that it's the same number for the full year. And yet again, if I remember correctly, at the half year stage, you guys were guiding for a rebound in the second half. So just wondering whether you could elaborate a little bit on what went wrong in the second half in semis and what exactly you're expecting for 2026? That's my first question. And then the second one is on your targeted reinvestment into the sales organization going forward. You were talking or in the press release, you're talking about CHF 40 million savings, if I understood correctly, in 2026. And part of that is going to be reinvested. So I was just wondering how much of that will be reinvested and what the net figure will be in terms of cost savings? Andreas Müller: I think 2 excellent questions, Martin. Thank you very much. I think, yes, that was something which we have not seen, and we have been quite optimistic when we have released mid-year results, then we have seen an increased project pipeline and also quite a nice order book on our semiconductor businesses. But we have seen that many of these projects can be pushed out of the year under review. So that was also for us, as I said, our results didn't live up to our expectations. That was one of the key drivers. So we have expected to be rather seeing a slight growth in the second half of the year, which we haven't seen. Going forward and outlook-wise, we believe that semiconductor could grow some 15% in the year to come. That's at least what we expect in that field. We see ourselves well positioned. We also have a couple of proof of concepts of the SYGEF ultrapure water system, which is giving the opportunity now also to move into the hot ultrapure water applications, which substantially drives down the rinsing time of installations. We are set in a couple of validation processes and homologation processes. So we believe we have set quite a new standard in that application. GF is an early mover when it comes to that industry. So we can't compare our business development with a VAT or INFICON. This is a bit of a different momentum when this kind of applications being stalled. So yes, in a nutshell, that was one of the disappointing factors in the year 2025. Reinvestment in our sales force, I have elaborated a bit on our new growth opportunities. As I have spoken, we have been nominated on a quite substantial order in Latin America for urban water infrastructure. That means for us that we also have to care to have the right sales force, the right technical expertise at the front, and we will invest, particularly in that one. But also when it comes to data center, this is a field where we have already employed a bit less than 40 people, but we will go and continue since we know that this is a different type of business. It's an OEM business versus a construction business. So the OEM business requires also some special attentions, let's call it this way. So we will also employ more people in that field, but also across Europe with our solutions and Building Flow Solutions, we see still, let me say, white spots when we look at the markets across Europe. So overall, we anticipate between CHF 5 million and CHF 10 million to be reinvested of this -- CHF 5 million to CHF 10 million to be reinvested in our sales force, but not only sales force but also customer-facing resources. Anna Engvall: Great. Please go ahead. Miro Zuzak: Miro Zuzak, JMS Invest. I have a couple of questions, if I may. The first one would be how much or how large or how big were the data center-related sales in 2025. Then the next question is a bit more a technical one. You mentioned the new valves here on stage. We also have introduced a couple of new products late 2025, including now covering the range even into the several blades, if I'm not mistaken. A couple of questions related to this. Firstly, in the entire change, there is still missing the cold plate part, so the very last part. Are you intending to close this gap at some point in time? And how through acquisitions? Secondly, can you please give some feedback about the initial response regarding the new products that you have introduced, how they are basically accepted by clients? Thirdly, maybe you can mention in which platforms that you are, I don't know, Vera Rubin, HP and so maybe of other clients which have already co-developed with you and how you are positioned? And lastly, the question about glycol versus pure water, maybe you can give some color there, how this is currently shifting towards pure water. And then lastly, you mentioned that the core business would be -- this business would become CHF 400 million to CHF 500 million in a couple of years, 3 to 4 years. How much of this additional growth comes from the new products that you've just introduced? And how much comes basically from the products that you already had in place last year? Andreas Müller: It's a lot of questions, and I should have brought my technology experts with me. But thanks a lot. First of all, the DC business in 2025 was approximately CHF 30 million, troubling from CHF 10 million to CHF 30 million, where our outlook for the year 2026 is approximately another growth in the magnitude of CHF 20 million. The new valve and in terms of -- so first of all, the feedback which we have received on the comprehensive solutions, what we have displayed now on multiple exhibitions was very positive. Nevertheless, the go-to-market is a slight different one than in our other businesses. So the so-called cooling processes is a very close business to the HVAC installation companies, but it's also an OEM business. That means you have different kind of contraction partners. As we all know, NVIDIA is specifying down to the concept to the horse to the quick connect, how a rack, which is serving their GPUs should be constructed. Talking obviously, to this kind of experts and homologation experts is not that easy. We have co-developed a lot of things together with big players such as Google, but also we are in touch with Algae. We are talking to AWS. So we have good inroads to that one because we have been already in hindsight in the facility water. We differentiate facility water, which is everything which goes out, let's call it a white room. So anything what is outside there, GF is well present already today. We also are now present in this kind of applications. For example, we have equipped a very well reputated data center facility of one of the big players in the Nordics with the storm water management, which is also then an application which nicely fits into the GF comprehensive offering. But coming back to facility water, going then into the technology area, that means the technology water, that is new for GF. Here, we are now with the first, as I have shown you, the Netmountain with Rittal being one of the big supporter and promoter of this kind of solutions. Algae was also a big promoter. We have multiple smaller developers, but we are also in the big ones. Next, cold plate. I have to say we have not looked into cold plate. We believe this is a technology which we're going to leave to the experts. We also believe that the cold plate technology might going to see some strong innovations in the years to come, which means that the cold plate will be replaced by a direct in the packaging cooling channel. So here also, we believe that liquid water, high-purity water will be superior over anything else because the purity of water is something which GF has played since decades. And so therefore, we can handle that one. The initial response, as I said, was very positive. I think the platforms I have mentioned, I just would like to correct, I said we strive for CHF 300 million in the strategy cycle, 2030 in terms of data center sales and new products, at least in the white room, a lot of our most recent presented innovations, whether it's being the balancing valve, energy valve or whether it's being the quick connect, what we have also here on display or the manifolds, which we provide, we assume in the white room, even 2/3 would be stemming from new products in the white room, in the white room, which is more or less most likely a 50-50 or a 60-40 split in terms of the entire installation. If you look at the entire large-scale hyperscaler, when we go from storm water, which would be a bit infrastructure applications to the facility water from the chillers to the CDUs and then the conveyance of the entire system and then it goes white room distribution here. I think this is obviously it would be quite attractive and appealing. Anna Engvall: Thank you, Andreas. Any further questions? Another one, Mr. Flueckiger. Martin Flueckiger: Yes. I'd just like to come back to your statement, Andreas, regarding the CHF 300 million targeted long term. If my memory serves me right, at the CMD, you guys were talking about CHF150 million to CHF 200 million. That's quite an increase. What's changed there? Andreas Müller: I think our market insights, also certain customer feedback and also the belief that water as a coolant is superior over glycol, makes us believe that in the second generation, you're going to see more polymer-based solutions. And we target it is still not that big. The total expected capital expenditures in regards to piping systems in the data center is approximately CHF 3 billion, at least that is the anticipation for the year 2030. So we're going to believe with our solutions, we are quite well positioned and also our discussions and our proof-of-concept installations with the positive feedback made us to believe that CHF 300 million is an achievable target. Anna Engvall: Yes. Dominik Feldges: Of course, it's not the focus today, but still you have sold now the -- also your -- the Casting business, the timing there. I mean is it -- was it -- I mean, could you not have waited for it? I mean, do you really have to -- I mean, is that not really unfortunate to sell it really at the bottom of the cycle? It seems you have had an impairment. I mean, why not being a bit more patient maybe like the Chinese who just wait and to put it maybe a bit provocatively? Andreas Müller: I think what is the right time of an acquisition or what is the right time of a divestment? I think that becomes quite a complex question. When we reflect a bit on how the business is being set up and embedded in the industry, we believe with the transformation, we have seen a lot of European suppliers, but also European OEMs strongly suffering from the developments. And we have seen that also in our call-offs and in our orders and order fulfillment rates even of the most recent order acquisitions, let me say, over the 3 and 5 years, as you may know, you acquire an order and you execute on this order in 3 to 5 years on these businesses. We have seen many of the platforms overpromising and underperforming of our OEMs, which also resulted obviously in severe headwinds on this entire group across Europe. Now let's talk a bit more China. China is a second pillar where GF has been strong with its Casting Solutions business, particularly with the automotive part of the Casting Solutions business. We have seen also a shift there in terms of which OEMs are the successful ones and how the supply base has changed, and has been less money being deployed in real estate as we have seen, let's say, some 10 years ago. Nowadays, a lot of venture capital flows into technologies and in manufacturing setups. We have seen a lot of new competitors growing over the last 2 to 5 years. Mads has presented the figures of the discontinued businesses, and he has also presented the figures of what has been achieved in our Casting Solutions business. If you take now a bit more than 3% EBIT margin and think about that we still keep a very profitable precision casting business, which serves the aerospace, commercial, but also the industrial gas turbine business, you can imagine that May profitability is far out of what has to be expected. If you ask me, I think it was one of the best possible moments in the last couple of years to get at least a decent strategic buyer attracted by our business where the combination with Nemak being one of the largest or the largest player in that field makes a very nice combination. We believe it's the right moment. And I think waiting wouldn't be the right recipe. You wouldn't have liked that. Mads Joergensen: And if I may complement, Andreas, in terms of timing, if you go back in 2019 was not a good year for automotive in China, 2020, COVID, 2021, supply chain, 2022, chip problems, et cetera, et cetera. What actually happened over that period is that the automotive industry changed fundamentally, and it's really in such a transformation at the moment that we were happy to be able to exit this business. We're very happy to be able to exit this business. Anna Engvall: Thank you, Mads. Any final question from the room? If not, then I will ask the operator if there are any questions from the webcast. Operator: So far, there are no questions from the webcast. Anna Engvall: Okay. In that case, then I will thank you for joining us this morning and invite you to join us for lunch in the room next door. Thank you very much. Andreas Müller: Thank you very much.
Operator: Good morning, and thank you for standing by. Welcome to the BIC's 2025 Full Year Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's call is being recorded. I would now like to hand the conference over to our first speaker today, Brice Paris. Please go ahead, sir. Brice Paris: Good morning, and welcome to BIC's Full Year 2025 Results Call. I'm Brice Paris, Vice President, Investor Relations. We're in Clichy today with our new management team, Rob Versloot, our CEO; and Gregory Lambertie, our CFO. This call is being recorded, and the replay will be available on our website with the presentation and press release. We will start with the usual results presentation, followed by a Q&A session. First, please take the time to read the disclaimer at the beginning of the presentation. With that, I give the floor to Rob. Rob Versloot: Thank you, Brice. Hello, everyone. I am pleased to be here with you today for our first full year earnings call together. And I'm joined by Gregory Lambertie, our new Chief Financial and Digital Officer. I will start with a brief overview of the key highlights from 2025. Gregory will then walk you through the consolidated results for the year. I'll then introduce my new leadership team and share our outlook for 2026. Highlighting the opportunities ahead before closing with a few concluding remarks. 2025 was a year marked by a volatile macroeconomic environment, softer consumer markets and geopolitical uncertainty. Against this backdrop, BIC faced many challenges in 2025. When I look back at my initial assessments of BIC's strength, and what we can build on for the new strategy, they are all clearly confirmed, the power of our brand, our deep distribution network and our excellence in manufacturing. The key takeaway for 2025 is that we delivered results in line with the expectations set when I became CEO. We achieved full year net sales of EUR 2.1 billion, down 0.9% at constant currency, an adjusted EBIT margin of 13.6% and a resilient free cash flow generation at EUR 222 million. Most importantly, we stabilized the business and achieved modest growth in the second half. Let me start by commenting on our main challenges in 2025. We faced significant headwinds in the U.S. across our 3 categories impacted by tough market trends. In the lighters, shavers and ball pen segments, markets were down mid-single digits in 2025. In Latin America, we faced serious challenges in Mexico. Net sales performance was impacted by big distribution losses and intense competition. We recently made leadership changes in Mexico with a clear objective to improve performance going forward. Finally, the very disappointing performances of our Skin Creative businesses, Rocketbook and Cello, weighed significantly on our growth and profitability in 2025. As I mentioned in Q3, it is my responsibility to act swiftly and rationally. As a result, we have taken decisive steps to streamline our portfolio, including the discontinuation of these underperforming activities. However, despite the numerous challenges we faced, we saw an improved performance in the second half of the year, particularly in the Middle East and Africa and in the U.S. Now let me highlight some key achievements for 2025. First, Tangle Teezer was integrated successfully, growing double digit in 2025 and contributing 4.1 points to the group's growth with accretive margins. This very strong performance reflects disciplined execution, strong collaboration across teams and the rapid alignment of Tangle Teezer with BIC's operating model. I will come back to this in more detail later. Second, we saw strong momentum from our value-added and recently launched products, all supported by impactful advertising campaigns. Products such as the 4-Color Smooth pens, the BIC Flex 5 and Soleil Glide shavers resonated well with consumers reinforcing the strength of our brands and our ability to drive mix through meaningful innovation. We also continued to make tangible progress on our ESG actions. We launched the Twin Lady razor, featuring a handle made from 87% recycled plastic and blades incorporating 70% recycled steel, reflecting our commitment to more sustainable product design without compromising performance. In addition, we achieved key milestones across 3 core ESG KPIs. 100% of cardboard packaging now comes from a certified recycled source. We reduced our Scope 1 greenhouse gas emissions by 47% compared to 2019. And lastly, we helped improve learning conditions of 245 million children across the globe, notably through the work of the BIC Foundation. I now want to tell you a bit more about our recent innovations and partnerships launched in 2025 and some planned for 2026. At the heart of these initiatives is a renewed focus on the power of our brand, which I strongly believe and see as essential to successfully execute our new strategy. In 2025, we launched the BIC Soleil 5 Glide, a new premium women's shaver supported by an impactful marketing campaign designed to modernize the category and strengthen brand engagement. Innovations like this one or like the BIC Soleil Escape are key to sustaining our leadership and driving mix within this segment. In 2026, we will further strengthen our shaver portfolio with the launch of the new BIC 5 Trim and Shave. This innovation combines a 5-blade shaver with an integrated precision trimmer, delivering superior performance and versatility at an accessible price point. In 2025, we executed highly successful partnerships with Netflix on Squid Game and Stranger Things across Europe and Latin America, leveraging a strong cultural moment to create distinctive collectible designs that resonated particularly well with younger adult consumers. For example, in Brazil, we partnered on a limited edition of the BIC 4 Colors and Stranger Things collaboration as one of Netflix's most successful global franchises, Stranger Things powered an activation that blended local pop culture with global entertainment, turning an everyday icon into a collectible. 2025 was also a year of major ramp-up for our first reloadable utility lighter, EZ Load. The product posted encouraging results, particularly in Europe, and our teams are working on expanding distribution further. EZ Load represents an important step in our efforts to combine innovation, sustainability and category premiumization. Lastly, in stationery, our iconic 4-Color pen once again delivered strong performance in 2025 with new additions such as the 4-Color Smooth contributing to growth. In January '26, we launched new BIC Cristal Figurines now available in our main markets. This great innovation combines the quality of a BIC Cristal with playful animal figurines and pastel colors to target a younger audience and encourage a collection trend. This launch allows us to access a growing consumer segment while leveraging one of our most iconic products. Finally, we also delivered several exciting innovations and partnership within Tangle Teezer, which I will cover more in the next slide. Moving on to Slide 6. Tangle Teezer delivered a very strong performance in its first year within BIC with double-digit net sales growth and margins accretive to the group. From a product perspective, The Ultimate Detangler hairbrush family drove strong growth in 2025 with consumers picking up the new premium Chrome and Matte collections. The Mini Ultimate range also proved to be a highly successful driver of incremental sales in impulse retail locations. And at the end of 2025, a limited edition collaboration with the popular SKIMS brand of Kim Kardashian further reinforced Tangle Teezer's appeal and was a clear commercial success. More recently, Tangle Teezer also partnered with the hairstylist of Grammy Awards winning artist, Olivia Dean, using the Ultimate Detangler for her red carpet look, authentically placing the brand at the center of a high-visibility global cultural moment. All these achievements helped consolidate Tangle Teezer's market leadership, securing the #1 position in the U.K. and growing market share in the U.S. to become the #3 detangling hair care brand. Finally, I am proud to see the continued progress in seamlessly integrating Tangle Teezer. And I'm very happy to share that in December 2025, we started to produce our first Tangle Teezer brushes in a BIC factory. Now before I give the floor to Gregory on the financials, let me go over our shareholder remuneration. In line with BIC's capital allocation policy, the Board of Directors will propose an ordinary dividend of EUR 2.40, representing a 50.6% payout ratio. In addition to this dividend, we are renewing our share buyback program in 2026 with a total consideration that can reach up to EUR 40 million. Our resilient free cash flow in 2025 enables us to continue delivering these returns to shareholders while reinvesting in the business to deliver on the strategic goals and new capital allocation policy that will be communicated later this year. With that, I will now hand it over to Gregory, who will present to you our 2025 consolidated financial results. Gregory Lambertie: Thank you, Rob. Good morning, everyone. Having joined the group in early January, I'm pleased to be here with you today for my first earnings call with BIC. I'll present to you our full year '25 consolidated results and then hand it back to Rob for the conclusion. Let's start with a general overview of our key financial figures. Full year net sales stood at EUR 2.1 billion in 2025, down 0.9% at constant currency and 4.7% on an organic basis. As mentioned earlier, we saw improved momentum in the second half after significant declines in the first half. Net sales in Q4 were EUR 495 million, up 1.1% at constant currencies. Excluding perimeter impacts from the acquisition of Tangle Teezer and the sale of Cello, net sales declined 2.3% in Q4. Full year adjusted EBIT was EUR 283 million, representing a 13.6% margin compared to 15.6% last year, mainly impacted by the decline in our revenues and partly offset by cost actions. Consequently, adjusted EPS was EUR 4.74 compared to EUR 6.15 in 2024. Lastly, free cash flow totaled EUR 222 million in '25, down EUR 49 million versus last year. Turning to Slide 10. Let's review the main building blocks of Q4 net sales evolution. In Q4, net sales were down 2.3% organically, mainly driven by the 2.2% decline in Flame for Life and in Human Expression by 1.7%, while Blade Excellence was up 1.6%. For the full year, net sales were down 4.7% organically, 0.9% at constant currency. Again, Human Expression and Flame for Life were the biggest negative drivers, declining minus 2% and minus 2.5%, respectively while Blade Excellence was down 0.2%. Turning to Slide 12. Let me walk you through the 2025 performance by division, starting with Human Expression. Net sales for the full year were EUR 736 million, down 5.6% organically. Constant currency performance was lower since discontinued businesses were a drag on growth. In North America, BIC's performance was significantly impacted by Skin Creative and Rocketbook. And as Rob mentioned earlier, we took decisive actions in Q4 with the discontinuation of these activities. In addition, the U.S. ball pen segment, where BIC is most exposed, declined mid-single digits in value. However, net sales for the core stationery business improved meaningfully in H2 versus H1 as we experienced a strong back-to-school sequence in Q3 in segments like mechanical pencils and correction. In Europe, following a very good 2024 driven by growth in flagship products such as the 4-Color Olympics, net sales were slightly down in 2025. Performance was resilient despite a challenging market, and it's worth noting the sequential improvement throughout the year, thanks to steady distribution gains and the success of recently launched 4-Color pens addition like the 4-Color Smooth. In Latin America, the decline was mainly driven by Brazil and even more by Mexico. In Mexico, in particular, we implemented managerial changes and are already seeing a stabilization. Lastly, in Middle East and Africa, net sales grew mid-single digits, driven by good commercial execution and solid back-to-school season in key countries like South Africa. Human Expression adjusted EBIT margin was 7.5% in 2025, flat versus last year. The impact of unfavorable currency fluctuations and higher raw material costs was offset by lower expense as well as favorable price and mix. Moving on to the performance of the Flame For Life division. Net sales were EUR 723 million in 2025, down 6.7%, both organically and at constant currencies. In North America, net sales were down significantly in the first half of the year and were impacted by deteriorating trading environment and lower consumption. Market trends, however, showed sequential improvement throughout the year. The U.S. pocket lighter market ended at minus 3.7% in value in 2025, and BIC managed to maintain its share in the [ lighter ] market. Our net sales were more significantly impacted in the convenience channel. In Europe, net sales were slightly down, impacted by soft performance in key countries like Italy and Germany. This more than offset distribution gains in the discounters channel and solid performance in the utilities lighters segment. In Latin America, we were impacted by challenging market trend with tough competition in Brazil and Mexico. In Mexico, in particular, performance was particularly poor in the traditional channel. As mentioned, this has been addressed through managerial changes. Finally, our net sales in Middle East and Africa grew double digits with strong commercial execution in Nigeria and distribution gains in Morocco. Flame For Life adjusted EBIT margin was 29.9% in 2025 compared to 33.3% last year. This decrease was mainly due to net sales decline and the negative impact of U.S. tariffs in H2. Turning to the next slide on Blade Excellence. Net sales totaled EUR 602 million, down 0.8% organically. As mentioned, Tangle Teezer performed very well, growing double digits and fueled by new products and distribution gains. In the U.S., our core shaver business declined mid-single digits, facing deteriorating market trends and high competition, particularly in the women's segment. However, we did a solid performance in the premium range and the new products such as BIC Flex 5 and the BIC Soleil Glide. In Europe, net sales declined slightly on a like-for-like basis as a result of softer performance in key countries such as Italy and Greece, and this more than offset strong commercial performance in Eastern Europe and the success of value-added products like BIC Soleil Escape. In Latin America, our trade-up strategy towards the multiblade segment continued to deliver positive results, particularly in Brazil. Lastly, in Middle East and Africa, net sales grew slightly, mainly driven by good Q4 performance in key markets like Morocco and Nigeria. Overall, Blade Excellence '25 adjusted EBIT margin was 15.9% compared to 18.5% in 2024, mainly due to tariffs and a very high comp in '24. Moving on to Page 15. Full year '25 adjusted EBIT margin was 13.6%, down 2% versus '24. Gross profit had a negative impact of 1.6 points, driven by high raw material and the negative impact of tariffs. This was particularly offset by continued manufacturing efficiencies and the positive contribution of Tangle Teezer. Brand support was relatively flat versus last year, and we had lower operating expenses, thanks to disciplined cost control. That said, as a percentage of net sales, operating expenses increased 0.3 points due to negative operating leverage. On Slide 16, let's review the key elements of our P&L. Adjusted EBIT stood at EUR 283 million, down EUR 60 million versus last year. Nonrecurring items amounted to EUR 127 million, mostly due to the sale of Cello and the discontinuation of our Skin Creative activities and Rocketbook announced in Q4. This included mainly EUR 104 million related to the discontinuation of Skin Creative and Rocketbook announced last December, EUR 11 million related to the negative impact of Cello's disposal and EUR 10 million related to the fair value adjustment on the Power Purchase Agreement in France and the Virtual Power Purchase agreement in Greece. As a result, income before tax was significantly down to EUR 139 million compared to EUR 298 million in 2024. Lastly, net income group share was EUR 86 million compared to EUR 212 million last year, while our adjusted net income group share was EUR 195 million compared to EUR 256 million last year. Our adjusted group EPS stood at EUR 4.74 compared to EUR 6.15 last year. On the next slide, you can see the main building blocks of free cash flow in 2025. Operating cash flow amounted to EUR 400 million, down EUR 71 million year-on-year, mainly due to the decrease in operating margin. Change in working capital was a positive contribution of EUR 7 million and income tax paid was EUR 90 million. CapEx were EUR 87 million, flat versus last year. As a result, in 2025, free cash flow was solid at EUR 222 million. Before giving the floor back to Rob, let me present our net cash position on Slide 18. On top of the free cash flow elements in 2025, we spent EUR 127 million in dividends and EUR 40 million in share buyback. This concludes our review of BIC's full year 2025 consolidated results. In summary, 2025 was a difficult year for BIC in most of our key regions, marked by continued inflation, consumer anxiety and tariff uncertainty in the U.S. Against this backdrop, the group continued to focus on free cash flow resilience through disciplined cost management and working capital improvements. Looking ahead, as we develop our strategic plan, we will continue to focus on protecting our cash, simplifying our organization to ensure we are fit for growth and well positioned to drive growth and profitability. With that, I give the floor back to Rob. Rob Versloot: Thank you, Gregory. 2025 was also a year of major changes in our governance structure. I just put in place a new leadership team, tighter and leaner with a clear objective of improving the business going forward. I strongly believe that BIC now has the right structure and leaders to execute and drive our next phase of growth. In addition to this, more, than half of BIC's Board of Directors was renewed last year and it is now fully equipped to support the implementation of our new strategy. These leadership and governance changes are essential to putting the business back on track. Let's now take a closer look at our 2026 outlook. Starting this year, BIC will now guide on organic net sales performance, a key KPI and priority for us going forward. It reflects the true underlying performance of our business, excluding the impacts from perimeter and foreign exchange. In this year of transition and as BIC's leadership team prepares its strategic plan, which will be presented later in the year, we anticipate under current assumptions, improving organic net sales trends in 2026, a slight expansion in adjusted EBIT margin and a stable free cash flow generation year-on-year. To conclude, 2026 is a transitional year as we are focused on improving and transforming our business as well as implementing the right structure and operating model. With the full support of the Board of Directors and my new leadership team, I strongly believe we are well positioned to prepare a clear plan of action and write the next chapter for BIC. I'm very optimistic that the decisive action we have taken so far are laying strong foundations for BIC to return to sustainable, profitable growth. I could not conclude this call without honoring the memory of Francois Bich, son of our founder, Marcel Bich, who sadly passed away this Monday. Throughout his career, Francois played a pivotal role in developing iconic safe lighters and transforming them into a global success through his visionary leadership from the acquisition of Flaminaire in 1971 to leading our lighter category until 2016 when he retired from his executive position. When I joined as CEO, I had the immense privilege of speaking with him. And I have to say that without Francois, BIC would undeniably not be the company we all know today. His legacy will continue to inspire us for the years to come. This concludes our presentation for today. We will now take your questions. Operator: [Operator Instructions] And we take our first question. And it comes from the line of Andre [indiscernible] from UBS. Unknown Analyst: Obviously condolences to the Bich family. I have a couple of questions. Firstly, on the 2026 outlook. Could you confirm that when you talk about an organic -- an improvement in organic trends, this does not necessarily mean you're going to return to growth in full year '26. And coupled with that, your margins will only increase up to 10 basis points because you talk about a small margin improvement. Coupled with this, where do you see the sharpest improvement coming within your divisions? And how much of that will be driven by Tangle Teezer? And secondly, obviously, Rob, Gregory, you've been with BIC for a few months now. What are your first impressions? And without giving too much ahead of the strategic update, any areas that strike you as most right for improvement? Rob Versloot: Andre, for your questions. I will start with your first question, which was about our guidance for 2026. I want to make it very clear. 2026 is a transitional year in which we aim to stabilize performance and laying the foundation for our new growth cycle. That would be our key priority for this year. I think your second question was related to the margin expansion. Look, I think what helps us in 2026 is the fact that we have exited underperforming businesses in Q4, namely Rocketbook, Cello and Skin Creative. We are also focusing on disciplined cost control. But on the other hand, we're also being hit partially by tariffs in the U.S. So the combination of all this makes us believe that we will be able to slightly expand our margin in 2026. It was related to my impressions of BIC. I would like to summarize that in 3 things. First of all, we have a wonderful brand, which is known in many places across the globe. So I think it's a fantastic brand platform. The other thing that has impressed me in my first month is the amazing manufacturing capabilities we have to produce super high-quality products at very cost competitive levels. And thirdly, we have a fantastic distribution footprint in many parts of the world. So I think this company has some really -- some key strengths and -- which will help us to revive growth going forward. Last point, if I get you right, Andre, was the Tangle Teezer performance. I can honestly tell you, we're super happy with Tangle Teezer. Also in 2025, our first year of full integration, we could notice that Tangle Teezer continues to grow at a fast pace, double-digit top line. It's margin accretive for our company. It has consolidated its #1 market share position in the U.K., and it's a fast-growing brand in the U.S., now reaching #3. So yes, all lights on green for Tangle Teezer and it also has been a key contributor to our growth in '25 with 4.1 points to the group's net sales performance. Operator: [Operator Instructions] And the next question comes from the line of Geoffrey d'Halluin from BNP Paribas. Geoffrey d'Halluin: I've got 2 questions, please. First one is related to the end of 2026. If you can share with us any thoughts on the trading trends you've seen in the first weeks of 2026, especially for the Flame For Life division in the U.S. That's my first question, please. And second question is related to the exit of businesses, so like Cello, Skin Creative business and Rocketbook. Could you share with us how much is it in terms of revenues, which is exited the company? And maybe also any thoughts regarding the profitability of this business? And on top of that, do you expect any additional one-off costs related to these disposals or business exiting? Rob Versloot: Geoff, thank you very much for your question. This is Rob speaking. I will answer the first part of your question, and then I will pass on to my colleague, Greg, to answer the second part. So your question was related to our expectations for Q1 and current trending. What I can tell you is that we expect a relatively flat organic growth for Q1. And what we are doing is we are taking actions to set ourselves up for real sustainable growth, amongst others, by rightsizing level of inventories at key distributors and wholesalers globally. Maybe more in particularly because I think you were also mentioning the Flame For Life. We expect a slight recovery in the U.S. despite the fact that macroeconomic environment continues to be uncertain with especially low-income consumers continuing to feel the pinch following the implementation of U.S. tariffs. We can also notice that we see some key customers continuing to optimize their level of inventory. So that's the U.S. Then in Mexico, where we, of course, in the recent days, we had a lot of unrest, where our primary concern is the health and safety of our employees. But concerning performance, we clearly expect a stabilization in Mexico. We had a very tough year last year. We took action, put new management in place, and we believe that we will be able to improve the performance in Mexico accordingly. Other regions, our expectation for now is more or less flat versus last year. This concludes my answer to your first question. I now pass on to Greg for your other question. Gregory Lambertie: Geoffrey, on your second question regarding disposals, I will not comment on the specific in terms of numbers, but the disposal of Cello and discontinuation of Rocketbook and Skin Creative will have a positive impact on organic growth and should be pretty -- organic growth in EBIT margin and should be pretty neutral between the disposal proceeds and the wind down cost in terms of free cash flow. Operator: [Operator Instructions] And now we're going to take our next question. And it comes from the line of Marie-Line Fort from Bernstein. Marie-Line Fort: Yes. I've got -- I would like to come back on 2 topics. The first one is about tariffs, the impact of the new tariff announcement? And what do you expect at this stage, even if it's not very clear? The second question is about the start of production of Tangle Teezer brushes. Could you tell us a bit more? Where is the production located? Is it a trial? What will be the ramp-up? And when do you see new synergies in terms of production and in terms of evolution in margin? Gregory Lambertie: Regarding tariffs, it's obviously too early to tell regarding the impact of the Supreme Court decision. It should persist -- and our view is that it should persist as we enter 2026 because raw material and local inventories were built at a higher cost that included those tariffs. So we'll now need to assess how the U.S. administration will react to this decision. Just to give you a sense of the numbers, in the current environment, the overall impact of tariffs for BIC as of -- for '25, '26 on an annual basis, the overall impact is EUR 31 million, of which EUR 13 million already impacted 2025. So we have EUR 18 million ahead of us, which we obviously try to offset through a number of levers, pricing, gross profit optimization, accelerating transformation of our supply chain and adjusting our manufacturing footprint and also disciplined cost management, which has to be one of our priorities as well. So that's that regarding the impact of tariffs. And on Tangle Teezer production? Rob Versloot: Yes, let me take that one, Greg. Marie-Line, I want to come back on your question related to Tangle Teezer. So we have started to produce the first brushes in our factory in Mexico by the end of last year. And we also have plans to produce the brushes in Tunisia in the course of 2026. So that integration is going well. Marie-Line Fort: And in terms of synergies, any kind of ideas of what could represent and at which or reason? Gregory Lambertie: Sorry, Marie-Line, we couldn't hear you very well. Can you repeat, please? Marie-Line Fort: Sorry. Just wanting to know if you can precise the synergies expected, not in terms of figures precisely, but in terms of calendar, at least? Gregory Lambertie: So it's pretty much limited in '26 and should be accretive going forward. Operator: Excuse me, Marie-Line, do you have any further questions? Marie-Line Fort: No, that's fine. Operator: Thank you so much. Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker, Rob Versloot, for any closing remarks. Rob Versloot: Thank you. I'd like to thank you all for attending today's call. And looking forward to stay connected with you throughout the year. Thank you very much. Gregory Lambertie: Indeed, thank you for your attention. Bye-bye. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Good day, and thank you for standing by. Welcome to the Flywire Fourth Quarter 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 speaker today, Masha Kahn, VP, Investor Relations. Please go ahead. Masha Kahn: Thank you, and good afternoon. With us on today's call are Mike Massaro, Chief Executive Officer; Rob Orgel, President and Chief Operating Officer; and Cosmin Pitigoi, Chief Financial Officer. Our fourth quarter 2025 earnings press release, supplemental presentation and when filed, Form 10-K can be found at ir.flywire.com. During the call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. Unless otherwise mentioned, all financial measures discussed on this conference call are non-GAAP. Please refer to our press release and SEC filings for more information under regarding these forward-looking statements that could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially and the required disclosures in our conciliations relating to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro. Michael Massaro: Thank you, Masha, and thank you all for joining us here today. Before we share more details about an outstanding quarter across all our operating metrics, I want to step back and revisit the progress we've made, the structural advantages of our model and how we've positioned Flywire for continued durability and growth. Since our IPO nearly 5 years ago, we have scaled Flywire into a diversified, resilient and increasingly profitable business. We have grown across multiple verticals and geographies, expanded margins reached GAAP net income profitability and continue to generate increasing levels of free cash flow, all while navigating significant macro disruption across payments, software and global education and travel markets. That progress reflects consistent execution against a deliberate strategy designed to leverage our competitive strengths, deepen our moat and deliver long-term shareholder value. Our strategy remains just as relevant and differentiated today as it has ever been. At our core, Flywire operates across multiple industries, but we execute a single, scalable playbook we embed deeply into mission-critical financial workflows, solve complex payments end-to-end and expand over time as clients turn to us for more of their critical operations. A defining characteristic and key competitive advantage of our business is the complexity of the environments in which we operate. We specialize in large value, cross-border receivables in highly complex verticals, where payments must be processed with precision, compliance and full reconciliation. This complexity creates real barriers to entry and allows us to embed deeply within systems of record and core financial workflows of our clients. Once embedded, expansion becomes a natural motion. We process a greater share of payment volume and attach value-added software that improves client outcomes, creating a flywheel that reinforces our position and value to our clients over time. Today, approximately 90% of our education revenue and over 70% of our travel revenue come from enterprise clients, which we define as clients generating more than $100,000 in the last 12 months revenue. With more than 100 direct integrations into ERP and vertical systems, including over 70 in education alone, we are embedded into the operational fabric of our clients. As a result, revenue churn across education and travel was below 1% last year. This advantage compounds through our proprietary global payment network, which supports transactions across more than 240 countries and territories, in over 140 currencies and through more than 1,200 local payment methods, fully integrated into enterprise platforms. That infrastructure is difficult to replicate and becomes more valuable with scale. As our volumes grow, our routing intelligence, compliance capabilities and localized economics improve. Access to direct relationships with China UnionPay, leading Indian banks and in-country accounts across markets such as Vietnam, Mexico and Brazil are just a few examples of our network in action. These specialized partnerships allow us to localize payment flows and deliver outcomes that generic providers cannot. As AI adoption accelerates, we believe value will increasingly concentrate in platforms that already control trusted financial workflows and proprietary transaction data. Flywire operates at that control point where data, compliance, workflow and transactional execution intersect. We are embedding automation and AI across routing, reconciliation, compliance and our client-facing software. Enhancing productivity and lowering friction while the underlying system of record remains ours. The takeaway is simple. Flywire delivers an end-to-end embedded receivables platform, not a stand-alone payment solution or a point software tool. We are structurally integrated into mission-critical workflows of our clients, where reliability, compliance, trust and scale matter most. That structural position translates into measurable, consistent outcomes, durable client relationships expanding gross profit per client over time and increasing lifetime value. Our competitive position continues to strengthen, not because of market cycles, but because of how deeply we are embedded in enterprise systems in the industries we serve. These advantages are durable. They do not fluctuate quarter-to-quarter, they compound as we scale. With that proven foundation established, let me now shift to how we are extending our advantage, balancing revenue growth with gross profit expansion, margin progression and disciplined capital allocation. As CEO, I'm focused on 3 core metrics. First, revenue and gross profit dollar growth. Together, they reflect demand for our platform, the durability of our client relationships, expansion of payment volume over time and the incremental value created through software adoption across verticals and geographies. Second, EBITDA margin progression. Over the last 3 years, we've increased adjusted EBITDA margins from nearly 6% to 20%. This reflects the scalability of our operating model and our ability to grow profitably while driving disciplined operating leverage including continued discipline around stock-based compensation and dilution. Third, multiple year annual free cash flow growth. Free cash flow generation and capital efficiency are central to how we think about long-term shareholder value. Over the past several years, we have meaningfully inflected and scaled free cash flow from $5 million in 2021 to $62 million in 2025. Together these metrics, define how we run Flywire and how we allocate capital. As we have scaled, we have deliberately shifted from a pure revenue lens towards gross profit growth, margin expansion, GAAP profitability, free cash flow generation and capital efficiency. That shift reflects the strength and maturity of our business model. With that context, we continue to transform Flywire into a more scalable and efficient company. This transformation is structural, not cyclical. We are strengthening the core drivers of our business: pricing, routing, productivity, capital allocation, so that our performance is powered by execution, not external conditions. Our execution is anchored around 3 operating priorities that reinforce our strategy and support durable value creation. First, accelerating product and platform innovation. We are not focused on incremental features. We are focused on solving high-value problems, deeper in client workflows. We are consolidating our platforms into a unified modular architecture where core services like payments, FX, risk and compliance are shared across verticals. This build once deploy everywhere model increases development velocity, improved durability and supports margin expansion as we scale. Second, building a scalable enterprise growth engine we are increasingly focused on larger clients, higher value deals in repeatable vertical playbooks that we are successfully executing across geographies. Flywire already operates as a global platform with deep local integrations and payment infrastructure across major markets. That means we can scale efficiently within our existing footprint and capture a significant portion of our global TAM. This is driving measurable improvements in pipeline creation, sales productivity and lifetime value per client while strengthening revenue durability and expanding unit economics. As a result, our go-to-market model is becoming structurally more efficient and globally scalable, supporting durable growth and long-term margin expansion. Third, accelerating our internal transformation, scaling the company through data automation and high-performing teams. We are building a unified data architecture, automating core internal processes and deploying AI-enabled decision support across the business. Our transaction data, reconciliation data and workflow data are all strategic assets, not just reporting tools. They improve routing economics, reduce manual intervention, enhance risk management and accelerate innovation. The impact is clear in our financial results. From 2022 to 2025, revenue has compounded at approximately 31% annually, with gross profit growth only slightly below revenue, while non-GAAP operating expenses have grown just 17%. That spread reflects operating leverage driven by systems, automation and execution discipline rather than short-term cost reductions. At the same time, we are strengthening high-performing teams with clear accountability and strong pay-for-performance culture. The combination of proprietary data, automation and operational discipline enables us to scale revenue and gross profit without proportional cost growth. Together, these pillars reinforce one another. They enable faster innovation, more efficient execution and disciplined scaling, while staying aligned with the outcomes that matter most to clients and long-term shareholders. You see this reflected in financial outcomes that matter, expanding EBITDA margins, sustained GAAP profitability and growing free cash flow even amid macro headwinds. As AI adoption accelerates, we believe AI will amplify platforms that already control trusted financial workflows and proprietary data. The winners in the Agentic era, will combine innovation with end-to-end workflow ownership, embedded data, measurable ROI and disciplined capital allocation. Because we own the workflow, the reconciliation layer and the underlying transactional data across complex and highly regulated verticals, we believe Flywire is structurally positioned to be one of those winners. Together, these priorities are reinforcing Flywire structural advantages and positioning us to scale efficiently, expand margins and capture our global market opportunity. With that context, Rob will walk you through how our go-to-market execution is driving this model across our verticals. Rob Orgel: Thank you, Mike. I'll focus on how our go-to-market execution is driving durable efficient growth across the business. Our go-to-market engine is built around deep vertical expertise. We organize our teams around specific industries, develop specialized integrations and embed directly into the systems and workflows our clients rely on every day. This vertical specialization allows us to solve complex financial workflow challenges and positions Flywire as a long-term infrastructure partner rather than a transactional provider. This model continues to scale effectively. In 2025, we signed approximately 750 net new clients. This reflected strong demand across our verticals and geographies with solid new logo momentum as we exited Q4 2025. That 750 net new clients, a number of which are named in our earnings supplement exclude additional properties added through Sertifi, invoiced only software clients and upsells across our existing client base. Because Flywire is deeply embedded in mission-critical workflows, our client relationships are highly durable. Revenue churn across our core verticals remains below 1%, reflecting the strength of our integrations and the long-term value we deliver. Education remains a strong example of our expansion-led model. Growth in EDU is driven primarily by expansions within our existing client base supported by adoption of our student financial software, broader full suite deployments and deeper ERP integrations. We are seeing particularly strong momentum in the U.S., where projected ARR from signed SFS deals grew more than threefold year-over-year. This reflects accelerating demand as institutions modernized financial infrastructure and demonstrates the increasing efficiency of our sales engine. In the U.K., growth is driven by deeper integrations, including SFS deployments and expansion of coverage of domestic tuition and accommodation payments. We remain early in full platform penetration but continue to make progress with full suite wins at University of Cumbria and the University of the West of England. As previously mentioned, we are working on our SFS support for Oracle Fusion and expect to have our initial U.K. launch clients signed and live this year. We are also seeing strong growth outside our traditional Big 4 markets with more than 50% of new education clients signed in 2025, coming from outside those countries and revenue from these markets growing more than 30% year-over-year. Beyond education, our vertical expertise continues to drive strong growth across the business. In travel, Flywire purpose-built platform allows travel providers to streamline global payment workflows and improve operational efficiency. Clients such as Villa Finder, a leading villa rental platform in Asia, serving a highly international client base, selected Flywire to modernize their global payment infrastructure and fully integrate payments into their booking workflows. This win highlights the strength of our vertically specialized platform and its ability to support complex cross-border travel providers at scale. Since acquiring Sertifi, we have increased the number of properties served and payment volume has nearly doubled year-over-year, driven primarily by higher attachment within the installed base. As we continue to make progress on integrating contracting, booking workflows and Flywire Payments into a unified platform, we expect to see continued cross-sell and international expansion opportunities. In health care, we tailor our integrated solutions to the complexity of each health system, particularly those running Epic or Cerner as their core EHR platforms. Success in this market requires deep domain expertise intricate integrations across pre-service, point of service and post-service workflows, seamless patient and administrative experiences and payment excellence. During the quarter, we signed Jackson Health System, an integrated health network based in the Southeast alongside several midsized and community hospital wins. We are also progressing through the phased rollout at Cleveland Clinic. Initial payment processing components are live with additional phases, including our robust patient financial experience solution expected to roll out in Q2. In B2B, we are seeing strong adoption of our integrated Software and Payments platform as businesses modernize their invoice to cash workflows. Increasingly, new Flywire B2B clients are adopting both Software and Payments from day 1, strengthening workflow embedment and improving long-term monetization and retention. Our invoice platform already delivers enormous automation to the accounts receivable process, but will shortly be introducing new AI-powered features that amplify the power of the platform for our clients and further streamline its implementation. As Mike mentioned, enterprise clients represent the majority of our revenue and provide significant expansion opportunities due to the depth of integration and breadth of workflows we support. At the same time, our go-to-market engine is becoming structurally more efficient. Pipeline creation entering 2026 increased by approximately 35% year-over-year, reflecting strong demand and improved market positioning. Sales productivity continues to improve, and we are generating significantly more ARR per sales rep than in prior years. These productivity gains are translating into meaningful operating leverage in 2025, signed ARR grew over 35% year-over-year, and that's excluding the impact of large payment processing contracts in health care. This ARR growth reflects strong underlying sales momentum across our core verticals. From 2022 to 2025, and sales and marketing expenses declined from approximately 25% to approximately 20% of revenue, all while delivering significant yearly revenue and gross profit growth. This demonstrates the scalability and efficiency of our go-to-market model. Stepping back, our go-to-market engine is delivering durable, efficient growth driven by vertical expertise, deep workflow integration and expansion within our existing client base. This model strengthens revenue durability, increases gross profit per client and supports continued operating leverage as we scale. With that, I'll turn it over to Cosmin. Cosmin Pitigoi: Thanks, Rob. I'll cover our financial performance, margin dynamics and our outlook on profitability and capital allocation. Starting with Q4 performance. In a year that demanded agility and discipline, we finished with strength. We delivered Q4 revenue almost 8 points above the midpoint of our guidance while continuing to expand EBITDA margins, outperforming consensus expectations. Importantly, performance was broad-based across verticals and geographies, reflecting disciplined execution and the durability of our diversified model. Starting with our top line performance, revenue was $152.7 million, growing 32.6% on an FX-neutral basis. FX-neutral organic growth, excluding Sertifi, was 20%. The guidance beat was primarily driven by strength in the health care payment processing ramp, followed by travel as well as better-than-expected macro conditions across many of our education markets. On a reported basis, foreign exchange contributed a 270 basis point tailwind relative to Q4 of the prior year. Transaction revenue increased 33%, driven by 42% growth in transaction payment volume, continued contribution from education as well as travel. Quarter-to-quarter, you may see variation in blended yield due to mix. For example, higher domestic volume or greater credit card penetration, which naturally carry different economics than cross-border effects. Importantly, on a like-for-like basis, pricing remains stable and competitive behavior continues to be disciplined. Our spreads reflect the value we deliver, compliance, reconciliation, ERP integrations and enterprise-grade infrastructure rather than commodity payment processing. Platform and Other revenues grew organically with the inclusion of Sertifi and continued momentum in health care patient affordability solutions contributing to 50% year-over-year growth, platform-related volumes increased 11%. Adjusted gross profit was $93.7 million, up nearly 24% year-over-year. Adjusted gross margin was 61.3%, reflecting mix and ramp dynamics as well as roughly 2 points of FX settlement pressure versus a benefit last year. Excluding FX and payment processing ramp activity, the normalized mix-driven margin decline was within our expected roughly 200 basis points annual range. As we attach Payments with deepen monetization and expand lifetime value, even when gross margin percentage shifts with mix as evident this quarter, gross profit dollars increased and those incremental dollars carry minimal incremental operating expenses. That operating leverage drove EBITDA to scale faster than revenue. Adjusted EBITDA margin was 16.6% in Q4, expanding 190 basis points year-over-year and exceeding guidance. Our objective remains clear, operating expenses must grow more slowly than gross profit. We are simplifying and modernizing our architecture, consolidating platforms, eliminating tech debt automating workflows and optimizing routing economics. We are making a focused near-term investment to build a unified end-to-end data foundation designed for an Agentic AI future. By embedding AI directly into our existing infrastructure, we are strengthening the platform today while expanding structural operating leverage over time. For the full year, we generated $13.5 million in GAAP net income and expect to build on that profitability as we scale. Our balance sheet remains strong with a $200 million net cash position. Since launching our repurchase program, we have deployed $118 million towards share buybacks with approximately $180 million remaining authorized under the program. Diluted weighted average shares outstanding declined year-over-year as share repurchases more than offset dilution, resulting in negative net dilution for 2025. Our capital allocation priorities remain unchanged with continued focus on growth and disciplined share buybacks, especially at current dislocated valuation levels. Turning to 2026 guidance. Starting our full year revenue, we've seen the strong momentum from Q4 continued into Q1. We expect approximately 15% to 21% FX-neutral revenue growth, including roughly 2 points from B2B migrations and the Cleveland Clinic ramp and approximately 1 point from inorganic contribution as we lap the Sertifi acquisition. First, some guidance context around our margin dynamics and macro assumptions. As those payment processing programs scale, they create temporary mix pressure, particularly in gross profit margin due to early stage ramp economics. As a result, we expect adjusted gross profit margin to decline approximately 200 to 300 basis points year-over-year. Excluding the impact of these payment processing ramps, we would expect gross profit margin dynamics to be closer to the lower end of that range, roughly in line with our historical approximately 200 basis points annual mix-driven shift as Software and Payments scale together. As discussed, our focus is balanced around expanding gross profit dollars. For 2026, at spot rates, we expect gross profit dollar growth in the mid-teens. Importantly, the incremental pressure from ramp activity is temporary and largely complete by the end of 2026. As we move beyond the ramp phase and into 2027, we expect margin dynamics to normalize towards the 100 to 200 bps annual decline and reflect steady state mix and demand. From a macro perspective, our 2026 outlook reflects a prudent set of country level assumptions. We have modeled U.S. first year visas down approximately 30%, Canada down 10%. And and flat visa issuance in the U.K. and Australia. In the U.S., total education revenue is expected to grow low single digits, with cross-border modestly down under our visa assumptions more than offset by domestic strength and continued SFS penetration. In Australia, we are assuming flat visa volumes and expect modest low single-digit revenue growth driven by continued strong execution and expansion within our existing client base, while closely monitoring tighter visa requirements for Indian students. In Canada, despite the visa headwinds given new client additions and continued expansion into domestic payments expecting education revenue growth to exceed 10% year-over-year, reflecting the impact of new contracts signed last year. EMEA and U.K. Education revenue growth is expected at or above company average. Importantly, our guidance does not assume a rebound in global student mobility. Growth is driven by share gains, SFS expansion and deeper enterprise penetration. Moving to margin guidance. We have now crossed the 20% mark on a full year basis. We expect approximately 150 to 350 basis points of EBITDA margin expansion, reaching 22.5% at the midpoint of our guidance. Since 2022, we've scaled revenue while reducing operating expense intensity across every major category. Sales and marketing declined from 24.8% to 20.1% of revenue, reflecting higher annual contract value platform deals and improve productivity. Technology and development declined from 13.7% to 8.3%, driven by platform consolidation and greater engineering efficiency. Our expense leverage reflects productivity gains, not reduced ambition. We continue to fund product, engineering, data and enterprise expansion where we see strong return on investment. General and administrative declined from 24% to 15.8%, supported by automation and system simplification. As we invest behind our accelerated data strategy and digital transformation advanced analytics and AI, these investments sit within G&A, but function as enterprise infrastructure, strengthening data architecture, automation and risk management across the platform. Our guidance assumes some deceleration in revenue growth from the first half to the second half, primarily due to more difficult year-over-year comparisons in the second half of 2026 and the timing of ramp-related contributions and as we remain prudent given the dynamic macro. Margin expansion, however, is expected to be more pronounced in the second half given normal seasonality and as operating leverage flows through the model. Looking beyond this year, we continue to invest for growth while scaling gross profit dollars faster than operating expenses. That operating discipline underpins our confidence in achieving 24% to 25% adjusted EBITDA margin for 2027. For 2026, we are focused on efficiently converting every dollar of adjusted EBITDA into sustainable free cash flow. After normalizing our historical conversion rates to remove onetime items, we expect conversion in the 70% to 75% range. Importantly, our equity program is directly aligned with our pay-for-performance culture. As a result, dilution remains disciplined and performance-based and is increasingly offset by growing free cash flow and opportunistic repurchases. Equity compensation is tightly aligned with long-term shareholder value and we carefully manage both gross, equity issuance and net dilution. Our goal is to limit gross dilution and maintain net dilution at approximately 3% over time, while continuing to reduce stock-based compensation as a percent of revenue with a target of approximately 10% in 2026. Finally, as a result of this focused discipline on profitability, we expect GAAP net income to grow approximately 3 to 4x versus 2025. Our objective remains durable free cash flow growth, supported by disciplined expense management and capital allocation. For Q1 2026, at the midpoint of guidance, we expect approximately 28% FX-neutral revenue growth and a 225 basis points of margin expansion. Revenue growth includes a 7-point contribution from lapping the Sertifi acquisition as well as approximately 3 to 4 points from the payment processing ramp. At current spot rates, we expect a 4- to 5-point FX tailwind in the quarter. Q1 includes multiple tailwinds that will moderate as the year progresses, particularly as we lap the Sertifi acquisition, and payment processing ramps from health care and invoiced clients. Gross profit dollar growth is expected in the 20% to 22% range at spot rates with approximately 7 points of that growth attributable to Sertifi, consistent with its contribution to revenue. In summary, in 2026, we expect to demonstrate the durability of our diversified platform, the scalability of our operating model, and our continued commitment to disciplined capital allocation. We remain focused on driving sustainable growth and expanding profitability over time. Stepping back, I spent more than 2 decades working through major data and technology transformations and moments like this are rare. The work we've done to modernize our systems, simplify our architecture and build a unified data foundation is not just an efficiency program. It positions us to participate fully in the next wave of intelligent AI-driven software from a place of architectural strength and financial discipline. What excites me most is that we are building a company designed to compound over time. I'll now turn it back to the operator for questions. Operator: [Operator Instructions] Our first question comes from Nate Svensson with Deutsche Bank Securities. Christopher Svensson: Just on the guidance, some of the macro assumptions, I think the prudent approach as you put at Cosmin is the right 1 to take. But just kind of wanted to dig down into the assumptions in the U.S. and Australia. So I guess I'll just ask both of them. So in the U.S., you're assuming visa is down 30%. Obviously, we aren't getting F1 data anymore, but based on some recent reports that seems like a pretty material step down in '26 relative to '25. And I guess relative to that common app data you called out in the slides. So I just wanted to ask if there's anything you're seeing or hearing that makes you think things are maybe getting worse versus how much of this is prudence or conservatism? And then in Australia, you're assuming flat visas but you also called out 9% growth in places for new international students. So just, again, trying to hope you can break down the delta between the 9% increase in new places and the flat visa growth. Cosmin Pitigoi: Yes. Thanks, Nate. I would say the summary is trying to be prudent. Obviously, we've seen this very dynamic environment in both of those markets. In the U.S. look, we've seen -- we don't have external data yet, but just looking at our own data last year, looking at first year payers sort of down in the first -- in the high teens. Of course, that is offset for us, as you've heard us talk about stronger retention and some of the improved or higher tuition kind of sized payments. So there are different dynamics always that play out beyond just visas. But looking at 30% for this year is, again, trying to be prudent as we look ahead still early in the year. So not necessarily, obviously, the same as all of you don't have a lot of data, and we have to wait for the usual peak season later this year to really kind of quantify it. But so far, just trying to take a prudent approach around the U.S. in particular. And then on Australia, Again, last year, we assumed that was going to be worse. It turned out to be a lot better than we thought, not just the external environment but also kind of our performance against it. But again, starting out the year early, I want to remain prudent around it. So again, we're seeing good performance there. Otherwise, in the market, as you saw the team keeps winning deals and growing above market in both of those markets. So good performance so far, both in the U.S. and Australia. Christopher Svensson: Yes, it makes sense. And I think the proven approach is the right one. I guess for the follow-up, I wanted to ask on SFS. I think Rob had some interesting stats in his prepared remarks there. So I think ARR growing 3x, if I recall correctly. So I just wanted more color on new signings, maybe impact to '26 numbers, what the pipeline looks like. And I guess, the area in SFS I'm really interested in, like you've talked a lot about the non-Big 4 success that you're seeing. I think revenues were up 30%. And I don't think SFS is live outside of the Big 4. So I guess specifically on that opportunity, can we start to roll SFS out in these new geographies? So kind of a broad-based question on SFS, but really interested in the non-Big 4 opportunity. Rob Orgel: Yes. So let me start with the U.S. SFS part of your question, and then I'll talk non-Big 4. So look, it was a very successful year last year for SFS. We talked about the threefold increase in ARR signed. We also saw -- it was about 13 wins for full suite deals over the course of last year that helped build that 3x growth and we entered the year feeling very good about our position with the product, very good about the amount of pipeline and deals that look to be opportunities for us in the year ahead. So we've done a lot to improve the caliber of our sales team. We've got great senior leaders around that team and looking forward to a good 2026. On-- you said it about right on the outside the Big 4, you are right in saying that SFS is not what's driving the success there. Rather that is our core offering of both cross-border and domestic payment capabilities that we are taking around the world, and we do that with sort of the lighter solution than the full SFS, but those markets are very dynamic. They are seeing lots of student growth and we are very successful in penetrating those markets. I think the last part of your question was around just sort of SFS expansion. We are focused primarily on the U.S. and U.K. There are other opportunities that we'll continue to evaluate around the world, but don't expect us to be focused on those in the near term. Operator: Our next question comes from Dan Perlin with RBC Capital Markets. Daniel Perlin: The area I wanted to focus on just briefly, you're talking about winning, obviously, much bigger deals more products per kind of these transactions and then higher ARR per deal. You touched on it a little bit in the prepared remarks, but I would love to just hear more about that sales motion. And I guess, how we should be thinking about all of that rolling throughout the year as those deals continue to kind of, I guess, come in at bigger ticket sizes? Rob Orgel: Yes. I mean you -- it's Rob again here. So you correctly sort of summarized my comments there. We did see a nice growth in overall ARR, but we also saw growth in average deal size across the business, that would be true across our different verticals. So it's not just an EDU story, but you will have seen that across other verticals as well. And in all cases, it's partly a function of what we target. We are targeting more clients that would generate larger ARR. We are also targeting, especially in EDU sort of the full suite presentation of our platform. that, combined with our success in the U.S. and the U.K., all of that sort of drives the higher ARR that we've been talking about. Daniel Perlin: Yes. That's great. Just a quick follow-up. I think over 30% of the business now is kind of noneducation verticals. I'm just wondering kind of as we sit here today and we think about the diversification going forward, the balance sheet you've got, obviously, you're going to put money to work, it sounds like in buyback. But just -- how are you thinking about M&A opportunities in the context of the way the business is currently structured? Michael Massaro: Dan, this is Mike. I would say, obviously, you've heard us talk, we think our own stock is quite dislocated. So you can expect us to use capital to to buy back stock and continue to be active in the market. Clearly, the valuation environment right now is quite dynamic. You've got a huge dislocation between private and public markets. I think for us, we have a core belief that is still our core M&A strategy, which is we like to sit in critical workflows. We like that combination of software and payment monetization. And so of course, we're going to be continuing to monitor companies that fit that profile. But at the same time, we're going to be very disciplined. I mentioned kind of the dislocation of our own value an opportunity for capital deployment there. I also think we have great acquisitions that we've accomplished in the last 18 months. We've got synergies that are playing out quite well there. And so we're going to continue to kind of land those planes. And and stay focused on our organic investment plan and then those synergies. So that's probably what I'd say on that. Operator: Our next question comes from Charles Nabhan with Stephens. Charles Nabhan: Would love to drill into Canada and some of the underlying macro assumptions. It looks like there's pretty wide outperformance versus the visa, where the visas are expected to come in next year. And I was hoping to get a little color as to the drivers of that outperformance. And just to broaden that, if we think about the guide, it's about a 6% -- 6-point delta from the top to the bottom. Could you maybe talk about like the key variables overall in the model, what would lead you to come in at the top versus the bottom end of the range for the year? Cosmin Pitigoi: Two-part question. Maybe so I'll start with the first part on Canada. Look, after 2 years of Canada being down last year, over 50% visas, and you're right, we outperformed that, right? Because if you look at revenue for us last year in Canada was down just a little bit short of the down 30%. So we still have done better than the market, both years. And that's the accumulation of the work that the team has done to continue winning clients, and we've mentioned that. Now as you saw in our expectations going into this year, visas will be down around 10%. So again, a big reduction still down, though, with growth up 10%, and that is driven because of that accumulation of client wins on the domestic side and just strong execution by that team despite that market being down. So all of that kind of obviously compounds and starts to drive benefits finally seeing Canada now on a positive going into this year. And then as far as your question about overall guidance, look, at the high end of that range, I would say. You would be looking at things like macro being a little bit better, continuing some of those ramps that we talked about across a lot of large clients that we've talked about, that could also drive some of that upside. And just general strength in the execution in the overall business. So -- and similarly, kind of on the downside of some macro remains something that we're watching. But I would say we've -- as you've noticed, we've captured most of that quite well and taken a very prudent approach to the overall. So we feel the midpoint is a solid starting point. Operator: Our next question comes from James Faucette with Morgan Stanley. Michael Infante: This is Michael Infante on for James. Apologies if I missed it in the prepared remarks, but any color you can share on what's embedded in the outlook from a travel perspective, both including and excluding Sertifi and maybe how you're thinking about resource allocation to travel to sustain the growth that you guys saw in '25? Cosmin Pitigoi: Yes. No, look, at a high level, we continue to believe travel will grow at or above company average. So solid growth for the year. And again, it's a large growing, as you saw, our share of the overall business. And that's really both on the Sertifi side where we continue to see strong performance in that business. Obviously, the payment monetization side, as we talked about, seeing that performing well, but also our legacy Luxury Travel business is doing well. And so overall, I would say Travel continues to be a big growth driver for us. And look, obviously, we're excited about all the wins there, adding a lot in terms of new clients, as you saw -- we're -- in terms of investments, we're growing the sales team. That is one big area of focus for us as far as investments and then, of course, investing in the overall Sertifi global expansion. So definitely a lot of focus in terms of investment dollars around the Travel vertical. Michael Infante: That's helpful, Cosmin. And then just for my follow-up. On the stablecoin topic, you guys have obviously spoken about payment costs there, large sort of being in line with some of your lower-cost payment modalities. But what are you actually seeing from a demand perspective, if anything? And any key quarters that you would call out there to the extent you are seeing some level of demand? Michael Massaro: Yes, this is Mike. I think we talked late last year on just our initiatives around stable coin and getting into the platform and focusing on markets that were, I would say, more volatile currency markets, right, where we could see payer usage from those areas. And so happy to say that we are live, we are testing demand actively and actually processing payments. And so we'll continue to kind of talk about that in the future and maybe break out a little more details. But right now, it's a small bit of usage, but we have high hopes it's going to grow. And then I would say the second use case is really an internal one, like many companies looking at what internal processes we can use from a stablecoin perspective to either settle different currencies, quicker, more cost effectively and our teams are really pursuing both acceptance and internal use of stablecoin. Operator: Our next question comes from Darrin Peller with Wolfe Research. Darrin Peller: It looks like gross margins and the monetization rate is a little bit lower just given the progress you're making on domestic payments. And so I think if you could just first give us a little bit more color on what's going well there. Anyway it's been an initiative of the company is really since you've been public. But any further acceleration you're seeing there or something sticking more than before, but it looks like it's obviously going well and to some degree, having an impact on the numbers. And then as you continue to upsell domestic to customers, just how should we be thinking about gross margins this year where they could reasonably normalize? Cosmin Pitigoi: Yes. Thanks, Darrin. So I'll start. So look, overall, like we said, although gross margin is under some pressure, and look, it's payment processing. It's what the -- what we're calling out specifically is Cleveland Clinic ramping up and some of the B2B cross-sell from invoiced. So those are sort of unique and mostly temporary actually playing out this year. Historically, as you said, domestic has been 1 area where the domestic payments piece does create some mix. But look, stepping back, you've heard me say it, and you see it in the supplement, our spreads are quite stable over time. That's kind of what we normally look at, and that's just understanding kind of pricing, so stable spreads across, especially our transaction side. But again, as we've looked at gross margin, what we really wanted to also include, and you saw me even talk about guidance around gross profit dollars, that's really what ultimately matters in these deals, whether it's domestic deals in the U.S. or in the U.K. and B2B, as you saw in our prior disclosures, all of those add incremental gross profit dollars. And as you probably know, they actually had less -- you don't have to add a lot of OpEx to that. So then what that does actually drive incremental EBITDA dollars with it. So, look, from a gross margin perspective, again, as we said, this year, we'll be in that 200 to 300 bps decline range. But if you exclude some of those -- so the timing of those ramps, we would be back in the kind of 100 to 200 bps range, which is kind of our historic as you go into next year overall. And again, for Q4, I would say 1 last thing just on Q4. You saw FX also can have an impact. So in Q4, in particular, one of our impact was about 2 points or about $1 million of FX lapping from last year, which actually drove about 2 points of decline in Q4 last year just from FX. And another couple of points or so actually from the same payment ramp. So Cleveland Clinic doing really well along with B2B. So those created some additional pressure in Q4. Darrin Peller: All right. Guys, maybe just one quick follow-up would be your expectations around the potential success of health care in '26. Just following the wins you've seen now with Cleveland Clinic and it's more broadly. I know you've been trying to put a lot of emphasis in investing back into that segment for at least a year now. And so I'm curious where you see that going? Rob Orgel: Yes. So Rob here. And obviously, we are -- we've talked explicitly about Cleveland Clinic. And not only is that a big deal for its sort of economics and how it rolls through our numbers, but it's also a big deal in terms of signaling to the rest of the health care marketplace. Cleveland Clinic has been kind enough to talk a bit about what we're doing with them and for them, and that has also gotten out. So, if you look at the combination of deals we've already signed both in our core patient financial experience and in the payment processing. Those are very positive. But you'll also see that in that pipeline expansion that I talked about in my comments, a good piece of that is from health care, where they are also seeing on the backs of recent success, a lot of opportunity opening up for them. Operator: Our next question comes from Ken Suchoski with Autonomous Research. Kenneth Suchoski: I wanted to ask about education just outside of the Big 4. I think I heard 50% of new education clients signed came from these markets, revenue up 30%. And can you just talk a little bit more about where these share gains are coming from, how you're organizing the sales team around this effort? And just anything on the growth algorithm as to how it might differ versus some of the mature -- more mature education markets? Rob Orgel: Yes. I can jump in and start with that. So the major markets the next group, the group outside the Big 4 sort of cluster around main markets in Europe and main markets in Asia, right? So as you think about Europe, France, Germany, Switzerland and the like, spain, as you think about Asia, you start seeing places like Singapore, Malaysia and others that are being successful. And so what -- what's happening is, first of all, those markets are being opened to the international students. And what you're seeing is a lot of interest intra regionally as well as interest of people moving around. So as you see patterns evolve, you may find more students and families from Asia choosing to stay somewhere in the region for their international experience. Again, these are not the Big 4, but the next group, but you do see some of that kind of corridor dynamics that we're observing here. From a Flywire perspective, we're investing in making sure we have good coverage across those markets. So we are present in all those markets. We have strength and capacity in all the places I've named, and we're seeing good wins in these markets that are being successful. Places like Singapore and so on that are emerging are places where we're enjoying really good client additions. Kenneth Suchoski: And just I think I heard a comment on just on the payment processing programs ramping. I think you -- I think Cosmin, you might have mentioned that this is going to hurt the gross profit margin due to the early stage ramp economics, can you just give a little bit more detail as to why it takes some time for that to ramp or just what the economics look like upfront and how that changes over time? Cosmin Pitigoi: Yes. I think if you think of Cleveland Clinic, for example, but also the B2B invoiced cross-sell, which already started in Q4, you can see the dynamic kind of starting to play out. And so if you look at the materials and disclosures, that's where we talked about some of the pressures that come from. You had a larger dollar amount on the revenue side with still some incremental positive gross profit dollars that naturally puts some pressure on the gross margin. We've kind of called that out for this year. You have some of those ramps basically running through most of the first half of the year, and then it comes off in the second half. Now you've also heard Rob in his prepared remarks, talk about that you start -- we started with Cleveland Clinic in the payment processing. And now sort of in Q2, you'll see us go live with some of the other sort of higher margin components of the products there. So that's why we -- as we exit this year into next year, we expect the gross margin kind of profiles to then decline to kind of go back to normalized levels. But again, we've also provided everyone with gross profit dollar growth guidance for the year in that mid-teens with this in mind and also for Q1, obviously, strong gross profit dollar growth in the 20% to 22% range with 7 points from Sertify. So still a very strong growth when you look at it from a gross profit dollar growth for these deals. But that's the timing dynamic that kind of plays out in the first half versus second half. Operator: Our next question comes from Tien-Tsin Huang with JPMorgan. Tien-Tsin Huang: Mike, you mentioned private public market differences I'm just curious from being opportunistic on the private side, are there assets out there like Sertifi that are on your radar that you and Rob and team are considering and be opportunistic? I'm just curious sort of what the where you are there with what you've done so far with acquisitions and the appetite to do more as they become available. Michael Massaro: Yes. Tien-Tsin, I would say the strategy still holds. I mean, we think there's -- we have a proven track record of being able to do this of driving synergies post deal. And again, we really think that intersection of around the financial transaction and critical workflows and our payment network is a really, really powerful combination. Again, I think what makes it challenging is there's dislocation, a lot of private companies think their values are still very high. Public companies probably don't think that or most of them don't. And so that dynamic is a little more challenging. Our team has always got a great pipeline of targets and is always looking at the market. The good news for us is we've got great organic investments, and we've got great synergies to continue to execute on. So we'll be ready. We'll be opportunistic if we see it and no change in strategy. Just obviously some complexities around valuation, and it's really hard to bet against our own stock price right now. Tien-Tsin Huang: Yes. That's all fair. It makes a lot of sense. Then just quickly, I always like to ask about visibility around just guidance, but how you see new sales booking across all the different businesses. How would you view it today versus this time last year? I would think it's better? I know things changed in April last year, but how would you qualify it? Michael Massaro: Yes. I mean I think for us, Bob did a great job just talking about some of the sales metrics and the go-to-market metrics. The thing I'd also just encourage people to realize is that transformation we're doing, and Cosmin mentioned about systems, about data, even how we're organized, we're really focused on investing more behind that go-to-market engine. And so sometimes increased capacity. Sometimes it's the way we organize, the way we deal with contract negotiations, the way we minimize distractions for our sales team and our client-facing teams. And what gets me most excited is we're doing all of those things, right, which I think is going to continue to help us increase velocity and really benefit us across industries and across geographies. And that's what gets me excited is setting the company up for going faster and doing more. Operator: Our final question comes from Timothy Chiodo with UBS. Timothy Chiodo: I want to talk a little bit about the mechanics behind optimizing international payment flows. So, my understanding is that this relates to when there is a student going into year 2, 3, 4, they might have opened up a local banking account and all of a sudden, their payments are being made more domestic. I was wondering if you could talk a little bit about how do you entice or change the behavior to keep those payments cross-border and running through Flywire on a cross-border basis? Rob Orgel: Right. So bigger picture, as you well know, our strategy has always been around moving all the money. Now one of the reasons why we like to move all the money is you get the opportunity to monetize both domestic and international flows. Both of those are lucrative for us, and both of those help us serve the clients better. There is a particular dynamic that I had referred to in all of that, which is that there is a fair bit of payment that shows up through what looks like a domestic channel. But -- and it is, in fact, from an international payer oftentimes using an international payment instrument, but it's just been showing up on the domestic payment routing website, where we take over all of it, we can make sure that payment gets routed properly. It also means we can make sure that we present to that family the best set of choices they have. It is oftentimes beneficial for them to understand the local payment options that we would make available to them. actually quite a bit better for them than the choices that they may be making, not realizing what we could be doing for them. So it's an opportunity to better serve the payer. It's certainly an opportunity to better serve the school, and it is also beneficial for us. Operator: Thank you. This concludes the question-and-answer session and today's conference call. Thank you for participating. You may now disconnect.
Gerard Ryan: Good morning, everybody, and welcome to our results presentation for 2025. Now this morning, Gary Thompson, our CFO, and I will be very happy to talk you through what has been another successful year for our business. I do want to acknowledge, however, that this is an unusual set of results in that we have in the background, the BasePoint bid for IPF. However, today's presentation is all about those results, not about the bid. So what we're going to do is we're going to go through the results as normal, and then we're going to follow on from there. And if we're allowed to answer questions at the end, we will, but we'll have to take advice on that. So with that, let's get started. Now as usual, I'm going to deal with the results at a very high level, and then I'm going to talk about our strategy and how that is delivering for us really, really well and consistently. I'm then going to talk a little bit about regulation, something we haven't done for a while. And I'll also touch on the security situation in Mexico. After that, I'm going to hand off to Gary, and Gary is going to take us through the divisional results in a detailed way and talk about how each of our divisions has performed over the past 12 months. He'll also deal with the balance sheet, look at how the portfolio is performing and how we finance the balance sheet and also dealing with the capital side of things. I'll then pick up at the end, and I'm going to do some closing remarks. Now as always, we have plenty of time at the end for Q&A. And just on Q&A, somewhere on your screen, there should be a dialogue box that at any stage during this discussion, you can type in your questions, and at the end, Rachel is going to pick all of those up and put those to Gary and myself to answer for you. Overall, I think this should take probably around 40 to 45 minutes. So with that, let's get started. Now hopefully, you had a chance to look at the RNS that we released this morning. And if you did, you'll see those we delivered a profit of GBP 88.6 million pretax and pre-exceptional items. And Gary is going to talk about the exceptional items later on. Now that's up 4% year-on-year. And it's delivered on the back of constant demand from our customer segment with excellent execution by our colleagues throughout the organization. In terms of top line, we improved our lending by just under 12% year-on-year, and our net receivables are up by just under 14%. So you can see it's fast approaching GBP 1.1 billion. Credit quality continues to be very good as our collections, and our Next Gen strategy really is delivering for us. So with all of those things taken together and with a really good strong balance sheet, the Board are pleased to propose a final dividend of 9p per share, and that's up 12.5% year-on-year. Now those are the very summary highlights. As I said, Gary is going to take us into a lot more detail on that. So what I'd like to do now is touch on our strategy. And I know for many people watching today, you've seen this quite a few times, but given the circumstances, I'm expecting that there are a lot of viewers out there who don't know us that well. So please bear with me as I take those people through what our strategy is and how we're executing against it. So it will seem familiar to a lot of you. This is our 3-pillar strategy. First of all, it's important to understand that we have a purpose in this business, and that is to build financial inclusion. So for people who are less fortunate than most of us and have less access to financial services products, we are there to help them. And we do that through this 3-pillar strategy that you see on the screen now. And what I'm going to do is walk through each of those pillars and tell you some highlights about what's happening under each of those. So the first pillar is Next Gen financial inclusion. And this is all about where we're trying to build the products and services that are appropriate for our customers today, but will also be attractive to them down the line. Then we have Next Gen org, which is all about trying to become a smarter and more efficient organization and deliver better services for our customers. And then finally, we have Next Gen tech and data. And this is just about becoming a technology-enabled business and using data in the right way to deliver services efficiently. Now all of this is done within our guiding financial model, and Gary is going to touch on that. But underpinning everything here are our values, which are responsible, respectful and straightforward. And in the 14 years that I've been in the business, those have never changed and they shouldn't either. So let's go and have a look at how we're doing under each of these pillars in turn, starting with Next Gen financial inclusion. Now I'm sure many of you will know that we launched our first-ever credit card in Poland some 2 years ago. So in effect, we created a new market segment where one didn't they exist. And I'm delighted to say that credit card is proving to be a big hit, and we currently have over 200,000 users of the card in Poland. In addition, it's now not just being delivered by our customer representatives or agents, but it's also being delivered fully digitally depending on customer preference and credit standing. As well as being in Poland now, we are currently testing the card in Romania. This is something we talked about at the interim results. It is very much a test phase, but I'm quite hopeful that it's going to prove to be a success there as well. And how else then do we interact with customers? Well, we have what we call our partnership model, and you might know it as point-of-sale finance. So we want to be where our customers need finance, so when they're out there shopping. And we're now interacting or have our services offered through 2,700 retailers. What I can confirm is that there is no shortage of demand, and this is now in Romania and in Mexico. There are lots of customers in our segment who want this type of credit. What we are having to do is figure out how to calibrate the credit quality, because ordinarily, when you do your marketing and it's broad-based marketing, you get a good picture of the whole segment. When you then change your channel and you bring it down to an individual retailer, you automatically skew the nature of the customer that's coming to you, and so you have to change your score card. And so we're currently in that evolution phase where we're getting plenty of demand, but we need to get the credit quality right. So that's going to take us a bit of time. In Mexico, we continue to extend our reach. We've opened a further 2 branches, one in Monterrey and one in Ensenada. And I can confirm that in 2026, we'll open a further one in Monterrey, and a new one in Chihuahua as well. So essentially, it's just that the geography is so big, we need to continue extending our reach through the physical infrastructure. Short-term products. Now short-term loans are something that we steered away for quite some time because of the negative association with payday lending, but we came up with a construct of a short-term loan that met the customers' needs, but at the same time, tried not to penalize them if they got into difficulty. And by that, I mean if they got into difficulty on the short-term lending repayments, we would offer them the opportunity to switch over to a slightly longer loan with a lower repayment and a lower interest rate. And I have to say that, again, is proving very popular. But once again, it's a completely new product for us, and it's all about the credit quality, and we're working our way through that at the moment. Brand in Australia. Now when we spoke about the interim results back in July, August time, we talked about the fact that we've taken a decision to invest more money in the brand in Australia, up to GBP 3 million per annum. We're currently executing on that plan. Brands haven't built overnight. So I would say this is somewhere -- one where we need to have a 3- to 5-year view. We're pleased with what's happening so far, but in terms of the payback, that's going to come a little further down the line. And then finally, at the bottom of the page here, you see a reference to a further GBP 5 million investment on our new growth initiatives. Essentially, what we're saying here is that we feel very positively about the growth that we're generating. And then to concrete that into the business, we believe we should spend a further GBP 5 million per annum for the next 2 to 3 years. So it will be a bit of a drag, but we believe it's really worth it in terms of expanding the business over that period of time. And I think Gary is going to refer to this when he gets up shortly. So those are all the things that we're doing to generate financial inclusion and bring current customers in but also ensure that we're attractive to future customers. So let's look now to our second pillar, and that is Next Gen organization. So trying to be a smarter and more efficient organization in order to deliver more effectively for our customers. And here, a lot of what we're doing is using technology to be better at what we do. So a few examples for you here. In terms of delivering change in the organization, we have a huge amount of change going on, whether it's new products, new channels or changing regulation that we need to adapt to. But even though we are one group, we have 2 very distinct ways of delivering strategic change. In our digital business, it's done under the product operating model, which I'm sure will be familiar to a lot of people. Essentially, there, product teams are formed and they own a product from birth through to maturity. They design it, they get the technology set up, they tweak it, they implement it and then they monitor it. Whereas in our home credit business, it's done the more legacy way, which is to say that for each product, when we want to do something, we start to pull people out of individual functions and we get them to work on it for a short period of time, and then they go back to doing something else. The second way is far less efficient and far less, I suppose, speedy in terms of getting impact in the organization. So what we've decided to do is to switch to product operating model across the whole organization. It is a really large undertaking. It will take us probably 18 months, 2 years, but we've started and we're really pleased with what we see so far, much better engagement internally in delivering new products and delivering strategic change, but also much faster impact across the business. Multiyear project delivery. What I'm referring to here is the fact that we've embarked on delivering a new finance and HR platform, a global platform. It's going to be SAP. It's going to cost us approximately GBP 12 million, and I think it's going to take us about 2 years. So it will give us a new platform for all of our finance and HR communities across our 10 countries. That will allow us then to standardize processes around that, and out of that, we will drive significant efficiencies. So it's a big undertaking, but we've contracted with a lot of professionals internally. We have over 250 people working on this at the moment. So it's something that we really need to nail, but I feel good about where we're at on that just now. ISO 45003. Now this might be new for some people, but it's all about psychological well-being at work. We want to be a great place to work. We employ about 5,500 colleagues, and we have about 16,000 customer representatives around the globe. We want them to feel valued and to feel safe working here. We want them to believe that they have opportunities and that their careers can develop. And so our team worked incredibly hard to achieve ISO 45003 for all of our home credit businesses and our digital business in Poland. It's a huge achievement and my thanks to them for that. And then finally, our reputation. We deal in a very specialist area of the consumer finance market, one where we have to be incredibly careful making sure that our customers can afford the money that they borrow from us that we treat them well all the time, but particularly when they get into difficulty. In order to make sure that, that works for our business and for our customers, we need good regulation, but to influence good regulation, you need to have a good reputation so that you get a seat at the table. And so we spend a huge amount of time working with external stakeholders to get them to understand what we do and why we feel we do it so responsibly. And so reputation for us is a key driver of our success and something that we'll continue to invest on in the years ahead. That's what we're doing on Next Gen org and turning then to the third pillar, Next Gen tech and data. The very first line you see here is what we spent in 2025. So GBP 35 million. And for an organization our size, GBP 35 million on CapEx is a big number. I can tell you, in 2024, we spent GBP 24 million. And if you look at the bottom of the page, you can see that we estimate that this year, it's going to go to GBP 45 million and possibly GBP 50 million thereafter for a year or so before it drops back down. Why? Well, there are a number of reasons. One is we have over -- I think the number is 450 or 460 individual systems or platforms across this organization. We need to simplify, standardize and secure our systems. But to do that, we need new technology and new technology cost money. So that's one thing that we're doing. And the SAP thing, the finance and HR platform is just one example of that. But let me give you some other examples of what we're doing here. So omnichannel platforms. In many other businesses, particularly banks, you would probably take this for granted, but for us, it's been quite a challenge to ensure that when our customers, this is particularly home credit, talk to their agents and then subsequently ring a call center or try to contact us by e-mail. In the past, they've had 3 different routes to get to us, but none of those conversations really joined up in our back office. This omnichannel experience through our Xenia project is to ensure that all of the conversations with the customers join up. So whether they call an agent in a call center, whether they contact us through webchat or WhatsApp, which is now integrated, all of those conversations form part of a whole and the customer gets a much better service, a seamless service, I would almost say. But it's a big investment, and I think we're closer to the end of that journey than the beginning, and it feels really good. Another example would be digital self-service through a customer app. Now we talked about this before. We have a very good one in Mexico that our Mexican team designed. We have a good one in Poland designed by our team there, and we're rolling it out now in Hungary, Czech and Romania. So within 6 to 8 months, it should be across all of our Provident businesses. The great thing about that app is that customers will self-serve because we see it in Mexico, and we see it in Poland. It dramatically reduces the call volume, the inbound call volume with simple queries because the customer gets on the app and they do it for themselves. But not alone that, actual problem resolution back through the app educates the customer further on how to get the best out of it, and then that has a positive impact on their relationship with us. So it's taking a bit of time and a bit of money, but the customer experience is vastly improved as a result. Digital payment flexibility. Here, I just want to mention Mexico. So Mexico is a huge geographic area to cover. And we do it in home credit through our agent network. But clearly, they can't cover everywhere. And what we've been finding over a number of years is that customers complained quite a bit that they weren't getting a consistent enough service when it came to collections. And so what we did over the past 3 years -- well, actually, it's probably more than 4 years now since the pandemic is we've tried to give customers in Mexico home credit, more and more options through which they could pay their loan back to us. And so we just signed up to a new platform now, and I think that was just in the last couple of months, it's added 30,000 payment points. So through retailers, 30,000 additional payment points in addition to the 12,000 bank branches that we deal with and in addition to the 23,000 OXXO stores that we deal with. So what we're really trying to do is to say to a customer, if you can't see the agent or they can't see you, you have -- you literally have tens of thousands of other areas that you could pay your loan back for or back through. Digital capabilities with AI, I wanted to mention AI specifically because in our previous discussions on AI, I said that people shouldn't expect a silver bullet solution for AI in our organization. It would most likely be incremental benefits accumulating from lots of different projects. That is proving to be the case. But actually, it's proving to be more beneficial than I had expected. And so, one example is here in terms of our own technology team, where they are developers. And they're using -- I think it's called Amazon Q developer or something like that. I think that's the name of it. What they found by using this AI assisted development is that the productivity gains are enormous. So actual development time is reduced by 20%, testing time is reduced by 25% and error detection in code is improved by 33%. And those are quite dramatic numbers. And those are just in our own developer colleagues internally. And so now what we're doing, we're going to our external contracts, people who develop for us. And we're saying, if we can do this, and we're not a technology house, you must be able to do even better, and we'd like to see some of that benefit coming back to us in reduced prices. Then another example in Mexico on AI, completely different. Our HR team in Mexico have started using an AI assistant to interview people who are coming for jobs. And I know this now has a very bad rep in the U.K. because it's been all over the media, the prospective job hunters can't get to see a real person, they see an avatar or something like that. And I do worry about that. But the experience in Mexico has been amazing. So using this AI-assisted, let's call it, an avatar in Mexico, what they found is that the quality of the candidates who eventually get through to the final application is increased. And of those candidates who actually get the job, they stay for longer. And so I went back with David and his team as to why that was the case because I wanted to understand it. And what it would seem is this that human behavior is, if I'm pitching to you for a job, I'm going to sell the job to you. And then when you arrive, the job might not be quite as spectacular as you thought it was when I described it. And so you're initially disappointed and you may stay for less time. But the avatar or the AI assistant, tells you exactly as it is. And so when you arrive and you get through all of that process, the job you get is exactly the job that we have. And therefore, your satisfaction levels are higher, and you're more committed to staying. It was a complete revelation to me, but it's one of the multiple, I think, benefits we're going to get out of AI going forward. I think that's all I want to say on tech for now. So those are our 3 pillars in terms of our strategy. And now I'm going to move on to regulation. And before I do, I just want to say that probably for the past 18 months or 2 years, Gary and I haven't talked about regulation that much. We've referred to the fact that CCD II is coming up, and there's probably going to be a rate cap in the Czech Republic, things like that. But today, I'm going to give you a more detailed update, and I'll explain why. And it's all about CCD II. Now CCD II was required because the way financial services are provided to consumers in the EU has changed dramatically over the last dozen or so years. So CCD I needed to be updated, and that is what this is all about. Now the way it was structured was that CCD II transposition into local regulation was meant to be achieved by November '25 and be effective from November '26. In fact, only one country in the EU as far as I'm aware, achieved that, and that was Hungary. All of the other countries have missed the deadline. And so the commission came out and said, unless you get on with it and get this thing done, we will be looking at finding people. And so what we have seen over the last 2.5 or 3 months is a huge uptick in activity around the transposition of the EU regulation into local regulation or law. Now what needs to be said is that the EU directive needs to be transposed into local regulation, but it doesn't prevent. In fact, in some cases, it seems to encourage local regulators to look at the whole of their regulation in this space and rethink a lot of it. And as a result, we're getting what you see on the page today, a whole menu of items that are currently in discussion across either one or multiple countries. And they're not even necessarily connected to CCD II, they're connected to the idea that the regulation in this space is being reviewed. And I want to talk about a number of them because they're potentially quite big. So the first one is introduction on caps on lending-related fees. Now as you know, we already have caps but they're mostly interest rate caps or total cost of credit cap. So we have them essentially in most countries with the exception of Czech and Australia, I think there is a cap there, but Czech in the European Union. What this talks about is that as well as that, there would then be individual caps on individual fee items for things related to a loan. So that could get quite complex and difficult to manage. And so we're looking at that very closely. The rate cap in Czech we've talked about, and we think that's absolutely coming, affordability assessments. Now at the heart of every loan that we provide, our ultimate aim is to make sure that the loan is appropriate for our customer. And in particular, that it is affordable. And affordability regulations are there in practically all countries. But the discussions that are going on at the moment in some countries talk about enhancing those regulations significantly. And you could get to a point where, in effect, the regulations would stop you lending to some of these customers. We hope that's not the case. We're looking at it. Changes to rebates is straightforward, increasing restrictions on advertising. There have even been discussions about a complete ban on television of any consumer financial products in some places, value-added services, more restrictions, I think, to come in terms of how value-added services can or cannot be tied to a financial services agreement. And then finally, introduction of free credit sanctions. Now this one is particularly significant. The concept here is if you as a consumer have a consumer finance agreement alone and you're either happily repaying it or you're having difficulty. It actually doesn't matter. If you go through your agreement and you find an error in the agreement, and it could be a tiny error, so not a critical error. It could be any error. But if you find an error, you can go back to the finance company and effectively repudiate the contract and get free credit. And my understanding is it would involve having to repay all of the interest already paid to the customer or by the customer. So you can see that one could be particularly difficult. Now what I would say is we have a great track record in terms of dealing with regulatory change. We really have a very good track record. In some instances, we had to make really difficult decisions about coming out of countries like Finland or Slovakia because we do manage our capital very effectively. But our track record in adapting to reasonable regulation is very good. My concern here is there are so many items on the agenda being discussed across multiple countries at the same time and under a stopwatch scenario, I can't commit to you that we will convince everybody of what reasonable looks like across all of these. I'm hopeful we will get there on most of them. And we will keep updated. But it's just to say that because the countries are behind in terms of the time line, there's now a big rush on to get this done very, very quickly. So we'll come back to you on this. And then the final thing I wanted to talk about is the evolving security landscape in Mexico. This is a very late entry slide in our deck today, and it's obviously because of the death of the head of the Jalisco, Cartel that I'm sure all of you have either read about or seen videos of on the news. What's fair to say is that Mexico, at the moment, as a result, is reasonably unstable from a security point of view. It's not the whole of Mexico, but there are particular states that are being badly impacted. Our #1 concern is always for the safety and security of our colleague and our customer representatives. So [ Australiers ], as we call them in Mexico. And so we've taken the decision in 3 particular states to close our branch network, tell our colleagues not to come to work and to also advise our colleagues and our Australiers not to use the highways because the highways are particularly vulnerable. Now it's very hard to say how this pans out from here. It could all die down or quite in the next day or 2. It could escalate. We can't say. But I want to repeat our primary concern is for the health and safety of our team, and so we've taken that decision. It impacts about 10% of our customer base in Mexico. I am very hopeful that the situation calms down very quickly and that the impact in our January -- or sorry, February results will be de minimis. But I'm not in a position to say that just yet. We need to see how this plays out. So a difficult situation for our colleagues there, and we empathize with them and everything that they're going through. So with that now, I'm going to hand you over to Gary and Gary is going to take us through the trading results in a lot more detail. So Gary, over to you. Gary Thompson: Thank you, Gerard, and hello, everybody. As you heard in our introduction today, we have delivered another good set of results in 2025 with profit before tax increasing by 4% to GBP 88.6 million. This result was delivered through disciplined execution of our Next Gen strategy and continuing robust credit quality across the group, which actually offset the short-term impact of increased growth. Now you can see on this slide here that second half profits were GBP 38.7 million in 2025, broadly in line with the GBP 37.9 million in the second half of last year despite a much larger receivables book. Now this is entirely consistent with the guidance we provided at the interim results in July and reflects the impact from the IFRS 9 impairment drag on increased receivables growth as well as additional sales focused costs relating to our new growth initiatives such as credit cards, short-term loans and partnerships. As Gerard mentioned earlier, we are stepping up our expenditure as we support the additional growth initiatives, enhance the foundations of the business and drive improved efficiency. Firstly, given the success and momentum we are seeing from our new products and distribution channels, we now plan to invest a further GBP 5 million per annum through the P&L account over the next 2 to 3 years. This additional expenditure will be through additional marketing and brand building costs, enhancing our colleague capability and also the upfront IFRS 9 impairment charges we will incur as we refine our credit scorecards. We expect market expectations to adjust for this additional investment. And secondly, having stepped up our investment in capital expenditure by GBP 10 million to GBP 35 million in 2025, we are increasing it by a further GBP 15 million in both '26 and '27 as we look to accelerate the transformation of the business. We then expect capital expenditure to reduce to a more normalized annual run rate of between GBP 25 million and GBP 30 million from 2028 onwards. And then finally, on this slide, we incurred exceptional one-off costs of GBP 3.3 million in 2025 relating to the potential acquisition by BasePoint. Now on to customer growth. It was very pleasing to see that 2025 saw the group return to meaningful customer number growth for the first time in over 10 years. And there is really good demand for both our core product set as well as our new products and distribution channels. Overall, we delivered a 4.7% increase in customer numbers to 1.729 million with all 3 divisions delivering growth. Now particular highlights in the year include Poland returning to growth with 10,000 new customers added in the second half of the year. And Romania, with an expanded product set also adding 10,000 customers over the same period. And then in Mexico, we added 46,000 customers in the second half, 24,000 of which came from our digital businesses, which continues to grow strongly and 22,000 coming from Provident Mexico, which is now firmly back in growth mode following the disruption from the IT upgrade in the latter part of 2024 and early part of 2025. So now let's look at lending growth. We delivered really good group lending growth of 12% at constant exchange rates in 2025. Provident Europe delivered 13% overall lending growth. In Poland, whilst we had a slower start to the year than we expected, lending grew by 20%, with the credit card offering continued to gain really good momentum as the year progressed. And Romania, delivered equally strong growth of 18%, supported by the continued expansion of partnership and hybrid digital channels, both of which are delivering encouraging results. And then Hungary and Czech delivered solid growth of just over 4% combined backing up the strong lending performances they achieved last year. Provident Mexico delivered 7% lending growth in the year. Now as expected, the growth rate accelerated in the second half of the year to 13% of the business recovered from the IT upgrade I just mentioned, as well as continuing with the geographic expansion with the opening of 2 new branches. IPF Digital continues to deliver very good growth in both customer numbers and lending as demand for our fully remote credit solutions continues to rise. Year-on-year customer and lending growth were 16% and 13%, respectively. Now Mexico and Australia were again the best performers, delivering lending growth of 32% and 19%, respectively. And Mexico is now actually serving 130,000 customers, and that's up 40% from last year. We remain very excited about the growth prospects, both in Mexico and Australia, and we're continuing to invest in both the brand and product proposition to maintain the growth momentum and capture the strong growth opportunities that we have in both of these markets. Now on to receivables. Our receivables have now surpassed GBP 1 billion and are at a level actually last seen in 2017. The improving momentum in lending growth is flowing nicely through to receivables growth, and we delivered 14% or GBP 130 million year-on-year growth on a constant currency basis. Now actually, the growth rate is a little lower than the ambitious target of GBP 150 million of receivables growth we set ourselves right at the start of the year, with the shortfall being shared between Provident Poland, Provident Mexico and Mexico Digital. However, whilst we didn't achieve our target, it's really important to note that all 3 businesses have very good momentum and have still delivered good year-on-year growth. In Provident Europe, we delivered receivables growth of 16% to GBP 575 million. All 4 countries delivered good growth, with Romania being a standout performer with 22% growth. Poland's receivable book now stands at GBP 195 million, with growth of GBP 25 million in the second half and higher-yielding credit card now represents approximately 50% of the overall receivables book. Czech Re also delivered good receivables growth of 16%, and Hungary, which, as I'm sure you're aware, is our most highly penetrated market also delivered really solid growth of 9%. In Provident Mexico, receivables showed good growth of 11% to GBP 191 million, with nearly GBP 25 million of that receivables growth added in the second half of the year. In IPF Digital, we delivered receivables growth of 12%, which reflects that consistent delivery of our digital strategy across all our markets. Now it won't surprise you that Mexico and Australia led the way with strong receivable growth of 16% and 23%, respectively. Whilst our other markets in the Baltics, Poland and the Czech Republic delivered combined growth of 7%. Turning now to the progress we're making against the core KPIs of revenue yield, impairment rate and cost-income ratio. Now before I go into the individual metrics, consistent with the approach at the interims, we have set out our KPIs, both on a fully consolidated group basis as well as on a group basis, excluding Poland. Now this is due to the major impact, which the ongoing transition in Poland has had on our KPIs and their comparison to our medium-term targets. Now the trend I'm going to talk you through are in line with our guidance and expectations. And therefore, from our perspective, the key to achieving our medium-term targets is to continue to rescale our Polish business through an increase in the distribution of the higher-yielding credit card proposition. So starting with revenue yield. In Provident Europe, the yield reduced by 1.7 percentage points to 44.8%. This was due to 3 factors. Firstly, the flow-through of lower rate caps in Poland, albeit we expect the Polish yield to begin to recover as we continue to expand the credit card offering that I just mentioned. Secondly, we saw a slight moderation in yield in Hungary due to the reduction in the base rate linked interest cap. Then thirdly, we also saw a reduction in the yield in Romania due to the introduction of the new total cost of credit cap in the fourth quarter of last year, which is now fully embedded into the receivables book. In Provident Mexico, we saw a reduction in the yield from 85.9% to 83.5%. Now this is wholly due to the flow-through of the reduction in new customers we saw through September last year to March this year as we focused on serving good quality existing customers rather than new customers during the IT upgrade. And as I'm sure you're aware, new customers tend to be served with shorter duration, higher-yielding products compared with our existing customers. In IPF Digital, the revenue yield was broadly stable at 42.8%, with the impact of reductions in base rate linked interest rate caps in the Baltics and Australia, being offset by the growth in the receivables book in Mexico, which carries a higher yield. Now overall, the group's revenue yield has reduced from 54.7% to 52.5% over the last 12 months. However, if we exclude Poland, the revenue yield was 56%, which is at the bottom end of the group's target range of 56% to 58%. And improving the revenue yield remains a key focus for the whole business. We expect the ongoing shift to high-yielding products through our credit cards in Poland and the growth in our Mexican businesses to help improve the revenue yield over the coming years. Despite some volatility in macroeconomic conditions in all of our markets, customer repayment behavior has remained really good, and the quality of our loan portfolio continues to be robust. Together with a strong debt sale market and a further GBP 8 million reduction in the group's cost of living provision, this has resulted a 0.6 percentage points improvement in the impairment rate to 9%. This result was achieved despite the impact of increased growth and the associated higher upfront IFRS 9 impairment charges. Now excluding Poland, again, which until the second half of this year, have seen a significant contraction in receivables and therefore, a very favorable impairment position, the group's impairment rate was 13.3% in 2025, and that's just below the group's target range of 14% to 16%. We expect the overall group impairment rate to trend back up toward the target level over the next 2 years as we regrow Poland and continue to grow our receivables in Mexico, which carry a higher impairment rate, but also carry a higher revenue yield. The strong repayment performance and further reduction in the cost of living provision has resulted in the impairment coverage provision reducing from 32.9% last year to 31.1% at the end of December. Now the cost of living provision stands at just GBP 1 million and is not expected to be a feature of the group's results going forward. We continue to maintain a focus on efficiency and cost control, which resulted in cost growth of only 3.3% in the year compared with receivables growth of nearly 14%. The group's cost-income ratio of 61.1% is actually a little changed from last year, mainly due to the reduction in revenue in Poland. If we exclude the Polish businesses, the group's cost-income ratio was 56.2% and that's modestly up from 55.7% last year with the increase due to the reduction in revenue yield as well as the investment we've made in our growth initiatives. We remain heavily focused on growing the lending portfolio whilst maintaining tight discipline over the investments made in building scale and expanding our capabilities in order to improve the group's cost-income ratio to our target range, 49% to 51% in the medium term. Now moving on to the shareholder returns that we are delivering. Our pre-exceptional return on required equity was 14.9% in 2025 just below our target level of between 15% and 20%. The reduction from 15.7% in 2024 is due to the investment in growth, both in respect of receivables, and new growth initiatives and is consistent with our guidance at last year-end and the interim results. We expect our returns to moderate further in 2026 as we continue to invest more heavily in growth before seeing returns begin to improve in 2027. The group's return on equity based on statutory earnings and actual equity was 10.7% in 2025, down from 12.6% last year. This is mainly due to the exceptional tax credit of GBP 17.4 million, which we took in 2024. Our pre-exceptional EPS increased by 5.6% to 26.3p which is slightly higher rate of growth than the 4% growth in PBT, and that's due to fewer shares in issue following the completion of the share buyback in the second half of last year. The effective tax rate in 2025 is 35%, which is consistent with the rate achieved in 2024. It's actually lower than the 38% we used in the first half of the year due to a reduction in U.K. losses. And then finally, on EPS, our reported EPS reduced by 9.2% to 24.8p in the year, and this is again mainly due to the exceptional tax credit in 2024 that I just mentioned. The Board has proposed a final dividend of 9p per share, which represents 12.5% growth on last year. Together with the interim dividend of 3.8p per share, this brings the full year dividend to 12.8p per share, an increase of 12.3% compared with 2024. The dividend payout ratio of 49% is above our target of 40%, but it is consistent with our stated desire to maintain a progressive dividend policy as we rescale the business and deliver consistent returns in our target range of between 15% and 20%. Before I hand you back to Gerard, I'd like you to talk through our strong funding and capital position, which underpins our growth ambitions. At the end of December, we had total debt facilities of GBP 750 million, comprising GBP 483 million in bonds and GBP 267 million in bank funding included GBP 55 million of new bank facilities raised in the year. Net borrowings at the end of the year totaled GBP 621 million, resulted in the group having funding headroom of GBP 129 million. Now in respect to debt capital markets, our credit ratings remain unchanged with both Fitch and Moody's, and they both continue to maintain a stable outlook for the group. Our strong funding position enabled us to repay the residual 2020 Eurobonds early in first half of the year, and in the second half of the year, we took the opportunity to successfully secure SEK 1 billion of unsecured senior floating rate notes due in 2028. Now that's the equivalent of around GBP 80 million. These notes carry a floating interest rate of 3 months STIBOR plus a margin of 5.75%. And really encouragingly, our blending cost of funding has reduced from 13.3% to 12.2% in the year, benefiting from both lower interest rates but also reduced hedging costs. On to capital and our equity to receivables ratio stands at 51% at the end of the year. That's down from 54% last year. The reduction in the ratio reflects the acceleration in receivables growth during 2025, partly offset by a foreign exchange gain of GBP 47 million taken to reserves as the majority of our currencies have strengthened against sterling. Our year-end capital position supports the group's growth plans and our progressive dividend policy through to the point at which we are delivering our target returns and operating closer to our 40% equity to receivables target. We now expect this to be in 2028 following the additional GBP 5 million of investment we're making in the P&L each year. So to sum up, we have delivered another great set of results in 2025. Credit quality remains robust. There's good growth momentum through the group, and we have a strong funding and capital position to support our plans. And on that note, I'll hand you back to Gerard to take you through the outlook. Thanks, Gerard. Gerard Ryan: Thank you, Gary. Okay. So Gary has just given us a really detailed run through the performance of the business over the past year. And as you heard, things are good, very, very solid. So in terms of a wrap-up and outlook, so what are we pleased with? Well, first of all, we see consistent demand across our markets from our customer segment. And we believe that we're gearing ourselves up in terms of products, distribution channels, price points to serve those customers effectively as we go forward. We've got good momentum as we come to 2026. The balance sheet, as you've just heard, is in a strong position and credit quality is very good. And we continue to see that as we put more money into Mexico and Australia, in particular, we're looking to grow those businesses over the next few years. So that all feels very good. One of the things that maybe we're not concerned, but yes, thinking about. Well, first of all, it has to be CCD II for all the reasons I outlined earlier. There's simply just a lot going on, and it's all going on at the same time. And we're not going to know for a number of weeks or possibly months, exactly how this plays out. But we've got a good track record. We just have to figure out how many conversations we can be engaged in at one time. And the second thing is simply the cost of running the business. I think we've done a fantastic job of managing inflation in our costs. But it's clear from the numbers that we talked about earlier that the cost of technology for us has increased quite significantly. So give or take, GBP 25 million in '24, GBP 35 million in '25, moving up to GBP 45 million and then possibly GBP 50 million, all of that with very good reason. It just means that whilst the balance sheet can cope with it, we have the funding, we have the strength in the balance sheet, there is a drag on earnings as all of that gets amortized over time. But what we need to do then is make sure that we bring that cost back down and that the investment we've made delivers in terms of better service for customers and a bigger business. So in total, we're in a good position. We have a solid business, but most important of all, we are fulfilling our purpose, and that is to build financial inclusion for those who are less well off than we are. So that's it for now. I think we've gone further than the 40, 45 minutes I promised you at the start, but hopefully, it was worthwhile for those of you who are new to the business. And with that now, we'll go to Rachel, who is going to, I think, hit Gary and myself, hopefully, with quite a lot of questions. So guys. Welcome, guys. Have we got some questions? Rachel Moran: We do. Yes, I'll start with the first one. We've got a question from one of our investors, [ Freddie ], highlighting the strong receivables performance. He wants to know, will this turn into a higher PBT in 2026? And can you give some guidance on this, please? Gary Thompson: Obviously, I can't give specific guidance. I guess there's probably 3 things to note there. In terms of receivables growth, yes, it was really good. Actually, as you probably just heard, we were a little bit below 1 actually. We set out to deliver GBP 150 million receivables growth in the year. We delivered about GBP 130 million. Now -- so that was a little bit down. I guess in the year, the offset to that was better impairment performance that probably mitigated the fact that we had a little bit less receivables, so that's just on receivables specifically. I guess in terms of what is consensus at the moment. If you looked into 2026 consensus before today, and that's before today, with GBP 97 million PBT. And then I think it was about GBP 115 million PBT for 2027. Now how that will change? I can't say. But clearly, what we've guided to today, is extra investment in GBP 50 million -- sorry, not GBP 50 million, GBP 5 million per year in each of those years. So that's probably as far as I can go in terms of guidance or expectations. Rachel Moran: Now we've got another investor, Doug. Given how much of your share register is now held by the [ ARB ] community? Are you worried about what might happen if they dump the shares in the event that the vote fails on the potential offer? Gerard Ryan: Okay. Well, the first thing to say is that we, as a Board, are strongly supporting the offer. So that's out there in the public domain. We are cognizant of the change in the makeup of the share register. We do recognize that, I think, over 30% are now with ARBs. But I don't think it's for us to speculate as to what they would do. Our view is, shareholders should probably support this offer at the new level. We think it's a really good offer and good value. Rachel Moran: Moving on to a question here on regulation. Is the financial effects of CCD II already reflected in your outlook? Gerard Ryan: No, because, I guess, as you saw just a few minutes ago, what I put up was a whole menu of items, none of which are fixed. And as I said, I'm hopeful that we will get sensible answers or regulation on all of those points, but we can't determine what the outcome is. So we can't put anything in there is the short answer. Rachel Moran: This one moves on to the fact that we mentioned the GBP 5 million of additional investments in growth impacting market expectations. However, given that you won't see the benefit of the cost of living provision release going forward, are you significantly increasing CapEx which you say will come through as much higher depreciation -- sorry, I got that quite a little bit wrong. Are you expecting consensus to revise down for these... Gary Thompson: Okay. Okay. Yes. Again, as I mentioned just shortly ago, clearly, a feature of '24 and '25, the profit before tax was the cost of living provision, which in 2024, we reduced it by GBP 7 million. And in 2025, it was GBP 8 million. So look, if you want to strip those out, PBT was around GBP 78 million in '24, and it was around GBP 80 million, excluding that in 2025. I guess those movements have always been built into what the market expects. In terms of the extra investment in CapEx, and it's right, I mean, we're putting through GBP 60 million more CapEx over '24 to -- sorry, '25, '26 and '27, GBP 60 million that will lead to 10-plus more amortization per annum going forward. Now clearly, what we are looking at doing is scaling up the business. That's the GBP 5 million P&L impact that we've talked about for the next 2 to 3 years, increasing receivables growth so we can absorb obviously, the extra amortization that will come through. Now clearly as well as that, the CapEx investment isn't just about growth. It's about a lot of foundational change, efficiency, et cetera, that we are looking to deliver over the next few years. So there's lots of hard work to do, a lot of hard work, and there's a lot of change going on in the business, but we wouldn't expect or we'd look to be mitigating or getting benefit from those -- that capital expenditure when you look out in the longer term. Gerard Ryan: So certainly a drag on the P&L. And our job is to offset as much of that as we possibly can. I mean the investments are very sensible for all the reasons we've talked about over the past hour. And our role now is to make sure that those investments pay us back. Rachel Moran: Okay. We've got a question here from one investor [ Lucy ]. The number of customers has been stable in the last 3 changes, small ups and downs. What is a number of customers you'd like to see and consider as achievable in the next 3 years or so? Gerard Ryan: Well, we have a more medium- to long-term target of 2.5 million customers out there. And if you think about it, we're currently at 1.7 million, which is a good customer base for our infrastructure. So 2.5 million is quite a sizable increase. But the investments we're making are designed to deliver that, but it's over quite a long period of time. But the short answer 2.5 million would be our long-term target. Rachel Moran: Great. That's all the questions that we've had so far this morning. Gerard Ryan: Okay. Thank you, Rachel. Thank you, Gary. Well, just to wrap up then, you've heard us over the last hour, I talk about the business. We performed well in 2025. We have a very strong balance sheet. We have good prospects in '26. We do have some headwinds. I think the regulatory one is a particular concern, but we're just going to have to deal with that. I am concerned about Mexico. We just have to see how that plays out. But the portfolio quality is good. The drag from the investments is quite serious. But as I said, it's for Gary and me and the team to figure out how we effectively pay for all those things that doesn't drain the P&L. But all in all, I think a good set of results. I'd like to finish just by saying a huge thank you to all of my colleagues because this is a big business. It can get reasonably complex, and we are making it more complicated by adding new channels and new products and new services because we think that's what our customers want and need, but that takes a fantastic amount of effort on the part of 5,500 colleagues and 16,000 customer representatives who work for us every day of the year, trying to deliver good results for our customers. So a huge thank you to every one of you right there. Thank you, guys. Gary Thompson: Thank you. Gerard Ryan: So with that, I'll close the webcast for now. Thank you very much. Rachel Moran: Thank you.
Operator: And these statements are intended to qualify for the safe harbor liability established by the Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions. In an effort to provide investors with additional information regarding the company's results, the company refers to various U.S. GAAP and non-GAAP financial measures, which management believes provide useful information to investors. These non-GAAP measures have no standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of GAAP to non-GAAP results is included in our news release and the appendix of our slide presentation. And now turning to slide three, I will turn the call over to the CEO. CEO: Thank you, Steve. Good morning, everyone, and thank you for joining us. We were pleased to report hard work that produced a successful year in 2025. On slide four, we highlight our fourth quarter and full-year performance. For the quarter, we achieved record fourth-quarter net sales of $400.6 million. Full-year net sales increased 8.1% due to a combination of organic and inorganic growth. Adjusted EBITDA for the quarter was a solid $44.7 million. This yielded an adjusted EBITDA margin of 11.2%. Adjusted EBITDA of $140.7 million for the year was at the upper end of our guidance range. The full-year adjusted EBITDA margin was 10%, which was a 140 basis point increase over the prior year. We are optimistic about 2026 due to our progress on internal initiatives and positive customer-centric momentum. Full-year 2026 adjusted EBITDA guidance range is $170 million to $190 million. We continue to generate positive free cash flow, which allows us to fund both organic and inorganic growth. In 2025, we saw healthy demand for asphalt plants and concrete plants within the Infrastructure Solutions segment, while forestry and mobile paving equipment were challenged. During the fourth quarter, we saw an increase in the backlogs for forestry and mobile paving equipment, though they remain at the lower end of historical ranges. The Material Solutions segment demonstrated anticipated recovery late in the year with a combination of organic and inorganic growth. Federal funding, healthy state and local budgets, and the construction of data centers are expected to drive multiyear demand in the Material Solutions and Infrastructure Solutions segments in 2026. Parts sales increased 19.7% versus the fourth quarter prior year. For the year, parts sales totaled $432.7 million, representing an 11.5% increase over the prior year and 30.7% of total net sales in 2025. As previously stated, growing our parts and service business continues to be a priority. We were pleased to show an increase in backlog to $514 million. This represented sequential and year-over-year growth of 14.4% and 22.5%, respectively, through a combination of organic and inorganic activity. On slide five, we highlight the acquisitions of TerraSource and CWMF that collectively represent over $200 million of annual revenue acquired by Astec Industries, Inc. As part of the TerraSource integration, we will share the new brand and designs at CONEXPO. The new designs are consistent with existing Astec Industries, Inc. products and incorporate our name and logo with the TerraSource legacy flagship brands, including Gunlop, Jeffrey Rader, Pennsylvania Crusher, and Elgin. Our joint teams are busy expanding the parts sales force, coordinating sales channels and cross-selling strategies, pursuing new product development, and assessing opportunities for optimal use. We anticipate benefits from these actions will be realized in 2026. On 01/01/2026, we were excited to welcome the skilled and dedicated employees of CWMF to the Astec Industries, Inc. family. As a reminder, CWMF is a highly respected manufacturer of portable and stationary asphalt plant equipment and parts primarily concentrated in the Midwest, South Central, and Great Lakes regions of the United States. Our organizations are a strong cultural fit, and we expect CWMF to be accretive from day one. Slide six provides detail on the state of the U.S. infrastructure and aggregate industries. Astec Industries, Inc. benefits from strong road construction and aggregate markets in the United States. As you may know, in 2022, Congress approved a five-year $347.5 billion infrastructure investment bill. Funds committed within the bill totaled $148 billion, or 71%, through 11/30/2025. Congress recently reached an agreement on transportation spending legislation for the remainder of fiscal year 2026. Street construction also supports the U.S. aggregate industry, as aggregates are used in asphalt, concrete, and as base. In addition to expected increases in federal funds for roads and bridge construction, 2026 state transportation budgets anticipate growth as well. Data centers, and the aggregates and the infrastructure necessary to support them, are also expected to drive multiyear demand. In an October 2025 study by Thompson Research Group, aggregate quarries within a 30-mile truck distance of a major data center construction project saw demand for aggregate tonnage that nearly doubled that of pre-construction levels. Overall, a healthy compound annual rate of 3.41% is expected for the U.S. aggregate markets through 2033. These industry trends provide advantages for Astec Industries, Inc., a company specializing in the rock-to-road sector. Ongoing infrastructure enhancements contribute to sustained demand for our equipment, parts, and implied orders, which were up $46 million, or 11%, from the prior quarter in 2024. Our book-to-bill ratio was 116% on a consolidated basis. Furthermore, our backlog grew to $504 million, an increase on a sequential and year-over-year basis by 14.4% and 22.5%, respectively. In forestry equipment, we are especially pleased with increased backlog in our Material Solutions segment. I will now turn the call over to Brian Harris for the financial results. Brian Harris: Thank you, Jacob, and good morning. Next I will cover our fourth-quarter consolidated results, detail by segment, liquidity and leverage, along with some 2026 outlook detail. Capital equipment and aftermarket parts adjusted EBITDA and margins increased due to strong volume, favorable pricing, and product mix. For the fourth quarter, adjusted earnings per share was $1.06. For the full year, net sales grew 8.1%, which was attributable to incremental net sales from the acquired TerraSource business, as well as positive organic volume and mix coupled with favorable pricing. As Jacob mentioned, we were pleased to report an adjusted EBITDA of $140.7 million, which was at the high end of our guidance range. Both segments experienced growth as adjusted EBITDA margin expanded by 140 basis points on a consolidated basis to 10%. Adjusted earnings per share for the full year ending 2025 was $3.33, representing a 28.6% increase over the prior year. On slide 11, we show the Infrastructure Solutions segment, which generated fourth-quarter net sales of $223.6 million. This measured to a strong prior-year comparison of $248.8 million as solid demand for asphalt and concrete plant sales was offset by softness from mobile paving and forestry equipment. Aftermarket parts sales were relatively flat, albeit at healthy levels. Q4 sales increased $20 million, or 2.4%. Segment operating adjusted EBITDA was $134.3 million for 2025, compared to $121.5 million for 2024, for an increase of $12.8 million, or 10.5%. Full-year adjusted EBITDA margin grew 120 basis points to 15.7% compared to 14.5% in 2024. Increases were primarily due to the impact of net favorable volume and mix from inorganic and organic operations, coupled with favorable pricing. Adjusted EBITDA margin for the quarter increased 530 basis points to 11.8%. For the year, net sales increased 18.2% to $553 million over the prior year, and the adjusted EBITDA grew 49.5% to $55.6 million. Adjusted EBITDA margin in 2025 reached 10.1% compared to 8% in 2024, an increase of 210 basis points. As shown on slide 13, our balance sheet remains strong, supported by substantial liquidity. At quarter end, we had $70 million in cash and cash equivalents along with $244.7 million of available credit, resulting in total liquidity of $314.7 million. Net debt to adjusted EBITDA of approximately 2 times is well within our target range. For 2026, account for the following anticipated full-year ranges: adjusted EBITDA of $170 million to $190 million; an effective tax rate between 25% and 28%; capital expenditures of $40 million to $50 million; depreciation and amortization of $55 million to $65 million; and the quarterly range for adjusted SG&A of $70 million to $80 million. I will now hand the call back to the CEO. CEO: Thank you, Brian. Moving to slide 14, please mark your calendars to visit us at the 2026 CONEXPO-CON/AGG Trade Show in Las Vegas from March 3 through the 7th. Our display will be located in the Central Hall in Booth C30236, where we will showcase several new products. We will also demonstrate our existing new signal. Slide 15 provides an overview of our key investment highlights. We are proud of Astec Industries, Inc.'s long-standing reputation and premium solutions for our customers. Our team is highly engaged with customers. Based on recent interaction, customers have a favorable outlook. Efforts within our manufacturing and procurement are enhancing efficiency, and we are seeing continued improvement in adjusted EBITDA. Our growth is supported by several promising opportunities, including growing our recurring aftermarket parts business, which remains a top priority for the Astec Industries, Inc. team; advancing our robust pipeline of innovative new products, many of which will be on display at CONEXPO; having consistent multiyear federal and state funding for interstate and highway projects within our core U.S. market; exploring expansion possibilities in both established and emerging international markets; and pursuing inorganic growth with our demonstrated disciplined and focused approach to strategic acquisitions. As Brian mentioned, our strong balance sheet provides flexibility to fund our growth initiatives and manage leverage effectively. With that, Operator, we are ready to draw your questions. Operator: Simply press 1 again. We will pause for just a moment to compile the Q&A. Your first question comes from the line of Steve Ferazani with JMP. Please go ahead. Steve Ferazani: I am really surprised by the strong backlog in 4Q, the orders as well as the guide. So I want to dig into some of those pieces. As far as what you are seeing in Material Solutions, it looks like that is where you really significantly beat on the top line in the quarter. I am assuming that is what is contributing to the strong guide. Higher interest rates as they came down, that could help as well as well as all of those products were underused. Just because some of the smaller customers were not ready to buy, and it was coming. CEO: And now we see it is coming even if we back out TerraSource. We saw it on the organic side. Can you inmates and PSG business. I will say PSG also came through really strong during the fourth quarter, and we got the results that we were looking for when we did the business. I will say we talked a lot about the state of inventory in our dealer network, and we have seen and spoke to our dealers just here recently. They have very healthy backlog situations now. They have very healthy inventory. For a while there, they did not necessarily have the right inventory. We worked through all of that. We have also seen a very positive development around data centers that is affecting this business. We see multiple of those super large projects coming through, and our team is very well positioned to enjoy some of that business, and I know our dealers are are highly engaged. These last projects. So, yes, we are also excited about this. I think our team is ready to take advantage of this and enhance the output that we provided for 2026. Steve Ferazani: Okay. And flipping over to Infrastructure Solutions, that backlog actually was ahead of where we were thinking as well, just because our expectation was as you enter the last year of the current highway funding bill, maybe you would see a slowdown in concrete and asphalt plant orders. That does not seem to be happening. CEO: Yes. No. You are right, Steve. So we are happy with how the year ended. Obviously, we had a very strong comp versus the prior year, but bookings stayed pretty strong. And I am happy to say here in the first couple of weeks of the year, MS and the IS business, the order intake has been strong as well. Steve Ferazani: And you are a little bit closer to this. Any updates on what you think highway funding might move forward this year, and are there any concerns on your end if it slowed down? CEO: Yes. So, you know, a couple of things on that. We believe that conversations are on track, that we will hear something about an infrastructure bill here in the next couple of months. On a positive note, as we mentioned in our prepared remarks, funding for 2026 was actually approved by Congress. So, overall, I think our customers are in a good space. We know that most of them have very good backlogs for the year. So I think our customers are really focused on the long term. The need for infrastructure is there, and I think our customers are looking beyond just the full year at the end of the year. Of course, if we do get the bill, I think it will be very positive for us and for the customers. Steve Ferazani: Got it. That is helpful. I want to turn to the guidance, which is certainly on EBITDA well above where we were. I am trying to think about, since you have taken over, you have tried to improve production efficiencies. I know you have made investments in the plants. You have been growing parts sales, higher margin. I am trying to think of how much of this growth is driven straight by top line or how much you think this is on margin beyond just the margin improvement generated by higher throughput? CEO: So, if you look at the walk from 2025, which will basically be workforce for the full year, we built some synergies in there for those two deals, and we feel pretty good about our progress around synergies. Obviously, these synergies take a while to work through the inventory that we already have. And we do see some organic growth for this year, and we have baked some of that into the number. If we get a highway bill or a new infrastructure bill, we could probably go to the higher end of the range, but we felt that that range is something that we feel makes sense this early on in the year. Steve Ferazani: You have not talked that much about the numbers around CWMF. I know CWMF is much smaller. Can you talk about what that contribution is to your range in 2026? And then as a follow-up, how we should read through on what your M&A strategy is with TerraSource and now CWMF? CEO: Yes. So, you know, on CWMF, obviously, we disclosed the profitability. We have not shared exactly what their sales are, but, Steve, we did mention that it is accretive from day one. So we are very happy with where they fit, their margin profile fit. From an acquisition point of view, we have a good momentum right now. I will say our team has done a fantastic job with teeing these two deals up. The integration has been going really well. And we have the team available to continue to go down this path. Our liquidity is in a strong position right now. So we are going to continue to look, and there are a lot of opportunities for us still to grow both in the U.S. and internationally. So, and CWMF to add to the team. Steve Ferazani: Right. Thanks so much. Operator: Your next question comes from the line of Steven Ramsey with Thompson Research Group. Please go ahead. Steven Ramsey: Hi. Good morning, everyone, and thanks. What I wanted to start with, maybe kind of continue the CWMF topics, and seeing that it is accretive day one, if you could talk to their parts contribution and maybe where Astec Industries, Inc. can help on that front. CEO: Yes. No. Absolutely. When I look at the CWMF business, the first thing is the owners, Colby and Travis, they have done a fantastic job with this business. They have created a great culture, and that culture fits in so well with Astec Industries, Inc. It is amazing to me just how fast our teams have come together here. Obviously, we know this business in and out, and the discussions between our teams around working together, integrating sales structures, synergies, has gone as good as what we could have imagined. This business and the previous owners, they have done a fantastic job creating a very nice manufacturing facility with good capabilities. And we see opportunities to use that facility and grow the output together with the rest of our Astec Industries, Inc. Asphalt teams. From a parts point of view, their parts mix is a little bit lower than what we have on our traditional asphalt business, Steve. So there is a big opportunity there to grow that. We are going to do the same thing with them to make sure we have great parts availability. And we will give our customers the support that they deserve and they are used to from a legacy Astec Industries, Inc. point of view. So we are excited about this. This buy will give us much more than just another asphalt product line. It will give us manufacturing capability, as it brings a great team to the table. So we feel very confident about what this will look like in a couple of years. Steven Ramsey: Excellent. And then sticking to recent acquisitions, for TerraSource, can you talk about the progress with this business? Good to see margin improvement in the Materials segment. And can you talk about the improving fill rates within TerraSource? I know that was a focal point. Can you talk about where it is now versus where it was when you closed the deal? CEO: Yes. No. Steve, obviously we are still pretty early in that improvement cycle. One thing that I will say is that our teams have done all the calculations. We know exactly what we need to do and what is the inventory that we need to put on the shelf. That process is going, and I will say within the next three to six months, we are going to be very close to where we want them to be. And we know that that will have a positive influence on the business. So good interaction, good buy-in from the team. They are running with this, and the Astec Industries, Inc. team just supports them. The other thing that we are making sure of is as we bring this inventory in, we make sure that we take advantage of the synergy opportunities that we have so that we can bring that inventory in at the levels that we can buy for in our legacy Astec Industries, Inc. business. So we are excited about that. Overall, the performance for TerraSource for the six months we have owned them has been in line with our expectations. And I will say here in the last couple of weeks, we have made significant improvements in the integration of the team. Just yesterday, I listened to our engineering team talking about the products that we are going to have at CONEXPO, and this just fits in so well with the Astec Industries, Inc. business. So we are excited about what they are going to bring to the table in the future. Steven Ramsey: Okay. That is great. You pointed out, obviously, infrastructure activity and data centers, and on the Material Solutions segment, can you talk a little bit more on data centers and how your equipment is being deployed there, and how much of your data center growth is following customers versus intentional efforts on your part, and then maybe one other thing on data centers is ballpark how, if you can gauge it, how much data center exposure you have. CEO: We actually try to calculate that a little bit because I will say the majority of the crushing and screening that is going to be needed to get these data centers built will be done by companies that we already do business with. So it is not that you will see a huge amount of new start-ups popping up. These are customers that we have relationships with. They are close to our dealers. And we have seen quite a few large projects that are coming our way, and we are going to try to take advantage of that as much as we can. We are adding capacity in our facilities again to make sure we can take advantage of this. So, Steve, I think we are well positioned. Exactly how much it will contribute, we have not got to a number that we feel comfortable with yet, but we can see what is in our quoting pipeline, and we feel that this business will be strong and support our EBITDA guidance range for the year. Steven Ramsey: Okay. That is excellent. And to clarify, the demand for data centers that you are seeing, is it being filled through dealers primarily, or is there any direct business? CEO: Yes. No. Most of that is through dealers. Our crushing and screening product line goes through dealers. Obviously, there is concrete needed there as well. That goes through a dealer structure. Any asphalt that is done around data centers, we sell directly to customers. And once again, a lot of our existing customers are involved in that construction. Steven Ramsey: Okay. That is helpful. And one thing I wanted to make sure of with the EBITDA guidance: do you expect margin expansion in both segments? CEO: Yes. So, Steven, we have been talking about growing our margins 0.7% to 1.5% a year on average. And if you go and look at the last three years, I think we have successfully done that. It is our aim to build on that and continue to try to achieve those improvements year over year. We will not do our job if we do not do that again this year. Obviously, there is a lot of work to be done to achieve that, but I think we have shown that we can do it. The team is ready to go this year. We know how to do it. We know that we have the opportunity. So now it is just up to us to go and execute. Steven Ramsey: Excellent. And then last quick one for me. CONEXPO, a big event that clearly does not happen every year. Can you talk about in the past if this helps sales in the coming quarters to a degree as you roll out new products or highlight improvements to existing products? And is there any scenario where CONEXPO is a needle mover enough to shift the guidance or go to the high end? CEO: Yes. These big shows can always raise the question, is it delivering good return on investment? I will just say we are very excited about this CONEXPO. Basically, every product that we have on display is either new or substantially upgraded. We are going to launch our Signal digital platform there that I am very excited about. So, Steven, I will say, are we going to walk away there with $100 million in new orders? Probably not. But will this send a signal to the market and to our customers that Astec Industries, Inc. is strong? We are unified under our brands. We will have TerraSource on display. Our CWMF team will be part of us. I think we are going to show really strong, and it is going to give our customers confidence. And I will be honest with you, I think it is going to give our own team members a boost just to see how well we show up now as still a relatively small player in the market. So, yes, I am excited. Hopefully, we will see you there next week, and hopefully, we will have great— Steven Ramsey: Yep. I will be there. Looking forward to it. Thank you. Operator: Your next question comes from the line of David MacGregor with Longbow Research. Please go ahead. David MacGregor: Yes. Good morning, everyone, and congratulations on the strong results. CEO: Morning, David. David MacGregor: Good morning. I wanted to begin by just maybe picking up on your last point there with regard to rolling out the digital platform at CONEXPO. Maybe you could just talk about progress on building out digital solutions generally. I know this is something you have been doing a lot of work on, but I guess the goal is ultimately to make Astec Industries, Inc. easier to buy from. And just how should we think about this as a revenue growth facilitator in 2026? CEO: Yes. No, David. That is a great question. If I look at the state of our industry and some of the larger players and where we want to take this business, the world is going to look at what I call dumb iron and how we make this dumb iron more productive and more reliable. That is one of the things that we want to achieve with our digital platform. We want to give our customers great visibility around how their equipment is performing. Are they getting the utilization of their equipment? And then, most importantly, how do we help our customers to ensure that their equipment runs all the time? Our digital platform is going to help them to do that. We see various opportunities coming out of that: driving parts business and increasing our service offerings. It will help us to grow that parts and service business in the future. There is a big opportunity here. I will say we are just scratching the surface on what this business can become, and if you go to CONEXPO, you will see how this is now integrated in every piece of equipment. I hate to use the AI term here, but our teams are doing really good things to start to bring more and more opportunities that we can help our customers, using the data to make better decisions. We have multiple large customers now that are standardizing on our platform, and they are going to be the beneficiaries of this. They are all looking forward to next week because they are going to see the full capability. We are excited. I think it is going to be great for us long term. Yes, it is exciting. David MacGregor: Second question for me, you mentioned in your prepared remarks that you were seeing a modest positive inflection in orders within the forestry business. I just wanted to maybe get you to talk about that a little bit further and what you think you are seeing there and the extent to which you may expect some follow-through. CEO: Yes. The forestry business was an interesting one the last 12 to 18 months. We have owned the Petersen business now for, I think, 12 to 13 years, and this down cycle was probably the worst we have seen since we have owned it. A couple of things there: the paper and pulp industry is a little bit in turmoil. And then, thank goodness the U.S. did not have much storm damage last year, but, obviously, that typically drives quite a bit of business for us. I am, however, happy to say that the last couple of weeks we have actually seen some decent order intake there. That is a business that traditionally, when it was running at full cylinders, made really good profit. So if that comes back, it will add to our profitability. We baked some of that in already in the EBITDA outlook. David MacGregor: Okay. Good. Thank you for that detail. I wanted to get you to talk a little bit about the parts business in 2026 as well. I know that you did a lot of work in the strategic inventory investments and expanding the service support. How should we think about the drivers here in 2026? What changes, if anything, in terms of how you go after that business? CEO: Yes. A couple of things there. We are continuously looking at the way we go to market. One of the platforms that you will see at CONEXPO is what we call MyAstec, and that is a digital platform that we have created starting for asphalt plants, where we are creating a digital twin for our customers that makes the ordering so much easier. That platform is rolled out. We have just started to now introduce that to the concrete plant side of the business. We are really trying to find ways to make it easier for our customers to do business with us. That is one thing. The second thing is, as you know, we are continuously strengthening our presence in the market. So with CWMF on board now, we got some parts sales guys from them. We have broken up our territories a little bit. Now we have even more feet on the street for parts on the asphalt side. And then, of course, the TSG side, big opportunity there. These guys, when we bought them, were in the, I will say, second or third innings of reviving these historically strong brands, and we are enabling them, focusing on fill rate. We are adding salespeople to go after that parts business. David, obviously, these things take time. The actions of last year will pay off this year, and the actions we are putting in place now will play out well later in the year and into next year. David MacGregor: Got it. Last question for me is maybe for Brian, just on working capital in the model for 2026 and how we should be thinking about source versus use, and I guess within that, I know that on the equipment side, you have seen people ordering on shorter lead times. Does that give you the ability to fund growth in parts inventory with maybe a little less equipment inventory? Brian Harris: Yes. Thanks, Dave. Thanks for the question. Working capital continues to be an area of focus for us, obviously. The better the cash flow that we can generate, the more ability we have to grow. I think in 2026, we are going to see further opportunities to improve our working capital management. It is always a little bit tricky to judge exactly where you will be at the year end. We ship a lot of inventory, but sometimes it goes into receivables in the short term, so year-end forecasting can be a little challenging. But overall, I do see opportunities for continued improvement. And, of course, we are going to drive cash through increased operating earnings as well. And then we have got, as you see in our guide, capital expenditures of $40 million to $50 million next year. We have a lot of good projects in our plants for operational improvement, improved quality, and automation. So we will be reinvesting some of that free cash flow back into the business. But overall, I think working capital should improve slightly. David MacGregor: Okay. CEO: Yes. David, maybe one other comment just to add to that. A lot of our ETO business, we do not have finished goods inventory. So the real opportunity is strengthening that parts availability, and you hit the nail on the head there by saying that we want to make sure we drive that. On the TSG side, we have done the calculations, and yes, it will take a couple of million or so of inventory, but it is not that it is going to be a double-digit number that we need to add to fix that. It is doable within a pretty decent investment. David MacGregor: Great. Thanks. Congratulations again on all the progress, and look forward to catching up with you next week. CEO: Thank you. Operator: That concludes the Q&A session. And now I will turn the call over to Stephen C. Anderson, Senior Vice President of Investor Relations. Stephen C. Anderson: All right. Thank you. We appreciate your participation in our conference call this morning and thank you for your interest in Astec Industries, Inc. As today’s news release states, this conference call has been recorded. A replay of the conference call will be available through 03/11/2026, and an archived webcast will be available for 90 days. The transcript will be available under the Investor Relations section of the Astec Industries, Inc. website within the next five business days. This concludes our call, but we are happy to connect later if there are additional questions. Thank you all, and have a good day. Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.
Aleksey Lakchakov: Good afternoon, and welcome to CS Disco, Inc.’s fourth quarter 2025 financial results conference call. Joining me today are Aaron Barfoot, CS Disco, Inc.’s Chief Financial Officer, and Richard Crum, CS Disco, Inc.’s Chief Product, Technology, and Strategy Officer. Today’s call will include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and future performance, our future capital expenditures, market opportunity, market position, product and go-to-market strategies, growth opportunities, and the benefits of our product offerings and developments in the legal technology industry. In addition to our prepared remarks, our earnings press release, SEC filings, and a replay of today’s call can be found on our investor relations website at ir.csdisco.com. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Information on factors that could affect the company’s financial results is included in its filings with the SEC from time to time, including the section titled “Risk Factors” in the company’s Quarterly Report on Form 10-Q for the quarter ended 09/30/2025, filed with the SEC on 11/05/2025, and the company’s upcoming Annual Report on Form 10-K for the year ended 12/31/2025. Forward-looking statements represent our management’s beliefs and assumptions only as of the date made. In addition, during today’s call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus our closest GAAP equivalents are available in our earnings release. I will now turn the call over to our Chief Executive Officer, Eric Friedrichsen. Eric Friedrichsen: Thank you, Aleksey, and good morning, everyone. Thank you for joining us. Right here at the start, I want to welcome aboard Aaron Barfoot, as CS Disco, Inc.’s Chief Financial Officer. Many of you saw our announcement in December and we are thrilled to have Aaron on board. His deep experience in enterprise software and AI-driven business transformation at several industry-leading companies, along with his inspiring leadership approach, is a perfect match for CS Disco, Inc. Aaron has hit the ground running and has already become a great partner on CS Disco, Inc.’s journey to revolutionize the eDiscovery industry. Speaking of that journey, I can tell you that I have never been more confident of CS Disco, Inc.’s role as the disruptor and our ability to help our customers drive better outcomes for their clients and their litigation matters. CS Disco, Inc. was built from the ground up on cloud-based, AI-native technology specifically designed for the rigors of high-stakes, complex litigation. Unlike general purpose AI tools, CS Disco, Inc. is built by lawyers for lawyers across massive volumes of complex and sensitive data with privilege controls, audit trails, and litigation-specific workflows that lawyers can stand behind in court. In order to best understand this, you really need to draw a mental picture of the four layers of our AI-native stack. At the foundation sits CS Disco, Inc.’s proprietary data layer, which is the result of a decade of innovation on data, machine learning, and artificial intelligence, with inference engines that power the industry’s fastest and most advanced eDiscovery platform. Built on top of that foundation is CS Disco, Inc.’s core eDiscovery solution, with its integrated workflows that are purpose-built for litigation professionals and trusted across the most complex high-stakes matters in the world. Our third layer brings in generative AI with Cecilia. It answers complex questions in natural language and surfaces key evidence in seconds, connecting complex and nuanced concepts across different types of data to dramatically accelerate evidence finding and document review. This is the layer where we recently announced agentic capabilities such as advanced research. Cecilia allows lawyers to speak to the data like never before possible. At the top of the stack, CS Disco, Inc.’s managed services layer is powered by Auto Review, bringing generative AI to the work traditionally carried out by large human review teams and thus delivering managed service expertise at software scale and economics. The result is a coherent AI-native stack underpinned by the enterprise-grade security, compliance, and auditability that litigators require. Our opportunity to disrupt the industry was a key driver in the strategy we built and began executing after I joined CS Disco, Inc. in 2024. Coming into 2025, CS Disco, Inc. set high goals for progress against our new strategy, and I am very proud of the team’s results. In Q4, total revenue grew 11% year over year to $41,200,000, and software revenue grew 14% year over year to $35,100,000. This was the third consecutive quarter of accelerating growth of both total and software revenue, excluding the one-time contingent deal we recognized and called out specifically in the previous quarter. We are very pleased to be at the high end of the guidance range in total revenue. Adjusted EBITDA was negative $2,200,000 in Q4, representing an adjusted EBITDA margin of negative 5%, compared to an adjusted EBITDA margin of negative 12% in Q4 of the prior year. Full-year 2025 total revenue was $156,800,000, up 8% year over year, while software revenue was $134,000,000, up 12% year over year. Full-year 2025 adjusted EBITDA was negative $10,200,000, a margin of negative 7% compared to a margin of negative 13% in 2024. While I continue to be proud of the end results, I am even prouder of how we got there, as it continually reaffirms that our strategy is working as we drive to durable growth and sustainable profitability over time. The main contributors to our performance included overall growth in usage on our platform, increases in large matters, and acceleration of adoption of our generative AI capabilities. In Q4, we set record highs in total terabytes on our platform with accelerated year-over-year growth. We finished the year with double-digit growth in multi-terabyte matters and with revenue growing over 30% from those matters year over year in Q4. We increased customers that generated more than $100,000 in total revenue during the last twelve months to 330. The revenue attributable to these customers totaled $119,000,000 in 2025, representing 76% of total revenue. Additionally, we saw significant acceleration in the adoption of our generative AI capabilities, including 4,100% attributable to these features. And it is important to point out that when customers choose to use our gen AI capabilities, they are also choosing our core CS Disco, Inc. platform. Our core CS Disco, Inc. platform with Cecilia AI, including our newly announced agentic capabilities, acts as a senior investigator that lives inside your data. It reasons, it performs multi-step operations, it links new concepts. It moves you from the “what” of the case to the “why” in a fraction of the time. I think it is always powerful to hear how our customers are specifically using CS Disco, Inc. eDiscovery. There are other capabilities where our platform narrowed the review population and did the review in just two days, delivering 98% precision and 97% recall—results that are not only superior to industry-accepted human review standards, but provide the statistical defensibility our clients require for court-mandated productions. To give a sense of the size of impact, in order to hit the same deadline with human reviewers, this would have taken a team of 70 people four weeks to complete. Instead, the client had the information they needed in record time with exceptional quality. This is a powerful example of how our gen AI capabilities augment our core litigation platform and are transforming outcomes for our customers, and why they decide to choose CS Disco, Inc. time and time again for their most important matters. The second example that I want to mention is from one of the preeminent law firms, Osborne Clarke. While they were already a fantastic customer when I joined CS Disco, Inc. twenty-two months ago, they were using us primarily for smaller cases. They were very pleased with the CS Disco, Inc. platform but were unaware of the services that we provide to help on larger and more complex cases. Over the course of this past year, CS Disco, Inc. has continued to build on the partnership with Osborne Clarke by providing strong client service, exceptional results, and value for the money. We made sure our enterprise-grade software, leading AI technology, and comprehensive services came through clearly in every interaction. So over the course of 2025, they more than doubled their matters with us. Osborne Clarke is an innovation-focused law firm, and they are leveraging their partnership with CS Disco, Inc. to help enable them to deliver better outcomes for their clients. The story of 2025 is one of accelerating adoption of AI and Auto Review on our platform and accelerating growth and improving profitability. We started to see the benefit of our new strategy in action. I will now turn the call over to Richard Crum for some exciting updates. Richard Crum: Thanks, Eric. In our daily conversations with customers, including at our recent customer advisory board meeting, it is clear that AI is a powerful catalyst for the legal industry. The real excitement, however, lies in how we apply it. While general purpose AI tools offer interesting solutions for transactional work, our customers highlighted that they are not sufficient for high-stakes litigation. Let me outline a few key reasons why purpose-built AI technology for managing complex litigation is so important to our customers. Accountability remains with lawyers, not AI. Our platform is designed to leverage AI in strict privilege control that manages data accessibility and establishes audit trails that law firms require to avoid malpractice risk. When you are dealing with the most sensitive data, corporate and privileged, you must exceed long-standing industry precision standards and provide lawyers with the high-quality output they can trust their careers with. Next, we are solving for scale. Many of the recently announced AI point solutions are great at helping lawyers with discrete legal work, such as drafting a memo or reviewing an agreement. This is useful to a legal professional, but it is not the same as supporting the legally mandated document review processes we support. CS Disco, Inc. is used to manage multi-step, litigation-specific workflows across millions of documents. Litigators are connecting the dots between years of private data, including email, Slack messages, PDF, audio, video, and financial records, to find the evidence and build their case. This is not a simple search problem. It is a massive, multi-format data engineering problem that requires an industrial-grade backbone to ingest, secure, and act on terabytes of data. Further, litigation is a complex, team-oriented workflow. Document review is a process involving many stakeholders—law firm partners, corporate attorneys, and outside counsel teams—who must collaborate seamlessly. And finally, our AI just works. With our newly announced agentic reasoning, Cecilia Q&A, and Cecilia deep research, which we will be rolling out, we have moved into the next level of legal insight. Cecilia is now an AI assistant that can find the deep connections across all types of evidence to answer why something is happening. The deep research mode for Cecilia can understand a question, create a plan, execute a multi-stage research flow, verify sources, and deliver cited answers. Again, it works across millions of documents to bring our customers the case insights they have been asking for, like analyzing evidence for inconsistency. We continue to push the boundaries of what our platform can do, both with the core technology that our lawyers require and the AI that makes them better at their craft. It is why our customers trust CS Disco, Inc. to lead the way in bringing innovation to legal tech. Now I want to transition to a new topic. While we have been innovating quickly, we have also been listening closely to how customers want to buy. For example, we see positive reactions in recent pilots, and we are excited to announce that, going forward, we are combining all of our powerful CS Disco, Inc. eDiscovery and Cecilia AI capabilities into a single offering, along with updates to our pricing and contracting approach. Let me dive a little bit deeper into these three exciting changes that we are making to how we bring our products to market. First, and I think most excitingly, with our new pricing model, all of Cecilia AI will be included on every matter. This means that incredibly powerful and industry-leading tools like Cecilia Q&A, auto timelines, document classification, and investigatory agents will be available as one integrated AI capability in one solution. Customers will have everything they need to manage and win their matters for one competitive price. We are also evolving the way we price the CS Disco, Inc. platform. In addition to now offering all of the great technology I just spoke about for one simple per-gigabyte rate, we are also adopting the industry-standard approach of pricing. The formula will be based on the size of the customer data as it grows over time rather than basing our pricing on the initial data load size, which has often required us to discount our rates to meet competitor pricing levels, reducing both revenue and margin from full potential. The unique approach we have historically used offered clients a level of cost certainty but often also led to some customers wrongly viewing CS Disco, Inc. as more expensive compared to other similar solutions and caused us to lose out on sales opportunities. Finally, we are updating our contracting options to better match the way our customers want to buy CS Disco, Inc. We know there are good reasons why law firms and corporations desire to buy either matter-by-matter or by selecting a solution to standardize on. We also recognize that often the decision process can be influenced by different drivers. To meet the market, we will now offer simple contracting alternatives that make it easier than ever to select and do business with CS Disco, Inc. We have been testing this approach with select customers for the last six months and have received great feedback. Starting today, it is now generally available to everyone, and we are looking forward to discussing this new platform and pricing model with customers at Legal Week in New York in a few weeks. All these changes and new product solutions are driven by a deep understanding of how our customers’ businesses are evolving, along with the powerful technology we offer. The long-term value derived from these changes will come in three ways. One, this new model will provide CS Disco, Inc. customers with all the tools they need to do their jobs better than ever before and elevate their legal craft and capabilities. We believe that when more customers see the full power and potential of the CS Disco, Inc. platform, there will be a natural acceleration in usage of both our core capabilities and AI. Second, by meeting the market with a more simplified and industry-standard pricing model, we expect to see an increase in win rates with less discounting pressure. At full implementation, we expect that this will provide a revenue and gross margin lift for CS Disco, Inc. over the long term. Third, by presenting customers with smart buying options, we make it easier to buy from CS Disco, Inc. and reward our most loyal customers who make spend commitments with our best rates on technology and services. We will grow our percentage of committed spend while keeping our offering at a competitive price in a smart commercial model. These pricing model changes, coupled with our leap forward in product capabilities, are part of our core strategy to grow wallet share with our largest customers and attract the largest and most strategic matters to our platform. I will now turn the call over to our Chief Financial Officer, Aaron Barfoot. Aaron Barfoot: Thank you, Richard. First and foremost, I am very excited to be here with the team at CS Disco, Inc. as we revolutionize eDiscovery and litigation and accelerate CS Disco, Inc.’s momentum. In my first month, I have been diving deep into the company, operations, and vision. So far, everything I have seen reaffirms my thesis for joining CS Disco, Inc., which is that the company has industry-leading technology and has the capacity to transform a historically services-oriented space into an AI-enabled software workflow. Capabilities such as Cecilia and Auto Review are central to that thesis. Eric has built a strong leadership team that balances domain-specific expertise with technical know-how. I believe that with the right operational execution and financial discipline, CS Disco, Inc. has the potential to accelerate growth, produce robust free cash flow, and generate attractive returns to our shareholders. With that, I would like to discuss our results. In Q4 of 2025, total revenue was $41,200,000, up 11% year over year. Software revenue was $35,100,000, up 14% year over year. This was the third consecutive quarter of accelerating revenue growth, excluding the impact of one-time contingent software revenue recognized in Q3. Services revenue was $6,000,000, down 3% year over year, driven by a reduction in traditional review. Full-year 2025 total revenue was $157,000,000, up 8% year over year. Software revenue was $134,000,000, up 12% year over year. Services revenue was $22,800,000, down 8% year over year. The decline was attributed to a decline in our traditional review business. However, we are excited as Auto Review had strong growth in its first year of sales and partially offset the decline. We are pleased to see Auto Review show nice adoption this year. What is even more positive is we are seeing repeat usage. The Auto Review process involves the customer and our AI team developing a review prompt for Auto Review to execute across millions of documents. This motion results in services revenue in addition to the software revenue. As customers begin to move to the prompt process without CS Disco, Inc. support, more of this revenue will be purely software. Our traditional review product is still all in services. We exceeded the top end of the guidance provided for the quarter across both software and total revenue. Looking back to the initial full-year guidance we provided in February 2025, we beat the high end of software revenue and came in near the high end of total revenue in that initial 2025 guide. We accelerated the growth of our software business for the third year in a row, from 3% in 2023 to 7% in 2024 and now 12% in 2025. We saw accelerating growth in the transaction gigabytes and revenue on our platform, especially the gigabytes of complex, multi-terabyte matters. These require an enterprise-caliber approach to the sale, navigating complex objections, providing value to the customer through software, and leveraging our services team to ensure success for the customer. These factors combined to increase our software dollar-based net retention to over 103%. Total dollar-based net retention finished the year at 98%. We finished the year with 20 customers contributing more than $1,000,000 in revenue, while our multiproduct attach rate was 19% at year end, including our AI. Unless otherwise specified, our references to gross margin, operating expenses, and net loss are on a non-GAAP basis. Adjusted EBITDA is also a non-GAAP financial measure. Our gross margin in Q4 was 77%. Gross margin for fiscal year 2025 was 76% compared to 75% in fiscal year 2024. As we mentioned before, our gross margin can fluctuate from period to period based on the nature of our customers’ usage—for example, the amount and types of data ingested and managed on our platform. Sales and marketing expense for Q4 was $13,900,000, or 34% of revenue, compared to 37% of revenue in Q4 of the prior year. For fiscal year 2025, sales and marketing expense was $54,400,000, or 35% of revenue, compared to 39% of revenue for fiscal year 2024, a decrease of over $2,300,000 year on year. The decline was primarily driven by a decrease in personnel costs and a reduction in marketing spend. Research and development expense for Q4 was $13,000,000, or 31% of revenue, compared to 32% of revenue in Q4 of the prior year. For fiscal year 2025, research and development expenses were $48,400,000, or 31% of revenue, compared to 30% of revenue in fiscal year 2024, an increase of over $4,500,000 year on year. This increase was primarily driven by an increase in research and development personnel spend as we continue to invest and innovate in our product capabilities. General and administrative expenses in Q4 were $7,900,000, or 19% of revenue, compared to 20% of revenue in Q4 of the prior year. For fiscal year 2025, general and administrative expenses were $31,300,000, or 20% of revenue, compared to 22% of revenue in fiscal year 2024. Adjusted EBITDA was negative $2,200,000 in Q4, representing an adjusted EBITDA margin of negative 5%, compared to an adjusted EBITDA margin of negative 12% in Q4 of the prior year. Adjusted EBITDA in fiscal year 2025 was negative $10,200,000, a margin of negative 7% compared to a margin of negative 13% in 2024. Net loss in Q4 was $2,500,000, or negative 6% of revenue, compared to a net loss of $4,300,000, or negative 12% of revenue in Q4 of the prior year. Net loss for fiscal year 2025 was $10,700,000, or negative 7% of revenue, compared to a net loss of $17,200,000, or negative 12% of revenue in 2024. Net loss per share for fiscal year 2025 was $0.17 per share compared to $0.29 per share for fiscal year 2024. Turning to the balance sheet and cash flow statement, we ended Q4 with $114,600,000 in cash, cash equivalents, and short-term investments, and no debt. Operating cash flow in fiscal year 2025 was negative $14,900,000 compared to negative $8,700,000 in fiscal year 2024. Now turning to the outlook. For Q1 2026, we are providing total revenue guidance in the range of $39,000,000 to $41,500,000 and software revenue guidance in the range of $33,750,000 to $35,250,000. We expect adjusted EBITDA to be in the range of negative $6,000,000 to negative $4,000,000. The decrease in Q1 2026 adjusted EBITDA relative to Q4 is primarily driven by increased employee costs and one-time expenses related to sales kickoff, marketing campaigns, and professional services. We believe we will be on track to achieve adjusted EBITDA breakeven by 2026 as our revenue grows and as one-time costs in the first half do not reoccur. For fiscal year 2026, we anticipate total revenue guidance in the range of $167,000,000 to $177,000,000 and software revenue guidance in the range of $145,500,000 to $152,500,000. We expect adjusted EBITDA to be in the range of negative $8,500,000 to negative $4,500,000. The story of the coming year will be continued growth acceleration, driving us toward adjusted EBITDA breakeven by 2026. I will now turn the call over to the operator to open up the line for Q&A. Operator: At this time, I would like to remind everyone, if you would like to ask a question, press star then the number 1 on your telephone keypad. Your first question comes from Scott Berg with Needham & Company. Scott Berg: Hi, everyone. Nice quarter. Two questions for me. Eric, wanted to start off with the pricing and packaging changes—why now? You have been there obviously twenty-two months. Why not maybe a year ago with what you have seen? And then how does that impact maybe existing customers in their current contracts? And I just, do you expect it to, I assume, positively impact deal cycles going forward, but any thoughts on deals that are in process? Is there any opportunity to disrupt or maybe accelerate those deals? Thanks. And then from a follow-up question, Eric, you mentioned that under twenty-two months now, the company has accelerated its revenue growth rate for two straight years—very, I would say very, very positive, especially on the software revenue line item. But as you have seen the business evolve with what you are looking at, whether it is product changes or the pricing/packaging changes, how do you think about the intermediate-term growth rate of the company now? What does that look like to you? Is it at a rate higher than where you are today? Is it lower? Help us understand maybe some of the industry dynamics and how you triangulate to what is the right kind of stable growth rate as you proceed forward. Thanks. Eric Friedrichsen: For sure, Scott. Thanks for the props on the quarter too. It was a great quarter, and I am super proud of the team. In terms of the packaging and our pricing approach, we just saw an opportunity driven really by the demand from our customers, and so I will let Richard talk a little bit more about how we worked through that process. With respect to your follow-up, I appreciate it, Scott. I have been really proud of the team and the fact that we went from 3% growth to 7% growth to 12% growth over the last three years. I have said before that I believe that CS Disco, Inc. can be a 20% plus grower, and I am actually more optimistic than ever. I actually think we have 20% in our sights—not calling out a specific quarter or a time frame that we are going to hit that—but we clearly have 20% in our sights, and I believe we can grow much faster than that. So just getting to 20% plus growth, if you look at the strategy that we are driving towards with our larger customers, with larger matters, and with more adoption of our generative AI capabilities, those things alone can help us get to 20% plus growth. As I mentioned in the past, you look at many of our largest customers, they are spending more than $100,000 with us and, in some cases, more than $1,000,000 with us. In many of those cases, we might only have 15% or 20% of their wallet share. So doubling down in that particular strategy and driving forward is, I believe, a path to easily get us to 20% plus growth. However, I think there is actually a lot more upside from there. If you think about the adoption of generative AI—particularly when it comes to the review piece of our space and the fact that it is a multibillion-dollar market that is being done by armies of human resources today, contract attorneys—we have the ability to leverage our Auto Review capabilities on top of our core platform to turn much of that into AI-driven software revenue instead of services revenue. That is an incredible win for CS Disco, Inc., obviously, but also for the end customers, for the corporate clients, who now will have the opportunity to bring the review process in eDiscovery much sooner in the litigation lifecycle, which can help them improve outcomes, increase their revenue streams relative to what has been traditionally done by these armies of contract attorneys, and it will help CS Disco, Inc. along the way. So I am actually optimistic beyond even this 20% plus growth profile. Richard Crum: Yeah, thanks, Eric. And you are right—the impetus for the model changes that we talked about and that we are bringing to market starts with listening to our customers who tell us they want to use CS Disco, Inc. more and they want to use it on larger matters, but that they faced some friction in selling it into some of the partner teams and corporate teams because of the uniqueness of the way in which we had previously priced. We took that feedback, and you couple it with the vision that we have for CS Disco, Inc., and that is what landed us on this new approach. As I said in my prepared remarks, we have been out testing this. We have been running this through with customers and signing deals based on this new model, and the feedback has been great. They are really excited about the inclusion of all of our tools and all of our AI into the core offering. And we are excited that it is going to reduce the friction to getting our customers access to that great technology on more matters. Making it easier to buy means they are going to have the tools on more matters, and it is great for CS Disco, Inc. We do expect it will improve our win rates, help us win those larger matters that we have been growing with many of our customers, which ultimately leads to improved sales efficiency and a higher lifetime value of matters, because, as we have talked about in previous calls, those larger matters last on the platform a lot longer. So we are real optimistic about the impact this new model is going to have on CS Disco, Inc.’s performance. Operator: Your next question comes from David E. Hynes with Canaccord. David E. Hynes: Good morning, guys. Nice quarter. Nice to see the software acceleration continue, and I appreciate all the commentary on the call. Eric, maybe we could tackle the elephant in the room. You did a good job talking about the moats that CS Disco, Inc. has, kind of less directly hit on competition from the foundational model companies. Obviously, there is lots of noise in the market around those folks targeting legal tech as an attractive area for automation. Are you seeing those LLMs show up in your customers at all? Are they exploring with that technology? Can you talk about which areas of the tech stack are most at risk of disruption, which are not, and how you think that impacts CS Disco, Inc. over the next two or three years? Aaron, maybe a follow-up for you. You are obviously pretty fresh in the seat, but you are also a fresh set of eyes on the model and only the second CFO since the IPO. I am curious of your impressions of the visibility that the usage-based model provides, and given this is your first call, maybe you could talk a little bit about how that informs your guidance philosophy. Eric Friedrichsen: Sure, David. I did notice there was some disruption in the stock market recently, for sure. No question about it. But look, I have had the good fortune of spending time with our customers on a regular basis. Two weeks ago, I was in the U.K., in London and Manchester. Three weeks ago, I was in Austin with our customer advisory board members, and I have not heard of a single customer utilizing general AI or these frontier models for the eDiscovery process. Frankly, I would have been shocked had I heard about it. It is a very different space. You have to look at the industry that we are in specifically, you have to look at the competitive advantages that we have, and then you have to look at the way we are innovating. The industry that we are in is squarely focused on litigation and eDiscovery, and it is just a very different space than areas like contracts or M&A or transactional areas where these general AI and frontier AI companies are really focused. When it comes to litigation, you either win or you lose, and eDiscovery is at the heart of all of that. It is complex, it is court-mandated, it is a legal process where the adversaries in a matter have to agree upon the methodology that they are using for eDiscovery. They are dealing with extremely sensitive data that gets highly processed before it even comes into our platform or as part of coming into our platform, and it is really not valuable outside the context of the integrated workflow. On top of that, ultimately, lawyers cannot make mistakes when it comes to litigation. It could cause a malpractice lawsuit, or even worse yet, it could cause a crushing outcome for their firm’s clients. So we are just in a very different segment of legal. Think of us as AI for litigators—that would be the first thing. As for competitive advantages, CS Disco, Inc., as I mentioned before, has been AI-native since our inception, long before these frontier models came out. We were the first to embrace gen AI in eDiscovery when we put Cecilia out three years ago, and we have ultimately built a very powerful, scalable, integrated platform, as I detailed earlier, that deals with the largest and most complex matters and with processed volumes of data that are well beyond what other solutions can handle. When it comes to technology for eDiscovery, that is really where CS Disco, Inc. is the answer. And then you also have to think about the innovation; CS Disco, Inc. is never sitting still. Our entire history has been about improving the way litigation works. As I mentioned earlier, if you think back to that story about one of our customers that in two days did what 70 contractors could do in four weeks, that is just a game-changing opportunity that can create a win-win-win for the corporate end client, for the law firm, and for CS Disco, Inc. along the way. So I think we are in a better position than we have ever been, David. Aaron Barfoot: Sure. When you think about the visibility the usage model gives us, there are elements that become more predictable with scale, and I have seen this in prior roles as well. The larger the scale, the more predictable it becomes. You have to pick up the trends that occur within the model. As our business continues to scale, we pick up more and more predictability in the usage model. There are still parts of the revenue model—when you look at services and Auto Review as it stands today—where there is an element that is less predictable. But once again, with scale, you gain the advantage of predictability—the law of large numbers type of math. Going into our guidance philosophy, when you think about that part of it, we obviously provide it as a range for that reason. We know that our customers are voting with their wallets every time they choose to use CS Disco, Inc., and I think that explains a lot of why we do provide the range. If we look at Q1, the range in software from 9% to 14% is relatively wide for that reason, but I think as time goes on, it allows us to get more and more precise. Operator: Your next question comes from Mark Schappel with Loop Capital Markets. Mark Schappel: Hi, thank you for taking my question. Nice job on the quarter. Eric, I just want to build on the earlier question about the new commercial model. I was wondering if you could discuss the trade-offs a little bit more, and maybe what potential downsides or trade-offs you foresee with the shift? And then as a follow-up, the start of the year is typically when software companies adjust their sales organizations and their go-to-market strategies. Eighteen to twenty-four months or so back, you made a significant change to the sales org. I was wondering if you could talk about any meaningful changes to the sales org as we start the year here. Eric Friedrichsen: Yeah, thanks, Mark. As Richard mentioned earlier, this really originated from our customers. If you think about it, our focus with our strategy is on winning more wallet share within our biggest and best customers and getting large matters from their biggest and best customers. We have great relationships with our champions at these customers, and sometimes they have struggled to explain our pricing model to the various case teams within their firms. While we might be getting $100,000 or $1,000,000 worth of revenue from some customers, we might only have 15% or 20% of their wallet, and our champions want to do more with CS Disco, Inc. They want to make sure that they can explain our pricing model. Sometimes we have seemed more expensive than our competition when we are really not, and we have had to teach our champions how to explain our pricing model to customers. You can do that for so long and then you realize maybe there is an easier way to just simplify the model. I also think there have been a number of cases where we have had to discount more than I would like to discount because our model was not as understandable. Now, with this new model, it is much more clear, much more understandable, and we think that gives us the chance to really proliferate along our strategy of getting larger matters and more wallet share within our largest customers. Regarding your follow-up on the sales organization, the strategy that we executed upon with our go-to-market shift has worked really, really well. It started with ensuring that we are bringing in the right leaders, the right talent, the right reps. As you know, we made some shifts last year, moving from less inside sales to more outside salespeople, as we are focusing on larger customers and larger matters. We did not add cost to sales and marketing last year, but we did shift the way we spent that money, and it has paid off. Also, the comp plan that we put in place to really incentivize sales reps for new matters and new revenue has worked out really well for us. The systems and processes that we put in place, the contract simplification—these are a lot of the things that we have already put into place that are starting to work. The main thing that we are doing is just doubling down and executing on that. As I mentioned, we did not add a lot of cost to sales and marketing in 2025 because we needed to go through that process of reorganizing and reaccelerating revenue. I think there is an opportunity this year to potentially bring in some additional talent to take advantage of the opportunity that we see ahead. Operator: There are no further questions at this time. I will now turn the call back over to CS Disco, Inc.’s CEO, Eric Friedrichsen, for any closing remarks. Eric Friedrichsen: Yes, thank you very much. To wrap up, our performance in 2025 was remarkable. It gives me extreme confidence that our strategy—focused on expanding our wallet share with existing customers, focusing on large and strategic matters, and accelerating our gen AI adoption of Cecilia and Auto Review—are the right strategy. Focusing on our customers and winning every case, combined with the innovation that we are delivering, has really put CS Disco, Inc. on the right path. We are going to do a lot of the same things that we did in 2025 in 2026. We are going to take advantage of the momentum that we started to gain. We are going to layer on top of that the new agentic AI capabilities that we just announced and our new pricing and platform approach. It has been two consecutive years on top of 2023 where you have been able to see the acceleration. It is a very large market within eDiscovery and litigation that CS Disco, Inc. is in a prime position to disrupt, and I am really excited. I think it is going to be a great year. I look forward to updating you as we progress throughout 2026, and I really appreciate you all joining. Thank you. Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to Taboola.com Ltd.'s fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Adam Anwar, Head of Investor Relations. Please go ahead. Adam Anwar: Thank you, and good morning, everyone. And welcome to Taboola.com Ltd.'s fourth quarter and full year 2025 earnings conference call. I am here with Adam Singolda, Taboola.com Ltd.'s founder and CEO, and Stephen Walker, Taboola.com Ltd.'s CFO. The company issued earnings materials today before the market and they are available in the investor section of Taboola.com Ltd.'s website at investors.taboola.com. Now I will quickly cover the safe harbor. Certain statements today, including our expectations for future periods, are forward-looking statements. They are not facts and are subject to material risks and uncertainties described in our SEC filings. These statements are based on currently available information and we undertake no duty to update them, except as required by law. Today's discussion is also subject to the forward-looking statement limitations in the earnings press release. Future events could differ materially and adversely from those anticipated. During this call, we will use terms defined in the earnings release and refer to non-GAAP financial measures. For definitions and reconciliations to GAAP, please refer to the non-GAAP tables in the earnings release posted on our website. With that, I will turn the call over to Adam. Adam Singolda: Thanks, Adam. Good morning, everyone, and thank you for joining us today. We are closing up 2025 with another strong quarter, exceeding the high end of our guidance across our key metrics. The year has been defined by disciplined execution, and more importantly, we are seeing clear early signs of acceleration in the growth of the business from our new advertising platform, Realize. In 2025, we repurchased 77,000,000 shares for a total of $254,000,000, reducing our share count by roughly 18% while continuing to invest in R&D to support our long-term growth ambitions. Before getting into the details, let me remind you who we are. Taboola.com Ltd. is one of the largest performance advertising companies outside of search and social, focused on the open web. Every day, billions of consumers read, watch, and engage with trusted publishers and communities across the open web. Similar to how Google and Meta understand intent within their own platforms, Taboola.com Ltd. understands intent across the open web and turns it into measurable outcomes for advertisers. When someone reads about the Knicks, plans a vacation, or checks the latest news on their favorite local site, we transform that moment of interest into measurable results for advertisers. That scale, that proprietary intent data, and the AI-driven conversion machine we built, that is Taboola.com Ltd. Turning to our results. In 2025, ex-TAC gross profit reached $714,000,000, up 7% year over year, and adjusted EBITDA grew 7% to $260,000,000. We began the year guiding for 2% and exited the year at 7%, a clear acceleration, which I am happy about. While I believe double-digit growth is the right long-term pace for this business, we are not there yet, but our 2025 performance gives us the confidence we are going in the right direction. We also generated $163,000,000 in free cash flow, up 10% year over year, representing approximately 76% conversion from adjusted EBITDA. Looking ahead, we expect 7% ex-TAC gross profit growth and 30% adjusted EBITDA margins while continuing to invest in accelerating our growth rate and continuing our primary use of cash to aggressively repurchase shares. In 2025, Realize, our advertising platform, helped increase the number of scaled advertisers and grow the budgets we manage for them. In 2025, scaled advertisers grew 6%, with an average revenue per scaled advertiser up 2%. These results are reflected in the financial performance I shared earlier. A strong example is personal finance, one of our ideal customer profile. Advertisers such as NerdWallet, Motley Fool, and Queen Street adopted Realize and leveraged newer capabilities like predictive audiences and format diversification. As a result, they grew meaningfully beyond their historical spend levels, with some becoming top advertisers at Taboola.com Ltd. When I think about what will continue accelerating Taboola.com Ltd.'s growth, I am laser focused on improving retention rates and increasing spend over time. While many things can help, this is the most important one. Examples like these are encouraging and reinforce that our strategy is working. As we look ahead, we are concentrating on these three priorities. First, investing in our technology to continue to advance Realize as we continue to expand our strategy to become the leading performance advertising company outside of search and social. We are investing heavily in AI-driven optimization, predictive targeting, onboarding automation, and stronger measurement and attribution to make the platform even more intelligent and easier to adopt while directing budgets toward the best-performing opportunities. While I think we are making good progress, there is a lot more for us to do here, and our R&D team is hard at work rolling out capabilities that advertisers are asking us to further drive advertiser success. Second, we restructured our sales organization around ideal customer profile, where we were seeing stronger retention and spend growth over time. The advertiser outcomes we delivered in 2025 are giving us clear signals on which advertisers to prioritize, how to reach them, and what success on Realize should look like. To further support these efforts, we recently welcomed Khushan Bhatia as our new Chief Business Officer overseeing revenue and partnerships and bringing additional focus and expertise to supercharge advertiser, agency, and publisher relationships to accelerate growth. Keeping with the same example I mentioned earlier, in 2025, we generated $120,000,000 in personal finance revenue within a $15,000,000,000 US market. Today, we capture only 1% to 10% of advertisers' total spend, which underscores the significant runway ahead as we deepen those relationships. At the same time, we are prioritizing new advertisers similar to the ones already succeeding on our platform and entering those conversations with a clearer understanding of their goals and what performance they should expect from Realize. By focusing on the right advertisers, not just volume, we are strengthening partnerships, expanding wallet share, and positioning Taboola.com Ltd. as a core long-term growth channel for advertisers. Lastly, on brand and perception. Since launching Realize one year ago, we have made meaningful progress in how advertisers view Taboola.com Ltd. As advertisers see clear results and expand their budgets with us, we are building trust and steadily positioning ourselves as a platform advertisers should test and scale beyond search and social. There is still work ahead, but Realize is proving to be a strong engine, not only for performance, but also for long-term brand credibility. As we think about our partners and the open web in the context of structural advantages, anyone can download an open source Llama and get going. AI is a commodity. But that alone cannot replicate Taboola.com Ltd.'s greatest advantages. AI can replicate features. It can improve interfaces. It can even outperform some raw models we developed. It just does not matter. Without proprietary data and distribution, it is a very powerful engine with no fuel. Our data is our fuel, and it is unique to Taboola.com Ltd. Hundreds of millions of times every year, people across our network make decisions to buy or take action. That creates a very rare form of performance-driven intent data that directly determines advertisers' outcomes. Think of it as a secret language of intent that exists only because of our deep integrations across the open web and our singular focus on performance advertisers. Without these signals, advertisers cannot effectively optimize, scale, or generate strong returns on investments. We get this data by having code on page integrated across 14,000 publisher properties such as ESPN, Yahoo, USA Today, The Independent, and many others, giving us first-party access to more than 600,000,000 daily users. Those direct relationships built over many years generate real-time intent signals at massive scale. When I look at our partners, what stands out is the strength of their brand, the trust, and communities they have built over many years. Users go directly to those, whether through their websites or their dedicated apps. As a result, they have little to no reliance on search traffic, while direct traffic continues to grow. These dynamics keep our company-wide exposure to search in the single-digit percentages, with about a third of our supply coming from in-app usage. In an AI-driven world, two assets ultimately matter most: proprietary data and distribution. And we have both. In summary, 2025 was not just about beating the number, but rather a validation that our strategy is working. We executed with discipline, accelerated the business, returned significant capital to shareholders, and invested heavily in the platform shaping our future. Realize is delivering the type of results we want to see, making new and existing advertisers successful while changing how the market sees Taboola.com Ltd. We are still early, but we are operating with greater clarity and urgency than ever. Our mission remains to help performance advertisers grow, help publishers win, and build the leading performance advertising company beyond search and social. As more players compete for advertising budgets, they will all need a trusted friend, and Taboola.com Ltd. is a great friend. With that, I will hand it over to Steve. Stephen Walker: Thanks, Adam, and good morning, everyone. We are pleased to close out the year on a strong note. In the fourth quarter, we continued to build on the momentum we generated throughout the year, delivering results that exceeded the high end of our guidance across our key metrics. Revenues in the fourth quarter grew 6% to $522,300,000 and for the full year increased 8% to $1,910,000,000. One of our key priorities this year was expanding advertiser budgets, and with the rollout of Realize, our performance advertising platform, and the introduction of new embedded features, we were able to successfully execute on that objective. This momentum was reflected in our scaled advertiser metrics in the fourth quarter, with a 3% increase in the number of scaled advertisers and a 2% increase in average revenue per scaled advertiser. We also enjoyed strong growth from non-scaled advertisers during the quarter, which contributed about 1% to our year-over-year growth. This indicates that we had a large number of advertisers testing Realize for the first time, even if we have not had a chance to scale them as of yet. For the year, scaled advertisers grew 6% and the average revenue per scaled advertiser grew 2%. Realize continued to improve retention and increase ad spend among existing advertisers compared to the same period in the previous year. As I have noted in prior quarters, we are particularly encouraged by growth in the number of scaled advertisers as they continue to be an important driver of future growth. Ex-TAC gross profit in the fourth quarter was $212,800,000, representing margins of approximately 41%. The fourth quarter results were flat year over year as expected due to the lapping of a challenging comparison with a strong Q4 2024. For the full year, ex-TAC gross profit grew 7% to $713,500,000. This growth was largely driven by the scaling of Realize, which drove growth in advertiser spend as well as continued strong performance from Taboola News. Gross profit for the quarter reached $175,600,000 with full-year gross profit totaling $569,500,000. In addition to growth in ex-TAC gross profit, this performance was driven by lower depreciation expenses on our servers following a reassessment of their useful lives, as well as tax efficiencies, both of which offset higher hosting and data costs required to support the growth and scaling of our business. In the fourth quarter, net income was $50,100,000 with non-GAAP net income coming in at $79,100,000. For the full year, net income was $42,300,000 with non-GAAP net income coming in at $168,600,000. Adjusted EBITDA for the quarter was $86,100,000. For the full year, adjusted EBITDA was $215,500,000, representing a margin of 30%. This reflects continued discipline in expense management while maintaining targeted investments to support long-term growth. Foreign exchange was a meaningful headwind in the quarter. On a constant currency basis, Q4 ex-TAC gross profit saw a tailwind of approximately $4,000,000 while operating expenses saw a headwind of approximately $7,000,000, primarily reflecting the strength of the Israeli shekel where we have a significant employee and cost base. In total, FX represented roughly a $3,500,000 headwind to Q4 EBITDA and about $11,000,000 for the full year. Without this FX headwind, our full-year adjusted EBITDA would have been $226,300,000, which would have represented an EBITDA margin of 31.7%. In terms of cash generation, we had $59,700,000 in operating cash flow in the fourth quarter and free cash flow of $46,900,000. For the full year, operating cash flow amounted to $208,400,000 and free cash flow was $163,400,000, representing a 76% conversion from adjusted EBITDA. On average, our free cash flow conversion from adjusted EBITDA has remained above 70% over the last twelve consecutive quarters. As a reminder, last quarter, we indicated that we now believe we can sustainably convert free cash flow at a 60% to 70% rate over any typical four-quarter period. That is an increase from our prior expectations of 50% to 60%. Capital expenditures in 2025 included internally developed software that was capitalized during the year, and we expect these strategic investments to continue into 2026. These investments were primarily driven by three initiatives: continued development of Realize, investment in new publisher-focused product capabilities, and investments in our ecommerce platform. Turning to the balance sheet. We remain in a strong financial position. We ended the fourth quarter with a net cash balance of $18,600,000. Cash and cash equivalents totaled $120,900,000, which more than offset our long-term debt of $102,300,000. Early in 2025, we secured a $270,000,000 revolving credit facility which enabled us to fully repay our prior term loan while maintaining approximately $168,000,000 of available liquidity as of December 31. The facility also reduced interest expense by $1,100,000 in the fourth quarter and $4,800,000 for the year. We remain focused on disciplined capital allocation, prioritizing R&D investments while returning capital to shareholders via share repurchases. In the fourth quarter, we repurchased approximately 18,600,000 shares at an average price of $3.78 for a total consideration of $70,500,000. For the full year, we repurchased 76,900,000 shares at an average price of $3.30, which represented total repurchases of over $250,000,000. In 2025, we bought back about 8% of our outstanding shares net of issuances. This reduced our total shares outstanding to approximately 276,000,000 at the end of 2025 from about 337,000,000 at the end of 2024. Since the inception of our share repurchase program in 2023, we have repurchased a total of 110,400,000 shares at an average price of $3.49 for a total consideration of $383,500,000. We currently have approximately $180,000,000 remaining in our authorization and intend to continue to use a majority of our free cash flow to repurchase shares. Moving to guidance, for the first quarter of 2026, we expect revenues to be between $444,000,000 and $462,000,000, gross profit to be between $119,000,000 and $125,000,000, ex-TAC gross profit to be between $158,000,000 and $164,000,000, adjusted EBITDA to range from $20,000,000 to $26,000,000, and non-GAAP net income to be from negative $1,000,000 to positive $7,000,000. For the full year 2026, we expect revenues to be between $1,990,000,000 and $2,050,000,000, gross profit to be between $601,000,000 and $621,000,000, ex-TAC gross profit to be between $753,000,000 and $774,000,000, adjusted EBITDA to be $222,000,000 to $236,000,000, and non-GAAP net income to be $165,000,000 to $191,000,000. I would note that our adjusted EBITDA guidance reflects a forecasted headwind from foreign exchange rates of $11,000,000 in operating expenses partially offset by ex-TAC tailwinds. Without this headwind from foreign exchange, adjusted EBITDA margins would have been over 31%. In summary, Q4 results exceeded the high end of our guidance across our key metrics, reflecting strong execution and continued momentum in the business. We are building on the traction we have seen with Realize and are focused on accelerating growth as our initiatives gain more traction this year. While we remain disciplined in our approach, the progress to date reinforces our confidence in our ability to return to sustainable double-digit growth over time. With that, we will now open for questions. Operator, can you please open the line for questions? Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please standby while we compile the Q&A roster. Our first question comes from Barton Crockett from Rosenblatt. The floor is yours. Barton Crockett: Okay. Thanks for taking the questions. Let me see. One thing I was curious about, you did not really address it in the commentary, and I realize maybe this means it is not a KPI, but there was a substantial variance in your revenues versus where you were guiding for the quarter. And I was just wondering if you could talk through what that variance was, why it happened, and how meaningful that is. Stephen Walker: Sure. I can take that. Hi, Barton. So I think, very simply, it was revenue mix, or mix of business. We had more business in some of our higher-margin parts of our business and a bit less revenue in some of our lower-margin areas. Ultimately, it was just mix of business. Obviously, for us, gross revenue is not the key metric. Ex-TAC is the key metric because that is what we keep after we pay publishers. You have probably heard me say a bunch of times in the past that we can grow gross revenue by doing bad business—signing up a bad publisher deal or doing something that does not drive ex-TAC—and that is not helpful. What we care about is ex-TAC. We are obviously happy that we had the beat on ex-TAC, which is really what we focus on. The rest of it was just mix of business. Barton Crockett: Okay. And then you guys gave the commentary about the growth in non-scaled advertisers suggesting some success with Realize initiatives to grow penetration and other elements of the page beyond bottom-of-page, which sounds encouraging, but your guidance suggests kind of a steady revenue trajectory versus acceleration. I was wondering if you could talk through that disconnect. How optimistic are you that this can bring enough new in to move the top line, and why is that not reflected in the guidance you give? Stephen Walker: Yeah. So I think, ultimately, our guidance philosophy as a company is always to be relatively conservative. We do not want to get ahead of ourselves. What our guide basically implies right now for 2026 is what we are seeing from Realize at this point in time. We have obviously seen good progress with Realize over the course of last year. We started last year guiding at 2%. We ended the year at 7% growth. We are now midpoint of our guide for 2026 at 7%. That is because that is basically what we are seeing from Realize today. We do have initiatives that we think will help improve that over time, and Adam can probably talk to a few of those initiatives that he thinks will drive growth this year. Those are not factored into the guide yet. For now, what we are factoring in the guide is exactly what we are seeing today. Adam Singolda: Well, hi. Good morning. I think in general, we are encouraged by seeing our investments in Realize at the center of our strategy progressing. There are three things I mentioned. The first one is focusing on our technology side, and we are seeing better retention for new advertisers, which is probably what we want to see the most, and we are seeing growth in spend over time. The second thing—and that results in scaled advertisers growing—and all those things are positive signs that we are progressing in our strategy and its results in our numbers, you can see from 2025. The second thing, I just came back from Bangkok, from Madrid, from Chicago, spending time with our 600 sellers. It is really incredible to spend time with our people and seeing that when you sell to the right clients—we call those ideal customer profile—we are seeing essentially we have what it takes. The chances for, again, example, the chances for a financial advertiser to succeed with us is not too different if they were to spend with Meta, which is incredible because it means that there is so much growth for us within our existing market that we are going after. So the second thing is just sales focus and going after the ones that we know chances for success are much higher. And the third one is continuing to invest in our brand. It is quite, for me, always encouraging to see how many advertisers do not even know Taboola.com Ltd. is out there. There are so many great advertisers that should try Taboola.com Ltd. that will succeed with us or that have a good chance to succeed with us. As part of that, I think continuing to invest in our brand perception and our brand in general will continue to help us attract new advertisers to try Taboola.com Ltd. and succeed with us. So all those three things make us encouraged. Barton Crockett: Alright. Thank you. Stephen Walker: Thanks, Barton. Thanks. Operator: Thank you for your question. Our next question comes from Matthew Dorrian Condon from Citizens Bank. The floor is yours. Matthew Dorrian Condon: Thank you so much for taking my questions. Adam, you talked about making incremental investments behind the product features in Realize. Can you dig into some of those and what we should expect from a product perspective in 2026? And then I was wondering if you could break down a little bit more as we look at Realize—how much is coming from existing advertisers and you tapping into incremental budget there versus bringing in new clients onto the Taboola.com Ltd. platform? Thank you so much. Adam Singolda: Sure. I will let Steve speak about the numbers. The biggest investment we are making, and I think the biggest opportunity for Realize—and we will share more throughout the year, so I want to let the team bring this to market in a more detailed way—but in general, where I think we have the biggest opportunity is making it more automatic and simpler for advertisers to be successful. If you look at the amount of permutation that exists when you buy from any channel—whether that is Google, Meta, Taboola.com Ltd., and others—it is complicated to succeed as a performance advertiser. Even right now with Taboola.com Ltd., with Realize, I think we made tremendous progress in terms of making advertisers successful. In my vision, I really want anyone that has a chance, that should succeed with Taboola.com Ltd., to almost automatically succeed with Taboola.com Ltd. In the world of AI, where we have so much unique intent data, we have so many thousands of advertisers that are already doing well with Taboola.com Ltd., generating $2,000,000,000 of conversions a year, I hope that Realize is a platform that if you should succeed with us, then chances are you will succeed with us, and that will be more and more automatic. Then our good people at the company can spend more of their time on strategy and being creative and going out there and helping attract more new advertisers. So, again, to me, the biggest thing that we will see from Realize later, for those who should succeed with us, will be more about automation and making it even easier to drive success. Stephen Walker: And then to the second part of your question about whether growth is going to come from bringing new advertisers to the platform versus growing our existing, I will talk about this in the context of our scaled advertiser metrics that we release. What I would say is the precise mix is always hard to predict because, as I have talked about in the past, as we bring on more advertisers and then we scale them and they get into that scaled level of performance with us, they do drag down the average. As the number grows, the average gets dragged down because usually when we initially scale an advertiser, it is at the low end, and then we grow them over time. The exact mix is hard to predict. In general, I would say we always expect to grow the number of scaled advertisers. That is the fuel for our growth. I would think that a larger portion of our growth comes from growing the number and bringing more new advertisers to the platform, but we should see some growth in the average revenue per scaled advertiser over time as well. It will come from a bit of both, generally speaking probably more from the number, and then over time, we will grow the average as well. Matthew Dorrian Condon: Thank you so much. Adam Singolda: Thanks. Operator: Thank you for that question. Our next question comes from the line of Laura Anne Martin from Needham. The floor is yours. Laura Anne Martin: Good morning. My first one is on generative AI. I am interested in whether how much your traffic was down in the fourth quarter and what the mix was and whether you think that—I think Wall Street thinks that is the first step in agents holding on to attention and not allowing people to go to the open web. Can you talk about why the open web survives generative AI? That is my first question. Then my second question is about Realize. One of your goals in Realize was to attract display budgets, which are quite a bit larger than native budgets, but I am interested in whether Realize is actually—are you seeing that happen, that you are getting new types of advertising rather than just staying in the narrowed native advertising bucket? Those are my two. Thanks. Adam Singolda: Sure. Good morning, Laura. I will pick up the first one. On the open web, we basically have a very structural advantage in where we sit in the open web. We are seeing traffic going up. We are seeing search traffic going down. But overall, through primarily direct traffic to publishers and then onboarding more publishers, traffic is overall going up. The exposure we have to search traffic, which I think is the main risk that investors are tracking, for us it is in the single digit. A lot of it is because we work with massive platforms like Microsoft and Yahoo and Apple News. A third of our traffic is in app. Overall, our exposure is low, and we are seeing direct traffic going up. In general, what is going to happen is publishers that have trust, that have good communities around them, will continue to be important. Local news, sports sites, news—they will continue to get a lot of momentum and attention from consumers. I can also tell you, AI engines—what we are seeing is what they crawl on the web, the proxy for what consumers are asking—a big chunk of what consumers are talking to AI about is the last 24 hours news. People want to know what is going on. AI really needs that content, and content in the open web is where content exists. I think that for trusted publishers, for bigger publishers, which is most of our business, there is a very bright future. The second thing is that when I imagine AI being adopted by those publishers, as you know, we have a product called Deeper Dive, essentially bringing ChatGPT-type technology to those bigger publishers so that consumers can converse and talk to publishers. If you go to USA Today, you can check it out. I think there is a significant ARPU growth, a significant revenue generation opportunity for publishers when they actually adopt AI on their own sites. The risk, I think, is more on the smaller sites, which we do not have exposure to, or for those who are very dependent on search, also not a publisher that we work with. I think there is a very bright future for the trusted publishers, especially when they adopt AI in a bigger way. Stephen Walker: And then to your second question, Laura, about are we seeing new types of advertisers coming onto the platform, I will talk about this in the context of the three growth drivers that Adam mentioned earlier. He said we are focusing on ICPs, we are investing in our brand to change perception of who we are as a company, and then we are investing in tech to make advertisers more successful. Today, that focus on ICP means we are bringing more of similar types of advertisers. What we have done is we have got our sales teams focused on finance advertisers, travel advertisers, auto advertisers, ecommerce advertisers—the ones that we know are working well on our platform today. Today, our growth in advertisers is coming more from that focus on ICPs and getting more similar types of advertisers to what we have. Over time, as we get our brand perception shifted a bit—getting out of the “we are a native company” and into the “a performance platform” type of mindset—and as our tech continues to develop and we are able to target more and more granularly on our platform, we do expect that we will expand the types of advertisers. More types of advertisers will become ICPs, and we will start focusing on selling to them. Today, more of it is more advertisers of a similar type to what we have, and over time, I expect more different types of advertisers to start coming on. Laura Anne Martin: Thank you very much. Stephen Walker: Thanks, Laura. Thanks, Laura. Operator: Thank you for your question. Our next question comes from the line of Tyler DeMatteo from BTIG. The floor is yours. Tyler DeMatteo: Great. Thanks for taking the question, guys. I wanted to start in terms of 2026, Steve. As you think about the advertising market this year and some of the one-off events, kind of FIFA, etcetera, is that baked into the guide? What level of visibility do you have into something like that today, and when would that start flowing through? And then my second question for Adam. On Realize and the developments, thinking about this in the context of the investment cycle for that, where do we stand in terms of the investments in the platform and the technology, etcetera? Are we going to see multiple iterations from here? Is everything largely ironed out? Those are my two. Thanks, guys. Adam Singolda: Sure. I can start with the second one. Good morning. We are all in. We are laser focused on Realize. Like I mentioned earlier, if you look at the market that we are selling into—the performance advertisers that we are going after—with the technology we have now, I think we have what it takes to grow. We spoke about seeing inflection point in double-digit growth, and I believe in our strategy, the market, and we have what it takes. That said, we are early in our cycle in terms of investment. There is so much more that we are going to reveal this year and in years to come. When you compare Taboola.com Ltd. Realize to Meta, when you compare it to Google, to PMX, to some of the platforms out there that are serving 10,000,000 advertisers when we serve 15,000 to 20,000, there is so much more that we want to do and intend to do to make it much easier for those who should succeed with us and become scaled advertisers to actually become ones, and that is later there. As a technology company, we are going to reveal a lot later in the year. I think we have what it takes to continue to grow and to generate 30% EBITDA within that growth rate and use most of it to repurchase shares, which we think is a great deal for the company. Most of our investment, which is significant and, like I mentioned earlier, very exciting, is can we make it so... Stephen Walker: Then to your first question about whether the big events happening this year are factored into our guidance, the quick simple answer is yes. The way they are factored in, just to get into a little bit more detail, is the big events this year are the Olympics, World Cup, midterm elections—those things are factored in. For us, interestingly, it is more of a traffic driver than it is an advertising revenue driver. World Cup and Olympics tend to be big sports traffic drivers, and we have Yahoo Sports, CBS Sports, ESPN. We have something like eight of the 10 top sports sites in the US, and we have similar coverage globally. It is a great traffic driver for us. Our advertisers tend to be always-on performance advertisers more so than event-driven advertisers. It will drive more traffic, which is more impressions and gives an opportunity to drive more revenue from our advertisers, but it is not like a display network where maybe they have got event-driven advertisers. Same thing with elections. Elections drive big ad budgets, but a lot of that is branding campaigns for the candidates. We do get some things like fundraising campaigns where it is a direct response trying to get somebody to donate. We do not get a lot of incremental revenue in terms of the advertising side, but again, it drives eyeballs and views, and that is what is factored into our guidance. Tyler DeMatteo: Great. Thanks, guys. Appreciate it. Stephen Walker: Thanks. Operator: Thank you for your question. Our next question comes from the line of Mark Zgutowicz from Benchmark. The line is yours. Mark Zgutowicz: Thanks, guys. Good morning. A couple for me. Steve, just to follow on to the question on the scaled advertiser metrics. Your scaled advertiser growth was up year over year, but down sequentially. I am curious if that was in line with your internal expectations, and what is the balance between those two metrics? Meaning, do you expect to see more of a lagging effect on the revenue side, and could that inflect at some point this year relative to that growth that you have been seeing on the actual advertisers? And then second separate question, I would appreciate if you could unpack your 1Q ex-TAC margin guidance. 1Q has guided a 100 bps of expansion year over year at the midpoint, and considering that you are lapping Yahoo tests, I think that had a positive effect on margin. Are you seeing mix shift towards higher take-rate publishers, or is that being driven by yield improvements? I will just stop there. Stephen Walker: In terms of the scaled advertiser trends, we tend to look at that year over year because there is some seasonality. Looking at it sequentially quarter over quarter can be deceptive, similar to our revenue itself. If you look at it quarter over quarter, you can see some things that may look weird, but if you look at it year over year, a lot of that normalizes. I tend to look at it year over year. I will also say the metrics bounce around a bit any given quarter, so they are tough to predict on a quarterly basis. For instance, if some of our bigger advertisers get really aggressive one quarter, they can squeeze out some smaller advertisers just because they are willing to bid more. They are hard to predict on the numbers basis. If you look at it year over year and over a longer period of time, then it tends to normalize. That is the way we tend to look at it. We tend not to look at it quarter over quarter sequentially as much. In terms of our revenue ex-TAC guide, the simple answer to your question about whether we are seeing traction in higher-margin areas is yes. We are seeing a shift in our business to higher-margin areas. Connexity, for instance, is 100% ex-TAC. If business shifts to them, that appears as higher ex-TAC margin business to us. Also, the mix between regions and specific publishers is trending in a positive ex-TAC margin direction. It is less to do with increasing yields right now, although I am hopeful that we will see that also over time. It is more mix of business today. Mark Zgutowicz: Okay. Got it. Appreciate that. And if I could just ask maybe one more, zeroing out here a bit. If you look at your rest of the world—roughly 35% of revenue—and that grew quite nicely in Q4. It was up about 10%, which looks like it is the fastest growth you have seen in fourth quarter ex Germany. Can you talk about any dynamics at play there in 2026 and how they compare to 2025 in rest of the world? Stephen Walker: We are seeing nice growth internationally. By the way, you asked about margin and mix of business. That is part of it. Some of those other geos tend to be high margin for us, so as they grow, they help with our overall ex-TAC margin picture. We are seeing nice growth internationally. If you remember, we used to be about 40% US, 60% rest of world. Once we brought on Yahoo, we got back closer to 50% US, 50% rest of world. I think this past quarter, it was 47% US, 53% rest of world. I think we are going to continue to see faster growth internationally than we will in the US. That is normal because a lot of those markets we are still newer in, so we have more growth opportunities in a lot of those markets. I think that is going to continue to be true as we go forward. What you are seeing there is basically the dynamic of less mature markets versus more mature markets and higher growth in the less mature markets. Mark Zgutowicz: Got it. Alright. Thanks, Steve. Appreciate it. Stephen Walker: Sure. Operator: Thank you for the question. Our next question comes from the line of Zachary Cummins from B. Riley Securities. The floor is yours. Zachary Cummins: Hi. Good morning, Adam and Steve. Thanks for taking my question. Two for me. The first one, I thought it was a notable callout that your non-scaled advertisers still contributed about 1% to growth here in Q4, largely due to early adoption of the Realize platform. Any incremental data you can give around how you are ramping the testing process, what tends to work best when quickly scaling up from these tests to expanding to more full budgets for some of these advertisers? And then second question, Steve, it seems like we have a greater shift of adjusted EBITDA going into 2026. Can you give some context around timing of investments or other items we should consider when modeling that out? Stephen Walker: On your first question about the non-scaled advertisers, it was an interesting effect. We saw a lot of testing budgets in Q4, and that drove 1% incremental growth, which is the first time you have seen that. In fact, if you look at the full year, non-scaled advertisers were basically down a bit year over year. Q4 was unusual in that regard. I think it is encouraging because at the end of the day, what we do want is a bunch of advertisers coming on to test our platform. Q4 is a good time for a lot of them to do that because it is where they have some of their maximum budgets, and they are looking to test new things. We found it encouraging. I am hopeful that that translates into more revenue going forward, although we are not counting on that. It was encouraging to see that. In terms of the EBITDA question that you had, the biggest impact on our EBITDA in Q1 in particular is that we have a headwind from foreign exchange rates. I mentioned that in my prepared remarks that we have about an $11,000,000 headwind on OpEx as we head into 2026 due to foreign exchange rates, mostly the Israeli shekel. That hits first quarter and second quarter much more heavily than third quarter and fourth quarter because if you look at how the shekel declined over the course of 2025, it really took a nosedive starting sometime in Q3. That is one factor. We are also intentionally putting some of our marketing expense, especially where we are marketing to advertisers upfront, in Q1 and Q2. Our guidance reflects what we expect to happen over the course of the rest of the year on OpEx. We do have some efficiency initiatives that are going on that we think can help us in the second half. It is a little bit of some upfront costs that we knew were going to happen, foreign exchange rates, and then us expecting to get more efficient as we go through the year. Zachary Cummins: Great. Thanks for taking my questions. Operator: Thanks for the question. Our next question comes from James McGee Kopelman with TD Cowen. The floor is yours. James McGee Kopelman: Hi. Good morning, and thanks for taking the questions. First one for Adam. Given some ongoing macro uncertainty and the state of the US consumer, what is your sense of conditions in the overall digital ad market and what are you hearing from your conversations with advertisers regarding their plans for budget growth this year? And then another one for Adam. I want to ask about the ARPU opportunity for publishers adopting AI on their sites. Where are we in that process, and what kind of progress are you seeing with publishers so far? And then I will finish with Steve as well. Adam Singolda: In general, there is a significant trend in the industry at large towards performance advertising. Last year, we announced two extended partnerships, one with Paramount and one with LG. These are big TV broadcasting companies that we are honored to be working with, and those partnerships are primarily around more ways for TV advertisers to get mid-to-low funnel metrics by working with Realize. That is a whole new type of demand opportunity for us. Remember, TV is a $100,000,000,000 market just in the US. If we can take a piece of that and prove, much like I think Amazon is doing such a good job with Prime, showing that you can buy TV and at the same time, through Amazon.com and the rest of their consumer journey, you can show that TV drives mid-to-low funnel metrics. The reason I am saying that is because I think for Taboola.com Ltd., there is a lot of growth opportunity because when you go beyond search and social, we truly become the monetization layer for the open web—the company that any advertiser and any company that is not Google and Facebook who needs someone that can generate conversions can work with. Taboola.com Ltd. is, to my knowledge, the biggest and best conversion machine outside of Google and Facebook. There is going to be a lot of growth for us in different trades, working with different types of companies as demand sources, and it is really nice to see companies like Paramount and LG—and you will see more throughout the year—partnering with us and spending more with Realize. I think we are on the right side of the industry. It is going to be much harder to be in the full funnel space or specifically in the top-of-the-funnel space. It is going to be much more important and critical, especially in this world with tariffs and things, to be the go-to company for anything outcomes, anything measurement, anything performance. On ARPU, I had many good conversations even yesterday with some of our bigger publishers. What we are seeing is two things. One, when consumers ask questions on a publisher site, they essentially become super—like you become a superhuman, a super engaged consumer. You are much more likely to engage with an ad. You are much more likely to engage with a piece of content. You are the best version of yourself. That is probably why I believe Google is very excited about Gemini, because if Google sees what we see with Dive on publisher sites, they know what we know, which is it is a very lucrative piece of interaction with consumers for advertisers. The second thing we are seeing—and we will share more data about that later in the year—is that when advertisers show up in LLM experiences, the opportunity for them to drive conversion and the CPMs we are seeing are something that I can tell you in fifteen years of doing this, I have never seen before. If we can scale that, if we can create a habit for consumers to talk to publishers they love—I love the Knicks. I will never spend five to ten minutes watching highlights and talk to ChatGPT about the Knicks. Never going to happen. But I do this every morning with my kid. We watch ESPN. We get the highlights. We read about it. It is something we like to do. If we can get those trusted, loved publishers to offer AI so consumers can talk to them, I think that is going to be a beautiful future for them and for us and for advertisers. The question is, can we create that habit? It is early stages for us, but I am encouraged by what I am seeing. James McGee Kopelman: Great. And then if it is quick for Steve, you reduced the share count pretty significantly over 2025. Going forward, how are you thinking about balancing investment with returns to shareholders, especially given healthy free cash flow generation? Would you expect to continue to significantly shrink the share count? And also on Connexity, any color on ecommerce growth, how that is trending relative to the rest of the business? Thanks. Stephen Walker: In terms of capital allocation and share buybacks, we continue to expect to use the majority of our free cash flow for share repurchases. We have said that we expect to convert 60% to 70% of our EBITDA into free cash flow, and then we expect to use a majority of that to buy back shares. If you look at our numbers and what we are guiding to this year and do the math, you can figure out how much we are expecting to buy back roughly. We have $180,000,000 left in our authorization, so we have plenty of capacity there, and that is where we expect to use most of our capital. I will note, and we have talked about this in the past, that there is a chance that we may do small M&A. It would not be large, but it would be something that is more of a tuck-in acquisition. Beyond that, to your second question about ecommerce and how that is doing relative to the rest of the business, they had a big Q4 for us, which was great. Generally, we expect them to grow in line with the rest of our business. It is our biggest ICP segment—ecommerce—and I think generally we expect them to have the most success out of any of our ICPs right now. It is a strong performing part of our business. Adam Singolda: Sure. Operator: Thank you for your question. James McGee Kopelman: Great. Thanks a lot, guys. Appreciate it. Operator: This does now conclude the Q&A portion of the session. I would now like to turn it back to Adam Singolda, CEO, for closing remarks. Adam Singolda: Thanks, everyone, for being with us this morning. As you can tell from our excitement, 2025 was not just about beating the numbers. It was a turning point for the company. It is a clear validation that Realize is working on our way to become the monetization layer for the open web. As Realize continues to gain traction, with our proprietary intent data and deep distribution across the open web, all of those things make us really special, and it makes us different in an AI-driven world. We believe these structural advantages position us to build and win the opportunity to become the leading performance advertising company beyond search and social. We are still early, but we are operating with a lot more clarity and more urgency than ever. Our focus remains simple: make new advertisers stay and get existing ones to spend more. Thank you all for the trust and the partnership, and we look forward to spending time over the next few weeks. Operator: Thank you. We appreciate your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good morning and welcome to the Unisys Corporation fourth quarter and full year 2025 financial results conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Michaela Pewarski, Vice President of Investor Relations. Please go ahead. Michaela Pewarski: Thank you, operator. Good morning, thank you for joining us. Yesterday afternoon, Unisys Corporation released its fourth quarter and full year 2025 financial results. Joining me to discuss those results are Michael Thomson, our CEO and President, and Debra McCann, our CFO. As a reminder, today's call contains estimates and other forward-looking statements within the meaning of the securities laws. We caution listeners that these statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed on this call. These items can be found in the forward-looking statements section of yesterday's earnings release furnished on Form 8-Ks and in our most recent Form 10-Ks and 10-Q filed with the SEC. We do not assume any obligation to review or revise any forward-looking statements in light of future events. We will also refer to certain non-GAAP financial measures, such as non-GAAP operating profit, that exclude certain unusual or non-recurring items such as post-retirement expense, cost reduction activities, and other expenses that the company believes are not indicative of its ongoing operations. While we believe these measures provide a more complete understanding of our financial performance, they are not intended to be a substitute for GAAP. Reconciliations for non-GAAP measures are provided in the slides for today's call, which are available on our investor website. With that, I would like to turn the call over to Michael. Michael Thomson: Good morning, and thank you for joining us to discuss the company's fourth quarter and full year 2025 financial results. I want to start off with three clear messages that we hope you take away today. First, we continue to execute against a consistent operating strategy, which is yielding improved profitability and free cash flow as we continue to advance our pension removal strategy. Second, the market perception of Unisys Corporation and our solution continues to advance among our clients, prospects, partners, and industry analysts. And third, which relates to a subject I know is top of mind for everyone, we believe artificial intelligence is poised to become a powerful driver of long-term demand in the solutions that are core to Unisys Corporation as a designer, orchestrator, and enabler of modern IT ecosystem. Before discussing AI, I want to discuss my first message of how consistent execution of our strategy is translating into financial results. Fourth quarter revenue grew 5% year over year, resulting in a slight improvement in our full year revenue projections coming in above our revised midpoint. Our non-GAAP operating margin was 18% in the quarter and 9.1% for the year, exceeding the top end of our upwardly revised projections and representing 30 basis points of annual improvement. We had a high degree of confidence in achieving the fourth quarter weighting of our license and support revenue, and we met those expectations. Full year L&S revenue exceeded our original expectations by nearly $40,000,000 making this the third consecutive year of substantial upside in our highest margin profit center. Our actions to streamline corporate costs reduced SG&A as a percent of revenue by nearly 300 basis points over the past three years. We generated $128,000,000 of full year pre-pension free cash flow in 2025, up 55% from the prior year and above the $110,000,000 we expected. We have strong liquidity with over $400,000,000 cash on the balance sheet at year end, up almost $40,000,000 year over year. We increased our year-end cash balance while net leverage, including pension, has improved to 2.8x compared to 3.0x at 2024. Our liquidity also improved despite using $50,000,000 of cash as part of the discretionary contribution to our U.S. pensions. Our total contributions have reduced our global pension deficit by $300,000,000 to $450,000,000 at year end and lowered future expected contributions by more than the interest on the incremental debt we raised, improving near-term cash flows. We also executed another annuity purchase, which removed approximately $320,000,000 of gross U.S.-defined benefit pension liabilities in 2025. This, coupled with our liability duration matching strategy, which has successfully removed substantially all market volatility from the total future contributions, keeps us on a fixed path for full removal of the U.S.-defined benefit pension plan. I want to shift to my second message, which is that awareness and perception of Unisys Corporation our solutions continues to advance. We are seeing this evidenced by our wins and our pipeline. 2025 was an especially large renewal year, and our team successfully signed $1,700,000,000 of renewal TCV, securing a large portion of our recurring revenue base. Over $1,000,000,000 of renewal TCV was signed in the fourth quarter alone, which included closing a three-year extension and improved economics our largest DWS client who has been with us for nearly three decades. This field services renewal spans the U.S., Canada, and Latin America and secures the necessary scale for us to provide affordable field services across our client base. Multiyear renewals can be a catalyst for expansion within client accounts by integrating new solutions that support enhanced client centricity and improved overall margin profile. We capitalized on these opportunities in the fourth quarter, which was our largest quarter of new scope signings in recent years. Almost all of our largest renewals during the quarter included new scope, evidencing improved perception within our existing client base. For example, during the quarter, we signed a five-year renewal with one of the largest public university systems in the United States for cloud transformation, migration and modernization services, and expanded scope to include centralized application management across campuses, and a center of excellence that will leverage AI agents to standardize and modernize application management, streamlining processes for both students and staff. As we discussed last quarter, we have seen some competitors price aggressively to prioritize revenue over profitability and delivery quality. While that contributed to a few significant renewal losses, and presents several hundred basis points of growth headwinds for 2026, we are confident our investments in our core areas of our portfolio will continue to drive market and wallet share gains and will both reduce client costs and extend the scope of our delivery for our clients. In our wins and pipeline, we are seeing more instances of clients placing increased value on delivery quality and viewing it as a real differentiator. For example, in the fourth quarter, we won back a public sector client in Australia with a large scope for DWS solutions after they experienced a decline in delivery quality with one of our competitors. This win sets a powerful new foundation for our business in the region and provides a global playbook for showcasing delivery differentiation. We also added several new logo opportunities to our DWS and CA&I pipeline, from Chief Information Officers who moved to new organizations and engaged us immediately to participate in their transformations because they know we are a true partner with all the necessary skills to modernize and reliably manage complex IT ecosystems post transformation. We are also achieving new heights in recognition and awareness among industry analysts that influence client decisions selecting IT solution providers. During 2025, we built upon several years of advancing awareness and recognition within the analyst community, again increasing our total report placements by over 20%, including two new leader recognitions. In the fourth quarter, we received a very significant recognition from Gartner, which elevates Unisys Corporation to a global leader position in their Outsourced Digital Workplace Services Magic Quadrant for the first time. Magic Quadrant reports are the culmination of rigorous fact-based research evaluating completeness of vision and ability to execute and provide a wide-range view of the relative position of providers. In addition, in its companion Critical Capabilities for Digital Workplace Services report, Gartner ranked Unisys Corporation as the number one overall provider for the North American market and the number one global provider for both service desks and device management capabilities. This acknowledgment is already helping us access more opportunities, giving us an edge, especially relative to three of our largest competitors that fell out of the leader quadrant. Unisys Corporation was also named to Forbes list of America's Best Midsize Employers in 2026, which comes on the heels of being named Time Magazine's World's Best Companies in 2025. Our culture is reflected in our below-average voluntary attrition, which was 11.4% for the year. As we look to the future, I want to discuss why we view AI as a powerful long-term driver of demand for our solutions and how we have invested in solution development and delivery skills to capitalize on it. As I said earlier, Unisys Corporation ultimately develops, enables, and orchestrates the IT ecosystem. In all three of our segments, we provide solutions that enable emerging technology throughout the enterprise and are agnostic to the placement of AI, software, or hardware that make up our clients' environment. As the industry heads into a major multiyear AI infrastructure build-out to supply the technology needed for broad AI adoption, there is a growing shortage of skilled technicians that will provide the design and service layer for modernization and post-modernization support. Importantly, demand for services will grow regardless of whether clients develop custom AI agents on private infrastructure, leverage standard capabilities from software providers and hyperscalers within private or public clouds, or a combination of both within hybrid environments. For us, the scale and reach of AI goes beyond the software and extends to physical AI. The scale and skills of our field service organizations present a unique market opportunity for us. We are already beginning to support private AI builds for OEM partners, requiring liquid cooling skills, complementing the work we already do in maintaining critical hybrid infrastructure such as servers and storage in data centers, or IoT devices in everything from conference rooms to restaurants. We will also continue expanding our existing use of agentic AI and expect AI agents to continue to be layered throughout our managed service offerings, orchestrating increasingly complex and automated workflows. Clearly, AI is adding complexity to managing the IT estate. Tokenization costs are high, business cases are challenging, and measuring returns on investments is difficult. We expect all these factors to increase client reliance on external providers. Unisys Corporation can reduce the cost of AI adoption for clients by developing solutions that can be leveraged across a large base of clients with standardized architectures for faster deployment. In 2025, we launched Service Experience Accelerator, an agentic AI framework for delivering next-generation service desk. SEA is now in production with some of our largest clients, and we are enhancing our solution to improve its ability to handle input ambiguity. We plan to roll this out to about one-third of our existing client base during 2026, which establishes a growing base of leverageable technology to support long-term expansion, continued delivery optimization, and enhanced quality. In CA&I, we are advancing our intelligent operations architecture with an integrated framework for rapidly developing, deploying, and orchestrating AI agents to streamline IT operations and aid in financial operation decision-making, especially as it pertains to design and compute. Our alliance partners offer a significant and relatively untapped opportunity to scale distribution and continue raising awareness in the market. Hyperscalers are eager to promote solutions that use their cloud platforms, tools, and models to drive AI adoption and development of their AI-enabled cloud ecosystem. For example, in CA&I, we are standardizing our SOC managed service delivery with Microsoft Sentinel and Defender Threat Detection as its main components. We are powering the service layer with AI agents, which helped us engage with Microsoft on development and discussions about joint promotion. Many of our key enterprise software partners are also seeking to accelerate uptake of their AI capabilities. As another example, we are a high-volume user of AgentForce internally, which we adopted to optimize our field service dispatch, and we are engaging with Salesforce to explore how we can jointly offer our internal framework as a service to some of their other clients and prospects. These examples illustrate the repeatable playbooks we developed across our portfolio that we think will help us capitalize on AI-related demand, strengthen our partnerships, and ultimately accelerate our growth in XL&S solutions. In the ECS segment, we continue to be highly confident in the enduring value of our ClearPath Forward ecosystem despite hypothetical threats posted by AI developers. AI coding capabilities do not replicate decades of development required to integrate processes, code, equipment, and environments with unmatched latency, availability, redundancy, and security. Our core platform offers an unmatched combination of speed, resilience, and most importantly, security, which is of critical importance to the financial services, government agencies, health care, and travel transportation companies we serve. Replicating these benefits would require parsing our unified platform into numerous functions and a wholesale reorganization of business processes with minimal benefit, bringing with it significant business risk. At the same time, we continue investing in our core platforms, which are already cloud compatible. We are enhancing our value-added products such as Data Exchange and ePortal, which unlock valuable data and allow it to move across environments and applications, powering AI and analytics. These solutions represent increased extensibility and ecosystem expansion that establishes ClearPath Forward as a pillar of a modern AI-enabled enterprise solution, advancing digital transformation. At the same time, we are leveraging AI to help us quickly assess work skills, identify gaps and vulnerabilities, as well as assist in cross-training and upskilling talent for the future. We are beginning to leverage our internal engineering expertise into advisory engagements with ECS clients. And while quantum computing may not be imminent in the short term, we are beginning to see tangible client engagement for quantum advisory services we introduced early in 2025. With that, now I will turn the call over to Debra to go through our financial results in more detail. Debra Winkler McCann: Thank you, Michael, and good morning, everyone. As a reminder, my discussion today will reference slides from the supplemental presentation posted on our site. I will discuss total revenue growth, both as reported and in constant currency, and segment growth in constant currency only. I will also provide information excluding license and support for XLNS to allow investors to assess the progress we are making outside the portion of ECS revenue and profit recognition is tied to license renewal timing, which can be uneven between quarters. To echo Michael's comments, our results reflect consistent execution of our business strategy and effective de-risking of our future pension contributions, making our financial performance and liquidity stronger and more predictable for investors. We have seen an ongoing positive shift in how we engage with partners, clients, and industry experts; we think much of that is related to our agility in adopting artificial intelligence within delivery and solution framework. And we expect AI to be a strong long-term driver of demand for our largest solutions. Looking at our results in more detail, you can see on Slide 6 fourth quarter revenue was $575,000,000, up 5.3% year over year as reported and 2.7% in constant currency, driven by the timing of L&S renewals. For the full year, revenue was $1,950,000,000, down 2.9% as reported and 3.3% in constant currency, slightly above the midpoint of our revised guidance range. Excluding license and support solutions, revenue was $388,000,000 in the fourth quarter, $1,520,000,000 for the full year, both of which were down 3.9% in constant currency. I will now discuss segment revenue performance in constant currency terms shown on Slide 8. Fourth quarter Digital Workplace Solutions revenue of $126,000,000 was flat sequentially to third quarter and down 3.7% year over year. For the full year, DWS revenue was $508,000,000, down 3.1%. Both fourth quarter and full year segment revenue were impacted by PC-related revenue declines, including lower third-party hardware and PC field services volumes. As we mentioned last quarter, Microsoft's extension of Windows 10 support has led to some clients delaying upgrade projects or pushing out purchases of new PCs required for compatibility with Windows 11, and recently higher PC prices due to memory chip shortages have compounded delays. However, we expect PC price increases to benefit us over time as they increase the significance of device costs within client budgets, potentially leading to incremental interest in our device subscription service, which provides intelligent forecasting and planning and a more flexible and predictable cost model. TCE-related declines were partially offset by growth in higher value infrastructure field services in areas such as enterprise storage and network infrastructure, which typically have lower volumes but higher margin and profit associated with them. As we mentioned before, we believe the PC volume declines have stabilized. Fourth quarter Cloud, Applications and Infrastructure Solutions revenue was $191,000,000, a decline of 4.1% year over year. For the full year, 4.8% to $733,000,000. Similar to what we saw in earlier quarters of 2025, the fourth quarter was impacted by a lower volume of short-term project work at U.S. public sector clients due to federal funding disruptions that have created budget uncertainty in the public sector. This remained a prominent factor in the fourth quarter, the first half of which experienced the federal government shutdown. We were pleased to still be able to secure multiyear renewals in both CA&I and DWS solutions with several of our largest U.S. public sector clients, some including new scope. Enterprise Computing Solutions revenue was $237,000,000 in the fourth quarter, up 14% year over year. Full year segment revenue was $629,000,000, relatively flat to 2024. Within this segment, L&S solutions revenue was $186,000,000 in the fourth quarter, up 19.8%, bringing full year L&S revenue to $428,000,000 in line with our increased expectations. Fourth quarter revenue for specialized services and next generation compute solutions, the XLNS solutions within ECS, was flat sequentially and down 3.7% year over year against a stronger prior year comparison. Full year SS&C revenue grew 4.9% year over year, due to increased project work and business process solutions volumes at financial services clients in Europe, Latin America, and Asia Pacific. Total company TCV was $2,200,000,000 for the full year, driven by strong growth in XLNS renewal signings and new scope bookings with existing clients. Full year new business TCV totaled $491,000,000, down 38% year over year, primarily driven by elongated sales cycles with prospective clients and hesitancy in the public sector. Full year new business TCV includes an approximate $200,000,000 adjustment to reflect a mutually agreed determination of a first quarter 2025 new logo signing in DWS where contractual terms were not aligned. We were pleased with this outcome as it averts risk of future profit dilution while preserving a positive relationship with a large prospective client that we anticipate will invite Unisys Corporation to bid should they seek new proposals for any portion of this work or for other Unisys Corporation solutions. Trailing twelve-month book-to-bill was 1.1x for the total company and 1.2x for our XLNS solutions. We ended the year with a backlog of $3,200,000,000, up 12% sequentially and 11% from prior year. Moving to Slide 9, fourth quarter gross profit was $195,000,000 and gross margin was 33.9%, up 180 basis points from the prior year due to L&S revenue growth over a relatively stable cost base. XLNS gross profit was $51,000,000 in the fourth quarter, a 13.2% margin. While this was 540 basis points lower than 18.6% in the third quarter, the majority of the margin compression was due to the aggregate impact of incremental cost reduction charges and timing of variable compensation. Full year gross profit was $549,000,000, a 28.2% gross margin compared to 29.2% in the prior year period, driven by an increased proportion of lower margin L&S hardware relative to the prior year, which we expect to be more normalized in 2026. Full year XLNS gross profit was $255,000,000, a 16.8% gross margin compared to 17.6% in the prior year period, which includes approximately 40 basis points of incremental cost reduction expenses. Overall, we were pleased with XLNS' profitability considering some of the revenue headwinds we faced this year. And we expect lower cost reduction charges and greater efficiency gains in 2026 supported by workforce and technology investments made in 2025. I will now discuss segment gross profit as shown on Slide 10. DWS segment gross margin was 10.5% in the fourth quarter, compared to 15.9% in the prior year period. Nearly 400 basis points of the year-over-year margin decline was driven by one-time items, including transition costs. Full year DWS gross margin was 14.5%, compared to 15.7% in the prior year. Over time, we expect a continued long-term shift towards these higher value infrastructure field services, which typically are at a higher margin. CA&I segment gross margin was 20.7% in the fourth quarter, up 210 basis points year over year due to workforce and labor market optimization, and increased automation and AI use in solution development and delivery, as well as an 80 basis point one-time benefit. Full year CA&I gross margin was 20.2%, relatively flat to the prior year. At a high level, strong delivery gains have been able to offset the slower pace of investment and project work at U.S. public sector clients. Looking ahead, we are pushing the pace of solution development and standardization in the CA&I segment and sustaining a focus on workforce optimization and rapid adoption of the latest AI models and tools to support additional efficiency gains. ECS segment gross margin was 65.9% in the fourth quarter, up 270 basis points year over year; full year gross margin was 55.5%, a 250 basis point decline related to increased hardware revenue mix which should normalize in 2026. Moving to Slide 11. Fourth quarter non-GAAP operating profit margin was 18%, driven by the higher concentration of L&S revenue in the fourth quarter. For the full year, non-GAAP operating profit margin was 9.1%, above the top end of our upwardly revised guidance range. The sustained strength of the trends in our L&S solutions again contributed more profit than we anticipated. Over the past two years, we have also diligently executed on a detailed plan to streamline our corporate real estate and central IT costs. We have been able to reduce SG&A by 13% or nearly $60,000,000. We expect to again lower SG&A in 2026 in absolute dollar terms by at least $10,000,000 to $20,000,000 as we receive a full-year benefit from savings, and most of the costs to achieve them are behind us. Fourth quarter net income was $19,000,000 and $63,000,000 on a non-GAAP basis, translating to diluted earnings per share of $0.25 and non-GAAP earnings per share of $0.86. For the full year, GAAP net loss was $340,000,000 or a diluted loss of $4.79 per share. This included an approximate $228,000,000 one-time noncash expense related to a pension annuity purchase occurring in the third quarter. Full year non-GAAP net income was $68,000,000; non-GAAP earnings per share was $0.93. Turning to Slide 13. Capital expenditures totaled approximately $20,000,000 in the fourth quarter and $78,000,000 for the full year, relatively flat to 2024. As a reminder, a significant portion of capital expenditure relates to our L&S software, and there is no change to our overall capital-light strategy. Pre-pension free cash flow, which is free cash flow prior to pension and post-retirement contributions, was $113,000,000 in the fourth quarter, $128,000,000 for the full year, which exceeded our expectation for $110,000,000. This is the result of a stronger profit performance and more favorable working capital relative to our assumptions. Full year free cash flow was negative $218,000,000 and includes a $250,000,000 discretionary pension contribution, and $95,000,000 of required U.S. and non-U.S. post-retirement contributions. Moving to Slide 14, our cash balance was $414,000,000 at year end, $377,000,000 at the end of 2024. Our cash balance increased by $37,000,000 year over year, which is primarily due to our strong pre-pension free cash flow, as well as some positive impacts from foreign exchange on cash balances and hedge settlements. As a reminder, our change in cash balance includes a $50,000,000 discretionary pension contribution, which was funded by approximately $100,000,000 of incremental borrowing as well as $50,000,000 of cash from the balance sheet. Our liquidity position is strong with no major $750,000,000 at 2024 or $300,000,000 improvement. $250,000,000 of improvement in our global pension deficit was driven by our discretionary contribution, with the remaining approximately $50,000,000 resulting from $95,000,000 of planned contributions to our global plan. On Slide 16, you can see a detailed projection of our expected cash contributions. We are forecasting approximately $350,000,000 of remaining cash contributions to our global pension plans in aggregate through 2029, reflecting stability from the actions we took to remove volatility in our U.S. qualified defined benefit plans. Moving to Slide 17, we have provided an updated projection of how expected future contributions and the benefits we disperse to pensioners are expected to impact our U.S. qualified defined benefit plan deficit both with and without annuity purchase assumptions, and the implied cost of full removal at 2029. At the bottom, we have also included our expected deficit reduction in all other plans. However, it is important to remember that while international contributions are negotiated every few years and very stable, the international deficit is impacted by asset returns and has more volatility. These projections are meant to provide a directional indication only of the relative conversion of contributions to leverage reduction in a given year, and will also change if contributions shift between years. Turning to Slide 18, I will now discuss our financial guidance for the full year and the additional assumptions we provide. We expect total company revenue to decline between 6.5%–4.5% in constant currency, which based on February 1 foreign exchange rates equates to a reported revenue decline of 3.8%–1.8%. Guidance assumes XLNS revenue decline of 7%–4.5% in constant currency. We also expect full year L&S revenue of $415,000,000 at a gross margin of approximately 70%. We also continue to expect 2027 and 2028 L&S revenues to average $400,000,000 per year, continue to see artificial intelligence as a driver of consumption and adoption of value-added products within the ecosystem, and have detected no change in client commitment to our platform. As a reminder, the timing and exact amount of L&S revenue can be difficult to forecast with precision and it depends on the renewal timing, term, and client consumption levels among other factors. We expect non-GAAP operating profit margin to be between 9%–11% for full year, which reflects the higher margin percentage in L&S, 100–200 basis points of improvement in ex L&S gross margin, and another modest reduction in operating expense in absolute dollar terms. Looking specifically at the first quarter, we expect approximately $415,000,000 of total company revenue on a reported basis and assume approximately $60,000,000 of license and support revenue. Based on renewal timing during the year, the first quarter is expected to be the lowest L&S revenue quarter, and we expect an approximate weighting of 30% of L&S revenue in the first half of the year, and 70% in the second half, with the third quarter likely the largest quarter of L&S revenue. Based on these assumptions, we expect first quarter non-GAAP operating margin to be slightly positive. We expect a number of noncash expenses impacting GAAP net income and earnings per share in 2026, including pension annuity purchases and streamlining certain legal entities expected in the second half, which we will guide on a quarterly basis. Also, as a reminder, in 2025, we removed hedges on our intercompany balances, which could create noncash FX gains as the U.S. dollar strengthens, or losses if the U.S. dollar weakens. These are difficult to guide due to constantly changing rates, but will impact quarterly GAAP net income. Full year free cash flow is expected to be approximately negative $25,000,000, which translates to positive $67,000,000 of pre-pension free cash flow. This assumes approximate payments of $85,000,000 in capital expenditure dollars, $70,000,000 of cash taxes, $70,000,000 of net interest payments, $30,000,000 in other payments, primarily restructuring, and $92,000,000 of post-retirement contributions, consisting of $87,000,000 of pension contributions and $5,000,000 of other post-retirement contributions. Approximately $17,000,000 of the pension and post-retirement contributions are expected in the first quarter. We are confident that we have the liquidity we need to comfortably support our pension contributions. We are focused on continuing to increase our efficiency and profitability during this period and maximize our underlying cash generation levels, investment, and capital return. Before we open the line for questions, Michael has a few additional remarks. Michael Thomson: Thank you, Debra. I wanted to take a moment to address our 2026 guidance. I am proud of what we have achieved in 2025, but disappointed that we did not overcome all of the industry headwinds impacting our XLNS revenue. For 2026, our expectations for mid-single-digit decline in XL&S solutions reflects an intentional deeper push into the adoption of emerging technology within our existing base of clients and the macro headwinds impacting discretionary spend in 2025 that we expect to linger through 2026, as we mentioned last quarter. Relative to 2024 year end, we have a more expansive book-to-bill ratio, more expected full year revenue already contracted and in backlog. And there is less embedded risk from assumptions for timing of revenue ramp on contracted new business. Similarly, for profitability, the majority of the required efficiency gains have already been actioned or identified. Achieving our 2026 guidance range keeps us on a path to potential full removal of the U.S.-defined benefit pension obligations by 2029, after which U.S. pension contributions would cease, and we expect a host of new possibilities for investments and capital return. Based on our interactions with existing and prospective clients, and the sequential growth in pipeline activity so far this year, we believe we will achieve positive XLNS revenue growth in 2027. With that, operator, you can open up the line for questions. Operator: We will now begin the question and answer session. The first question today comes from Rod Bourgeois with Deep Dive Equity Research. Please go ahead. Rod Bourgeois: Okay. Thank you. Hey, I will start with an AI question. So I want to ask, how are AI and automated code modernization tools influencing the road map that you have and the demand for ClearPath Forward? We have clearly seen some recent concerns that COBOL refactoring may affect IBM's mainframe business, so I want to ask how you are assessing the implications of that trend for the ClearPath Forward platform. Thanks. Michael Thomson: Great. Hey, Rod. Thanks for the question. Certainly very timely with the communications that we have all seen. Look, the code factoring component of the dialogue that is, I guess, the issue du jour is not really new. Maybe the tools that we are using are new, but we have been talking about code factoring for a long, long time, years in fact. And, you know, you referenced IBM here and I think they have a piece out as well kind of reacting to that. It is really only a part of the story and it really is talking about, in my opinion, the enhancement of the platform. I mean, the code modernization is kind of the easy part. That does not change the engineering challenge of running the mission critical workloads at scale and doing it securely. I mean, really, it is about the architecture redesign, the runtime replacement, transaction processing integrity, the hardware tuning and years of performance tuning that is embedded in the platform. Cofactoring does none of that. Right? It really is just about the kind of modernization of what I would consider to be above the enterprise level of the core. So from a strategic perspective, you know, internally, we talk about ClearPath Forward 2050. I mean, that is kind of the time frame that we are looking out for that ecosystem. And we think net-net it is going to be a positive to kind of drive more demand to the platform. Think of it as kind of the automation of above the enterprise level and giving our clients more and more flexibility to that. And I guess secondarily, I would say that the other area that it is really important for is the continual kind of documentation of the code base, etcetera, testing and really reverse, right? Kind of doing scripts in current languages and maybe refactoring them back to COBOL into kind of a legacy mindset. So the reality is we do not view that as any change from the strategy that we are currently on. And I think if you look at, you know, what we have encountered, you know, I mentioned in my prepared remarks, three straight years of roughly $40,000,000 of improvement against our expectations in that business. That is a byproduct of longer contracts being signed, additional consumption being signed and the tooling that we have done over the course of the last say five years in that ecosystem has really positioned it to be AI-enabled. So I do not think it has really changed our strategy at all. And we see it as a continuation of the ability to kind of automate around the enterprise platform layer. Rod Bourgeois: So, Michael, I just want to take an extra second on that. I mean, what you are saying is that the cofactoring threat—I think what you said was automation above the enterprise level—actually adds to the usage of your platform. Can you just add more color on that point? Michael Thomson: Yeah. Look, I think in general, what we have been targeting and what we have been seeing is to put tools above the enterprise platform that allows for analysis and data extract, data movement across platforms, etcetera. And so using kind of AI agents and, I will say, refactoring of code above that enterprise level really just continues to enable the use of the data. And remember, the dataset that we are talking about are standardized datasets and decades worth of data embedded in there. Right? So if you are really trying to enhance a large language model, the key is really access of that data. Not necessarily what code it is written in to get there. So the easier we can make that, the more customized or localized we can make that interface, and through the use of these particular agents, I think will be beneficial and cause more use of data, not less. Rod Bourgeois: Got it. Then just a question about the outlook for bookings in 2026. Last year had a big load of renewal activity but at the same time, over the last couple of years, you have invested to win new logos. So I am just—I want to get a perspective on your latest pipeline and sales effort and what the outlook is for your bookings activity and your bookings mix? I mean, will the mix shift toward, you know, existing client scope expansion where I think you had some positive commentary? What is the outlook for the bookings mix for 2026? Thanks. Michael Thomson: Yes. Thank you, Rod. Great question and appreciate the opportunity to expand on that a little bit. So you are right. I mean, we signed $1,700,000,000 of renewals in 2025. That clearly took a lot of the team and the clients' focus to kind of get that behind us, which was great. We have got a really strong backlog and frankly a higher backlog position going into 2026 than we had going into 2025 in relation to that. But the corollary or knock-on to that is when you are doing that renegotiation on renewals, typically, clients are not talking about new scope opportunities. Right, because you are really focused on what that renewal looks like. So on the heels of that, and we mentioned in our prepared remarks that when we have done those renewals we have actually embedded into that some new scope. So as you know, we think of new business as new scope and new logo. So I would say two things. One, our focus on new logo expansion in 2026 is enhanced because we have got a lot more, I will say, bandwidth to really get after that because the renewal cycle is a little smaller this year—probably about a third of what it was last year. So we will have some more focus there. And then secondarily, and more importantly I think is the new scope expansion opportunities in the existing base will allow us to grow that new business as well. So I think you are right in looking at kind of that new business and I bucketed that way intentionally. It is not just about new logo, it is really about the proliferation of new scope opportunities whether that is in our existing base or whether that is with new logo clients. We talk about having roughly a $31,000,000,000 TAM in our existing base for new scope opportunities. So that is, you know, a really important element to our growth trajectory of the future. Rod Bourgeois: Alright. Thank you. Operator: The next question comes from Mayank Tandon with Needham. Please go ahead. Mayank Tandon: Thank you. Good morning. Michael, you mentioned the longer sales cycles and some of the competitive pricing dynamics. So maybe if you could just provide a little bit more details around how you counter some of that competitive pricing. And of course, you cannot control the overall market discretionary spending slowdown. But how do you maybe counter that? Michael Thomson: Yes. Thank you for the question. Super important, right? Look, when we think about the sales cycles in general, I would say 2025 was really tough just because of all of the macros and kind of the adoption of new technology—people a little uncertain around how much to adopt, where to adopt it. Uncertainties around whether it was tariff-related or, again, other macro-related issues, geopolitical, etcetera, I think that weighed on the longevity of the contracting cycle a little bit more than the mechanics of, you know, what we typically see and I would say some of that is already starting to ease. We have got a pretty good jump-off point for Q1 as far as our pipeline is concerned, our discussions with clients in regards to that. In fact, just anecdotally, I had some correspondence with hopefully a future client that is talking about setting kind of record pace in their renewal cycle, really trying to expedite the use of that. So I think those were a little bit more macro than they are process-oriented from our perspective. But clearly, we have done a lot from the embedding of tools and technologies and process changes, qualifications of the pipeline, and also kind of how we are approaching opportunities to enhance and streamline the first touchpoint to contract closure. So, you know, we are very focused on trying to do everything we can to shorten that cycle, and be very prescriptive about how we approach clients and who we approach for what. So there definitely are some elements embedded in that. As far as pricing is concerned, look, it has always been a very competitive pricing environment. I think what has made it a little bit more competitive is you have got this pause, I guess, or the hesitancy to grow in some of the industry, right? We have seen our traditional industry CAGRs from, say, 4.5% or some percent CAGR growth down to flat, which means you have got a lot of folks chasing a smaller pie. Right? And so from our perspective, we rarely want to have or even start a discussion that talks about commodity pricing and race to the bottom. Right. All of our go-to-market approach is around enhanced experience and value and quality. Right? And we mentioned a couple of the renewals that we did not win. And I mentioned those in Q2 and in Q3. We need to maintain pricing discipline. We know what the value and the market-based pricing is for what we deliver, and we think we are delivering value in advance of that market pricing. So we should be able to get at least market-based pricing, and so not trying to, you know, just compete on price. If the client does not see the value we offer, obviously, that is going to be a longer-term problem anyway. Right? So our point is really to get in front of that early, make sure we can illustrate the value that we bring to our clients, and we have plenty of qualms to support that. So that is kind of how we are addressing the market on both of those fronts. Mayank Tandon: That is very helpful. And just a very quick follow-up for Debra, maybe. Debra, you know, given the guidance range, I am just curious as you entered this year, have you built in a little bit more buffer in your expectations given some of the uncertainty and macro headwinds? Or would you say you basically aligned your guidance with your historical strategy? And in that context, what dictates whether you come in at the low end of the range or the high end? Like, what are some of the factors we should be considering? Debra Winkler McCann: Right. Yes. I think, you know, we definitely, as Michael talked about some of the revenue pressure, some of the industry headwinds, is what we considered as we did the guidance. So I think the things to look for are, you know, at some of those macro factors, you know, alleviate—is what we assumed, that later in the year some of those factors alleviate. We had some—we, as Michael talked about, the mix of new logo is planned to have a lot more new logo this year as far as renewals. So as we are doing that, we think the Gartner Magic Quadrant will help. And so if we, you know, sell new logo kind of faster, that will be another element to look for that would increase, you know, what we put out there as our guidance. But we have kind of built in all these headwinds through most of 2026. Michael Thomson: Look, I would say too, like, we absolutely took in a different approach to our guidance this year. It is not last year's same exact strategy. We saw obviously the PC refresh cycle we were expecting that never came to fruition. And so we have kind of backed that off and looked at trajectory a little bit when we talk about that cycle. Clearly, we have got the hardware cost components and we think that that is going to have some opportunities for DSS. But I would say in general, there was a little bit more of a conservative approach to the way we set guidance. But I want to just be really clear. Related to top line, you know, I think from a bottom line perspective, we have been very consistent in our ability to execute bottom line improvement. We are also calling for another, say, 150-ish basis points of bottom line improvement—good line of sight to that. But we definitely took into consideration the kind of market hesitancy that we have seen. We have kind of carried that through the first half of the guidance. And I think we wanted—as you know, we kind of pride ourselves on the level of transparency that we put out on a regular basis as it pertains specifically to our guidance. And we really kind of went through element by element to say, hey, is this an area where we feel really good about and kind of how to get there. So a little bit of a different approach on top line. I would say in general, just taking out some of the things that we thought were going to happen that did not happen in 2025 and expect that as they pick up throughout the year—kind of a midyear convention on that? Mayank Tandon: Great. Thank you so much, Michael and Debra. Michael Thomson: Sure. Thank you. Appreciate it. Debra Winkler McCann: You are welcome. Thanks. Operator: The next question comes from Maggie Nolan with William Blair. Please go ahead. Maggie Nolan: Wanted to look ahead a little bit. You talked about several things that you are working on in the script that would help accelerate XLNS revenue growth. And I am just wondering what leading indicators we can watch to assess this progress, and then what is kind of a realistic timeline—especially given some of the first half pressures you just outlined—what is the realistic timeline for seeing some level of growth acceleration? Michael Thomson: Great. Thanks, Maggie, for the question. And a really good one and intuitive here too. I would say to you, clearly our new business kind of conversion rate is, I will say, the earliest indicator on top line. So I look at that question in two ways. One is really about the top-line expansion and the growth. And the other is about the deployment of our embedded technology, right, when we talk about enhancing the capabilities of our bottom line, right? So pushing that technology out to our existing client base we think will add some ability for us to grow top line through the use of, as I mentioned earlier, new scope opportunities within those accounts. Just know that that also comes with a little bit of a headwind. Right? So leaning into the adoption—and one of the examples I gave was the Service Experience Accelerator adoption that we are looking to push out to a third of our existing installed base. Well, when we push that out, there is going to be some pricing pressure on that top line because clearly it is—the agentic service desk that we are using is a lower cost of delivery and some of that we have to share with our client base. So you are pushing out this technology, which is going to put a little bit of a headwind pressure on. We think we are going to overcome that headwind with the expansion of the opportunity embedded in that client, and the addition of new logos to that base as well. So those are the things that we think are really going to support that XLNS growth rate—that is a DWS example. On the flip side, when I think about CA&I and the example there, we talked about the intelligent operations platform and really adding those agentic agents to expand our scope within the construct of the hybrid infrastructures that we and manage. Frankly, when we think about the current drivers, probably misquote this, I need to change it, but I think there was a recent McKinsey report out where we talked about a $300,000,000,000 to $400,000,000,000 TAM in what I would consider to be the above-layer automation of AI agents. Right? And we saw a lot of noise in the market around software and service implementers for software. That is not what we do. Right? Like, we are more an orchestration on that. But when we think about the application of AI agents above the SaaS-level enterprise software—that is what we do. That automation component both to help with transition and to actually orchestrate and manage post orchestration of the IT ecosystem—that actually allows us to participate a little more fully in what used to be just solution implementers of ERPs or CRMs or HCMs, where they are taking that customization layer or that integration layer and moving it above the enterprise stack—that is an area we do play in that we historically have not. Right? So I think it gives us a lot more opportunity to participate in that legacy TAM and in this future TAM on both CA&I and DWS. Maggie Nolan: That is very helpful. Thank you. For my second question, just on margins, could you maybe distill for us the main puts and takes on margins in the next year, just kind of excluding the SG&A efficiencies you have gained, assuming that there is not incremental efficiency to drive there in the near term, beyond what you have already outlined? The efficiencies that we will be annualizing? Michael Thomson: Yeah. Look, I mean, I think we have been fairly consistent from our perspective where we think those are coming from. Primarily, it is the application of emerging technology, right. The embedding of AI into our delivery platform allows us to deliver in a much more efficient manner. So clearly, there is going to be margin benefit from doing that. And as I mentioned, some of that margin benefit comes in the form of a revenue share, if you will, right, giving some of that back to the clients. But clearly, a portion of that stays embedded in our delivery platforms. And as we then add to that platform through the use of top-line growth, there is going to be obviously additional margin pull-through from that point of view. So I would say it is primarily in the application of emerging technology. There are still opportunities for us to be more efficient. There are still opportunities for us to continue to look at, I will say, upskilling or right skilling or right shoring components of what we do, and we continue to look at those opportunities as far as the delivery workforce is concerned. But again, the adoption of a digital workforce working alongside our human workforce—we are kind of working both sides of that equation. And then I would say lastly, when you think about the mix shift as we continue to push more and more into some of these newer elements of our solution. And I will just pick on field services as a very practical example. As we continue to shift the mix of what we are actually supporting with those field service technicians, whether that is liquid cooling, whether that is hybrid infrastructure, whether that is high-end storage—those are just higher margin elements of work for the same technician, moving away from some of the more traditional PC break/fix. So I think those three elements would be what I would point to as the real drivers of where we should expect to see margin improvement, which is again why I think we are really confident in the ability to execute it because a lot of the technology is obviously already embedded, and we are already moving it into production. And again, I think we have put a track record out there—almost 600 basis points improvement over the last three years in XL&S gross margin. Right? So we are looking for another 150 basis points there in 2026. Maggie Nolan: Thank you. Operator: The next question comes from Anna Goskow with Bank of America. Please go ahead. Anna Goskow: Hi, thanks very much. So first question is on the L&S revenue outlook. Do sense your kind of historical pattern of being conservative and then beating and raising. So back in October—when I think it was October—when you had the ClearPath kind of webinar for us, you had talked about a $400,000,000 CAGR for the next three years, and it looks like you are already kind of beating that with the $415,000,000 expected for this year. But then I think you did comment that you still expect about $400,000,000 2027–2028. So just wanted to understand. I understand there are license renewals in there, but it seems that the driver is AI in terms of consumption. So I wanted to understand what your thinking or expecting with regard to the impact of AI being a continued driver of consumption? Michael Thomson: Great. Thank you, Anna, for that call and that call-out. I am going to reiterate a comment I made in an earlier point. We did revisit kind of the way we were putting our guidance together. And this is another good example of that. And so you saw that we actually put out here $415,000,000 of L&S revenue, even though a little while ago we were talking about an average of $400,000,000 over that three-year period and we carried that average, you know, up. Right? I think we started that in maybe in the $360,000,000 to $370,000,000 range, moved it to $390,000,000, moved it to $400,000,000. And are still saying $400,000,000 in those out years. So—and you are exactly right also that the driver of that has been consumption and use much more so than, you know, just the license renewal schedule. And we do think that that is the AI comment that I made earlier in regards to Rod's question. Right? The more tools and techniques and processes that we can build and put on the front end of that ecosystem or that platform, the more consumption of that data and, obviously, the more value that orients to the platform and to, frankly, to our clients and to us. So we do expect that trend to continue, which is why we increased that CAGR average for those out years. And I would just note too that the $40,000,000 beat over the last three years, which you kindly pointed out as well. You see the $415,000,000 kind of take some of that now into our guidance to go, okay, you know, this has been a pattern here of continued consumption. So we wanted to bake some of that in so that we are not—sometimes it is just bad to continually overperform than it would be to underperform. So we are trying to do a better job at making sure that some of that overperformance that we have seen and expect to continue to see is baked into the numbers. Anna Goskow: Okay. So but for 2027–2028, you just have not really adjusted that yet for—I mean, any of us that are following the AI space or the AI impacts. I mean, consumption levels should continue to increase. Is that fair? Michael Thomson: Yeah. Look, I would say it is too far out for us to adjust multiple-year-out consumption estimates. But I would say if history is indicative of the future, then yes, we would expect as we go further down the road that we will revisit that estimate. But for now, we felt pretty comfortable with—it is already a $10,000,000 to $15,000,000 step-up from what we were chatting about before. So you can assume there is some consumption baked in there. Anna Goskow: Okay, great. And then Debra, so just on some of the balance sheet stuff. So I just want to make sure I am understanding on the free cash flow guide, which is a use of 25. So that is largely your expected all-in use of cash. Right? So if I just do the simple arithmetic on your current cash balance, going to be approximately $25,000,000 lower at the end of 2026. Debra Winkler McCann: That is correct. And pre-pension that translates to pre-pension of $67,000,000, you know, compared to the $128,000,000 this year. Anna Goskow: Right. And then the slides on the pension outlook are great. Thank you very much. So it is really clarifying. So then if I look at the slide on potential annuity purchases, you really gave us the estimates of what the deficit is going to be. So at the end of the day, whether you purchase an annuity or not, your pension deficit is going to be down roughly in the $50,000,000 range. Right? So net-net, like your net debt is going to be lower at the end of the year because your cash is only going down by, like, 25, but your pension deficit is going down by at least 50. Is that right way to— Debra Winkler McCann: —down by that. Yes. Anna Goskow: Yes. Okay. Yep. So it is down by about that much, but in the next three years, 2027–2029, $180,000,000, $137,000,000. It is all on that chart 17. Debra Winkler McCann: Okay. Anna Goskow: Yeah. I mean, every contribution— Debra Winkler McCann: Right. Correct. Michael Thomson: —shows that debt reduction. Deficit value. It is not dollar for dollar, but you will see continual improvement in the deficit and in net leverage. Anna Goskow: Okay. And then the annuity purchases would are noncash. Debra Winkler McCann: Right. We use the plan assets to reduce the plan liabilities. Anna Goskow: Correct? Okay. Okay. And then so yeah, I know you worked really hard last year to do the bond issuance and you know, it came at a rate that was a little higher than you probably preferred and your plan at some point is to refinance those lower? Obviously, like the market overall is pretty messy right now. So those bonds are trading below par. Have you thought about using some of your cash to buy back some of that debt at this point? Because it is a pretty attractive rate. Debra Winkler McCann: Yeah. I mean, we always look at everything. But, I mean, at this point, you know, we are always looking to conserve cash, right, given the pension obligations, given everything. But we are always looking at everything, but it is not, you know, something at this exact moment we are planning to do. Anna Goskow: Okay. So the preference is just to keep, like, a solid cash balance. It sounds like. Debra Winkler McCann: Yes. Anna Goskow: Okay. Great. Okay. Well, thank you very much. Debra Winkler McCann: You are welcome. Michael Thomson: Continued into 2026 we are hopeful by kind of midyear that we will get back to kind of our normalcy as it pertains to kind of public sector work that we are doing. In fact, we signed a big deal recently in Australia public sector that was—in one case we had a win back from a competitor and another we expanded a relationship there that was pretty significant in the region. So we are optimistic. Anna Goskow: Okay. Thank you. That was all for me. Operator: Thank you, Anna. Michaela Pewarski: This concludes our question and answer session and concludes our conference call today. Thank you for attending today's presentation. 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Operator: Good day, and welcome to the UFP Technologies, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. These Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as “believe,” “expect,” “anticipate,” “pursue,” “forecast,” and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-Ks and subsequent 10-Qs and 8-Ks, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures, which include organic sales growth, adjusted gross margin, adjusted operating income, adjusted SG&A, adjusted EPS, EBITDA, and adjusted EBITDA. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the Investor Relations section of our website. I will now turn the call over to Jeff. R. Jeffrey Bailly: Thank you, Ron. I am pleased with our 2025 results and our progress on key strategic initiatives. Sales grew 19.5% for the full year, bringing our total revenue to $602.8 million. This is a significant revenue milestone and represents nearly a tripling of revenue since 2021. During that same four-year period, operating income grew 435% and EPS grew 419%. We also made significant progress on several key strategic initiatives related to contract extensions, program launches, facility expansions and related moves, and adding and training of new direct labor talent in St. Charles, Illinois related to our previously disclosed E-Verify attrition issues. 2025 EPS grew 15.4% despite absorbing $6.3 million in labor inefficiencies at our Illinois AJR facility. The AJR E-Verify labor inefficiency was $1.2 million in Q4, less than half of the $3.0 million Q3 impact, demonstrating the progress that is being made in onboarding and training new direct labor team members. We are continuing to make progress expanding our capabilities and capacity in the Dominican Republic. In Santiago, we launched our second major program and have recently negotiated a lease for a third building, which will allow us to further expand our safe patient handling business and transfer a third major program. Each program transfer, when complete, saves our customers money and increases our profit potential. In La Romana, Dominican Republic, three significant new programs launched. Our fifth building and related move of equipment, materials, and personnel is now complete. It houses a new expanded product development center, a newly launched external capital program, and a centralized warehouse to support Buildings One through Four. We plan to take possession of a sixth building in April, which will further expand our robotic surgery capacity to support anticipated growth. We have also expanded and extended our contract with our largest customer, materially increasing the volumes on existing programs and adding an additional program. We have also made exciting progress in other markets, funding a contract extension with our largest infection prevention customer to run through 2030. In the orthopedic sterile packaging space, we have also won new business and added new capabilities in Harlan, which adds significant value to our global offerings. On the human resources front, our new director-level talent, one level below our corporate officers, is making significant contributions in the U.S., Ireland, and the Dominican Republic. This group runs our day-to-day operations and is doing a great job. On the acquisition front, integrations of the four acquisitions completed in 2024 and the three completed in 2025 are all progressing well. We continue to search for additional strategic acquisitions that will increase our value to customers while maintaining our disciplined approach. And finally, our CEO transition planning for InterRock is essentially complete, and he is well prepared to succeed me as CEO in June. I will continue for one year as Executive Chair to support him and provide assistance in vetting new acquisition opportunities and key strategic hires. With a robust pipeline of new growth opportunities, significant progress on our strategic initiatives, including multiple successful program launches, exciting new talent in our company, and a strong balance sheet to fund future growth, we remain very bullish about our future. I will now hand it over to Ron to provide more color on our financials. Ronald J. Lataille: Thank you, Jeff. I am also pleased with our fourth quarter and year-end results as we delivered solid numbers despite working through the labor challenge referred to by Jeff. Before I provide more color on our results, I want to spend a few minutes on the cybersecurity breach disclosed in an 8-K last evening. The attack was detected on the morning of Saturday, February 14. By that evening, forensic incident response consultants were engaged, and by Sunday evening, they were on-site in Newport. This was a classic ransomware attack that appears to have impacted many, but not all, of our IT systems. Data was taken and then destroyed. Fortunately, we had credible duplicate backups and a thorough contingency plan that allowed us to operate since the date of the incident. At this point, the incident caused minimal interruptions to our operations, and we believe our primary information systems are being brought back online this week in all material respects. From a financial standpoint, we have cybersecurity insurance and cash or liquidity and do not expect a material impact to our operations, though our investigation is continuing. Moving to operations, overall sales were up nicely, largely fueled by growth in the safe patient handling, infection control, and orthopedic packaging medical submarkets. As anticipated, organic sales growth for the year was low single digits. This is largely due to abnormally high 2024 sales in robotic surgery as well as backlog in our safe patient handling business due to the labor issue at AJR. Gross profit as a percentage of sales, or gross margin, decreased in 2025 to 28.3%, largely due to the $6.3 million in extra labor costs incurred at AJR, which are all reflected in cost of sales. Absent these additional labor costs, gross margins would have increased to 29.3%. As Jeff mentioned, improved efficiency levels in the fourth quarter and we anticipate further ongoing improvement. Adjusted operating margin for the year was 17.1% of sales, within our target range of 17% to 20% despite the extra labor costs. Our effective tax rate of 17.2% for the full year of 2025 was down from a year ago, reflecting a continued shift in pre-tax income to the Dominican Republic, where we effectively pay no income taxes. 2025 was a strong year for cash generation. We had approximately $92.0 million in cash from operations, and despite $12.9 million in capital expenditures and funding three acquisitions, we paid down approximately $53.9 million in debt and ended the year with a leverage ratio of approximately 1.1x. We will now open for questions. Operator: Our first question comes from Brett Adam Fishbin with KeyBanc Capital Markets. Please go ahead. Will (for Brett Adam Fishbin): Hey, this is Will on for Brett. Good news around the contract extension. Could you provide us any directional color on how we should think about volumes with your largest customer in 2026 and 2027? And maybe how we should think about the minimum volumes for 2028 and 2029? I have one more as a follow-up. R. Jeffrey Bailly: Sure. The contract extension is great news for us. We have extended two additional years, which we knew was coming, but it makes the rest of the world settle down, and it was expanded. That additional program and the two programs in place increased materially. Our customers have asked us not to give any information that could allow the outside world to project our business and put us at any competitive disadvantage. We are not able to give any commentary on how significantly it went up, but they agreed to the words “material” because it is a material increase over where we are now. The same applies for giving guidance on 2026 and 2027. You can refer to the previous contract, and you know there are minimums that they have to hit. I think it has to be in the low sevens the last couple of years. They have consistently been higher than those minimums. Under strict instructions from many of our customers, we are not going to be able to give specifics, unfortunately. Will (for Brett Adam Fishbin): Okay. I think that makes sense. And then maybe just going over to AJR. Regarding the headwind, you indicated a $1 million impact in Q4. How are you thinking about this impact in Q1? And maybe any impact in the rest of 2026? R. Jeffrey Bailly: The team is making consistent progress, and there are a couple of different objectives. One was to bring on new people because our team was way down. We have staffed up to the level that we needed. Some are still temps; some are permanent. When they get to a certain level of skill, they switch over, and two things happen: the skill goes up and the cost goes down. We are continuing to transition from temps, but we are not bringing in people in general right now. Those two things are forward progress we will look forward to. We are running overtime now, so we can keep up with our existing team, and we are running overtime to knock down any backlog that exists. We did have backlog carry over into this year, which is good news for the revenue of this year. It is bad news that we have not completely caught up with our customer. When that backlog is worked down, we will get rid of the overtime as well. Everything going forward should be progress. We expect Q1 will have some impact. It will be less than the fourth quarter, and then it will diminish after that. There will be some carry-on, but continued progress is expected in each consecutive quarter. Operator: Our next question comes from Justin Ian Ages with CJS Securities. Please go ahead. Justin Ian Ages: Good morning. Can you give us a little more color on the puts and takes of the flat medtech growth? I know you mentioned infection prevention, but just trying to take a look into 2026 and size what is going to be the main drivers of growth there in medtech. Thank you. R. Jeffrey Bailly: We are expecting continued robust growth in the patient services market. That is expanding on its own, and we are catching up from the prior year, so I think that will be a super strong year. We have also launched three new programs of late, one in infection prevention and two in robotic surgery, which are both positive influences going forward. There are some other markets that are coming along. They represent growth in the future and are in the development stages now. Those are a little more wound care and diagnostics. I think those will hit 2026 revenue, but they hit the list of things we are excited about going forward. That is the update on what we expect to be robust growth next year. Ronald J. Lataille: And Justin, let me elaborate. If you are talking about flat medtech growth specifically for Q4, just a reminder that we had some revenue pulled into Q3. Sales in Q3 were higher, if you recall, than we had anticipated. That is part of the reason why sales for the fourth quarter were a bit softer. Justin Ian Ages: That is helpful. Thanks for that. And then second, on the cybersecurity incident, I know you mentioned systems are back online, but is there any disruption in business that will impact growth rates? Operationally, it seems things are back in order. In terms of performing for customers, is there any impact there, or is that still under investigation? R. Jeffrey Bailly: Big picture, it is not good news that somebody was able to get into our system. It was really good news how our team responded and how robust our backup systems were. We were back in action literally day one making parts. We did not have the ability day one to label everything properly and ship everything, so there will be a delay in how things get shipped. I will turn it over to Ron to give you some specifics, but the key is we were able to keep making everything we needed to make. There may be some delays in when some of these things actually ship. Ronald J. Lataille: The event happened mid-quarter, and we are back online in all of our ERP systems as we speak. Fortunately, years ago our Senior Vice President of IT, in conjunction with our operations leadership, developed a robust contingency plan to operate without systems for this exact reason. We launched that contingency plan, and albeit inefficiently, we were able to make parts and ship to customers with manual invoicing. I do not think there is going to be a material impact on Q1 in its entirety. It will be soft within the month of February within the quarter, but we will make up for it in March. Justin Ian Ages: That is super helpful. Thanks for taking the questions. Operator: Our next question comes from Maxwell Michaelis with Lake Street Capital Markets. Please go ahead. Maxwell Michaelis: A few here around the contract extension, just around the facility. That sixth facility, are you on the hook for that entire investment? Are you getting any help from your largest customer? Also, what is the timeline of completion of that facility? R. Jeffrey Bailly: With all of our major contracts, there is co-investment, really without exception. In some of them, the customers are on the hook for literally all of the capital. Under confidentiality with the customer, we have not been able to give out all those details. I can tell you our primary responsibility in this contract extension relates to leases and personnel. Capacity is ramping up, so capital will be purchased and installed, and we will be starting. I think we take possession of the sixth building in April, and we will begin—first we have to get the building fit for use, which is putting in clean rooms and getting it all set up. It will start this year. We will be adding that capacity, and as I mentioned, our primary responsibility is leases and personnel. Maxwell Michaelis: Perfect. And then you called out safe patient handling in the press release as well. Is there any way you can size that opportunity for us? It seems like it is going to be a solid opportunity. Do you expect more growth in 2026? Can you give us an idea of what the market size is there, or any way you can help us? R. Jeffrey Bailly: I think that is a large and growing market. We have partnered with the market leader, and we are experiencing double-digit growth while making up for previous backlog additions. You can look forward to robust growth in that market for multiple years. Maxwell Michaelis: Alrighty. Thanks, guys. R. Jeffrey Bailly: You are welcome. Operator: Our next question comes from Andrew Harris Cooper with Raymond James. Please go ahead. Andrew Harris Cooper: Hey, everybody. Thanks for the questions. Maybe first, I want to clarify some of the commentary around new programs. I think in the release, you mentioned you launched three new programs, and it sounded like referring to the La Romana facility. I know you had talked about two, and then you mentioned one new one in the extended contract. Are those the three, or is there an additional program that is net new that we need to think about for that facility or that line of business? R. Jeffrey Bailly: Two of the programs were the multimillion-dollar programs we referred to in the past that we were launching at the end of the year. They were both robotic surgery related. The third one was not robotic surgery. We had three different plants collaborate and come together with their materials expertise and process expertise to design an infection prevention device, start to finish, that will ship directly to the patients. It will be packaged and ready to go from our facility. That one has launched in La Romana in our new Building Number 5. That is set up and going. Launches are slow, but we are making parts. They will go through a rigorous process of vetting those parts, and they will slowly ramp up. The third program is not robotic surgery. Andrew Harris Cooper: That is helpful context. I know you are limited in what you are able to say in terms of the contract, but I think the release included noting that you added volume-based pricing matrices and some cost-sharing provisions. I want to clarify: are those net new, and is there anything to read into layering those in and how that maybe portends for the long-term nature and not needing to amend or adjust the contract as much going forward because you have these features in place in the existing language? R. Jeffrey Bailly: The key to the contract for us is when we make a long-term commitment to a customer, we want to make a long-term contract with a vendor at the same time. Part and parcel to this is if we make promises to the customer that relate to cost downs, very often they are being financed by our vendor or together with our vendor. When we come up with cost savings, they are typically shared with our customer. I think the customer wins and we win in this process. I do not think there is any negative to look forward to, other than increased volume. When they hit certain milestones, whatever those are, there are cost-sharing opportunities that are borne between the three of us—or enjoyed between the three, I should say: the vendor, ourselves, and the customer. Andrew Harris Cooper: I did not mean to imply a negative—sorry if that came across differently—but that is helpful. Lastly, on the AJR business, I think you talked about about $8 million of backlog in the last update. Did that work down all in the quarter? If not, how should we think about the pacing of that starting to happen? And then any updates, knowing you have this third program moving, on completion of and when we should expect the pacing of the shift to start flowing through the P&L more? R. Jeffrey Bailly: Ron, I will let you tackle the backlog, and then I will tackle the second question, which relates to Program Three. Ronald J. Lataille: Our customer specifically asked us not to speak of backlog. The $8 million you referred to, Andrew, was the quarter, not the full amount. I can tell you that the backlog going into 2026 is higher than that, but I cannot disclose the number. We expect to work it down gradually throughout 2026. R. Jeffrey Bailly: With respect to Program Number Three, these were all Phase One, then the next and the next. Program One was completely transferred, up and running, and running at rate. Program Two has now been transferred. It is up and running but not running at rate as we go through the process. Program Three is scheduled to transfer when Program Two is complete. We are taking possession of a new building, I believe in April, and we will get that set up. That will be a second-half-of-the-year assignment. The key is that we have full capabilities already in Illinois to do these programs. These are redundant capabilities, and when they move over, our customer enjoys some cost saves, and we enjoy the opportunity to make additional profits when we get to our run-rate levels. Andrew Harris Cooper: Okay, I will stop there. Thanks, everybody. R. Jeffrey Bailly: You are welcome. Operator: This concludes our question and answer session. I would like to turn the conference back over to R. Jeffrey Bailly for any closing remarks. R. Jeffrey Bailly: Thanks, operator, and thank you all for participating on the call. We are excited about the future. The long-term contract hopefully dispels some of the concerns some people might have had. We have positioned ourselves with our top three or four customers for the next four or five years, really understanding what our growth trajectory is, and we have the vendors aligned right beside us. I think we have done an excellent job in the transition plan for our new CEO. He is fired up. He has been with us for 25-plus years. He was integral in developing the strategy. He has been integral in executing the strategy. He had a development plan that has given him exposure to all different parts of the business, including to some of our investors of late. It has all gone well, and I think that is something for everybody to be excited about. He is well qualified and a very capable leader. We appreciate your interest. We are excited about the future, and I will end it there. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
Operator: Greetings. Welcome to Alcon Inc. Fourth Quarter 2025 Earnings Call. At this time, we will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Daniel Cravens, Vice President and Head of Investor Relations. Thank you. You may begin. Daniel Cravens: Welcome to Alcon Inc.'s fourth quarter 2025 earnings conference call. Yesterday, we issued our press release, interim financial report, and earnings presentation. We also published our Annual Report on Form 20-F. All these documents are available on our website at investors.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer, and Timothy C. Stonesifer, our Chief Financial Officer. Before we begin, please note that our press release, presentation, and remarks today will include forward-looking statements, including statements regarding our future outlook. We undertake no obligation to update these statements as a result of new information or future events, except as required by law. Actual results may differ materially from those expressed or implied in these forward-looking statements. Please do not place undue reliance on them. Important factors that could cause actual results to differ materially are included in our Form 20-F, earnings press release, and interim financial report, each of which is on file with the SEC and available on their website at sec.gov. We will also discuss certain non-IFRS financial measures. These measures may be calculated differently from, and may not be comparable to, similar measures used by other companies. They should be considered in addition to, and not as a substitute for, IFRS-prescribed performance measures. Reconciliations between our non-IFRS measures and the most directly comparable IFRS measures can be found in our earnings press release. For discussion purposes, our comments on growth rates are expressed in constant currency. In a moment, David will begin with highlights from the fourth quarter. After his remarks, Tim will walk through our financial performance and outlook for 2026. Dave will then return with closing comments before we open the line for Q&A. With that, I would like to turn the call over to our CEO, David Endicott. Good morning, everyone, and thank you for joining us. David Endicott: Before we begin, I want to express my appreciation to our more than 25,000 associates. Your commitment to customers, your passion for innovation, and your resilience continue to fuel our performance. Each advancement we will discuss this morning begins with the work that you do every day. And while our full year results reflect softer markets, 2025, and especially the fourth quarter, demonstrated the strength and momentum of our business. Let's start my remarks today with innovation, which is the engine behind our growth. Over the past 18 months, Alcon Inc. has entered one of the most productive launch cycles in our history, and today I will highlight a few of the most impactful advances. First, we are excited about the progress we are making with our Unity VCS and CS platforms. Unity VCS, our next-generation vitreoretinal and cataract combination system, was recognized recently by the Business Intelligence Group for outstanding technology achievements. This prestigious award recognizes companies, products, and leaders that are transforming industries through applied innovation, intelligent platforms, and measurable real-world impact. We are honored that Unity was selected as this year's overall winner. Surgeons have responded enthusiastically to Unity, highlighting its enhanced control, improved efficiency, and integrated user experience. Since launching in mid-2025, Unity VCS has been introduced across most major markets worldwide and continues to build momentum. And Unity CS, our standalone cataract system, was designed to increase throughput while maintaining precision and safety. Surgeon feedback has been encouraging, particularly regarding its seamless workflow and next-generation energy delivery, which helps optimize case efficiency without compromising outcomes. We launched CS late last year, and we will continue expanding its global availability throughout 2026. The Unity platform represents one of the largest upgrade opportunities in our surgical portfolio in more than a decade, and with its large installed base and compelling value proposition, we continue to expect this platform to be a steady contributor to growth through the coming decade. Now let me move to IOLs. In the coming years, we expect to launch a wave of new lenses that will expand our portfolio and strengthen our competitive position. I will start with PanOptix Pro. PanOptix Pro is off to an excellent start and has meaningfully stabilized trifocal share in the U.S. Building on the proven performance of PanOptix, Pro reduces light scatter, a feature surgeons associate with an improved visual disturbance profile, and delivers even greater quality of vision. Adoption in the U.S. has exceeded our expectations, and we are now rolling out the lens in Japan and Australia with more markets to follow, pending regulatory approvals. Adding to the strong momentum of PanOptix Pro, we are expanding our portfolio with TruPlus, which recently received PMA approval from the FDA and is on track to launch at ASCRS in April. Importantly, TruPlus strengthens our position in the Monofocal Plus segment, enabling us to more effectively convert competitive offerings while also defending and extending our Clareon base among surgeons seeking an enhanced monofocal option. TruPlus is engineered to deliver enhanced intermediate vision compared to existing offers in this category, without compromising the distance performance surgeons expect from a monofocal. TruPlus will also launch with a toric option. Toric’s availability is a meaningful lever to increase our ability to compete in the toric segment and grow AT-IOL share. And next, later this year, we also expect to receive regulatory approval on an upgraded version of Vivity. Vivity is already the most implanted EDOF lens in the world, and this advancement builds upon its success. This improvement is designed to enhance near vision while preserving the visual disturbance profile that surgeons expect from Vivity. We are excited to launch this innovation in most major markets in early 2027. Finally, we continue to advance our accommodating lens program. Last year, we extended the clinical program after seeing some refractive changes in a portion of patients in our early clinical work. As part of this extension, we amended the protocol to include changes in intraoperative and postoperative medications. Given these changes, we now expect to read out the complete data towards the middle part of 2026. Switching now to retina, Valeda, our photobiomodulator device, is showing encouraging adoption trends and is helping deepen our engagement in the dry AMD space. Valeda uses three distinct wavelengths of light to improve mitochondrial activity and retinal health, giving clinicians a noninvasive treatment option they have not had before. This is the first and only treatment clinically shown to maintain visual improvement in dry AMD patients. We are excited about its long-term potential, as treatment is now being reimbursed by six of the seven MACs. Our team is continuing to build awareness and adoption within ophthalmology to complement our strong OR-based retina portfolio. Moving to Vision Care, reusable contact lenses continue to be a strategically important part of our portfolio, where we are under-indexed versus the market. More than half of new wearers start in a reusable lens, and this category offers long-term patient loyalty with attractive margins. Our growing reusable portfolio is anchored by Total30, the industry's first and only monthly lens with water gradient technology. The Total30 family already includes sphere, toric, and multifocal lenses, and this month, we expanded the family with the introduction of Total30 Multifocal for Astigmatism. This is Alcon Inc.'s first multifocal toric lens, a key step in expanding our innovative monthly portfolio. It positions us to compete strongly in the multifocal category, the fastest-growing segment in contact lenses, by addressing presbyopic patients with astigmatism, a group that historically has had limited options. Alongside the Total30 family, Precision1 provides an accessible, high-quality weekly option that broadens our reach within the reusable segment. Launched early last year, Precision1 was designed to meet the needs of both eye care professionals and cost-conscious patients by delivering week-long comfort and consistent vision in spherical and toric modalities. Combined, these innovations helped drive significant share gains in the reusable category in 2025. And finally, in Ocular Health, we continue to develop products that meet the needs of the expanding dry eye category. Dry eye remains one of the most prevalent and persistent ocular conditions worldwide, and our innovation continues to strengthen Alcon Inc.'s leadership. I will start with the over-the-counter Systane family, where we saw a strong quarter of double-digit growth. This performance was supported by new formulations such as Systane Complete and our newest launch, Systane PRO. In the fourth quarter, we also launched a direct-to-consumer advertising campaign on Systane PRO to help broaden awareness and drive trial. Systane PRO is our most advanced artificial tear. It is designed to hydrate, restore, and protect the ocular surface and deliver long-lasting relief. This multidose preservative-free formulation fills an important need in the U.S. market by offering a premium artificial tear without preservatives, a feature that clinicians and patients increasingly value. In the pharmaceutical space, Truqtra continues to perform exceptionally well. By year-end, it had surpassed approximately 84,000 total prescriptions and achieved 3% share of the U.S. market, which is a great result for a product only five months into its life cycle. Physicians appreciate its unique mechanism of action, which stimulates natural tear production as early as day one. Refill rates are high, signaling meaningful patient benefit and acceptance as well as strong engagement from eye care professionals. We also made great progress with reimbursement from commercial carriers like Express Scripts, Kaiser Permanente, and Highmark, and now have more than one-third of commercial lives covered. In 2026, our focus will be expanding the prescriber base and improving coverage. We continue to expect to expand Medicare coverage in the next 18 months. Systane PRO and Truqtra represent significant innovation in the dry eye space, broadening our reach across the full spectrum of dry eye patients and reinforcing Alcon Inc.'s leadership in this growing category. And to bring this all together, Alcon Inc. is delivering sustained, high-quality innovation across the company. We are advancing a portfolio of products across both of our segments, each with multi-year commercial potential. I will close with a few observations on the market during the fourth quarter. In cataract, we estimate that global procedural volumes grew approximately 3%. Additionally, AT-IOL penetration globally was up 90 basis points. In contact lenses, global market growth was approximately 4%, which was primarily driven by the strength within the U.S. With that, I will turn it over to Tim, who will walk us through the financials. Daniel Cravens: Thanks, David. Timothy C. Stonesifer: Our fourth quarter sales of $2.7 billion were up 7% versus prior year. In our Surgical franchise, revenue was up 6% year over year to $1.5 billion. Implantable sales were $474 million in the quarter, up 2% versus the prior year period. As David mentioned, PanOptix Pro continued to perform well in the U.S., and we are in the early stages of launching it in select international markets. Even so, during the quarter, we continued to see an increasingly competitive IOL market. In Consumables, fourth quarter sales of $794 million were up 5%, which reflects growth in cataract and vitreoretinal procedures as well as price increases. In Equipment, we saw another quarter of acceleration with sales of $77 million and growth of 18%, driven by the launch of Unity. Turning to Vision Care, fourth quarter sales of $1.2 billion were up 7%. Contact Lens sales were up 4% to $683 million in the quarter, primarily driven by price increases and product innovation, partially offset by declines in legacy products where we have limited our promotional activity. Please recall that this quarter we faced particularly tough comparisons with double-digit sales growth in 2024. In Ocular Health, fourth quarter sales of $474 million were up 12%, led by continued strength of our dry eye portfolio, including Truqtra and Systane. As David mentioned, Truqtra’s launch is tracking ahead of expectations with strong early refill rates and broad prescriber enthusiasm. As access expands and awareness builds, we expect Truqtra to be a meaningful growth driver in 2026. Systane also had a great quarter with mid-teens revenue growth. Now moving down the income statement. Fourth quarter core gross margin was 62.5%, down 50 basis points year over year, mainly driven by incremental tariffs, partially offset by price increases. Core operating margin was 19%, down 160 basis points, driven by lower gross margin, increased sales and marketing investments behind new product launches, and increased R&D investment. This was partially offset by favorability from lower annual incentive compensation compared to prior year. Fourth quarter interest expense was $53 million, and other financial income and expense was a net benefit of $6 million. The average core tax rate in 2025 was 17.5%, down from 19% in the prior year due to discrete tax benefits. Finally, diluted earnings were $0.78 per share in the quarter. Turning to cash, we generated $1.7 billion of free cash flow in 2025, compared to $1.6 billion in 2024. In addition, in 2025, our free cash flow as a percentage of core net income was 114%, well ahead of our long-range goal. Our robust cash generation has enabled us to return $848 million to shareholders in 2025, comprised of $682 million in share repurchases and $166 million in dividend payments. Moreover, I am pleased to report that in January, we completed the repurchase program and returned the full $750 million to shareholders, more than two years ahead of schedule. Regarding tariffs, we incurred $91 million of tariff-related charges in 2025, of which $67 million was recognized in cost of sales. Now moving to our outlook. As I am sure you have noticed, starting this year, we are updating the way we present guidance to more closely align with the framework we outlined at our last Capital Markets Day. Our outlook assumes that aggregate eye care markets grow 3% to 4% for the year, that exchange rates as of January hold through year-end, and regarding tariffs, this outlook assumes an average tariff rate of approximately 15% for imports into the U.S. for the remainder of the year. Additionally, we have assumed that retaliatory tariffs remain unchanged. Starting with sales, we expect top-line growth of between 5% and 7%. We believe this outlook reflects a balanced view of market conditions, complemented by the steady progress of recent product launches. Although we had a strong fourth quarter exit rate, we feel this guidance is prudent given the soft market conditions in 2025. Importantly, given our innovation pipeline and new product launches over the coming years, we remain committed to our long-range Capital Markets Day targets. In terms of phasing, we expect sales growth to be relatively level-loaded throughout the year given the cadence of new product launches. Turning to gross margin, while we are not providing formal guidance, we currently expect 2026 to look broadly similar to 2025. Efficiency gains and the launch of Truqtra should continue to support margins, while headwinds from tariffs and the ramp of equipment launches largely offset those benefits. Moving to operating expenses, we expect SG&A leverage to be the primary driver of operating margin expansion. R&D expense is expected to be approximately 9% of sales. Additionally, as we have discussed previously, over the past several years, we made significant investments in operational improvements and system enhancements to drive efficiencies. Building on this progress, as outlined in our earnings release, we have announced new efficiency measures to further optimize our cost and support long-term margin expansion. We expect approximately $100 million in annualized run-rate savings, with about $50 million realized in 2026. This initiative is expected to cost approximately $150 million and be completed by year-end. So in aggregate, we expect full-year core operating margin to improve by approximately 70 to 170 basis points. Moving to the bottom line, we expect core diluted EPS to grow between 9% and 12%. And in terms of phasing, given the cadence of product launches and the run-rate savings, we expect the second half of the year to benefit from higher profitability than the first half. Before I wrap up, I am pleased to report that our Board has proposed a dividend of $0.28 per share. This is in line with our payout policy of approximately 10% of the previous year's core net income. Shareholders will vote on this proposal at the upcoming Annual General Meeting in April. And lastly, I too would like to extend my thanks to our more than 25,000 associates across the organization for their dedication and hard work. And with that, I will turn it back to David. David Endicott: Thanks, Tim. Before we open the line for questions, I want to briefly step back and summarize what we believe is most important. First, our fundamentals remain strong. We delivered solid fourth quarter performance, exited the year with momentum, and continued to invest behind innovation that supports sustainable, long-term growth. Our portfolio is broader, deeper, and more differentiated than at any point in our history. Second, our innovation engine is working. Across Surgical and Vision Care, including Ocular Health, we are advancing multiple platforms with multi-year commercial potential. This breadth matters. It gives us a broad portfolio of potential revenue opportunities that reinforces our confidence in consistently creating value for shareholders. Third, we remain disciplined. As Tim just outlined, our 2026 outlook reflects a balanced view of market conditions, while preserving our commitment to margin expansion, strong cash generation, and shareholder returns, investing where returns are highest while continuing to optimize our cost structure to support long-term performance. And finally, none of this happens without our people, and I want to thank our more than 25,000 associates again around the world for their dedication, resilience, and focus on serving eye care professionals and their patients every day. With that, operator, please open the line for questions. Operator: Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. Our first question is from Graham Doyle with UBS. Please proceed. Graham Doyle: Thanks, guys. The line is a little bit choppy, so I am assuming you can hear me. Just a question on the guidance. So obviously, last year, we had a couple of missteps really around the market. Could you give us a sense as to how comfortable you are today in terms of visibility? Because when I look at some of the equipment and Truqtra, it feels to me like you get halfway towards the midpoint of your guide already. And then to Tim’s comments on phasing, it strikes me that you should, you have got some relatively soft comps Q1, Q2. You have obviously exited quite a strong rate. So should you be kind of in the middle or the upper end of the revenue guidance range, we think, for the half? Thanks a lot. David Endicott: Graham, thanks for the question. Let me just, on the markets, the markets improved in the fourth quarter. They were improving most of the year, as we kind of indicated. But they are not quite back to normal yet. So I think, you know, the balanced view that we have right now is that we should call it about where, you know, it finished. And so when you look at this year, you know, the way we see the market broadly is the Surgical market finished about 3%. That is probably where we will call it for next year. Vision Care was 4% and change. You know, that is probably where we will call it. So in aggregate, you know, being in the 3% to 4% range for now makes a lot of sense to us. And I, you know, maybe that is discipline, but I think that is the right answer. So that is how we are thinking about the market for the year. And on the front and back half, I mean, I would— Timothy C. Stonesifer: Say on the phasing, Graham, you know, I think Surgical, to your point, is going to be driving that first half growth if you think about PanOptix Pro, equipment continuing to do well. And then as you get in the back half, I think Vision Care is really going to be driving that. Truqtra is really going to be building a lot of momentum. We are also going to see some nice growth in P1 and Total30. So it should be relatively balanced for the year. Graham Doyle: Awesome. Okay. Thanks a lot, guys. Appreciate it. Operator: Our next question is from Lawrence H. Biegelsen with Wells Fargo. Please proceed. Lawrence H. Biegelsen: Good morning. Thanks for taking the question. I wanted to start with Equipment, really strong growth, 18% in Q4. So any color on how much Unity contributed to Equipment growth in Q4? If we look at year-over-year growth of about $48 million, was that mostly due to Unity? And how should we think about Equipment growth in 2026? You know, David, you have talked about, you know, 3,000 placements per year, just on average. How should we think about that in 2026? And I had one follow-up. David Endicott: Yes, Larry, a great quarter on Equipment. Obviously, we have got CS out in the quarter as well. So, but if you look at year on year example, Unity for Retina, our VCS, you know, our revenue doubled in that category. Now, it is not what you should think about the going-forward number, but I would just say that we had really strong demand. We filled that demand pretty well in the fourth quarter, and we really did not get CS out. So I would say, you know, we have got really good visibility to a funnel of contracts that, you know, are ready to go. We have visibility to the install rates. We feel really good about the number that we have given in the past, so I think if you are referring to the number we gave mid-year last year, certainly with, you know, on our, exactly, no change to that, I would just say. And I think the kind of the important part of it is the feedback we are getting on the product itself is positive and a little bit that I commented on relative to the award we won from the BIG thing. The customer really appreciates, at this moment in time in particular, being able to do more surgeries in a day in a very safe way, and that is kind of the core of the proposition. So we feel good about Unity right now, and it was a big part of the Equipment growth. Lawrence H. Biegelsen: It is helpful. And David, it looks like Truqtra sales are actually tracking better than the IQVIA prescription data. I guess my question is, was there any stocking in Q4, how should we think about Truqtra in 2026? Is $80 million to $100 million the right range? And still comfortable with that $250 million to $400 million peak sales? Thank you. David Endicott: Yeah. Look, Truqtra really has taken off nicely for us, and we are, you know, we are excited about the enthusiasm that I think the patients are describing, which is this kind of rapid onset and tolerance that we are kind of expected to see, but I think it is pleasing to see. I think ophthalmologists and optometrists around the world, I think, are looking forward to this product. But I think in the U.S., where we see it now, it is exciting to watch. You cannot track it in IQVIA because it is obviously flowing through a third party right now to kind of make sure that we handle reimbursement best, but we are very comfortable with peak sales right now. In fact, I would say we probably are edging towards the higher end of the range we have given, which is that $250 million to $400 million range. Lawrence H. Biegelsen: All right. Thanks so much. Operator: Our next question is from Veronika Dubajova with Citi. Please proceed. Veronika Dubajova: Hey guys, thank you so much for taking my questions. Congrats on a strong finish to 2025. Two things please, if I can. One, just David, do want to circle back to your comments around the Unity order book? So I do not know if you can just describe how much visibility you have at this point in time. And I guess, sort of the demand CS versus VCS and how you kind of characterize your confidence in sustaining a healthy double-digit growth rate in Equipment as we enter 2026. And then my second question is for Tim, please. I noticed that the guidance assumes 498 million of shares. Obviously, we finished the year at 488 million. Any kind of reasons for that and then sort of indications, desire to do more buybacks as we move through this year, given that maybe there is a bit less M&A in the pipeline than there might have been before? Thank you, guys. David Endicott: Veronika, thanks for the question. I would just say the key is, we do have a very detailed view of our funnel, you know, the order book, as you will. Everything from prospects through to installations. So, you know, we track contracts, we track shipped products, and all the way through to installation and follow-up. So we are very confident in what we have got out there in terms of demand, and, you know, we expect the product to do really well this year. Timothy C. Stonesifer: Yeah. And I would just say on the share buyback, you know, the 498 million versus the 488 million, that is basically how the employee vesting is treated. So that is kind of the mechanics of the buyback. I would say in general, on future buybacks, listen. Our capital allocation philosophy has not changed. Our first priority is going to be investing in organic investments. Again, if you think about PanOptix Pro, Vivity, those types of things, those are doing very, very well. At the same time, we realize that we cannot develop everything. So we will continue to be active in BD&L and M&A. And then, obviously, the third leg of the stool is the returning cash to shareholders. So we review that every year with the Board when we do our strategic plan. So if we have any changes or any more buybacks, we will certainly announce it as appropriate. Operator: Our next question is from Matt Mitnick with Barclays. Please proceed. Matt Mitnick: Hi, thanks for taking the question. So I wanted to follow up on some of the dynamics in the IOL market, cataract market a little bit. If you could maybe elaborate on anything that you are seeing in market capacity, in market volumes, trends that could be improving there? And then anything in the pipeline, PanOptix Pro has been great. And your market leadership is impressive. But anything that you think could help sort of either expand laterally or penetration or drive share in other geographies or pick up the growth a little bit closer to some of the competitors in that segment? David Endicott: Yes. Thanks, Matt. And let me just comment a little bit on the IOL market broadly. It is kind of a, this quarter, or fourth quarter itself, was a little bit a kind of a very different market quarter, with PanOptix Pro kind of leading the way. And so we gained some share. Our AT-IOL penetration was high. And I think that did very well. We have got TruPlus coming right now. We have got Vivity 2.0 at the end of the year. And frankly, over the longer haul, we have got a number of ideas, you know, on how to, you know, continue to stay out in front of competition on this one. So we feel pretty good about the U.S. We weathered a bit of a storm there. And at this point, I think we feel like we have kind of got it under control, if you will. Internationally, a little bit different. Much more competitive. And I would just say, we still have not launched Pro, and we need to do that. We will get Tru out, and we will get a new Vivity product late this year. But those products are yet to be seen into the market, and I think that is where we will see a bit of turn there. The other dynamic in the market for International was International was soft in Japan and soft in Asia in particular, partly because China ran into some trouble with their AT-IOL market. So they hit a bit of a cap in the VBP, where they ran out of money at a hospital level. Vivity had done so well during the year, they ended up using a lot of bifocal product, you know, towards the end of the year. And so we had a little bit of a challenge in the China market for us. That is a little bit different than the market per se, but the market, generally speaking, was soft. Generally speaking, China has made up a big part of that in terms of growth in AT-IOLs, where it was soft. So if you look at that part of it, it needs to improve, but I think, generally speaking, we are well positioned. Operator: Our next question is from Ryan Benjamin Zimmerman with BTIG. Please proceed. Ryan Benjamin Zimmerman: Thank you. Thanks for taking the question. On the guidance, I want to ask a question. And I think you kind of alluded to this, but I just want to be clear. Historically, we have thought about 200 basis points of innovation coming from Alcon Inc. on top of market growth. But if you look at the high end of the guide, at 7% and given where you assume markets to be, that implies about 300 basis points. So it is a little bit higher than what we have historically thought of on top of your market growth rates. And so if you can kind of bridge that 100 basis point delta for us, David, is that mostly Truqtra and Unity? Or is there anything embedded in that, in that, you know, higher growth rate at the top end of the guide that we are not thinking about from a product standpoint. David Endicott: Yeah. Look, we have been disciplined about the guide here. I think, you know, what we are trying to do here is say, look, we think the prudent thing to do at this moment is pick up the fourth quarter rate. We do not think that is the normalized rate, but at the same time, that is what we have seen for the last couple quarters. So let us start there. To your point, we always say we have got a couple of 100 basis points of new product flow which should sit on top of that. So if you say 3% to 4%, which is where roughly the market was, you know, in the fourth quarter, then I think you add 200 basis points, and you are exactly right. We have a little bit on the top because we do not really know what the new product flow is going to do. And I think, look, if it does well, we will be on, you know, on the upper end of that. If it, you know, does kind of what we expected, or a little bit, you know, any other kind of concerns that show up, you know, we will see it, you know, in that range. So we have been, I think, disciplined about the way we think this one through. Ryan Benjamin Zimmerman: Okay. And then, David, I would like to ask maybe what is the strategy in refractive at this point? I know we went through the STAAR saga. There was a share buyback, obviously, on the back of that. But do you feel like, and again, appreciating that it is not needed necessarily to achieve your growth targets, as you alluded to on the last call. But where do you stand on refractive, and what do you want to do at this point? David Endicott: Well, I mean, first and foremost, we are excited about WaveLight. And WaveLight Plus in particular, you know, if you compare it to, for example, the competitive procedures, particularly, you know, the lenticular extraction procedure, we are getting a substantially better outcome. And I think we are, you know, our main objective right now is for six and unders, you know, these minus six patients, they should be getting LASIK. LASIK is a better procedure in our minds, and I think the data bears that out. You know, I think we had almost 50% or 60% at 20/14, you know, postoperative, and 100% at 20/20, and something like 80% at 20/20. What was it? 20/38, I think. So it was, I mean, we are getting tremendous results from this customized LASIK. We will keep moving down that path. We obviously would like to augment that with an ICL. Whether that, you know, it does not look like it is going to be STAAR at this point, but there are a lot of ICLs out there. And I think, you know, maybe the good news on this is, you know, we have got lots of other options out there. We are not in a hurry on refractive, but we are definitely moving down a path of committing to the refractive area. Whether that is RLE, whether that is laser work, whether that is an ICL, you know, there are a lot of options here that we are going to work at. But refractive is clearly one of a number of white spaces for us that we are interested in. Glaucoma as well. In the Vision Care business, we have got a lot of pharmaceuticals we are interested in. So we are looking broadly at white space. Refractive is certainly one of them. Timothy C. Stonesifer: Thank you. Operator: Our next question is from Jack Reynolds-Clark with RBC Capital Markets. Please proceed. Jack Reynolds-Clark: My first one is on Implantables. Could you remind us what your expectations are around timelines of the launch of PanOptix Pro outside the U.S.? And just to kind of dig in a bit deeper here, at what point do you expect growth in this segment to grow in line with the market? Is it 2027? Is it 2028? And are launches sufficient to make that happen, or is there something else that you think is needed to make that happen? And then sorry, just to ask again on the guidance, but it is a wide range on the revenue side for the year, obviously, given the market growth range too. What is it that drives revenues coming in at 5% constant currency growth versus the top end 7%? Thank you. David Endicott: Yes. The second one is pretty easy. Let me kind of give you where it is. I mean, we basically are saying 3% to 4% with the market. If the market does better than that, that is the high, or worse than that, that is the low on the market. And then the new product flow trajectory, we have got 10, or actually more than that now, new products kind of in play that have variation around the mean. So we are obviously going to have some variable answers there. Some of them are going to do better, some of them may not do as well as we expect, but how that mix is will also give us a high and a low around the range. So think about it as both a market dynamic and then also new product trajectory dynamic. On the Implantables piece, look, we are launching PanOptix Pro in Japan right now and Australia right now. I think we are waiting on a regulatory approval in Europe. I think you are going to see TruPlus and Vivity 2.0, I think late this year. Maybe it is early next year, but I would say that, you know, we have got lots coming ex-U.S. And I do think that that will help a lot in our competitive fight there because, you know, I would just say this TruPlus product is, you know, we have kind of ignored the Monofocal Plus category for a while. We found a very clever way to do something I do not think anybody else can do with our optical design on that. So we are excited about, particularly internationally, the toric Monofocal Plus and the Monofocal Plus base lens are relatively good sized, and so we like our chances in that market with new products. So we will see how those go. Jack Reynolds-Clark: That is great. Thank you. Operator: Our next question is from Anthony Charles Petrone with Mizuho Group. Please proceed. Anthony Charles Petrone: Thank you, and good morning everyone. I actually had a question on the U.S. IOL cataract market. David, you spoke in the past about how surgeon capacity is constrained for a good part of 2025. Timing on that was a little bit opaque. So wondering where U.S. surgeon capacity is on the cataract side as we enter 2026? And I will have a quick follow-up on margins. David Endicott: Yeah, Anthony, it is a really good question. We have been working on this one for a while, and I do think that surgeon productivity is the main dynamic. You know, when you look out and you see where the practice of cataract surgery or ophthalmology is going, there are some practices, for example, in the Midwest that we follow very carefully. And, you know, what they are doing is they are doing more surgery days right now by employing optometrists to do some of the pre-op work, some of the post-op work. They are using paraprofessionals around the clinic days so that they have got more time to spend in the OR. And then, you know, to a large degree, in states where you do not need a certificate of need to get an ASC, there is a lot of ASC movement now. And then I would say, in other states, you know, where you do need a certificate of need and where hospital time has been difficult to get because there is so much other demand, you know, you see the societies and the surgeons looking for alternative ways to get OR time. And so I think the market is working it out. And it makes sense that they should because there is a lot of demand for cataract surgery right now. Days are actually going up in terms of wait time, not down. There is a lot to be done out there and money to be made if the facilities can provide the time and the surgeons can provide the skill. And so I think you are going to see that normalize, as we said it would. But again, we are playing that just a little bit more balanced than perhaps we have in the past, just because, you know, we have not seen it happen yet. We expect it to, but we will see when it happens. Anthony Charles Petrone: Great. And then just follow-up on margins would be, when you look at the high end of the range here, 170 basis points, I know you called out the restructuring program, $50 million this year, $150 million total. But you also have some pretty good new product mix. Truqtra is doing well. Unity is getting off and running. I am just wondering to what extent new products plus price is in that margin guide versus the $50 million cost-out program? Thanks. Timothy C. Stonesifer: Yeah. Again, we are, I would say that we are going to continue to get price this year, probably not as much as we got last year, but we will continue to get price. We are going to continue to get leverage out of the M&S. Again, think about, we invested a lot in the new product launches last year. We are going to invest more this year. But when you look at it from a year-over-year comparison, we are not going to see as much pressure. And then the new product launches, yeah, again, to David’s point, it just depends how that flows. Truqtra should be favorable. The more equipment we do puts pressure on the overall margin rates. But we feel comfortable with the range we provided. Operator: Our next question is from Patrick Wood with Morgan Stanley. Please proceed. Patrick Wood: Beautiful. Thank you so much for taking the questions. Just two quick ones. First one around Voyager, how you guys are feeling about things, how things are going there? How it fits into glaucoma treatment and how that has gone recently? David Endicott: Yeah, look, Voyager, we are excited about Voyager. SLT is one of those things that, if you ask surgeons, or ophthalmologists, generally speaking, should you do SLT, a 100% of them, I think, will say yes. That is where we should start. And then you ask them a second question, which is, you know, how many of you all are doing it? And, you know, you get a kind of a mixed bag. And that is because it is a tedious procedure to sit and click from the kind of the traditional, you know, laser systems that are in the office. So Voyager represents something that is very efficient, but really great for patients. And, you know, I think this is a move that is going to take some time, but I think the glaucoma community is definitely on board with this. You know, we made a good move, I think, this year in the U.S. in particular in consolidating Voyager with our Valeda product to improve our in-office coverage. Remember, this is in-office equipment. This is a piece of equipment that sits in the office, not the OR. And I think one of the challenges we had last year with Voyager, we were in the OR because of Hydrus. We were struggling to get everybody covered properly. So I think you will see, you know, a nice move on Voyager and Valeda, both of which I think, you know, sit in that kind of efficiency play for, you know, in-office equipment, which, again, in the U.S., we are doing a lot with, and we will see how that goes. Obviously, internationally, there are some reimbursement challenges that we are going to continue to work through. But we are very excited about Voyager directionally. Patrick Wood: Makes a ton of sense. And then just quickly as a follow-up, you guys touch the consumer in a whole bunch of different categories in different ways, whether it is contacts or whether it is the non-Rx business in Ocular Health. Like, what do you think you are seeing? How do you think the consumer’s health is? I know that is a very broad question, but is promotional activity going up at the retail side? And just curious, the big picture, how you think the consumer is doing based on the categories you guys are in? David Endicott: Well, I think big picture, I would say the U.S. is pretty okay for us. International maybe a little bit more mixed. It is hard to tell. In the Contact Lens business, which is probably one of our, you know, if there was a sensitive business, it is probably that one. That particular business internationally has resisted price, partly because it is chain-dominant. So if you look at the Europe market, you have got a lot of big chains who basically are telling us we are not going to take price from you. And that is really what is causing kind of a big chunk of the challenge in market growth in the International business. I think the same is in Japan. Japan is a big Contact Lens market and has a lot of chains which, frankly, just are not going to take price right now. So for a number of years, we took price pretty easily. That has slowed down. Certainly last year it did. So I think, generally speaking, the U.S. was very healthy, and we, I think, were 6% or 7% growth in the U.S. So I think the U.S. also, if you look at the consumer, you think about sensitivities that would matter to us, our OTC business, shoot, we had, I think, a 6% artificial tear growth in that market. That was a valuable market for us. And the promotional efforts or the health of the consumer, you know, is driving AT-IOL penetration up significantly in the U.S. So U.S., I think, was up a 100 and some odd basis points in promotion. So if there was really any consumer sensitivity, you would see it in one of those categories in the U.S., and it really has not appeared to us, at least in the data, that that is what is going on. A little bit more sensitive maybe outside the U.S., but I think that is, again, none of our markets are terribly sensitive to the consumer. Eye care, as you know, is obviously a very kind of inelastic demand. Patrick Wood: Thanks for the details, David. Operator: Our next question is from Issie Kirby with Redburn Atlantic. Please proceed. Issie Kirby: Hi, guys. Thanks so much for taking my question. I wanted to start on Unity and the cataract system in particular. Appreciate it is only a couple of months and relatively early within the launch. But what are you seeing in terms of your placement rate? I know with VCS, perhaps there were some difficulties in getting trained up. Is that something you are seeing with the CS system? Just wondering about the momentum there. And then I have a follow-up on Contact Lenses. David Endicott: Yeah. Issie, like I said earlier, I would say the visibility to the order book is very high. And obviously, the cataract system is going to be the bigger of the systems. The VCS, which we spent most of last year on, is really a retina system with, you know, I think some degree of, you know, actually, we sold a lot into mixed groups where there was a retina person and a cataract surgeon, so there was quite a little bit of that. But I do think, you know, the volume is going to be, you know, in the cataract system because that is just, you know, naturally where most of the volume is. So we have real good visibility to that. I would just say that the response has been excellent. I mean, I think we are working our way through, you know, as fast as we can getting these things installed, but the demand is high right now. Issie Kirby: Great, thanks. And then actually as my follow-up, just sticking on cataracts. Are you seeing any benefit really to the broader portfolio within particularly the Implantable business when you are placing a cataract system? I am just wondering if there is any sort of real halo effect coming through with having an Alcon Inc. rep in the door, ramping it up, ramping the system up. David Endicott: Well, you know, I mean, obviously, all these decisions are independent on a product basis. And I think, you know, certainly one of the beautiful things about having a really important piece of equipment is that you get to be in the OR a lot. So you do have opportunities to talk with the staff and the surgeons a little bit more, perhaps, than people who are not there every day. But I do think that really what is driving our IOL share in the U.S. is PanOptix Pro. We had a really good quarter on Pro, share was up and, you know, stabilized, you know, year on year. So I think we are feeling pretty good about the potential of that product around the International markets as we kind of get out there. So really, I think as we go forward, you know, think about it mostly as discrete choice of, is our lens better than their lens, and I think that is the fight we are really taking on most every day. Operator: Our next question is from Thomas Stephan with Stifel. Please proceed. Thomas Stephan: Great. Hey, guys. Good morning. First one on cataract physician fee cuts just here in the U.S. David, maybe if you can talk about how you are seeing, to date, or expecting these dynamics to potentially impact different areas of the business like AT-IOLs, capital equipment? And then I have a follow-up. David Endicott: Yeah. You know, oddly enough, I think cataract fee cuts, which, you know, again, for the, just for everybody who may not know this, physician fee came down. I think it is about $4.50 or something like that per procedure. Actually, facility fee went up 3%. So just to be clear, there was not a cut in the facility fee, and the facility is generally who purchases the AT-IOL. So just, you know, that is an important distinction. What is interesting though is, you know, penetration in the U.S., for example, was up 130 basis points for AT-IOLs. And I do think there is, look, there is some promotional effect going on here, but we have seen a couple, three quarters now where you are seeing very significant AT-IOL growth, but particularly in the fourth quarter. We saw a kind of a step up in it. And I do think that people are aware that if they are going to do a limited amount of surgery, and they are going to get paid $4.50 for it, you know, they can make more money, you know, getting the patient a better lens, kind of talking to them about what it looks like to invest a little bit more but get them a better outcome. And that is, I think, what is driving some of this. And I think some of that is actually coming off of these fee cuts. That is going to move people to say, hey, I could do something else here. Thomas Stephan: Got it. That is great. And then my follow-up is just on Contact Lenses, grew about 5% this year. So probably still above market, but maybe a smaller delta than usual. So, David, to stick with you, I mean, can you talk about just your confidence in growing above market? And more importantly, what are the incremental drivers, I guess, Total30 and Precision1? But just curious if you can, you know, speak a bit to, you know, how we should think about growth next year relative to market? Thanks. David Endicott: Yes, really important comment, and I think probably we have not talked enough about it. Look, the market was pretty solid. I mean, it remained on the low end of normal, but I think it was probably 5% globally last year, and I would just be careful with our fourth quarter because we are wrapping around an 11% number from the prior year which involved our P1 launch and some inventory there. So again, I think if you normalize for all of that, we have been growing ahead of market most of the year. You can see that we had a very good quarter in the fourth quarter in Contact Lenses. If you look at the audited data, our global share of Contact Lenses was up, maybe we gained almost a full share point, like 70 basis points. Our global share of Reusable was well over that. Our daily disposable SiHy was double digits. We had really nice share growth in dailies and reusables in the fourth quarter. So I think, you know, we are feeling good about Contact Lenses, and it is really coming from, I think, a combination of our ability to focus on both Reusables and Daily. So our, obviously our daily is Total1 product, P1 product. Those are, we believe, really well positioned for both value and then premium markets. The Reusable market is a very profitable, I think kind of underappreciated market, because almost half of the patients are going into reusables. So we are gaining a good bit of share there by focusing on it. I do not know that a lot of other people are, and that has been very positive for us. So, you know, we are continuing to work on our multifocal toric, which is exciting to get into that. But I would just say that if there is one place we are a little bit soft, it is probably in that multifocal area where we have been losing a little bit of share. And I say all of that with the underlying belief that, you know, we have been letting go a little bit our DHPC product. So, you know, we have got some downward pressure from some of the older legacy brands that we, you know, try to move away from and get them into the higher-end, more profitable brands. So we had a good quarter in Contact Lens. Thanks for asking. Operator: Our next question is from Susannah Ludwig with Bernstein. Please proceed. Susannah Ludwig: Good afternoon, and thanks for taking my questions. I guess I wanted to follow up in terms of International IOLs. You guys talked about China. Could you remind us what percentage of your Implantables business China is and what your expectations are for the upcoming VBP? David Endicott: Yeah. I do not think we break out the, we do not break it out at that level. I think China broadly is 5% or 6% of the total, and you can find that in the general financials of our total business. And I would just also say that China is mostly a Surgical business. Relative to the IOLs in China, what really went on, I think, was we had a really fast-growing business with Vivity that kind of hit a ceiling because there is a DRG level of reimbursement that comes to the hospital level a lot of the hospitals ran up against, and they kind of had to slow everybody down in the hospital. So they went to a lot of bifocals. So when you look into it, monofocal growth was pretty high, foldable growth was pretty high, but it was not coming out of AT-IOLs. I think that was a valuable lesson for us. The VBP expectation going forward, it is going to be tough. We expect some price erosion here. We expect to get into this and kind of continue to be roughly year on year, I would say, roughly, we would be flat would be a good number for us. So I think we will get volume, but we are going to have to give up some price, and that assumes we win. So again, all of those things are in play. Middle part of the year is the current expectations, but we will see how that all plays out. It is an increasingly competitive market in China, but it is also a very big market. So we think volume will grow nicely and offset some of the pricing erosion. And again, prices are still pretty good in China, actually. So you look at it relative to Europe, they are pretty similar. Susannah Ludwig: Okay. And then I guess just as a follow-up to how do you guys think about sort of long-term? Would you ever sort of look at long-term moving production to China given their focus on local production? David Endicott: Well, we will look at that every year and see. Right now, we do not produce in China. We are manufacturing a couple of things in the Equipment land that we are, or we are thinking about moving there, because for exactly the reason you indicate, which is there is a Buy China rule there for folks that are making product there. There is a small advantage, depending on what product we are talking about. So we will move a little bit of Equipment there. But generally speaking, we are sourcing China out of other locations than the U.S. So I think we are trying to do that. There is obviously some challenge with that, particularly around Equipment. But, you know, IOLs, I think we can move to a neutral location for trying to avoid tariffs, if that is the purpose of your question. But in terms of long-term production in China, good question. Not sure we have discussed it in a broad sense for anything other than Equipment. Operator: Our next question is from David Joshua Saxon with Needham & Company. Please proceed. David Joshua Saxon: Great. Thanks, guys, for taking my questions. Just a couple of ones. Maybe starting with Tim, you talked in the script, I believe, about Truqtra starting to benefit margins in the back half. So can you talk about just the magnitude of the investments you are making behind that product? And once that does turn profitable, kind of the magnitude of the benefit you could see? Timothy C. Stonesifer: Yeah. Again, we are not going to give product-level margin analysis, but we are investing what we feel is appropriate to make sure that that launch is successful. And as David said, right now, it is performing better than expectations. David Joshua Saxon: Okay. Great. And then just on Unity, as it relates to Consumables, I mean, how soon after a unit is placed do you start to see those Unity Consumables start flowing through? And if the market is growing 3%, I mean, do you get a couple extra points from the Unity Consumable pricing? Thanks so much. David Endicott: Yeah. I mean, I think, generally speaking, you can, you know, as a, I will just call it a broad rule of thumb and, you know, depends on, you know, lots of things. But I would say we generally look at the market and say Consumables will run a couple of points hotter than the market. That is generally what happens and has happened in the past. I would expect that to continue. I would not really interpret the Unity placements as driving a lot of additional above that. I think a couple of points above market growth would be the right way to think about it. Operator: Our next question is from Jeffrey D. Johnson with Baird. Please proceed. Jeffrey D. Johnson: Guys, good morning. Thanks for squeezing me in. I will be quick here with just two questions. David, going back just on your TruPlus comments, I think you alluded to this, but I do not believe you have ever had a Monofocal Plus. Can you just, one, confirm that? Two, can you remind us monofocal versus Monofocal Plus kind of mix in the U.S., but especially in some of the International markets? How much Monofocal Plus share has been taken over the last, call it, couple of years or what the current mix is? And remind me if you do get a little pricing premium on a Monofocal Plus over a monofocal? Thanks. David Endicott: Yeah. You do get a little bit of a price premium. Let me start by saying, you know, in the U.S., the monofocal business, Monofocal Plus business, has not been a huge phenomenon. It probably had its biggest effect on the toric business. And I would say, you know, partly because you can, you know, in the add collect space you can collect extra money from them for an advanced technology lens like this. And so they positioned the toric lens, I think, with an increased amount of intermediate vision, which is really nice. And it is better than the monofocal. But the impact has been really in the toric space. So, you know, we lost a fair bit of share in the U.S. over the last several years in toric. I think to some degree it was to the Monofocal Plus, so we are looking specifically, that is the opportunity, I think, in the U.S. Internationally, a little bit different because they really, you know, I think had a price point challenge internationally, and Monofocal Plus did do a better job, I think, in the, I have just thought, somewhere between monofocal lenses and AT-IOL lenses. They carved out some space. I am not sure what size of that was, but it is meaningful. And I do think that, you know, when you really think about it, this world may just turn into being, you know, the monofocal business turns into Monofocal Plus. I mean, I think it comes with a little bit of a premium, and, you know, this is a better lens than our core lens because you get more intermediate, but you do not give up much distance. So I am excited about the opportunity. It is a modest one, but I think important in terms of our share in toric. Jeffrey D. Johnson: Fair enough. And then just one quick question on EPS gating. I heard your comments on second half profitability higher than first half profitability, but you also are guiding a couple of 100 basis points of FX tailwind to earnings, to EPS growth, I am sorry, this year. So I just want to make sure I am understanding. Gating up EPS because I think those currency tailwinds should be probably more first half weighted, should gating of EPS throughout the year be relatively flat or consistent, even if profitability improves in the back half of the year? Timothy C. Stonesifer: Yes. Again, the EPS growth that we are talking about is in constant currency. But if you think about sort of phasing in general and profitability, just go down the P&L. We talked about revenue. We talked about gross margin. Gross margin flat year over year. The only thing I would say there is the first half will be lighter than the second half, and that is because you have the impact of the tariffs coming through. But overall, they should be flat year over year. SG&A will be a similar profile as last year when you think about it on a percent of revenue basis. Again, as we have seen in the last two or three years, be a little careful with Q2. That is a heavy M&S spend for us from a back-to-school perspective. So I would go back and look at the prior years and see how much it is. You know, it is $40 million or $50 million, probably more in Q2 versus Q1. The savings we talked about, that will be probably 60% to 70% back-half loaded. So that is another driver why the second half is better, and then you can work the rest of the P&L. But we feel pretty good about the guide, and we are going to continue to grow the business faster than the market. We are going to continue to expand margins, and that should drop through some nice free cash flow. Operator: Our next question is from Steve Lichtman with William Blair. Please proceed. Steve Lichtman: Thank you. Hi, guys. Maybe a couple for you. First, any color you can give on free cash flow outlook for this year? You gave some inputs with CapEx, and it looks like a restructuring charge. But any other you could provide on puts and takes and where you could end up would be great. Timothy C. Stonesifer: Yes. Again, I think as we continue to drive margin expansion and grow the business, that is going to drop through some nice free cash flow. So I would expect it to be similar to what we had last year. That would include the restructuring charges that we talked about. But we feel pretty good about the free cash flow this business can generate. Steve Lichtman: Okay. Got it. And then are you still expecting some incremental spend on Auryon this year? Looks like you are talking about getting some leverage on the R&D line. So any update on where you are at with that program and the incremental costs? Thanks. Timothy C. Stonesifer: Yes. There is still probably 40 basis points, as we talked about last time. That really has not changed from the Auryon perspective. But again, we have talked about over the last, call it, you know, 12 to 18 months, about some of the efficiency programs that we are working on. One of them is in the create-to-make space that we have talked about. You know, our internal goal there is about a 20% improvement of getting product to market faster. Now, some of that is in these numbers, which is why you are seeing a little bit of the leverage. But certainly not all of it. But we feel pretty good about the R&D spend and the innovation pipeline that we have, and we feel like we are investing appropriately behind it. Operator: We have reached the end of our question and answer session. I would like to turn the conference back over to Daniel for closing remarks. Daniel Cravens: Great. Well, thank you, and thanks again for joining us this morning. For any follow-up questions, from an investor standpoint, reach out to either Alan Tring or myself, and for media, reach out to our Corporate Communications department. Thanks again. Have a good day. Operator: Thank you. This will conclude today’s conference. You may disconnect at this time. Thank you for your participation.
KC Kelleher: Welcome to the Angel Oak Mortgage, Inc. fourth quarter 2025 earnings conference call. Today’s call may include forward-looking statements that may cause actual results to differ materially from current beliefs. We disclaim any obligation to update our forward-looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company’s results, please refer to our earnings release for this quarter and to our most recent SEC filings. During this call, we will be discussing certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are contained in our earnings release and SEC filings. This morning’s conference call is hosted by Angel Oak Mortgage, Inc. Chief Executive Officer, Sreeniwas Vikram Prabhu, and Chief Financial Officer, Brandon Robert Filson. Management will make some prepared comments, after which we will open up the call to your questions. Additionally, we recommend reviewing our earnings supplement posted on our website, www.angeloakreit.com. I will now turn the call over to Sreeniwas Vikram Prabhu. Sreeniwas Vikram Prabhu: Thank you, KC, and thank you all for joining us today. Our fourth quarter and full year results were encouraging, serving as a testament to the strength of our earnings engine and our dedication to our process. We delivered our second consecutive year of double-digit net interest income percentage growth alongside our third consecutive year of operating expense reduction, emphasizing the stability of our platform and the strength of our operations. We executed our proven strategy, demonstrating its value in an evolving and constructive market environment as we navigate a shifting rate backdrop. GAAP book value per share increased year over year due to improving valuations in our legacy securitizations as rates move lower as well as high net interest income supported by our deployment of capital into high-yielding investments. Credit performance remains strong, both in aggregate and relative to the overall market, and we believe our portfolio remains well positioned to perform comparably well over a range of macroeconomic outcomes. We continue to see the benefits of our deliberate early decision to step up in credit quality and focus our balance sheet on assets that we believe are resilient across a range of economic outcomes. The broader interest rate environment in 2025 was characterized in general by decreasing rates across the curve and over the course of the year, amid shifting expectations around the pace and the path of short-term rates. While uncertainty remains, we are optimistic that short-term rates will continue to decline and we will see further steepening in the yield curve. Securitization markets were healthy throughout 2025 with tightening spreads and healthy investor demand supporting attractive term financing for our investment portfolio. We participated in four securitizations and called two of our legacy deals from 2019, enabling us to redeploy the de-levered capital into higher-yielding assets. Notably, we also completed our first HELOC securitization. We believe HELOCs are an attractive and growing asset class and we expect to continue to invest in them, though we remain focused on our core strategy of acquiring and securitizing high-quality non-QM loans. We had a new warehouse credit facility in 2025, diversifying our lender base and continuing to optimize our funding mix to support high-quality loan purchases. Additionally, we completed our second issuance of senior unsecured notes, the capital from which was quickly deployed into accretive target asset purchases that generated incremental earnings within a quarter of the debt issuance. These actions position us to sustain and further enhance our net interest income increases as we move forward while maintaining a prudent approach to leverage and liquidity. Looking ahead, our addressable market remains significant and continues to grow, driven by structural demand for non-QM solutions and ongoing need for specialized mortgage credit. Within this market, Angel Oak Mortgage, Inc. has established itself as a leading non-QM platform with differentiated sourcing, underwriting, and financing capabilities. Our consistent securitization execution, combined with strong collateral performance and a growing track record of the AOMT shelf, positions us to capture attractive risk-adjusted opportunities. We will continue to manage recourse leverage prudently, emphasize net interest margin and earnings growth, and focus on the segments of the market where we see the most compelling long-term risk-reward. We believe our results and momentum prove that Angel Oak Mortgage, Inc. is well positioned to operate through a range of economic environments, to continue strong performance within the existing rate landscape, and to deliver risk-adjusted returns and long-term value for our shareholders across cycles. I will now turn the call over to Brandon Robert Filson for the financial results. Brandon Robert Filson: Thank you, Sreeni. Fourth quarter results tracked in line with our expectations and, as Sreeni mentioned, capped the second consecutive year of expanding net interest income alongside continued operating expense reduction. Interest income increased 30%, and net interest income increased over 11% year over year versus 2024, from $110,400,000 to $143,700,000, and from $36,900,000 to $41,100,000, respectively. This growth was supported by a 15.4% reduction versus 2024 of operating expenses, including securitization costs and stock compensation, as we continue to push hard on cost rationalization and key expense savings initiatives. Valuations were supportive during 2025, and in the fourth quarter, driving increases in valuations across the portfolio. As of today, we expect that our book value moderately increased compared to the end of 2025 as the rate curve continues to steepen. For 2025, we had GAAP net income of $11,300,000, or $0.45 per diluted common share, compared to a GAAP net loss of $15,100,000, or $0.65 per common share, in 2024. For the full year, we had GAAP net income of $44,000,000, or $1.80 per fully diluted common share, representing a 53% growth, versus $28,800,000, or $1.17 per diluted common share, for the full year of 2024. Distributable earnings in Q4 2025 were $7,300,000. The primary driver of the difference between this and our GAAP net income of $11,300,000 and distributable earnings was the removal of $8,400,000 of net unrealized gains from our securitized loan portfolio, offset by $4,000,000 of unrealized losses from our residential loans and hedge portfolios. For the full year, distributable earnings were $14,600,000. The primary driver of the difference between this and our $44,000,000 of GAAP net income is the removal of $28,600,000 of unrealized net gains on our securitized loan portfolio. Interest income for the fourth quarter was $39,000,000 and net interest income was $10,900,000, marking a 22% improvement in interest income and a 10% improvement in net interest income compared to 2024. Compared sequentially to 2025, interest income increased by 6.5%, and net interest income increased by 7%. For the full year, interest income was $143,700,000 and net interest income was $41,100,000, which translates to increases of 30% and 11%, respectively, compared to the prior year. This increase in net income was driven primarily by a steady purchase of securitizations of newly originated loans, higher weighted average coupons on our overall investment portfolio, and decreases in funding costs as a percentage of borrowings associated with our residential whole loan portfolio, as well as the consistent securitization market. We expect our net interest income to continue its growth trend with earnings generated from accretive loans purchased throughout the year and ongoing securitization activity. Our $861,800,000 of loan purchases in the year carried a weighted average coupon of 7.79%, with a weighted average combined loan-to-value ratio of 65.4% and a weighted average credit score of 756. Our total residential whole loan portfolio had a weighted average coupon of 7.38% as of the end of the quarter. The non-QM portion of our whole loan portfolio carried a weighted average coupon of 7.09%, and HELOCs and closed-end seconds carried a 9.75% weighted average coupon. As of the end of the quarter, loans in securitization trust portfolio carried a weighted average coupon rate of 5.97% with a weighted average funding cost of approximately 4%. As mentioned, the securitization market remains constructive, and we intend to continue leveraging the current strength through our disciplined, methodical securitization strategy. We executed four securitizations over the course of the year, in addition to calling two of our legacy deals from 2019, keeping in line with our stated goal of four securitizations per year. In total, we securitized $704,000,000 in unpaid principal balance across these four securitizations. In the fourth quarter, we completed AOMT 2025-10 as the sole contributor, contributing a balance of $274,300,000 in loans. Additionally, we participated in AOMT 2025-HB2, Angel Oak Mortgage, Inc.’s HELOC securitization, which was a $281,400,000 securitization, of which we contributed $58,600,000 of HELOCs alongside other Angel Oak strategies. Operating expenses for the fourth quarter were $5,200,000. Excluding non-cash stock compensation and securitization costs, fourth quarter operating expenses were $3,000,000. For the full year, operating expenses were $16,400,000, representing a decrease of 15.5% compared to 2024. Excluding non-cash stock compensation expenses and securitization costs, operating expenses for the full year were $11,500,000, representing a decrease of 15.4% compared to 2024. Going forward, we expect to maintain similar operating expense levels, and we will continue to be as efficient as possible with our expense structure. Looking at our balance sheet, as of the end of the quarter, we had over $41,000,000 of cash, and our recourse debt-to-equity ratio is 1.4x. We expect to continue to prudently manage our recourse debt-to-equity ratio going forward. GAAP book value per share increased 1.3% to $10.74 as of 12/31/2025, from $10.60 as of 09/30/2025. Economic book value, which fair values all non-recourse securitization obligations, was $12.70 per share as of 12/31/2025, down 0.2% from $12.72 per share as of 09/30/2025. The growth in GAAP book value was driven by improving valuations in our legacy securitizations and higher operating income, while economic book value decreased slightly, as expected with the normalization in those legacy valuations. We ended the quarter with unsecured residential whole loans at a fair value of $294,100,000, financed with $218,800,000 of warehouse debt, $2,100,000,000 of residential mortgage loans in securitization trust, and $305,500,000 of RMBS, including $25,500,000 of investments in commingled securitization entities, which are included in other assets on our balance sheet. We finished the quarter with undrawn loan financing capacity of approximately $1,000,000,000. Now looking at credit, we ended the quarter with the total portfolio weighted average percentage of loans 90-plus days delinquent at 2.18%, inclusive of our residential loan, securitized loan, and RMBS portfolio, a decrease of 2 basis points from the third quarter 2025 and a decrease of 25 basis points compared to year-end 2024. Performance across the Angel Oak shelf has remained strong. We believe the continued outperformance of our collateral relative to the broader market further differentiates our platform. This not only serves as a competitive advantage in terms of financing stability but also strengthens confidence in our earnings profile. Our shelf’s performance divergence, combined with consistent deal execution, reinforces our view we are well positioned as a leader in the non-QM market and that our securitization program remains a reliable and repeatable tool for earnings growth. We expect our differentiated credit performance to translate into lower losses than comparable non-QM platforms across a full credit cycle. This view is supported by a proactive migration up the credit spectrum, conservative LTVs, and a disciplined underwriting approach, which we believe position the portfolio to perform consistently even in more challenging environments. Three-month prepayment speeds for the RMBS securitized loan portfolio were 11.2% to end the quarter, reflecting an increase from 9.4% in the third quarter 2025. As we have mentioned in previous quarters, prepay speeds are expected to increase as rates decrease and homeowners are incentivized to refinance. With that said, as a reminder, we model our returns based on the historical average prepayment speeds of 20% to 30%. Prepayment speeds are likely to tick upwards if newly originated coupon rates continue to decrease. However, the majority of our portfolio still has coupon rates that are well below newly originated coupon rates, and we expect that mortgage rates would need to fall meaningfully in order to produce a significant impact to the returns on our portfolio. Finally, the company declared a $0.32 per share common dividend, which will be paid on 02/27/2026 to common shareholders of record as of 02/20/2026. For additional color on our financial results, please review the earnings supplement available on our website. I will now turn it back to Sreeni for closing remarks. Sreeniwas Vikram Prabhu: Thank you, Brandon. We are optimistic about the future performance of Angel Oak Mortgage, Inc. and are excited to demonstrate the strength of our model in a steepening yield environment. The team has worked tirelessly to establish what we believe is the best non-QM loan origination, purchase, and securitization platform, which provides us the confidence for the future. We will maintain our focus on diligent trend selection, consistent securitization execution, and value-driven decision making, and we look forward to continuing to build long-term value for our shareholders in the coming quarters and years. We will now open for questions. Operator? Operator: Thank you very much. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Matthew Erdner with Jones Trading. Please go ahead. Matthew Erdner: Hey, good morning, guys. Thanks for taking the question. Where are you guys seeing the best kind of risk-reward opportunities right now? You have mentioned kind of that whole loan portfolio purchases, or, I guess, what you currently have is it 709 basis points, call it, and then the HELOCs are about, give or take, 250 points higher. You know, where are you guys favoring your capital allocation right now for purchases? Sreeniwas Vikram Prabhu: Thanks, Matt. This is Sreeni. We think we have a healthy mix of opportunities. Obviously, there is more relative value in terms of buying HELOCs for sure because the IRRs are better. But the long-term is more focused on non-QM. They both provide healthy returns for us, and I think you should see us continue to keep that mix. HELOCs can, the more you scale, you want to be very careful of the credit you underwrite, so we are extremely careful about what we underwrite in blocks, which is growing the volumes and securitizing it. The cleaner credit has always been non-QM for us. We like the returns there, and then we are selectively using HELOCs for a little bit more alpha. Matthew Erdner: Got it. That is helpful. And then, where are you seeing the ROEs on each of those types of securitizations today? Brandon Robert Filson: On the non-QM securitization front, we are still in that mid- to high-teens level. It should bounce around a little bit with rates coming down on the mortgages, but then spreads on the securitizations have come in. The HELOCs are going to be five, six, seven points higher than that on a fully securitized basis, so, you know, low-20s ROE perspectives. Matthew Erdner: Got it. That is helpful. And then last one for me. Did you guys provide a book value update quarter to date? Brandon Robert Filson: Our book value today, we think, is modestly increased from where we were at December 31. Matthew Erdner: Got it. Thank you, guys. Thank you. Operator: Thank you. Your next question comes from Douglas Michael Harter with UBS. Please go ahead. Douglas Michael Harter: Thanks, and good morning. Can you talk about your ability to continue to recycle capital, either through calling deals or just optimizing financing? How much more capacity you have to grow with the existing capital base? Brandon Robert Filson: We have a pretty good amount of power that we could still recycle and use. We have lots of unlevered loans in our book right now that we could choose to lever to continue to buy new loans. Our recourse debt-to-equity ratio leverage is very low. Our actual total amount borrowed on repo facilities is lower than it has been over the course of time, even though our RMBS portfolio has grown dramatically through securitizations. And then as we do these securitizations, we usually are releasing $2,030,000,000 in cash off of each one. So we have enough capacity for sure to take us through a similar buying clip into 2026. Douglas Michael Harter: I appreciate that. Thank you. Operator: Thank you. Next question comes from Timothy D’Agostino with B. Riley Securities. Please go ahead. Timothy D’Agostino: Hi. Thank you. Good morning. Thanks for taking the question. My question is a little bit more general, just like to get your sense on how the market feels and the activity level, whether that be in non-QM, HELOC, as well as securitization markets, and how it feels different at the start of 2026 compared to 2025? Thank you. Sreeniwas Vikram Prabhu: It is a good question. 2025 was a solid year across the board in the mortgage market; any part of the resi market was doing well. That continued into 2026. Taking the last two weeks of volatility out, we had seen spreads tightening in the securitization market. I think we printed a deal close to 100 basis points; it was 105, 110 basis points. They have widened out since, as the volatility has gotten into the entire market. The mortgage market itself seems to be solid. The non-QM market continues to grow. I think we are going to have more issuance this year than last year, and there are more players coming in, so it is getting competitive for sure. What we try to tell people, whether it is private funds or Angel Oak Mortgage, Inc., is that we originate what we can originate. We are not looking for scale per se; we are looking for quality and the relationships we have with those brokers. We have been in the market for so many years, we are able to not have to compete on price. Right now, the market is competing extremely on price because there are more entrants. People want to get bigger in this space. The growth is good, but it is coming with competitive pressures. There are going to be balance sheets which will have lower IRRs for sure, because getting pretty much brings lower IRR if you try to reset more loans. That is the backdrop we have. The non-QM market by itself continues to grow as there are more and more people looking for loans that do not fit the guidelines. As more people get self-employed, entrepreneurs, non-permanent employees, they need non-QM loans. How do I see this unfolding in 2026? We feel that there will be pockets of volatility. 2025, except April, was a phenomenal place. You cannot expect that. That is one of the reasons why we hit the securitization market as fast as we can. Rates are continuing to drop. You have seen that mortgage rates have dropped. We think generally, the market is going to be solid with some pockets of volatility. Timothy D’Agostino: Great. Thanks so much. And then just a quick follow-up. Regarding HELOC securitizations, I believe, and correct me if I am wrong, earlier on the call, you said you are contributing to the second one. In terms of HELOC securitizations per year, would you say the pace is probably one to two? Or just any color there? Thanks. Sreeniwas Vikram Prabhu: When we said two last year, that was to our entire franchise. You will probably see more from our entire franchise. I would speculate that Angel Oak Mortgage, Inc. will be more than one to two of them. That is what I have been thinking. Brandon Robert Filson: I think that is probably right. I would tee up two for that. We just started buying HELOCs in 2025. We contributed to 2025-HB2 in December. If you follow that same pace, that puts us on the course of about two participations a year in the HELOC space. Timothy D’Agostino: Okay. Great. Thank you so much for taking the questions today. Sreeniwas Vikram Prabhu: Thank you. Operator: Again, if you have a question, please press star then one. Our next question comes from Eric J. Hagen with BTIG. Please go ahead. Eric J. Hagen: Hey. Thanks. Good morning. How are you guys thinking about this attention across the market right now on private credit, and the impact on other asset managers, and the knock-on effects that it could have on the resi and commercial mortgage markets? Do you think this raises attention on the underwriting, or could it affect the demand that we typically see from asset managers to buy whole loans or securitized products? Sreeniwas Vikram Prabhu: We see this across what we at Angel Oak Partners see. We have ETFs, mutual funds, private credit in the mortgage space. We are traveling to raise institutional money, and we have Angel Oak Mortgage, Inc. as a public REIT. We see across the board what investors are thinking. A lot of money that went into so-called private credit went into corporate credit. There was institutional money from three, four years ago and then retail followed in the last couple of years. That is where a lot of money went. That is what happens when new money comes into a space and then gets worried; you see the momentum shift. In terms of other types of private credit—asset-backed, mortgage credit—generally, institutions are underinvested, and retail definitely is underinvested. They may invest through ETFs and mutual funds in buying bonds, but in terms of private credit in the mortgage space, they are under-allocated, and retail is definitely under-allocated. From that perspective, in terms of commercial, it is a little different because there are delinquencies and defaults happening in the commercial real estate sector. You have to dissect the good, the bad, the ugly. Very different. But in terms of asset-backed and resi, that is why you are not seeing any of the private credit side—any ABS or mortgage funds—in the crosshairs right now. Can it bleed into the mortgage sector? It could. But in terms of unwinding or what had happened to a couple of funds in the private credit space, we have not seen that in the mortgage or ABS space. Eric J. Hagen: Okay. That is really helpful commentary. Good perspective there. How sensitive do you think the origination volume in the primary market non-QM could be if there is a backup in spreads in the secondary market? Which one is responding to the other? Do you think that spreads can stay this stable if we do get a steeper yield curve and higher longer-term interest rates? Sreeniwas Vikram Prabhu: We have gone through a high-rate environment. If you go back to 2023, we saw high spreads in the secondary, and we had to combine that with high rates. As long as rates are range-bound—plus or minus 50 basis points—I believe volumes will continue to grow as people need more of these loans. It would not affect that much. It is driven by IRRs, obviously. We need to make IRRs for Angel Oak Mortgage, Inc. and for private funds, so our volumes will not be affected as much by that. A steeper yield curve which brings 10-year rates much higher—two things could happen. One is you could see the origination move towards a hybrid, more of fixed-to-floating kind of mortgages that will be out there. You have seen that happen a little bit more in the prime jumbo space. We have not seen that in our space yet. The curve is not steep enough to do that, so you could see that trend. On the stability of spreads, we are not expecting spreads to be static. For example, in the last two weeks, spreads have widened out again. As long as the spreads are in the range of 25 to 40 basis points, securitization markets will be healthy, and the origination activity will be healthy, I believe. Eric J. Hagen: Great commentary. Appreciate you guys very much. Thank you. Sreeniwas Vikram Prabhu: Thank you. Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Brandon Robert Filson for any closing remarks. Brandon Robert Filson: Thank you, everyone, for your time and interest in Angel Oak Mortgage, Inc. We look forward to connecting with you again next quarter. In the meantime, if you have any questions, please feel free to reach out to us. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
Operator: Good morning. Thank you for attending the Aspen Aerogels, Inc. Q4 2025 and full year 2025 financial results call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Aspen Aerogels, Inc.’s Neal Baranosky, Senior Director, Head of Investor Relations and Corporate Strategy. Thank you. You may now proceed. Neal Baranosky: Thank you, and good morning, everyone. Joining me today are Donald R. Young, President and CEO, and Ricardo C. Rodriguez, Chief Financial Officer and Treasurer. The press release announcing Aspen Aerogels, Inc.’s financial results and business developments and the slide deck that will accompany our conversation today are available on the Investors section of Aspen Aerogels, Inc.’s website, aerogel.com. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA and adjusted net income. The reconciliations between GAAP and non-GAAP measures are included in the back of the slide presentation and earnings release. On today’s call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the disclaimer statements on Page 1 of the slide deck as the content of our call will be governed by this language. I would also like to note that from time to time, in connection with vesting of restricted stock units and/or stock options issued under our long-term equity incentive program, we expect that our Section 16 officers will file Forms 4 to report the sale and/or withholding of shares in order to cover the payment of taxes and/or the exercise price of options. I will now turn the call over to Don. Donald R. Young: Thanks, Neal. Good morning, everyone. Thank you for joining us for our Q4 2025 earnings call. My comments will cover the evolving demand environment for electric vehicles and our related organizational adjustments, our growth outlook for the Energy Industrial segment, and our progress in developing a battery energy storage systems segment. I will also outline our strong liquidity position and the strategic review process that we are undertaking to explore opportunities to maximize shareholder value. Ricardo will amplify these points with his comments, and we look forward to your questions. Throughout 2025 and into 2026, we streamlined the organization, lowered our fixed cost base, strengthened liquidity, and positioned Aspen Aerogels, Inc. to operate effectively in a resetting EV market. As expected, U.S. EV sales in Q4 dropped significantly. GM followed suit with a ramp down of its EV production rates beginning in Q4 2025. We expect GM and other North American EV OEMs will determine the demand for EVs absent incentives and regulation during 2026 and align inventory and production rates based on the new market conditions. From this reset level, we expect EV to resume growth, though at a more measured pace than in prior years. GM has maintained its full line of EV nameplates and has stated that it remains dedicated to its long-term EV success, including in its Cadillac division where EV sales represented nearly 30% of total sales over the year 2025. In Europe, we see stronger structural drivers for our PyroThin thermal barrier segment. The key factors of market penetration, charging infrastructure, and steadier policy guidelines create a more visible multiyear adoption trajectory for OEMs. We recently secured a new award with Volvo Car, bringing our total to seven European design wins. We remain actively engaged with other European OEMs as they advance to their next-generation EV platforms, and we anticipate securing an additional award during the year. Across these European awards, we are supporting programs that incorporate battery cells from a diversified global supply base, including European, Japanese, Korean, and leading Chinese manufacturers. We are encouraged by our momentum in Europe and believe the region will be an important contributor to our thermal barrier growth in 2027 and beyond. Our Energy Industrial segment is poised to grow through the year 2026. Revenue in 2025 of $102 million was comprised largely of baseload maintenance and limited LNG work and was largely absent subsea project work, where we had record years in 2023 and 2024. We believe 2026 growth in this segment could reach 20%, supported by three primary drivers. First, we now have a robust pipeline for subsea projects and anticipate strong demand throughout the decade as more subsea developments move into deeper water and more challenging environments. Aspen Aerogels, Inc. has led this segment for two decades, and we are well placed to benefit from the current subsea cycle. We are off to a good start in 2026 with our first award win for an attractive North Sea pipe-in-pipe subsea project, which we expect to deliver in Q3. Second, LNG is an attractive growth vector for our Energy Industrial segment, and we are positioned across the activity set in 2026 to roughly double versus 2025 in both project count and revenue contribution, and we also see steady opportunities through the decade. Accelerating electricity demand keeps natural gas central for reliability and speed to power. We are positioned to convert this demand into profitable growth for our Energy Industrial segment. And the third key factor is pent-up demand for maintenance in refinery and petrochemical end users who have run their facilities hard and profitably over the past year while minimizing maintenance and turnaround. We see opportunities for strong growth in 2026 for our Energy Industrial segment with opportunities for similar growth in 2027 and 2028. In 2026, we are investing in our Energy Industrial business by adding to our customer-facing sales and technical service teams around the world. Our objective is to scale Energy Industrial into a $200 million high-margin segment without the need for incremental capital investment. As part of our long-term growth strategy, we are also developing additional commercial segments that leverage our unique technology, sales and technical service teams, and existing manufacturing assets. We believe this effort will diversify and broaden Aspen Aerogels, Inc.’s addressable market. Within energy storage, we see opportunities across LFP architectures and other high-reliability applications. With EV-proven performance, we believe our solutions can enhance fire safety and thermal performance for both large-scale and modular systems. We have structurally reduced fixed cash costs by approximately $75 million annually and expect margin expansion while requiring limited incremental capital investment. Again, we are initiating a strategic review to ensure our growth strategy and capital allocation priorities are aligned with long-term value creation. Importantly, it is being conducted from a position of financial strength and operational progress. Our objective is clear: Ensure our strategy, capital structure, and asset base are optimized to drive long-term value creation. Ricardo, over to you. Ricardo C. Rodriguez: Thank you, Don, and good morning, everyone. I will review our fourth quarter and full year 2025 results, provide our Q1 outlook, discuss the European EV market, and close with our strategic framework. 2025 was a transitional year for Aspen Aerogels, Inc. North American EV production levels fell in response to accelerated deregulation and end-market demand, while Energy Industrial results were weighted toward maintenance activity with fewer large project awards. We believe a recovery is around the corner as EV demand finds a floor and a new baseline is established, with momentum building in our Energy business. Fourth quarter revenue was $41.3 million, including $25.3 million in Energy Industrial and $16.1 million in Thermal Barrier. GAAP net loss was $72.9 million and adjusted EBITDA was negative $18 million. Gross margin was materially impacted by lower production volumes during the quarter and certain discrete items incurred. Adjusted operating expenses, excluding impairments, restructuring charges, and bad debt expense, declined from $22.6 million in Q3 to $21 million in Q4. Reflecting the impacted conversion costs and gross margin, a $3 million bad debt expense associated with a customer solvency issue, and several year-end material adjustments temporarily elevated costs to 48% of revenue in Q4, which we view as nonrecurring. Importantly, we do not believe Q4 profitability levels reflect our go-forward cost structure. Lower EV production volumes during the year reduced manufacturing absorption, particularly in Q4, and we responded by implementing structural cost actions. Turning to full year performance, revenue totaled $271.1 million, with $102.2 million from Energy Industrial and $168.9 million from Thermal Barrier. GAAP net loss was $389.6 million and adjusted EBITDA was $2.9 million. Gross profit was $46.3 million, representing a 17% margin. With P&L headwinds, we generated $6.1 million of cash in Q4 and ended the year with $158.6 million in cash and cash equivalents. This performance reflects disciplined working capital management, inventory optimization, and materially reduced capital expenditures. In December, we amended our MidCap credit agreement to enhance covenant flexibility, and we maintain a substantial liquidity cushion under the revised terms. For Q1 2026, we expect total revenue between $35 million and $40 million. This decline from Q4 reflects typical Q1 planned production, and we expect Q1 to represent the lowest revenue quarter of the year. From this base, we anticipate sequential revenue growth through 2026 supported by three primary drivers: increasing GM production as downtime subsides and EV volumes normalize through the year; the continued ramp of our European OEM programs, which we expect to contribute approximately $10 million to $15 million of revenue in 2026; and approximately 20% revenue growth in Energy Industrial, with a greater concentration of project activity in the second half of the year. As volumes increase and we continue to lower our cost structure, we expect improved operating leverage and margin expansion throughout the year. Given the mix in the revenue range, we expect adjusted EBITDA to be between negative $13 million and negative $10 million for the quarter. We expect working capital to be neutral to slightly positive and capital expenditures to remain minimal. Over the past year, we have methodically restructured Aspen Aerogels, Inc. to operate with a significantly more efficient cost base while preserving long-term revenue capacity. In 2024, adjusted EBITDA breakeven was approximately $330 million of revenue. In 2025, that level will decline to approximately $270 million, and by 2026, we will have reduced that further to approximately $200 million. Looking ahead to 2027, as further structural efficiencies are realized, we are targeting an adjusted EBITDA breakeven level of approximately $175 million of revenue. For 2026, we currently expect $10 million of capital expenditures and approximately $35 million of scheduled debt payments, including $24 million of term loan principal amortization. Factoring in scheduled debt amortization, disciplined capital spending, and improving profitability through the year, we expect to expand our net cash position to over $70 million by the end of this year. Let me highlight our positioning in Europe, which we view as a structurally attractive EV market with increasing visibility into future platform launches. EV penetration is projected to approach 40% of European production by 2030, supported by continued infrastructure expansion, OEM electrification commitments, and evolving regulatory frameworks. Importantly, Aspen Aerogels, Inc. is embedded across major European EV platforms spanning both passenger and commercial vehicles. Our European-only pipeline represents approximately $220 million tied to 2027 launches, expanding to more than $450 million in 2028. These figures reflect customer growth potential into 2027 and 2028, and several of these programs incorporate activity in North America and Asia as well. Taken together, Europe is positioned to become a meaningful revenue contributor beginning in 2027, with attractive capital efficiency as these platforms ramp. Lastly, I will frame our long-term strategy around three clear priorities. First and foremost, we have a healthy balance sheet. This provides flexibility to operate through market volatility, allocate capital deliberately, and pursue growth from a position of strength. With that foundation in place, our strategy centers on three pillars. First, continue driving structural operating leverage. We have reset our EBITDA breakeven level from $330 million in 2024 to $175 million in 2027, with additional efficiency opportunities ahead. Above that level, incremental revenue delivers 50% to 60% EBITDA margins, meaning a core market recovery translates directly into profitability. Second, strengthen and optimize our capital structure. We have transitioned to a capital-light, flexible manufacturing model that eliminates the need for new plant construction and allows us to scale using existing assets and swing capacity. This flexibility allows us to fund key growth initiatives while maintaining a strong liquidity profile. And third, accelerate growth through aerogel platform expansion and pursue transformative opportunities to unlock the full potential of the business. We are scaling our core EV and Energy Industrial platforms, including growing European EV momentum and renewed subsea and LNG activity, that could accelerate growth and enhance long-term value creation. We have engaged highly qualified advisers to rigorously test our assumptions, evaluate capital allocation options, and sharpen our strategic road map. Importantly, this review is being conducted from a position of strength, not necessity. Our objective is clear: thoughtful and disciplined execution of our strategy that maximizes value creation. Thank you. We will now open for questions. Operator: Thank you, Ricardo. We will now open for questions. When prepared to ask a question, please kindly limit yourself to one question and one follow-up. If you have additional questions, please rejoin the queue. Our first question is from Eric Stine from Craig-Hallum. Your line is now open. Please go ahead. Eric Stine: Good morning, everyone. Maybe just starting with the full value of what is being provided by your customers, or is that discounted, as I know when you have done this in the past, you have given it a pretty healthy discount? And then, curious as you think about these numbers, I know a lot of these programs are in ramp mode, but when you compare that to GM, and I know there is uncertainty as to what GM looks like as well, what do you think the mix looks like when you get out into 2027 and 2028 between your primary OEM today and a lot of these programs that are coming on in Europe, and, as we have discussed a little bit in the past, battery storage? So you mentioned, and if you can provide any clarity, you mentioned that you are actively involved in some quoting and some potential opportunities, maybe clarity there and, if you are able to, any estimate of what you think that means in terms of fitting into that 20% growth for Energy Industrial in 2026? Ricardo C. Rodriguez: Good questions, Eric. To answer your first, it is fully the full customer volumes in 2027 and 2028. So that blue-shaded portion of the chart, the $120 million and the $150 million, that is what they have provided to us. And when we look forward at 2027 and 2028, there is a lot of activity. You can see how much quoted activity we have with programs that start in 2027 and really ramp in 2028, combined with our awarded programs today. As we think about North America versus Europe and the shifts in mix in 2027 and 2028, it is probably fair to assume that GM will continue to be at least half in 2027. In 2028, we are opportunistically looking at the quote/bid pipeline and current awards that will ramp faster, and so that mix could change. It is worth noting that these are all at similar margins, so our 35% gross margin target remains intact. Donald R. Young: And on battery storage and the Energy Industrial outlook, we are focused on our core maintenance, LNG, and subsea-type work as the drivers of the approximately 20% growth we referenced for 2026. In parallel, we are deep in the qualification and bidding process for the new battery energy storage systems segment, and as I said in my remarks, we anticipate beginning revenue in this new segment in 2026. Eric Stine: Okay. Thank you. Donald R. Young: Thank you. Operator: Thank you. Our next question is from Colin William Rusch from Oppenheimer. Your line is now open. Please go ahead. Colin William Rusch: There is a lot of interest around rack-level storage and indoor applications, and I am just curious where you are seeing interest. Is it really for some of these larger systems that are outside some of the data centers looking at various duty cycles around voltage management and some of the heavy-duty recycling, or is it more tailored towards some of the larger-scale external systems? Donald R. Young: We are working on large-scale external systems, but we are also doing rack-level modular-type systems as well. Again, as you point out, fire safety is most critical, and that is what we are bringing to the party in this particular case. We are working with large companies on these projects, and again, we are deep in the qualification and bidding process. Not only are we bringing important technology to it, but we have some policy advantages as well with our domestic capacity here in the U.S., which is creating benefit for those projects. Colin William Rusch: Okay. Awesome. And then, a market where it seems like there are some applications, and we have not heard a lot about it, is in and around the military. Certainly, if you are doing things out at sea and there is a buildup of incremental EVs or EV-related devices, I am curious about any initial conversations or potential for you to enter into the defense market in a more substantial way? Donald R. Young: It is an interesting question, and we do have a team. As I have talked in the past, this idea of broadening our addressable market includes defense, and we have deep roots in the defense industry going back to our early first decade, really. We are focusing on certain applications within defense. Our first priority, though, in adding a segment is on the energy storage side most immediately, and that is where we are applying the majority of our resources. Colin William Rusch: Alright. Thanks so much, guys. Ricardo C. Rodriguez: Thank you. Operator: Thank you, Colin. Our next question is from George Gianarikas from Canaccord Genuity. Your line is now open. Please go ahead. George Gianarikas: Good morning, and thank you for taking my question. I would like to focus on the Energy Industrial side and ask if you have tried to make an assessment as to what your market share trends have been over the last several quarters, and it is good to see it getting back to growth this year, but I am curious as to what you have discerned the lack of growth was due to last year. Thank you. Donald R. Young: Thank you, George. We have, of course, spent a good amount of time analyzing this, and I think we can point pretty clearly to the lack of project work that separates our 2023 and 2024 numbers from our 2025 number. Let us just say roughly a $30 million to $35 million dollar gap between the earlier years and last year, and you can go straight to subsea, for example, and that accounts for the vast majority of that gap. Our market share in that segment is extremely high. Yes, we occasionally lose a project, but not very often, and so the fact is in 2025 there just were not many projects to be had. When we look at the pipeline for 2026, 2027, and 2028, it is much more robust. The project that we won earlier this year gets us back. More typically, a year is a number in the mid-teens, and the project that we won earlier this year that we will deliver in Q3 gets us a long way towards getting back to that average level, and we have other projects that we are trying to tie down now for the second half of this year, and that is why, George, we believe that we will grow our Energy Industrial business throughout the year. We will build on it quarter in and quarter out through the year and do believe that we have that opportunity to grow that business by 20%. George Gianarikas: Thank you. And maybe as a follow-up, Slide 5 talks a lot about this growth potential for Europe, particularly in 2027–2028. I am curious how you juxtapose that with some of the news coming out of Europe that the ACC, they are still operating, but they appear to be winding down some of their growth projects. Are there other battery manufacturers that you are working with to support some of the OEMs that are involved in that joint venture? Thank you. Donald R. Young: Yes, George. We are. In fact, I think both Ricardo and I had referenced in our comments working with battery cell manufacturers who are European, Korean, Japanese, and a couple of the leading Chinese manufacturers as well. That has given us a more robust outlook on Europe and a little less dependent on any single cell manufacturer. You mentioned ACC. We had Northvolt as well. As just an example, in the Northvolt case, those battery cells were replaced by Asia-based cell manufacturers, and we are right in the middle of those programs. So that diversity is important to us, I think, and gives us confidence about the European market. George Gianarikas: Thank you so much. Operator: Thank you, George. Our next question is from Chip Moore from Roth Capital Partners. Your line is now open. Please go ahead. Chip Moore: Good morning. Thanks for taking the question. Don, maybe on adjacent growth opportunities beyond BESS, any more you can share on what you might be looking at? Obviously, building materials in the past has been something you targeted. Any update on some of those target markets? Donald R. Young: We have a strong background on the B&C side, and we are working on a product today that we believe can be effective in a slice of that market. It is a very large market, and so a slice is additive for us and incremental for us, and as we pointed out, incremental revenue is extremely valuable to us. It is a product that we would most probably supply from our EMF supplier, and we want to make sure we have just the right product that gets certified properly. Then we renew the relationships that we had in that space, and before we became tight on capacity in the late teens, we developed that segment into a multimillion-dollar effort on our part, and we think we can rekindle that with our fire safety and thermal performance characteristics. Chip Moore: And with Europe in particular, would that be more of the target opportunity for that product? Donald R. Young: Yes. The building type and more of the thermal efficiency regulation and the style of buildings in Europe suit our retrofit-type approach to the market and increasing thermal performance in existing buildings. Chip Moore: And maybe for my follow-up question, on the strategic review, any more you can give us on the process and timeline and potential options that you might consider? Thanks. Donald R. Young: Look, for the strategic review, we have had a lot of change in our commercial markets. We have restructured the company significantly. We have strengthened our balance sheet significantly, and we feel that we are making operational progress that translates into quarter-over-quarter growth throughout this coming year. From a strategic review point of view, we just want to make sure that we have some external influences on our thinking and that we do not get too caught in our own thinking. Testing our assumptions externally, we think, is a prudent thing for us to do. We are able to do it, again, much more off of our front foot as opposed to our back foot. We are going to be very deliberate about it on the one hand, but this is important to us, and we are going to do it with urgency. We have a broad view. We are in our early stages, so we do not want to take anything off the table, but we are not prepared quite yet to say what the logical outcome would be of that effort. Ricardo C. Rodriguez: And maybe just to add to Don's comment, we are in the early stages, but right now we have plenty of cash runway. So this is not about just bolstering the balance sheet more or anything like that. What we are focused on is pouring gasoline on the fire. We want to accelerate growth, and to do that, we want to have world-class advisers and have fresh thinking and make sure that we are pursuing every strategic opportunity while maintaining optionality for the business. We are going to be very deliberate in our search and in our process, and in doing so, I think that we will, naturally over time, funnel down these opportunities to find that unicorn. Chip Moore: Thank you. Operator: Thank you, Chip. Our next question is from Ryan James Pfingst from B. Riley. Your line is now open. Please go ahead. Ryan James Pfingst: To follow up on battery storage first, can you size the revenue opportunity, maybe if not this year, perhaps later in the decade as it matures, or is it still early to do that there? Ricardo C. Rodriguez: It is still early, Ryan, to really get to exact numbers or exact projections, if you will, by the end of the decade. But what I would say is that we know it is a growing market, an important market, and we would not do it unless it could be impactful and also leverage our current technology and our current manufacturing capabilities. For us, this is a little bit of a tweener in the sense that it leverages our expertise around thermal barriers, but it is in more of an industrial setting. It is a natural extension of our existing markets and capabilities. But, again, what I would say over the course of the remaining part of this decade is we would not be doing it if it did not have impactful growth potential. Ryan James Pfingst: Got it. Appreciate that. And then maybe one on the EV side and quoting activity. Don, I think you mentioned it in your prepared remarks, but how are you thinking about potential wins this year, and how would those wins compare to some of your current OEM partners in terms of scope? Donald R. Young: We did indicate that we think we are in a strong position to add an additional opportunity in Europe and potentially here in the United States as well, and we do not exclude some of the work that we are doing in Asia as well. We think we have the opportunity to add one, two, possibly three additional awards. What I would say about the awards is that these OEMs are more experienced. Their technology has developed more significantly than even two years ago or three years ago, let alone five and six years ago when some of the platforms that are rolling off now were originally conceived. Our work is much faster and more technical and with a greater knowledge base not only for ourselves but for those OEMs as well. We see these programs proceeding much more effectively. As I said, we see the European market—just the structural aspects of that market with steadier policy and a more mature infrastructure—to be a great opportunity for us, as we showed in the opportunity base in one of our slides today. Ricardo C. Rodriguez: Great. Thanks, Ryan. Ryan James Pfingst: Thank you. Operator: We currently have no further questions, so I will hand back to Don for closing remarks. Donald R. Young: Thank you, Gabby. We appreciate your interest in Aspen Aerogels, Inc., and we look forward to reporting to you our first quarter results in May. Be well, have a good day. Thank you. Operator: Thank you. This concludes today’s Aspen Aerogels, Inc. Q4 2025 and full year 2025 financial results call. Thank you for joining. You may now disconnect your lines.
Operator: Good day, ladies and gentlemen, and welcome to the LivaNova PLC fourth quarter and full year 2025 earnings conference call. My name is Emily, and I will be coordinating your call today. After the presentation, you will have the opportunity to ask any questions. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Briana Gotlin, LivaNova PLC’s Vice President of Investor Relations. Please go ahead. Briana Gotlin: Thank you, and welcome to our conference call and webcast discussing LivaNova PLC’s financial results for the fourth quarter and full year of 2025. Joining me on today's call are Vladimir Makatsaria, our Chief Executive Officer and member of the Board of Directors; Alex Shvartsburg, our Chief Financial Officer; Ahmet Tezel, our Chief Innovation Officer; and Zach Glaser, Director of Investor Relations. Before we begin, I would like to remind you that the discussions during this call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company’s most recent filings and documents furnished to the SEC, including today's press release that is available on our website. We do not undertake to update any forward-looking statement. Also, the discussions will include certain non-GAAP financial measures with respect to our performance, including, but not limited to, revenue results, which will be stated on a constant currency and organic basis. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our website. We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool. You can find the presentation and press release in the investor section of our website under News, Events and Presentations at investors.livanova.com. I will now turn the call over to Vladimir Makatsaria. Vladimir Makatsaria: Thank you, Briana, and thank you everyone for joining us today. Welcome to LivaNova PLC’s conference call for the fourth quarter and full year of 2025. 2025 was a year of strong performance for LivaNova PLC. We delivered double-digit revenue growth, meaningful adjusted operating margin expansion, and robust cash generation, reflecting strong execution across our cardiopulmonary and epilepsy businesses. 2025 marked LivaNova PLC’s fifth consecutive year of double-digit EPS growth, and third consecutive year of double-digit organic revenue growth. Importantly, we also continued to advance our long-term strategy and made progress toward the financial targets outlined at our November Investor Day. Our core businesses provide a durable foundation of growth, profitability, and cash generation, which enables disciplined investment in innovation to drive our next chapter, entering high-growth, high-margin markets to build a more profitable, more sustainable financial profile over time. The first stage of that next chapter is obstructive sleep apnea, where we have a clear right to win based on rigorous clinical evidence, a differentiated technology designed to treat a broader range of challenging patients, and our existing neuromodulation capabilities. At the same time, we will continue to preserve upside optionality in difficult-to-treat depression pending a CMS reimbursement decision, and we remain focused on advancing the work required to reach clarity there. As we execute the strategy, our goal is to transform LivaNova PLC into a best-in-class medtech company for the long term. Over time, entering higher growth markets like OSA will shift LivaNova PLC’s overall weighted average market growth upward and position the company for sustained acceleration. Our approach leverages our competitive advantages and is grounded in disciplined capital allocation and focused execution. We have also been deliberate in strengthening the capabilities required to execute the strategy, including our innovation engine, our digital platform investments, and targeted leadership and talent upgrades across the organization. Consistent with that focus, we recently appointed Lucille Blaise as Global Head of Commercialization for obstructive sleep apnea, further strengthening our leadership team as we prepare to scale this opportunity. Lucille brings a strong track record in creating new sleep therapy pathways, improving patients' access to care, and building high-performing teams. I would like to welcome Lucille to LivaNova PLC and look forward to her leadership in advancing our OSA program. For the remainder of the call, I will discuss our fourth quarter and full year 2025 segment results and provide top-line guidance for 2026. After my comments, Ahmet will discuss key innovation updates, including recent clinical and regulatory progress. Alex will then provide additional details on our results and 2026 guidance. I will wrap up with closing remarks before moving on to Q&A. Now turning to segment results. For the cardiopulmonary segment, revenue was $207 million in the quarter, an increase of 10% versus 2024. Cardiopulmonary revenue for the full year was $785 million and grew 13%. The heart-lung machine revenue grew in the mid-single digits in the quarter, driven by an increase in Essence placements and sustained favorable price premiums. Some planned Essence placements and tender activity for the quarter shifted into 2026, moderating the fourth quarter contribution. As a point of reference, Essence represented approximately 55% of our annual HLM units placed in 2025. HLM growth remains strong with full year revenue growing in the mid-teens. Cardiopulmonary consumables revenue grew in the mid-teens in the quarter, driven by market share gains, procedure growth, and price. Strong demand for oxygenators continues to outpace the market's ability to supply. Our manufacturing capacity expansion plans are progressing well and remain on track, and we continue to partner with third-party suppliers to increase component supply for even more rapid expansion. For the full year, consumables revenue grew in the low teens. Looking ahead, our growth strategy in cardiopulmonary is driven by three levers, as we outlined at Investor Day. First, continued market share gains in consumables, enabled by capacity expansion and enhanced by our next-generation oxygenator, with an estimated launch in 2028. Second, the continued upgrade cycle of 80% of our new heart-lung machine placements to be Essence by 2026. And third, recurring revenue streams via software, hardware, and service attachments leveraging the breadth of our HLM installed base. For the full year 2026, we expect cardiopulmonary revenue to grow 7% to 8%. Our forecast incorporates continued HLM growth as we drive Essence penetration globally. It also reflects strong demand for consumables and expanded manufacturing capacity. Turning to epilepsy. Revenue increased 9% versus 2024 with growth across all regions. Epilepsy revenue in the Europe and Rest of World regions increased a combined 17% versus the prior-year period, while U.S. epilepsy revenue increased 8% year over year. These results reflect strong commercial execution globally. For the full year, epilepsy revenue grew 6%, with strength across all regions. Epilepsy revenue in Europe and Rest of World grew a combined 13% versus 2024, while U.S. epilepsy revenue grew 5% year over year. We expect continued profitable growth in this business supported by three key strategic levers. First, impactful clinical evidence leveraging the CORE VNS clinical study, which we presented at the American Epilepsy Society in the fourth quarter. The study has been well received and is reshaping the perception of VNS Therapy effectiveness, prompting clinicians to reevaluate where VNS Therapy sits within the treatment algorithm. Second, innovation, including our Connected Care and Bluetooth-enabled generator, will remove barriers to access and improve both the patient experience and physician workflow. Ahmet will provide additional details on recent progress with our digital health platform and how we intend to leverage it as a foundational innovation. Finally, sustained commercial excellence, including reimbursement and market access initiatives, will continue to be a driver as demonstrated by recently improved reimbursement in the U.S. Effective 01/01/2026, provider reimbursement for VNS Therapy procedures for drug-resistant epilepsy under Medicare increased significantly, with hospital outpatient payments rising by approximately 48% for new patient implants and 47% for end-of-service procedures versus 2025 rates. This shift will improve hospital economics for VNS Therapy, creating a more sustainable financial foundation for providers and paving the way for expanded patient access. As a reminder, there are more than 1,000,000 DRE patients in the U.S., yet fewer than 10% receive advanced treatment. These changes significantly reduce a known barrier to procedure penetration, as historical hospital rates for Medicare patients did not fully cover VNS Therapy procedure costs. For the full year 2026, we expect epilepsy revenue growth of 5.5% to 6.5%. This forecast incorporates mid-single-digit growth in the U.S. We continue to evaluate the positive impact of reimbursement on the U.S. business. It also assumes the Europe and Rest of World regions will deliver a combined growth of high single digits for the year. In summary, our growth in 2025 was driven by healthy markets, the continued successful rollout of Essence, market share gains in cardiopulmonary consumables, strong commercial execution in epilepsy, and pricing strategies. These drivers will continue to fuel growth in 2026, supported by sustained execution in cardiopulmonary, and the combination of impactful clinical evidence and improved reimbursement dynamics in epilepsy that should support expanded patient access over time. As a result, we are guiding full year 2026 revenue growth between 6% and 7%, which is consistent with the 2025 to 2028 framework detailed at our Investor Day. Alex will provide additional details on our 2026 guidance later in the call. I will now turn the call over to Ahmet Tezel to discuss progress with our digital health platform and continued regulatory and clinical evidence momentum in OSA and difficult-to-treat depression. Ahmet Tezel: Thank you, Vlad. Innovation remains the key driver of value creation for LivaNova PLC, both by strengthening our core businesses and by enabling our next chapter of growth. Starting in epilepsy, we recently received FDA approval for our cloud-based digital health platform. This approval establishes the foundation for our Connected Care roadmap and enables the initial rollout of our cloud-based clinician portal. At Investor Day, we also described a multiyear innovation roadmap in epilepsy, starting with the clinician portal, followed by a Bluetooth-enabled generator that integrates patient and clinician applications. The goal is to streamline workflows that include remote titration, provide immediate access to patient insights, and enable more digitally connected care pathways that remove barriers to access. Consistent with this roadmap, we expect a limited market rollout of the clinician portal in 2026, primarily focused on workflow validation and clinical engagement, with limited financial impact. A full market release is planned for 2027 alongside the launch of our next-generation Bluetooth-enabled implantable pulse generator. More broadly, this is a strategic investment in Connected Care, and epilepsy is the first step. Importantly, it also establishes a single shared cloud platform across the entire portfolio. That means the same digital infrastructure we are building for epilepsy can be leveraged across OSA, depression, and cardiopulmonary over time, accelerating the cadence of our software and digital health innovations and supporting a connected ecosystem approach. To be more specific, for cardiopulmonary, these same capabilities can also support more connected workflows and data-driven insights as we continue to build around Essence. This includes a pipeline of hardware and software upgrades designed to improve workflow and outcomes. Our innovation efforts in cardiopulmonary consumables also continue to progress. We recently completed a design freeze for our next-generation oxygenator and will now move towards manufacturing scale-up. Turning to obstructive sleep apnea, our modular PMA submission continues to progress with the FDA, and our timing expectations have not changed. We continue to expect PMA approval for the clinical trial device in the first half of this year, followed by a PMA supplement for the commercial MRI-compatible device. This supports a limited market release of the MRI-compatible device in 2027, followed by a broader commercial launch in the second half of that year. We continue to view OSA as a very compelling de-risked opportunity, grounded in differentiated technology and clinical evidence, as well as our established neuromodulation capabilities. On the clinical evidence front, we expect a full 12-month dataset from the OSPREY trial to be published imminently. OSPREY is the first and only randomized controlled trial in the HGNS space, bringing gold standard scientific rigor to the field. As previously disclosed, patients with the complete concentric collapse, or CCC, were not excluded from OSPREY, and approximately 45% of participants were high risk for this condition. OSPREY also enrolled a challenging patient population with higher baseline AHI and BMI compared to other pivotal U.S. trials, yet the responder rates were comparable to these studies, even though other studies screened the more difficult-to-treat patients out. This is reflected in their FDA labels as contraindications or warnings. Additionally, our PolySync evaluation continues to progress. As a reminder, PolySync is our advanced titration algorithm designed to fully leverage the six-electrode architecture of our HGNS cuff, which was not done in OSPREY. It enables multicontact activation for greater nerve and muscle selectivity, optimizing therapy for each patient. PolySync’s demonstrated ability to convert nonresponders into responders both strengthens our competitive positioning versus existing HGNS therapies and has the potential to expand penetration by bringing neurostimulation to a broader range of patients. We look forward to sharing the full PolySync results at the SLEEP conference in June, but are confident we will be able to convert at least half of the nonresponders into responders using the PolySync algorithm. As a reminder, we intend to make PolySync immediately available during our commercial launch to ensure all of our patients have access to this advanced algorithm at their initial titration. This will not be used as a follow-up for nonresponders. We will optimize therapy with PolySync for all patients from the start. Now turning to difficult-to-treat depression. In January, the RECOVER durability manuscript was published in the International Journal of Neuropsychopharmacology. The durability profile of VNS Therapy is central to why we believe it is a differentiated option in this markedly ill patient population, where therapies can often get patients better for a short time but cannot keep patients better over time. RECOVER demonstrated that after 24 months, more than 80% of patients maintain clinically meaningful improvements across symptoms, daily function, and quality of life. With respect to CMS, we remain in active contact with the agency, and we are working toward our next meeting with them. We view this as an important step towards submitting our reconsideration package, which remains a top priority. Given current scheduling uncertainty, we will not speculate on the exact submission timing at this stage. In summary, we are encouraged by our progress, from advancing our Connected Care foundation across our portfolio to continued regulatory and clinical evidence momentum in OSA and DTD. We look forward to providing future updates as milestones are achieved. I will now turn the call over to Alex. Alex Shvartsburg: Thanks, Ahmet. During my portion of the call, I will share a brief recap of the fourth quarter results and provide commentary on 2026 guidance. Turning to results. Revenue in the quarter was $361 million, an increase of 9.5% on a constant currency and organic basis versus the prior year. Foreign exchange in the quarter had a favorable year-over-year impact on revenue of approximately $9 million, or 3%. Adjusted gross margin as a percent of net revenue was 68%, in line with 2024. Favorable product mix and pricing across segments and geographies were offset by unfavorable currency changes and tariff impacts. Adjusted SG&A expense for the fourth quarter was $131 million compared to $122 million in 2024. SG&A as a percent of net revenue was 36%, down from 38% in 2024. The year-over-year decline as a percent of net revenue was driven by fixed cost leverage. Adjusted R&D expense in the fourth quarter was $49 million compared to $40 million in 2024. R&D as a percent of net revenue was 14%, up from 13% in 2024. The year-over-year increase was driven by OSA and core product development investments. Adjusted operating income was $64 million compared to $56 million in 2024. Adjusted operating income margin was 18%, as compared to 17% in 2024. The increase was primarily driven by revenue growth and operating leverage from fixed costs, partially offset by investments in cardiopulmonary oxygenator capacity expansion as well as higher R&D spend in both OSA and the core. Adjusted effective tax rate in the quarter was 24%, up from 20% in 2024. The increase was related to changes in geographic mix and the roll-off of certain tax attributes that have contributed to our historically low effective tax rate. Adjusted diluted earnings per share was $0.86 compared to $0.81 in 2024, reflecting strong revenue growth in both the epilepsy and cardiopulmonary businesses, as well as effective cost management. Additionally, Q4 2025 included $0.04 of favorable impact versus prior guidance assumptions related to cardiopulmonary investments, primarily due to timing of the Essence printed circuit board conversion, where the related costs have been rephased over the rollout period. Importantly, the printed circuit board conversion program remains on track and is reflected in our 2026 guidance assumptions that I will cover in a moment. Moving to our cash balance at December 31, cash was $636 million, up from $429 million at year-end 2024. The increase reflects improvements in operating cash flows and the release of $295 million of restricted cash following the SNIA litigation guarantee termination. Total debt at December 31 was $377 million compared to $628 million at year-end 2024. The reduction in total debt was a result of the $200 million early repayment of a portion of the term facilities as well as the $58 million repayment of the 2025 convertible notes. On January 8, we fully repaid the outstanding term facilities through an early payment of $98 million inclusive of accrued interest. Adjusted free cash flow for the quarter was $53 million as compared to $62 million in the prior-year period. The year-over-year decrease was driven by increased capital spend. Adjusted free cash flow for the full year of 2025 was $183 million, up from $163 million in the prior-year period. We forecast 2026 revenue growth between 6% and 7% on a constant currency basis. Adjusted effective tax rate is forecasted at approximately 23%. We project adjusted diluted earnings per share in the range of $4.15 to $4.25, with adjusted diluted weighted average shares outstanding to be approximately 56 million for the full year. The EPS range represents approximately 8% growth at midpoint. This range also incorporates the assumption of a third-quarter SNIA payment of approximately $400 million, representing a $0.06 unfavorable impact to adjusted free cash flow due to the liability. Adjusted free cash flow is expected to be in the range of $160 million to $180 million. This range includes $120 million in capital spend, and the next-generation oxygenator manufacturing changes shared today incorporate our best estimate of the impact of current assumptions. Vladimir Makatsaria: To close the prepared remarks, 2026 is an important year for LivaNova PLC with a number of key milestones, including the manufacturing scale-up of our next-generation oxygenator in cardiopulmonary, the launch of our digital health platform in epilepsy, PMA approval for our clinical trial device in OSA followed by PMA supplement submission for the MRI-compatible system, and the formal submission of reimbursement reconsideration to CMS in difficult-to-treat depression. I want to thank our colleagues around the world for their focus and dedication to serving our customers and improving outcomes for patients. We have the right team and the right strategy, and I am confident in LivaNova PLC’s path forward and our ability to deliver sustained value for shareholders as we look ahead. We will now open for questions. Operator: If you have a question at this time, please press the star then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press star then 2. As we enter the Q&A session, please limit yourself to one question and one follow-up question and then return to the queue if you have additional follow-ups. The first question today comes from Adam Maeder with Piper Sandler. Please go ahead, Adam. Adam Maeder: Hi, good morning. Congrats on a nice 2025 campaign, and thank you for taking the questions. Two for me. The first one on 7% to 8% growth for FY 2026. Can you help us think about how you are thinking about oxygenators versus HLM growth in 2026? And then you did signal some HLM tenders shifted from Q4 into 2026. Maybe just flesh that out for us in more detail and which regions, and if possible, could you quantify that? And then I had a follow-up. Thanks. Alex Shvartsburg: Hi, Adam. Yes. We expect the same growth drivers in 2026 that we saw last year: one, Essence upgrades; two, market share gains in consumables; and three, price. As far as the components of the guide, the Essence upgrades are going to drive approximately double-digit growth, which means that the market share gains will continue into the year, so we will have good growth on consumables as well. Given the timing of the year and consistent with the typical guidance philosophy that we have, we have made some prudent assumptions around our outlook. We have assumed a moderation in the price premium for Essence, as well as being conservative on the oxygenator output, given the third-party supply constraints that we experienced in 2025. Adam Maeder: And Alex, any color on the shifting of the tenders from Q4 to 2026? Alex Shvartsburg: Yes. We are going to fully recapture those in the first quarter. It was not super material in terms of the shift, so it is fully incorporated into our full-year guide. Adam Maeder: Thank you. Operator: The next question comes from David Rescott with Baird. David, please go ahead. David Rescott: Great. Thanks for taking the question, and congrats on the strong end to the year here. I wanted to ask maybe first on the epilepsy business and what is baked into the guide for the year. It looks like the outlook that you have laid out for this year is higher than the epilepsy guidance you initially laid out in 2025. So curious if at all there is anything with comps there or if it is fair to read into maybe some incremental tailwinds coming in from the elevated reimbursement front. If so, when you think about the potential either pricing or contracting tailwinds that could be there or utilization benefits through the year, how should we be thinking about the pieces that you have baked into this epilepsy look for 2026? Vladimir Makatsaria: David, good morning. Thank you for the question. I will start and then I will turn it over to Alex and Ahmet because there are important components in that. Just to remind everybody, in our epilepsy business, the procedure penetration is still significantly low and there were a number of barriers to this penetration. We have two significant tailwinds that happened early this year and last year in terms of removing those barriers. The first one is reimbursement improvement close to 50% on both new patient implants and replacement implants. The second one is the CORE VNS study clinical results that were published and received very strong support from the clinical community. While maybe this is early to measure the impact, strategically those two drivers will be lasting levers to continue growth and durability of growth in the epilepsy business. Maybe Alex can address reimbursement, and Ahmet can address the clinical side. Alex Shvartsburg: Sure. As Vlad said, we are excited about the tailwinds with both the CORE VNS as well as the increased Medicare reimbursement. What we have baked into the guide is price will be driving increased penetration and will be a short-term contributor to growth, but it will take some time, so we are being prudent at this point given those assumptions. We ended 2025 with strong results, and we are confident we can continue building on that momentum, but it also means that we have a difficult comp in the second half of 2026. The other thing I want to remind everybody is that two-thirds of the U.S. epilepsy revenue comes from replacement implants. This provides us with a durable, profitable recurring revenue stream, but it also means that increased growth in new patient volume has less of an impact on the overall epilepsy growth rate in 2026. Ahmet Tezel: Yes. Maybe I will give a quick summary of the CORE study. This was the largest global prospective study for VNS to date, with 800 patients in 60 sites over 16 countries, and the study demonstrated that VNS Therapy delivers early, durable, and meaningful seizure reduction and freedom in both children and adults that have drug-resistant epilepsy. Just to give you a few key points, the study demonstrated that seizure frequency across multiple seizure types, including the most severe and disabling seizures, significantly reduced. For example, at 36 months, seizure reduction was 80% for patients with focal onset seizures, and there was a meaningful improvement in outcomes. We continue to roll it out in conferences and through publications. Vladimir Makatsaria: David, I think in summary, the combination of those two factors gives us more confidence in the durability of our growth in epilepsy. Unknown Analyst: Okay. Thank you. Maybe just on this WISER program that I think may have an impact on the VNS business. Maybe it does not. But I know we have heard some other companies call out some of the denials in the Medicare patient populations so far in 2025. Can you be more specific on where that is happening and, if it is in China, your fresh perspective as it launches in China? Vladimir Makatsaria: Yes. So, Mike, good morning. Good to hear from you. On the first part of the question, like Alex said, the shift in some placements was immaterial and will be fully captured, the majority of it in Q1 of this year and then maybe potentially some in Q2. Regarding China, our launch is going as planned. We continue to be very optimistic about that market. Just a reminder, China is our second-largest market in terms of placed units. We are the market leader there, and our current win rate in China is above 80%. To give you a little bit of flavor on the launch, we had the product approved in the first half of the year. We had a commercial launch in the second half of the year. Given the timing of capital sales cycles, the first placement actually was in November, which gives you a little bit of a flavor that 2025 was the year of preparation and launch, and 2026 will be the first year of significant impact with this launch in China. We see the funnel of new placements, and we are very confident. As a reminder, Essence in terms of percent placements of all HLM is going from approximately 55% last year to approximately 80% this year. Unknown Analyst: On the reimbursement increase, can you remind us how long the window is to get a replacement? I am imagining it is 12 months. I think I see evidence the device alerts that much in advance. Could there be a dynamic that you have not fully thought about with the reimbursement change? Vladimir Makatsaria: We always thought of the improvement in reimbursement for end of service as a step-up in end of service, similar to a new patient implant opportunity. Expanding penetration across all of our account universe is what we are focused on. Unknown Analyst: A couple of months ago, CMS actually removed the HGNS procedures from joining your current reimbursement. Can you comment on the change versus any changes in economics as it pertains to the HGNS opportunity down the road? Ahmet Tezel: This is Ahmet. Maybe I will start by summarizing what happened so that everyone on the call has the same information. Just as a reminder, with HGNS, the previous-generation device of the incumbent was in a different code than VNS. When they moved into the latest generation, temporarily they started utilizing the VNS code for HGNS therapy as well. Consistent with the recent statement by CMS, we believe that the code for VNS Therapy for epilepsy should be separate and not shared with reimbursement codes for HGNS or OSA. As we prepare for our launch, we will continue to work with the relevant medical societies to have the most appropriate HGNS code, and at the time of our launch we will utilize the prevailing codes at that time. Because the features and the procedure of our technology for HGNS are similar to the incumbent, we do not see any risk of misclassifications for new patients with VNS Therapy, and as I said, we believe VNS Therapy for epilepsy and OSA therapy should be separate codes. Unknown Analyst: Alright. Super helpful. And then may I ask for an early read on commercial focus areas this year? You had said you were going to focus on reopening accounts that had closed for you and prioritizing price relative to volume. Any update there? Ahmet Tezel: I can answer this. Our early read is consistent with what we said we were going to focus on. First and foremost, trying to reopen accounts that have closed for us, and we are seeing some green shoots there that we are pleased with. On price relative to volume, we remain focused on value-based discussions with accounts. Operator: Our next question comes from Anthony Petrone with Mizuho Group. Anthony, please go ahead. Anthony Petrone: Thank you, and good morning, everyone. Congrats on a strong 2025. Question on RECOVER and one on R&D spend. When we think on RECOVER and depression, I know timing is still up for debate. But if we look ahead and take a glass half-full approach, assuming that we get favorable coverage, I am wondering from the company's perspective: is favorable coverage now level six coding—that in depression we should expect that to code to level six, i.e., payout $45,000 or so on an outpatient basis versus what we estimate is a $25,000 device input cost—or should we assume that still level five coding at $30,000 to $35,000 is still a best-case outcome? And I have one quick question on R&D spend. Thanks. Ahmet Tezel: I will comment on the code piece and then ask Alex to comment on the pricing piece. We anticipate that depression would be the same code as VNS Therapy. So whatever the classification for VNS Therapy is for epilepsy, depression will be together with it. Alex Shvartsburg: I would just say it is too early to comment on our ASPs, given that we are still awaiting the reimbursement decision from CMS. Anthony Petrone: Helpful. And then just R&D spend, Alex. It ticked up a little bit in Q4. I am just wondering what the complexion was there. Was that RECOVER manuscripts? Was it setting up sleep apnea? Something else that we are not seeing—device redesign—and is the fourth quarter level for R&D sort of the new run rate? Alex Shvartsburg: I will speak to R&D in general as it relates to 2026. We are largely maintaining our R&D investment in the core for 2026. Obviously, we want to continue to advance innovation, and that is what is going to fuel the sustainable growth for both epilepsy and cardiopulmonary. As far as focus in 2026, in epilepsy we are prioritizing development of our next-generation Bluetooth-enabled IPG, which we intend to launch in 2027. In cardiopulmonary, we are investing in the next-gen oxygenator and additional HLM hardware enhancements to strengthen our market leadership. The next-gen oxygenator is expected to launch in 2027/2028. Ahmet Tezel: This year, we are increasing our investment in OSA product development. The investment is focused on our next-generation device, which will be the product that we launch into the market in 2027. Just as a reminder, our goal is to continue to drive adjusted operating margins above 20% annually, despite the fact that we are ramping investments in the OSA business, and so our 2026 guidance is very much in line with the targets we set. Operator: The next question comes from Mike Matson with Needham & Company. Mike, please go ahead. Mike Matson: Yes, thanks. With where things currently stand with the OSA HGNS reimbursement, assuming nothing changes there going into 2027 when you go into your full launch, what does that mean for that launch and that business for LivaNova PLC? Does it limit you somehow, or can it still be equally successful if reimbursement does not improve? Ahmet Tezel: I am going to comment on the reimbursement piece. We are very comfortable with the current coding that CMS guided towards. It will still be a very meaningful growth opportunity for us. Our excitement around the OSA space has not changed at all. We believe we have a differentiated technology with very interesting and differentiated clinical outcomes, and we believe this is a disease state that has unmet needs. It is underdiagnosed. The growth for the patient population is there. Nothing has changed for us since the Investor Day that we communicated around our excitement. Mike Matson: Got it. And then just another one on sleep apnea. I think at the Investor Day you had spoken about making some investments in 2026. Can you maybe talk about what you are doing this year to set the stage there? Are you going to start hiring reps, and then how much have you baked into the OpEx guidance to account for those investments this year? Ahmet Tezel: This is Ahmet again. I will give a broad answer to that. On the R&D side, we have multiple key deliverables. One, we need to continue and finalize the PolySync clinical piece; we are spending time and energy there. We are still actively working in getting our clinical trial device approved. Nothing has changed there; we expect that in the first half of this year, and we are actively working on our commercial launch device, which is the MRI-compatible version, which will be submitted after we have the FDA approval of the clinical trial version. Those are the key R&D pieces where we are spending time and energy. We are going to invest in our commercial organization, but it is fairly limited in 2026. The broader build of the commercial capabilities is more in 2027 onwards, as we discussed during the Investor Day. Again, nothing has changed compared to what we shared in November. Operator: Our next question comes from John McAulay with Stifel. John, please go ahead. John McAulay: Hi, good morning. Just want to follow up on the earlier guidance questions we heard. The last three years, by our math, you grew double digits. This year, you are saying 6% to 7%, albeit that is in line with the Investor Day guidance. I just want to be very clear that there is not any negative shift in dynamics that is reflected there, whether it be tougher comps or being later in the Essence upgrade cycle. Is this truly just conservative positioning as you start the year? Vladimir Makatsaria: John, thank you for the question. There are no negative dynamics. We are consistent with our guidance philosophy that we have had in the past years. I was asked a question during Investor Day: what are the biggest levers to the upside from our plan? They remain the same. We have to see how the reimbursement improvement and the clinical data impacts our epilepsy business. On the cardiopulmonary side, Alex noted that we are continuing to gain market share in our oxygenator business, and our ability to scale manufacturing faster will be an additional lever of growth. Alex Shvartsburg: I would just add to that. In terms of our guidance, we assumed a moderation in the price premium on Essence relative to the premiums we realized in 2025. The other conservative assumption is on the oxygenator output, given the third-party component supply constraints that we have been working through. Those are the two elements that have moderated our assumptions going into 2026. John McAulay: That is very helpful color. Switching gears to epilepsy, if I recall, something like 40% of your patient population is covered by Medicaid—you can correct me if that number is off—but my understanding is that the reimbursement there for a decent portion of states has to be adjusted at the state level. Could you give us an update on where you are in terms of Medicaid reimbursement changes and where you might expect to be by the end of the year? Alex Shvartsburg: The way to think about this is Medicaid is essentially going to follow Medicare. While it is going to take some time to work through the individual state situations, we assume that ultimately Medicaid will get to the same level of reimbursement. Operator: Those are all the questions we have time for today, and so I will turn the call back over to Vladimir Makatsaria for closing remarks. Vladimir Makatsaria: Thank you, everyone, for joining the call today, and thank you for your continued support and interest in LivaNova PLC, and have a good day ahead. Operator: Thank you everyone for joining us today. Bye-bye.
Operator: Greetings, and welcome to the Alkermes plc Fourth Quarter 2025 Financial Results Conference Call. My name is Melissa, and I will be your operator for today's call. All participant lines will be placed on mute to prevent background noise. If you should require operator assistance during the call, please press 0. Please note that this conference is being recorded. I will now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, please go ahead. Sandra Coombs: Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter and year ended 12/31/2025. With me today are Richard F. Pops, our CEO, Joshua Reed, our Chief Financial Officer, C. Todd Nichols, our Chief Commercial Officer, and Blair Jackson, Chief Operating Officer, who will join us for the Q&A. A slide presentation along with our press release, related financial tables, and reconciliations of the GAAP to non-GAAP financial measures that we will discuss today are available on the investor section of alkermes.com. We believe the non-GAAP financial results, in conjunction with the GAAP results, are useful in understanding the ongoing economics of our business. Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements. Please see slide two of the accompanying presentation, our press release issued this morning, and our most recent annual and quarterly reports filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call or in the accompanying presentation as a result of new information or future results or developments. After our prepared remarks, we will open the call for Q&A. And now I will turn the call over to Richard for some opening remarks. Richard F. Pops: Great. Thank you, Sandy, and good morning, everyone. Well, we clearly had a strong and eventful 2025. As we enter 2026, there are three elements of the business to understand and to value. And the first is the commercial business. In 2026, we expect to generate revenues of more than $1,700,000,000 and adjusted EBITDA of more than $370,000,000, and we are continuing to build this business with the recently completed acquisition of Avadel. Adding Avadel represents an important milestone and strategic step in the company's transformation. The acquisition adds an important new revenue stream and growth opportunity to our portfolio of commercial products. Strategically, it accelerates our entry into the commercial sleep medicine market and provides a highly functional commercial platform for the potential launch of elixirixib. Which brings me to the second element of our business. Elixorexant. Our most advanced orexin candidate. We plan to enter Phase 3 in narcolepsy this quarter, following the completion of a rigorous Phase 2 program and with recently granted FDA breakthrough therapy designation. We had our end of Phase 2 meeting with FDA last week, which solidified our registration plan and reaffirmed for us the benefit of consistent interactions with the reviewing division. We believe elixirixen has blockbuster potential and could advance the standard of care in central disorders of hypersomnia. Ready for Phase 3. We are excited to get going. And third is the opportunity that extends beyond elixorexant in central disorders of hypersomnia. Orexin 2 receptor agonist candidates represent an entirely new potential vertical of growth and expansion in multiple disease areas beyond sleep medicine. We identified this early on, and were leaders in advancing the frontiers of this pharmacology. Following a review with financials and the commercial performance and outlook, I will provide an update on where we are today and our plans to advance these development programs in 2026. So with that, I will turn it over to Joshua to review our financial performance and expectations. Joshua Reed: Thank you, Richard. Alkermes' economic engine is underpinned by a diverse portfolio of commercial products. These revenue streams provide the resources to advance our exciting pipeline of development programs while generating strong cash flow. In 2025, we generated total revenues of nearly $1,500,000,000, driven primarily by our proprietary product portfolio, which grew 9% year over year and generated approximately $1,200,000,000 in net sales. For the year, we recorded VIVITROL net sales of $467,900,000, ARISTADA net sales of $370,000,000, and Livaldi net sales of $346,700,000. For the year, we recorded manufacturing and royalty revenues of $291,300,000, including revenues of $130,500,000 from VUMERITY and $109,600,000 from the long-acting Andega products. Turning to expenses. Cost of goods sold were $196,500,000, which compared favorably to $245,300,000 for the prior year, primarily reflecting efficiencies following the sale of our Athlon-based manufacturing business last year. R&D expenses were $324,000,000 compared to $245,300,000 in the prior year, reflecting investments in the VIBERANCE Phase II studies of elixirexan across narcolepsy and idiopathic hypersomnia, and first-in-human studies and development efforts for our next orexin 2 receptor agonist candidates, ALKS 4,510 and ALKS 7,290. SG&A expenses were $701,500,000 compared to $645,200,000 in 2024, reflecting the expansion of our psychiatry field organization last year and promotional activities related to libality, as well as certain legal and transaction-related expenses incurred in 2025. The investments we have made in the expansion of our psychiatry sales force have generated a strong return, and we expect to continue to build on that momentum going forward. Our performance generated strong profitability resulting in GAAP net income of $241,700,000, EBITDA of $285,600,000, and adjusted EBITDA of $394,000,000 for the year. Turning to our balance sheet. We ended the year in a strong position, with $1,300,000,000 in cash and total investments. In order to fund the acquisition of Avadel, closed in February 2026, we used approximately $775,000,000 of cash from our balance sheet and entered into term loan totaling $1,525,000,000 due in 2031. We expect to pay down this debt quickly with cash flows from the business. In 2026, we plan to continue to manage the business with disciplined operational execution to deliver strong profitability and cash flow while continuing to invest in the opportunities we believe will drive long-term shareholder value. With the Abadel acquisition now closed, our commercial platform is meaningfully strengthened, and we are allocating capital to the highest potential growth drivers across the business, including the advancement of our orexin portfolio. Our 2026 financial expectations were outlined in the press release issued this morning and reflect the combined organization including ten and a half months of contribution from Avadel and certain transaction expenses and related accounting adjustments that were outlined in the press release that we issued earlier this month upon closing of the acquisition. Starting with the top line. We expect total revenues for 2026 to be in the range of $1,730,000,000 to $1,840,000,000, driven primarily by net sales from our proprietary products in the range of $1,520,000,000 to $1,600,000,000. Todd will provide more specific details on each of our proprietary products including expected LoomRise revenues for the remainder of the year. For manufacturing and royalty revenues, we anticipate 2026 revenues in the range of $210,000,000 to $240,000,000. This outlook reflects the scheduled expiration of certain Zeppelin royalties, which phase out on a country-by-country basis during the second half of the year. For VUMERITY, we completed our manufacturing obligations in 2025, and going forward, VUMERITY revenues will be solely driven by the royalty on worldwide net sales without any associated costs. Turning to expenses. Cost of goods sold are expected to be in the range of $365,000,000 to $385,000,000, reflecting the impact of purchase price accounting related to Loomrise inventory. In connection with the closing of the acquisition, Loomrise inventory held by Avadol was marked to fair market value resulting in an increase of approximately $180,000,000 over its cost. Approximately $150,000,000 of this amount will be expensed as the inventory is sold in 2026. R&D expenses are expected to be in a range of $445,000,000 to $485,000,000. The increased investment reflects activities of the combined organization and development across the orexin portfolio. Later this quarter, we plan to initiate the Phase 3 Brilliance program for lixorexin in narcolepsy. We expect to complete the recently expanded Phase II study in IH in the fourth quarter. In addition, we will continue to advance our ongoing Phase I work for ALKS 7,290 and ALKS 4,510 with Phase II programs expected to begin in the second half. In terms of the Avadel R&D portfolio, we plan to complete the Phase III program in IH in the first half and to continue to advance valroxabate in the early clinic. SG&A expenses are expected to be in the range of $890,000,000 to $930,000,000. This reflects consistent investments in our proprietary commercial portfolio, plus $50,000,000 of transaction costs related to the acquisition of Avadel, which closed earlier in the first quarter, and the incorporation of Avadel's commercial infrastructure supporting Loomrise for the remainder of the year. In connection with the acquisition, we will also begin to record amortization of intangible assets. In 2026, we expect this will be in the range of $95,000,000 to $105,000,000. Net interest expense for the year is expected to be in the range of $75,000,000 to $85,000,000, and we expect a net tax benefit of approximately $20,000,000. While GAAP results will be confounded by the accounting for the Avadel acquisition, we expect to maintain a strong cash flow positive profile in 2026. We expect a GAAP net loss in the range of $115,000,000 to $135,000,000 reflecting accounting related to the transaction contrasted by positive EBITDA in the range of $60,000,000 to $90,000,000 and adjusted EBITDA in the range of $370,000,000 to $410,000,000. As a reminder, adjusted EBITDA excludes share-based compensation and transaction-related expenses of $50,000,000 as well as the non-cash inventory step-up charge of $150,000,000 that I previously mentioned. Adjusted EBITDA is useful in that it is more reflective of cash flow to the business. As we look ahead, to support your modeling, I will provide some additional context on our expectations for the first quarter of the year. In the first quarter of 2026, we expect net sales from our proprietary commercial product portfolio to be in the range of $310,000,000 to $330,000,000. This reflects our expectation of less pronounced inventory fluctuations during the first quarter, typical patient co-pay and deductible reset dynamics, and historical demand patterns, as well as six weeks of contribution from Lumerize. Royalty and manufacturing revenues will reflect the annual reset of the royalty tiers on the remaining long-acting INVEGA products and typical Q1 end-market demand patterns. We expect these factors will drive a sequential decrease compared to Q4 2025, to a range of $405,000,000 to $450,000,000. On the expense side, we expect cost of goods sold in the first quarter of 2026 to increase by approximately $20,000,000 sequentially from the fourth quarter, primarily driven by the inventory fair value step up related to Loomrise. For the first quarter of 2026, we expect R&D expenses to increase sequentially from Q4 to a range of $110,000,000 to $125,000,000, primarily driven by activities related to the initiation of the elixiraxin Phase 3 program in narcolepsy and the integration of Avadel's ongoing R&D activities related to LUMRIZE and valroxabate. We expect SG&A expenses in the first quarter to be in the range of $230,000,000 to $250,000,000, reflecting one-time transaction-related cost of approximately $40,000,000, the incorporation of Loomri's commercial activities in the latter half of the quarter, and consistent investment in promotional activities for Livaldi, ARISTADA, and VIVITROL. Taken altogether, we expect Q1 adjusted EBITDA in the range of $30,000,000 to $50,000,000. As we close out 2025, we do so from a position of financial strength. Our commercial portfolio delivered another year of solid performance, providing a profitable foundation that enables continued investment in our strategic priorities. With the Avadel transaction now closed, we enter 2026 with expanded commercial capabilities and a broader platform from which to grow. Across the organization, we remain focused on operational discipline, efficient capital allocation, and investing in the opportunities we believe will drive long-term value, including the advancement of our orexin portfolio and the integration of Loomrise into our commercial model. We are well positioned for the year and committed to delivering shareholder growth. With that, I will now hand the call to Todd for a review of the commercial portfolio. C. Todd Nichols: Thank you, Joshua, and good morning, everyone. 2025 was another strong year of disciplined execution against our commercial strategy. I am pleased that we delivered at the high end of the increased guidance ranges we provided in October for our proprietary products, driven by strong performance across all three brands. For the full year, proprietary product sales totaled $1,180,000,000. The commercial investments we made throughout 2025 have already generated strong returns and strengthen our foundation for growth as we enter 2026. Joshua has taken you through the top line results, so for my remarks, I will focus on the underlying demand trends well as our strategic priorities and expectations for 2026. Starting with VIVITROL. In 2025, VIVITROL net sales were $467,900,000, reflecting 2% growth year over year. VIVITROL performance continued to be driven by growth in the alcohol dependence market, and our ability to capitalize on highly localized market dynamics in certain states and payer systems. As a reminder, VIVITROL results in 2025 included approximately $27,000,000 of gross-to-net favorability that we do not expect to reoccur. As we look ahead to 2026, we expect VIVITROL net sales in the range of $460,000,000 to $480,000,000. We continue to expect VIVITROL to contribute meaningfully to our revenue and profitability profile over the coming years. Turning to our psychiatry franchise. The expansion of our psychiatry sales force in early 2025 was a key strategic initiative designed to enhance our competitive share of voice. Has been highly successful. With our expanded footprint in place, we significantly increased call frequency to high priority prescriber targets across both Livaldi and ARISTADA throughout the year. This improved reach and frequency combined with strong execution in the field contributed a broader engagement and increased breadth of prescribers for both brands. For the ARISTADA product family, in 2025, net sales were $370,000,000, reflecting 7% growth year over year. Similar to VIVITROL, during the year, ARISTADA results included approximately $14,000,000 of gross-to-net favorability, which we do not expect to recur in 2026. Throughout the year, leading indicators of underlying demand remain solid. We continue to see expanding prescriber breadth, healthy persistency, and strong new-to-brand prescriptions reflecting effective execution by the field team. For the full year 2026, we expect ARISTADA net sales in the range of $365,000,000 to $385,000,000. In 2025, net sales of Lebovy grew 24% year over year to $346,700,000. Underlying 24% year over year driven by sustained momentum in new patient starts and continued expansion in prescriber breadth. Throughout the year, improvements in payer access supported broader utilization and reinforced the durability of demand. Gross-to-net adjustments were approximately 29% in 2025. Looking ahead for 2026, we expect LEVOLVI net sales in the range of $380,000,000 to $400,000,000, reflecting expectations of strong continued growth in demand and gross-to-net adjustments widening into the mid-thirties starting in Q1 of this year reflecting a strategic expansion of payer access to support broader adoption. We look ahead to 2026, we are excited to build on the strong foundation. This year also marks our entry into the commercial sleep medicine market, accelerated by the recently closed acquisition of Avadel, which brings a number of valuable new assets into our business, including Avadel's commercial product Loomrise, and the organization supporting the brand. First, for a few thoughts on Loomrise. Launched in 2023, LUMRIZED is a once-at-bedtime sodium oxybate for the treatment of narcolepsy. The features of this product are differentiated and address a significant unmet need in the treatment landscape for narcolepsy. Intended to consolidate the fragmented sleep, sodium oxybates are an important option in the treatment paradigm for narcolepsy. And Lumerize is the only once-at-bedtime option available, avoiding the need for patients to wake up in the middle of the night for a second dose. The Avadel team has done exceptional work launching this product and we intend to build on this momentum. In 2025, Lumerai has generated approximately $279,000,000 in net sales, with approximately 3,500 patients on lumbrance therapy as of the 2025, a roughly 40% increase in number of patients from the 2024. With an estimated 50,000 oxybate-eligible patients with narcolepsy, we believe there is a significant opportunity to continue to expand the number of patients on LUMRIZE. We are delighted to welcome the talented commercial team joining us from Avadel, and their integration to our organization is already underway. Their expertise and deep relationships in sleep medicine will be critical to our success with Loomrise, and provide an opportunity for Alkermes to establish a strong presence in this community as we prepare for the potential future launch of orexin 2 receptor including our own elixirextin. We believe will be transformative in how narcolepsy is managed. We expect strong continued growth uptake of LUMRIZE as we integrate this commercial team and capabilities. We expect Lumerize total revenue the range of $350,000,000 to $370,000,000 for the full year. For the first six weeks of the year, the Avadel team was off to a strong start and generated revenue of approximately $33,000,000. Following the recent completion of the acquisition, we expect that in 2026, Alkermes will generate an additional $315,000,000 to $335,000,000 in LUMRIZE net sales for the remainder of the year. We are truly excited about the opportunity for Lumerize which we believe will continue to play an important role in the treatment paradigm. With the momentum across our existing brands and the addition of Loomrise, we enter 2026 with meaningful opportunities to drive growth and broaden the impact of our commercial business. With that, I will pass the call back to Rich. Richard F. Pops: Great. Thank you, Todd. So as you have heard, the financial foundation of the business is strong, with a resilient commercial portfolio important growth potential. 2026 will be a year of execution across the elixorexant development program. As I mentioned in my opening comments, last week, we completed an important milestone in the development program with our end of Phase 2 meeting with FDA. This meeting followed the completion of a Phase 2 program developed in consultation with the agency. The interaction was detailed and constructive, and helped confirm key design elements of the pivotal program. With breakthrough therapy designation and clarity regarding the elements of our registrational program, we are in a strong position to initiate the Phase 3 later this quarter. So here is what it is going to look like. The global Brilliance Phase 3 program in narcolepsy will consist of three 12-week randomized, parallel-design, placebo-controlled studies. Two in narcolepsy type 1, and one in narcolepsy type 2. In NT1, each study will include three arms and will enroll approximately 150 patients. The primary endpoint will be change in mean sleep latency on the maintenance of wakefulness test, or MWT, with weekly cataplexy rates and the Epworth Sleepiness Scale, or ESS, as key secondary endpoints. The Brilliance NT2 study will be a four-arm study. Is planned to enroll approximately 180 patients. Again, with MWT as a primary endpoint, and ESS a key secondary. Each program will have as an anchor a once-daily dose that demonstrated robust efficacy in Phase 2. We expect that the option for once-daily dosing will continue to be a differentiating feature of elixirixa. We will also include split dosing regimens designed to drive wakefulness later into the evening hour. Along with the once-daily option, split dosing may add another strong element to the product profile. Our first clinical trial from the split dose regimens will be from the ongoing Vibrin 3 Phase 2 study in idiopathic hypersomnia. This study is expected to be completed in the fourth quarter. So for elixorexin, we have a clear path forward. We are capitalizing on our momentum for Phase 2, and we are excited to get started with the Phase III program later this quarter. We also expect to have data from the REVITALIZE Phase 3 study of lumirides in patients with idiopathic hypersomnia in the second quarter. This 14-week randomized withdrawal study enrolled approximately 150 patients. If positive, we expect these data would serve as the basis for an sNDA submission with a potential launch in early 2028 if approved. Now turning to our other orexin-2 receptor agonist development programs. ALKS 7,290, and ALKS 4,510. Regarding the orexin pathway, with well-tolerated small molecule drugs is a rich area for pharmaceutical development. ALK 7,290 and 4,510 are both currently in Phase 1 studies in healthy volunteers. We expect to advance these candidates into patients this year. We plan to develop ALKS 7,290 for ADHD, moving quickly to generate proof of concept data in patients this year. ADHD is characterized by persistent difficulty in maintaining attention and concentration. It is frequently accompanied by impulsive behavior. Despite the availability of stimulant and nonstimulant treatment options. A significant unmet need in this space. And an orexin agonist targeting the wakefulness and attention circuitry could be a major advance. With approximately 15.5 million adults, and 6.5 million children in the U.S. with a current ADHD diagnosis, this represents a significant potential opportunity. OX7290 has demonstrated improved measures of attention, and task engagement and decreased behavioral impulsivity in validated preclinical models. We have already shared these compelling data with you. Our single and multiple ascending dose cohorts in healthy volunteers are underway. As we progress through the multiple ascending dose cohorts, we plan to initiate a multidose Phase 1b study evaluating safety, tolerability, and efficacy in adult patients with ADHD. And we expect data from this translational study in the second half of the year. In parallel, we are planning for success. Expect to initiate a Phase 2 study in the second half of the year. We plan to develop OX48510 for fatigue associated with neurodegenerative disorders, starting with fatigue associated with multiple sclerosis, and Parkinson's disease. Fatigue is one of the most common and burdensome symptoms affecting these patients. Patient populations here are significant, with approximately one million patients in the U.S. with MS, and another million with Parkinson's. OX 4,510 went into its healthy volunteer Phase 1 study last year, and has completed several single and multiple ascending dose cohorts. We are planning to initiate a multidose Phase 2a study this year evaluating safety, tolerability, and efficacy in fatigue associated with MF and Parkinson's. We see this as the beginning of a much more extensive fatigue in the future. So we have built a strong foundation for growth for value creation, both in the near term and for the future. With elixirac elixiracin moving to Phase 3, ALKS 7,290 and 4,510 moving to Phase 2, yes. I will at long last pass the CEO torch to Blair Jackson, who is our current Chief Operating Officer and my valued colleague for many years. We will make the transition official this summer, and I will continue as chairman. The timing is good. The company is in the strongest position it has ever been in my 35 years, for reasons that we have summarized today. Now is not the time for reflection. We have got too much important work to do over the next few months. But I will say what many of you know, which is that I am extremely proud of this company, its people, and all that we have accomplished. Thousands of patients have benefited from our medicines, developed in a culture defined by scientific curiosity, integrity, and deep commitment to patients and families. I have great confidence that we will continue to build on the momentum we have right now. Alkermes is on a whole new growth path. It took us some time to get here, but we did. And the road ahead looks extraordinarily promising. With that, I will turn the call over to Sandy for the Q&A. Sandra Coombs: Okay. Thank you, Richard. We will now open the call for Q&A, please. Thank you. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. To allow for as many questions as possible this morning, we ask that you each keep to one question. Thank you. Our first question comes from the line of Joseph Thome with TD Cowen. Please proceed with your question. Joseph Thome: Hi there. Good morning. Thank you for taking my question, and it is always great to work together, so best of luck to both of you on this next step. Maybe when thinking about the Phase III trial design and start going into the split dosing for some of these candidates, how should we think about the AE profile associated with that? Obviously, hoping to boost some efficacy. Is that also going to reduce AEs because you are splitting up the dose, or would it potentially also drive up AEs? How are you thinking about that? Thank you. Richard F. Pops: Good morning, Joe. It is Rich. First of all, I think most important at the highest level is that the data so far for these orexin 2 receptor agonists in treatment of narcolepsy are they are generally quite well tolerated and very safe. So the baseline AE profile is quite favorable. The way we model the split doses is in order to drive those later hours of wakefulness, for those patients who want an extended duration of wakefulness, with a very similar AE profile. So I think that is the virtue of running such a big Phase 2 study where we can model the exposure wakefulness profile, we can select that split dose in order to maximize the later durations while minimizing side effects. Sandra Coombs: Thank you. Our next question comes from the line of Lena Timosheth with RBC Capital Markets. Please proceed with your question. Lena Timosheth: Hey, guys. Thanks for taking my question, and congrats, Richard, on a great career. Guess I wanted to ask on now that the Avadel deal is closed, whether you can speak a little more about the potential synergies across the Salesforce between the psychiatry Salesforce and the potential sleep sales force? There is overlap in prescribers that can, you know, help fully both businesses and just generally how the onboarding of the Lumerai team has been. Thanks. C. Todd Nichols: Yeah. Absolutely. We are really excited about the integration of the Avadel commercial team. As I said in my prepared remarks, that team has done just an exceptional job, and they are off to a fast start this year. The beauty of this strategic integration is it is our first step into sleep medicine market. Right now, we do not see a lot of overlap between our current psychiatry sales force and the sleep medicine sales force. And so there is a beauty in that that we can keep our psychiatry team excessively focused right now on driving Lavalvian Aristada. So we think there will be some synergies eventually when we get to the place where we are prepared to launch elixirextin. And at that time, we will be building out that Salesforce to maximize the for both Loom Rides and Alixorexed. Sandra Coombs: Thank you. Our next question comes from the line of Joon Lee with Truist Securities. Please proceed with your question. Joon Lee: Hi. Thanks for the updates and for taking our questions. I think I understand the medical rationale for narcolepsy patients taking both oxbates and orexin agonist, but what sorts of evidence would you need to generate to convince the payers to reimburse for both premium priced drugs? Is especially since the patients from both fibrinase one and two seem to be doing well just on orfenac. Agonists in the long term extension after being washed out of oxalates. Just trying to understand why orexin agonist would not cannibalize the oxbate market. Thank you. Richard F. Pops: Yeah. It is a really good question. This is Rich. I think that the way we think about it is that the orexin agonists are working on the wakefulness side of the equation. And that may indeed be sufficient for many, many patients. As you know, most patients are not on oxybates right now. But the ones who are on oxybates are on them because of what they do on the other half the day, which is the fragmented sleep piece of it. We think there will be a cohort of patients for whom both sides of the equation are going to be important. Their daytime wakefulness as well as consolidating the fragment of sleep at night. It remains to be seen that the full range of doses what the complete effect is of an orexin 2 receptor agonist on reconsolidating nighttime sleep. But we know from talking patients over the last few years, there is a dedicated cadre of patients for whom the nighttime benefits of oxybate will continue to be valuable. And we will be the only company so far that has agents in both camps. So we will be motivated to actually generate some data for payers explaining for that verified cohort of patients why both medicines might be the most effective way of treating their disease. Joon Lee: Thank you. Sandra Coombs: Thank you. Our next question comes from the line of Luke Herrmann with Baird. Please proceed with your question. Luke Herrmann: Hi, team. I just wanted to extend my congratulations to both Richard and Blair. Thanks for taking the question. So thinking about the Lumris, Phase III in IH, can you help us understand your internal bar for ESS that would give you confidence ahead of a potential launch? And maybe the degree of importance of key secondaries in the eyes of prescribers? Thanks. Richard F. Pops: This is Rich. I think that the IH study mirrors very much what was done for the previous oxybate program that was approved by the FDA. So when we acquired Avadel, we picked up this program essentially at the end of its development phase. And as we did the diligence on it, you know, what we found is that the randomized withdrawal study mimics exactly what was happening with XIAWAVE. So our expectation is that when we see the data in Q2, they will see a very similar profile for the once nightly medicine. With respect to key secondaries, I do not think I have the answer to that question right now. As I just do not have that protocol committed to memory yet. We can get back to you on that. Joshua Reed: Yeah. I will just add to that. Go ahead. Yes. So the primary is ESS, as Rich said. With the randomized randomized withdrawal study. So our expectation is that it would mirror what we have seen in the market already with Xywav. Key secondaries are PGIC and IH, and our expectations, that would be similar to what we have seen for the current product in the market. I will just reinforce that it is really a significant opportunity here. As you kind of heard us in the past, the eligible population is about 40,000, our estimate, in the U.S., and it is a very low penetration right now with only one approved product. It is penetrated about 10% in the marketplace. So this is something that we are looking forward to. Sandra Coombs: Thank you. Our next question comes from the line of Rudy Lee with Wolfe Research. Please proceed with your question. Rudy Lee: Hey, thanks for taking my question. Congrats reaching Bio for the Neuro. The question regarding the upcoming Phase III. So apparently, we are on track to start the trial for NT1 and NT2. I am just curious how have we discussed key factor for a Phase 3 trial in IH with FDA yet? Can you potentially start trial earlier? Would you really need to wait for the Vibrin 3 data? Thanks. Richard F. Pops: Morning. Yeah. I think for IH, we will do exactly what we did for narcolepsy, which is get the Phase 2 data from the Vibrant study, have a, you know, formal end of Phase 2 meeting with FDA, and map out and agree on the Phase 3 program. So we will wait for those data to come later this year before we initiate that meeting with FDA. Rudy Lee: K. Just a quick follow-up. Like, what is your current understanding on the dynamic here? Like NT1 versus NT2 in IH? Richard F. Pops: The dynamic from a market perspective or from a regulatory— C. Todd Nichols: Yeah. For the market? Richard F. Pops: I think as Todd just said, the IH opportunity is a really interesting one because if you simply look at claims data, you would say that there is about 40,000 patients who are being treated for idiopathic hypersomnia today. But we think that that pretty significantly underestimates the clinical need for a medicine that would deal with hypersomnolence that is not diagnosed as narcolepsy. So while we have a better sense of the narcolepsy numbers, i.e., about 200,000 patients in the U.S. prevalence, about 100,000 being diagnosed, about 80,000 being treated, we have a much more vague understanding of how big the IH market might be. So as we have talked about before, the narcolepsy market by itself represents a very significant commercial opportunity given the unmet needs in that space. And IH, you know, I think that that is the next step in the evolution of the elixirrhexin story. So we will wait for the Phase 2 data, conduct the Phase 3, and then hopefully launch into that well. Rudy Lee: Yeah. Super helpful. Thanks. Sandra Coombs: Thank you. Our next question comes from the line of Ami Fadia with Needham and Company. Please proceed with your question. Ami Fadia: Hi, good morning. Thanks for taking my question. With Loomrise now in your portfolio, what are your plans to study elixirextin along with an oxybate together to explore the synergistic effect of a patient being treated with both outside of the information that we already have, based on anecdotal evidence. Thank you. Richard F. Pops: Morning, Ami. Yeah. As I just was saying in the previous question, I think that there is a potential benefit for certain patients of dealing with the excessive daytime sleepiness with a wakefulness-promoting agent like elixirextin as well as consolidating fragmented nighttime sleep with an oxybate. That will not be the modal treatment. I think most patients will not opt for that polypharmacy. But for those patients that derive benefit from both sides of the equation, it could be a very, very powerful treatment approach. I can tell you during the even during the pendency of the Phase 2 studies, we were hearing from investigators an interest in testing both agents together in certain patients. And we will be the only company that have agents in both camps. And so from our perspective, we see it less as a registrational pathway as more of an evidence-building pathway for the purpose of reimbursement. So I think you can expect to see more from us on that front in the weeks ahead. Sandra Coombs: Thank you. Our next question comes from the line of David Amsellem with Piper Sandler. Please proceed with your question. Alice: Hi, good morning. This is Alice on for David. Thanks for taking our question. So now that you have LUMRIZE under your control, how are you thinking about the field force for the product, also bearing in mind that there will be another market entrance? Entrance by year end. And if an expansion is on the table, are you thinking about more from a breadth or a depth perspective? Thank you. Joshua Reed: Yeah. Absolutely. So right now, we feel like the Salesforce is right-sized to really maximize the opportunity. I think context is important here. We have done a lot of work in this area. You know, our estimate is there is about 50,000 oxybate-eligible patients in the marketplace right now. And there is a dynamic segment of about 9,000 patients that are psyched. And so that is really the target for Lumerize. That is what the Salesforce is really lined up against. It is really this oxybate prescribers to maximize that dynamic segment. We are seeing very encouraging trends, obviously. The team made some investments late last year with expanding the Salesforce slightly, also some commercial investments within our patient services area, and we are seeing benefits from that. So right now, we believe that we are right-sized. As Rich said, you know, we think this is a durable market. And so that patients will continue on oxybates. We will have to see at what how the year plays out with competitive entrants, but we clearly see this as a uniquely positioned product, and we think we are right-sized at this point. Sandra Coombs: Thank you. Our next question comes from the line of Jason Gerberry with Bank of America. Please proceed with your question. Jason Gerberry: Hey, guys. Thanks for taking my questions. My question is just how to think about kind of SG&A, underlying SG&A spend beyond 2026? And if you can outline in the 2026 guide for the full year, sort of what is the embedded one-time transaction cost because as I look ahead beyond 2026, I assume that there is redundant G&A spend between Avadel and Alkermes. And then with the VIVITROL LOE in 2027, I imagine there is harvest that brand for profit. Unless the decision internally is to just reallocate that spend towards other brands with longer tails. So kind of curious if you can just outline some of those puts and takes in the SG&A kind beyond 2026? Thanks. Joshua Reed: Yeah. Let me talk about— Please talk to me. Know, SG&A. With respect to 2026, what you have impacting SG&A are a couple of things. You have got about $50,000,000 in one-time transaction costs that are impacting the year. So, clearly, those will not carry over into future periods. What you also have in 2026 compared to 2025, obviously, is taking on the commercial investments associated with LUMRIZE and, you know, typical increases that you might see in labor and benefits. You know, frankly, you exclude the impact of the transaction cost and the acquisition of Avadel, essentially, on our base business, our base company, SG&A is flat. And so, you know, thinking certainly, we will look to about future periods, so 2027 and beyond, control spending and be disciplined on that front. And we will look to determine whether or we have got some synergies and opportunities to reallocate some of those costs of our business as it evolves. To increasing investment if necessary in our sleep medicine for elixiraxin, and for our— Sandra Coombs: Thank you. Our next question comes from the line of Ashwani Verma with UBS. Please proceed with your question. Ashwani Verma: Hi. Thank you for taking my question, and congrats to both Richard and Blair. So just on Lumrise, there is a bit of a focus on the impact from the first generation full genetic market formation, some of the initial list prices coming in much above where the expectation was. And I know Jazz also talked about this last night, impact to Xywav in the second half. I think that like how are you thinking about that for LUMRISE, which is once nightly? Do you similar dynamic, what would apply to, like, an indirect pricing pressure and Zybee would also replicate on the rise, or does it have some sort of an advantage that the competitor might not have? Thanks. Joshua Reed: Yeah, Ash. I will take that. We clearly think there is an advantage for Loomrise positioning. Again, it is the only once nightly oxybate, which is significant value to patients in HCP. So the positioning is clear. So strategically, we do believe there is a significant advantage. In terms of just the dynamics of the market, right now, I think just for context, you know, with generic multisource generics coming to the market, that is very specific to Xyrem. Very specific there. That is not specific to Lumerize. These products are not interchangeable. So our view right now and what we see in the marketplace with our discussions with payers is payer access is strong. Over 90% of commercial payers or commercial patients have access to LUMRI. So we are not seeing any material changes at this point. Obviously, we are going to have to see how this plays out. Likely, if there is any impact, it would probably be second half of the year or a little bit later. And so we are going to watch that very closely. What we do know, what we hear from our sleep specialist is that they are committed to making sure that patients get access to Lumerize. They are, you know, sleep centers have the capabilities to support navigating market access hurdles, and they are committed to doing that. So, again, we do not see any material changes at the beginning of the year. We will see how it plays out for the second half of the year. Sandra Coombs: Thank you. Our next question comes from the line of Marc Goodman with Leerink Partners. Please proceed with your question. Marc Goodman: Hey, good morning. Can you talk about valuelox that you inherited in the acquisition? Just the development plan and how excited you are about this product. You view it as a replacement strategy for Lumerize eventually. And just give us a sense of when you think in know, what do you have to do to get it to market, and how fast can you get it to market? Blair Jackson: Blair, do you want to jump in on that one? Yeah. Hi, Marc. It is Blair. It is a good question. So actually valroxabate is a really interesting asset that came over as part of the Avadel transaction. It has an opportunity to play in really the low to no sodium space. And I think what we are looking to do there is try to move program forward as quickly as possible, trying to really look through the PK profile of that and leverage some of our formulation capabilities to advance that rapidly through the clinic. So it is too early to say whether this would be a future replacement to Lumerize or an addition into the portfolio. We will just see how the data plan pays out over the next year or so. This— bridging studies just you can do to get it to market? I mean, do you think you are going to have to do a full development plan, or is this— Joshua Reed: That totally depends on the data that we get that we get early. Blair Jackson: If we are able to match bioequivalents and things like that, then there is a much rapid path forward. If we need to do some additional studies, we will do that. This is an area we know really well. As you know, we are a formulation expert, and we have navigated these paths before. So we are early stages here, but it is now in our hands, and we are moving forward. Marc Goodman: Thanks. Sandra Coombs: Our next question comes from the line of Jason Matthew Gerberry with Jefferies. Please proceed with your question. Anna Sejan: Hi. This is Anna Sejan for Akash. Just a couple questions about your ADHD study. Are you able to share any more details about that, and are you considering potentially enriching the population for a specific ADHD phenotypes? Richard F. Pops: Yes, Rich. No. We are not going to enrich for any particular phenotype or chronotype. What we are going to do is what we are excited about for ADHD, it is very similar in many ways to what we did in narcolepsy in that we think in a reasonably short period of time and a reasonably small cohort of patients, we should be able to discern dose response and efficacy signal. So we are going to move quickly into that translational study. Anna Sejan: Thanks. Sandra Coombs: Our next question comes from the line of Benjamin Burnett with Wells Fargo. Please proceed with your question. Benjamin Burnett: Hey. Thank you. I wanted to ask about the split dosing program in split dosing the elorexant program. Just color on the protocol, like when is the second dose taken? And I guess, given that this is a split dose, is it possible you could get away from having any sort of food restrictions? Richard F. Pops: So this is Rich. I think that we will not give a whole lot of specificity on the split dose strategy other than to say what its objective is, which is to drive additional wakefulness in the later hours of the day for patients who might want to extend that wakefulness duration. What we are finding is that people are experiencing a quality wakefulness that they have not had before. They are very interested in certain situations of having that persist deeper into the hours of the evening. So because of the modeling we have been able to do through our Phase 2 program, have a really good sense of how to administer two different doses, administer in time, to both extend that wakefulness and also minimize associated side effects. So that is proprietary information. And so we are going to keep that under wraps as long as we can. And I think that that is going to, at the end of the day, if we can have a sort of an anchor once-daily dose available to all patients as well as this option for split doses, think that will differentiate the product significantly commercially. Sandra Coombs: Our next question comes from the line of Umer Raffat with Evercore ISI. Please proceed with your question. Umer Raffat: Hi, guys. Thanks for taking my question. First, congratulations, Blair, on the expanded role. But my question, Richard, for you is, I have been tracking this from the days of eighty seven hundred and thirty eight thirty one, and I feel like pipeline finally is in a spot that it is never been in Alkermes' history. So I am just curious about the timing of your decision to give up the CEO role while saying chairman. And secondly, on your Phase 3 design strategy that you laid out, could you remind us if it includes split dosing both in NT1 and in NT2? Thank you very much. Richard F. Pops: Good morning, Umer. You know, my theory all along has been the time to pass the baton—you recognize I have been doing this forever—is when the company is just in a demonstrably strong position. Past few years, we have had to basically change the business model from a royalty-based company based on formulation technology into a proprietary products company. And the last step in that transformation was getting our hands on what could be a potential blockbuster drug and its sequelae. And that is where we are right now. So, you know, Blair has been my partner through this for a long time. He is actually been at the helm for much of the transformation within the company. And so it is a very logical time to do this. And, you know, I will say as chairman, I am extremely proud of where we are, and I think we are on this really exciting new trajectory, which I am going to be part of. On the Phase 3, we are going to include split doses in the NT1. And the history of that is through the NT1 study, notwithstanding the fact that we had this really beautiful efficacy once daily that we presented at World Sleep. Along the way, we heard from clinicians have patients who want to extend this duration into the evening. So, originally, our thought was that we would do this as a life cycle management post first approval, you know, adding what we were calling at the time a top up dose. But when we saw the NT2 data, it was so clear that for most patients or many patients, they would benefit from a second dose, to lift those later at time points, we decided to incorporate it into the registration program. And I think that turned out to be a real blessing for their overall program because I think the competitive dynamic is going to swing significantly in our favor if we are successful with both the once-daily and the split dose regimens. Joshua Reed: Thank you, Richard. Sandra Coombs: Thank you. Our next question comes from the line of David Huang with Deutsche Bank. Please proceed with your question. David Huang: Hi there. Good morning. Thanks for taking my questions, and congrats to both you, Richard and Blair. So with the Takeda potentially having a PDUFA date for oviporexant in Q3 and then q potentially being on the market by the end of the year, what learnings do you think you could take away from their commercial launch, if any? And would their pricing inform how you think about the value proposition of elixirixen? Thanks so much. Richard F. Pops: Hey, David. I will start, then I will turn it over to Todd. From my perspective, I think the most interesting unknown is going to be pricing. Because I think that is going to set the tone for the market's receptivity to the value that is being created with these NT1 drugs. So note that they are going to come to market in NT1. In NT1, this is a true orphan indication where we have a disease-modifying therapy conferring benefits from a wakefulness perspective that have not been seen before in this patient population. So I think that they are entering the market with a premium product with this degree of medical benefit to patients is a great thing for us because I think that we come second if successful with a much more broad product offering. But, Todd, your perspective. Joshua Reed: Absolutely. Yeah. I would say, you know, there is the basic things that will be interesting, which is just the positioning of a product like this. Whether it is really positioned for market expansion or for switch. That is clearly something that we will be watching. But I think Rich really put on the really key thing that we are going to be watching, which is really the pricing dynamic. The markets. And that is going to be very interesting for us. It will be something for us to pay close attention to, and it will absolutely fold into what our pricing strategy, market access strategy looks like. Sandra Coombs: Thank you. Our next question comes from the line of Douglas Tsao with H.C. Wainwright. Please proceed with your question. Douglas Tsao: Hi. Good morning. Richard, congrats on your accomplishments at the company. We will miss you. Just a question on seventy two ninety in ADHD. If I remember from the presentations that you gave at the orexin day, in 2024 you showed preclinical data showing a profile that looked better than the nonstinulant ADHD drugs on the market right now. I guess I am curious is that the benchmark, or do you have a sense how ultimately this might compare to the stimulants on the market, which have continued to have very significant disruption on the market and real challenges for availability. So I think that there would be sort of demand for better nonstimulants. Thank you. Richard F. Pops: Yeah. Good morning. I think what struck us about that preclinical program was that our going-in hypothesis was that the orexin pathway might be a really nice complement to the nonstimulant drugs. And then in those model systems, the orexin system by itself as monotherapy looks incredibly important. There have been some recent publications about the actual effects of stimulants on ADHD, what the mechanistic basis of that is. And if you map that on to what is happened with the orexin pathway, the orexin pathway just anatomically and neuro obiologically, it is affecting many of these domains that are relevant to the idea of attention, focus, and vigilance and things like that. So I do not think we necessarily have an a priori sense of how to compare it to a stimulant or compare it to a nonstimulant. What we think is that the phenomenon that we will see in the clinic could be very specific to that of an orexin 2 receptor agonist in the disease setting. So we will be keeping our eyes wide open for the clinical signs that emerge from the study. But we go in with some very strong preclinical expectations that we will have a benefit. Blair, know if you have any additional thoughts on it. Blair Jackson: No. I guess just to add, I think as you look at the preclinical data, one of the things we saw in this five choice serial reaction test—it which is a highly translatable model to the clinic—is that we saw about equivalent efficacy across sort of the stimulants versus the orexin. And so we think as to Rich's point, think we are very confident about seeing a signal in the next study. And we will define that further as we get through the Phase 2 program. Douglas Tsao: And if I can, just a quick follow-up. Do you think that you might have sort of a different effect on different domains of ADHD than stimulants, as well as sort of that currently marketed non stimulants? Thank you. Blair Jackson: You know, I think it is too early to be to tell. I think right now, our best data is that the early test that I mentioned earlier, and we actually had efficacy across all the domains in ADHD both on concentration and impulsivity. So, you know, we are going to be testing all of those part of this program. Douglas Tsao: Okay. Great. Thank you very much. Sandra Coombs: Thank you. Our next question comes from the line of Yuhi Eir with Mizuho Securities. Please proceed with your question. Yuhi Eir: Thanks, guys. Congrats, Rich, to your accomplishment, and, Blair, congrats on your next role. So maybe just help us understand, that there is potential generic entry for the Viretrol in 2027. How you are thinking about the dynamic and you think, as far as you know, whether there is whether Teva has capability to manufacture generics at all at this point. Thanks. Joshua Reed: Todd, do you want to go? C. Todd Nichols: Yeah. Absolutely. So, know, our plan right now is to continue growth and expansion of VIVITROL similar to what we did in '25 and '26. So we see again strong demand for '26. We are preparing for multiple different scenarios. Could occur in 2027. You know, all the research that we have done continues to validate that this is a difficult product to commercialize, but it is really difficult to manufacture. So we know that, you know, as the company that is had this for so many years. And so we will have to see if there is a capability to do that, what the supply in the market looks like. We are prepared for that. And if we do get competition in 2027, what that looks like, we will be prepared to compete, but we will also be prepared to execute a range of scenarios, which could include pulsing our spin differently. Sandra Coombs: Thank you. Our further question this morning comes from the line of Paul Mitchell with Stifel. Please proceed with your question. Julian: Hey. This is Julian on for Paul, and let me offer my congratulations on behalf of Paul and the rest of the team at Stifel. Just a couple really quick ones to you, Rich and Blair. When can we expect more detailed data on NT2? I am not sure if you have the open label extension is still ongoing, and disclose that, and when can we expect to get that data? And then for when you are talking about the Brilliance program, Rich, I think you mentioned that the primary endpoint in the NT2 Phase 3 study it is going to be MWT. I know it was a dual primary for the Phase 2. So just curious know, thinking behind that or if there was always a plan to go ahead with with MWT. Thanks. Richard F. Pops: You are welcome. The DM—we have submitted the NT2 results for a series of presentations at Sleep in Baltimore in June. We should hear fairly soon. I expect those to be accepted. So you will see more of the complete dataset. You have seen a lot of it, but I think what I am really interested in, we have been talking internally about it, is trying even bring some more color to the quality efficacy that she sees in the NT2 population. Because I think looking at average MWT or average ESS does not really tell the whole story of the clinical benefit and the benefit of two receptor agonist in that more heterogeneous patient population. I think that in the Phase 3 NT hierarchy. Now that we have the data from Phase 2 and we can model, we are comfortable with one. NT2 studies, we are referring to more the traditional— And I am looking around the table to make sure I am not misspeaking on this. Just we will have just a primary analysis on MWT, with key secondary, including ESF. Sandra Coombs: Thank you. Ladies and gentlemen, this concludes our question and answer session. I will turn the floor back to Sandy for final comments before we close out. Sandra Coombs: Great. Thank you, everyone, for joining us on the call this morning and the questions. Please do not hesitate to reach out to us at the company if you have any follow-up questions you can be helpful with. Thank you. Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Greg Martini: Forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current safe harbor statement slide, as well as under the heading Risk Factors in our Annual Report on Form 10-K for the year ended 12/31/2024 and in our subsequent SEC filings. All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements. Also included are non-GAAP financial measures, which should be considered only as a supplement to and not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures. During today's call, our Chief Medical Officer will discuss how we are advancing aproglutide, and I will review our financial results and 2026 guidance. Tammy Gaskins, our Chief Commercial Officer, will also be available for Q&A at the end of the call. Today's webcast includes slides, so for those of you dialing in, please go to the Events section of our website to access the accompanying slides separately. With that, I will turn the call over to Tom. Tom McCourt: Good morning, everyone, and thanks for joining us today to review the fourth quarter and full year 2025 financial results. Results and business updates. In 2025, we took several important steps to maximize LINZESS, advance aproglutide, and deliver sustained profits and cash flows to strengthen our financial position and position the company for long-term success. For LINZESS, we delivered on the full-year 2025 guidance with $865 million in LINZESS U.S. net sales supported by an impressive 11% demand growth and 8% new-to-brand volume growth year over year. We also further strengthened the clinical utility of LINZESS with FDA approval in November 2025 for the treatment of irritable bowel syndrome constipation in patients 7 years of age and older. This new indication establishes LINZESS as the first and only prescription drug approved for the treatment of IBS-C in patients 7 to 17 years of age, which is great for patients in need. In addition to expanding the clinical profile of LINZESS, we also took steps to lower the LINZESS list price effective January 1, 2026, in response to the evolving healthcare dynamics and to support ongoing patient access. For advancing aproglutide, we met with the FDA in the fourth quarter of 2025 and aligned on key elements of a confirmatory Phase III clinical trial design, which we will be referring to as STARS II. We are on track to begin site activation in the second quarter of this year and continue to believe that the data generated in the prior STARS Phase III trial will support an eventual NDA submission. Mike will discuss the Phase III trial design in more detail later in the call. Lastly, for 2025, we finished the year strong, delivering $138 million in adjusted EBITDA and ending the year with $250 million of cash and cash equivalents on the balance sheet, positioning us well for 2026. Looking ahead to 2026, on January 2, we announced a strong outlook for 2026 with our full-year financial guidance, highlighted by our expectation that LINZESS will return to blockbuster status with greater than $1.1 billion in U.S. net sales in 2026, driven by improved net price and low single-digit prescription demand growth. We expect increased LINZESS U.S. net sales and our continued disciplined expense management to drive greater than $300 million in adjusted EBITDA in 2026, which will enable us to continue to advance aproglutide and reduce our debt to further strengthen our financial position. As such, our priorities in 2026 are clear. We will continue to maximize LINZESS, we will advance aproglutide by initiating STARS II for short bowel syndrome patients with intestinal failure, and we will continue to emphasize disciplined expense management to deliver profits and meaningful cash flows, which will enable us to reduce our debt and further strengthen our financial position. With clear 2026 priorities and our improved financial position, we now have a clear path to execute our strategy. We have aproglutide, which has demonstrated strong efficacy and tolerability to date, becoming the first and only GLP-2 to achieve a statistically significant reduction in weekly parenteral support volume with once-weekly administration. Patients in our open-label extension study, STARS EXTEND, continued to reduce parenteral support volumes with longer-term exposure to aproglutide. Data presented at the American College of Gastroenterology meeting in October reported that patients have achieved and maintained enteral autonomy, or complete weaning of parenteral support, for at least three months. Our conviction for the commercial opportunity for aproglutide remains high because of the strength of these data and the fact that many GLP-2-eligible patients with high parenteral support burden go untreated or discontinue therapy. We believe that the clinical profile will demonstrate efficacy, tolerability, and once-weekly administration of aproglutide and redefine standard of care for short bowel syndrome with the potential to improve adherence and increase the number of GLP-2-treated patients to generate greater than $700 million U.S. peak net sales. The addition of potential approvals in geographies abroad further increases the opportunity. I would also like to take a moment to acknowledge patients suffering from GI and rare diseases. We also seek to increase awareness for people we serve year-round who are at the center of our work. Short bowel syndrome is a devastating condition, and we thank you for your trust as we work with urgency to deliver this important new medicine to short bowel syndrome patients who are dependent on parenteral support. With that, I will move to our commercial performance update on page seven. Throughout 2025, LINZESS has continued to maintain its prescription market leadership for the treatment of IBS-C and chronic constipation in the U.S., recently surpassing 5.7 million unique patients treated since launch and ending the year with roughly 45% market share. With over 40 million addressable patients in the U.S., we believe LINZESS still has significant potential to grow prescription demand over the coming years due to the significant unmet needs. For the full year in 2025, the second consecutive year delivering 11% prescription demand growth, LINZESS demand growth was consistent, driven by price headwinds associated with legislative change. We expect to continue to support ongoing patient access. As a result of this change, we expect more than a 30% increase in 2026 Medicaid. Due to this decrease, we still expect meaningful cash flows in 2026. In April 2025, we announced that the FDA requested a confirmatory Phase III trial to seek approval for aproglutide, given the pharmacokinetic analysis of our prior STARS Phase III data indicated that the exposure and dose delivered in the trial were lower than planned due to dose preparation and administration. As a reminder, STARS was the largest-ever Phase III trial conducted of a treatment for short bowel syndrome with intestinal failure, and we continue to anticipate this dataset, along with the data from STARS II, will support a future NDA submission. As I mentioned, we met with the FDA in the 2025 timeframe to align on the key elements of the program. Michael Shetzline: STARS II is a randomized, double-blind, placebo-controlled study in short bowel syndrome with intestinal failure in a 1:1 randomization. Enrollment will include patients with both stoma and colon-in-continuity anatomy to be representative of the heterogeneity of the overall population of patients with this condition. Our primary endpoint for the study will be the same as our prior STARS Phase III clinical trial, evaluating the relative change from baseline in actual weekly parenteral support volume at week 24 in the overall patient population. Key secondary endpoints, also to be measured at week 24 for the overall population, include clinical response, defined as at least 20% reduction in parenteral support volume, number of days off parenteral support per week, and enteral autonomy. Patients will receive a 3.5 mg once-weekly dose of aproglutide to align with what was delivered in the prior Phase III trial. In designing the STARS II trial, we have leveraged learnings from the prior STARS Phase III to refine the instructions for use to optimize the dose preparation and administration. We are encouraged by the efficacy and tolerability data of aproglutide to date through the STARS trial and the long-term extension study, which give us confidence in the potential outcome of this confirmatory trial and in aproglutide's potential to be a best-in-class treatment for short bowel syndrome with intestinal failure as we pursue an eventual regulatory approval. We look forward to initiating the STARS II trial as we continue to grow our body of clinical evidence supporting aproglutide's potential to become the first long-acting once-weekly GLP-2 therapy for the treatment of short bowel syndrome, if approved. With that, I will turn it over to Greg to review our financial performance in 2025. Greg? Thanks, Mike. Greg Martini: We ended 2025 in a strong financial position, achieving our latest full-year 2025 guidance. Turning to slide 14 to review full-year 2025 financial highlights, LINZESS U.S. net sales were supported by 11% prescription demand growth. Fourth-quarter net price was impacted by unfavorable quarterly phasing of gross-to-net rebate reserves due to units dispensed for the quarter exceeding units sold to wholesalers. As a reminder, in 2025, we noted a change in AbbVie's estimate of gross-to-net rebate reserves for 2025 based on expected rebates owed for units dispensed by channel in each quarter, which was expected to impact the quarterly phasing of LINZESS U.S. net sales but not impact full-year results. Accordingly, full-year LINZESS U.S. net sales decreased 6% year over year, with net price erosion primarily associated with the Medicare Part D redesign. Now moving to our balance sheet, we significantly improved our financial position. Disciplined expense management, including a $61 million reduction in operating expenses year over year, resulted in $127 million in cash flows from operations and $215 million of cash and cash equivalents at year-end. We expect our strong cash position and 2026 outlook will support deleveraging of our balance sheet while simultaneously funding investment to drive long-term growth. We plan to use our cash on hand and cash flows generated to reduce our total debt balance in 2026, including repayment of our 2026 convertible notes at maturity in June, and expect to end the year with approximately $300 million of debt on the balance sheet, less than 1.0x 2026 adjusted EBITDA by year-end. Moving to our financial guidance on slide 16, we are reiterating our 2026 guidance. This includes U.S. LINZESS net sales between $1.125 billion and $1.175 billion, a greater than 30% increase year over year, driven by improved net price and low single-digit prescription demand growth. We expect Ironwood Pharmaceuticals, Inc. revenue between $450 million and $475 million, and we expect to maximize LINZESS, advance aproglutide, and deliver sustained profits and cash flows. We look forward to beginning site initiation for STARS II, a confirmatory Phase III trial for aproglutide, in the second quarter, and we believe we have the opportunity to redefine standard of care for patients living with short bowel syndrome with intestinal failure. I want to close by thanking all of our employees, patients, caregivers, and advocates for their shared dedication to advancing life-changing therapies for patients with GI and rare diseases. Operator, you may now open up the line for questions. Operator: At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Jason Butler from Citizens. Please go ahead. Jason Butler: Hey, thanks for taking the question. Just a couple on STARS II. Can you give us any more details on the learnings from STARS and the refined instructions for use that you are now including in STARS II? In repeating the data from STARS I, and then just lastly, when you think about the enrollment timeline? Thanks. Tom McCourt: Thanks, Jason. Mike? Michael Shetzline: Yep. Yeah, thanks, Jason. So in terms of the learnings, as you know, the original STARS trial had a very successful outcome in terms of the primary endpoint and the benefit for patients, as well as the GI and other systemic tolerability. As we mentioned, what we learned most was about the dose preparation and administration, and we are refining administration with better kit components and also better instructions for use. I mean, that is the main difference, so to speak, in the two trials. In terms of your next question about the alignment on the endpoints, they remain pretty much the same, and we obviously have a high degree of confidence in the outcome of the STARS II trial because of that similarity. And we do think we have improved the instructions for use and the dose preparation and administration for patients, so we expect that to be a positive contribution for the study as well. In terms of timelines, we learned a lot with the original STARS program. We certainly have taken those learnings to better inform us to start the STARS II trial. We already have a lot of sites in the STARS EXTEND program, which we are going to continue to use as well. So we think we are in a good position to successfully enroll the program in a timely fashion. That is why we put the timelines on the table in this call. We are certainly going to do everything we can. It is a lot of work, and the team puts a lot of effort into it. We are going to push to make it successful, but we absolutely believe we can do that and achieve it in the timelines we propose. Jason Butler: That is great. Appreciate all the details. Operator: Your next question comes from the line of Chase Knickerbocker from Craig-Hallum. Please go ahead. Chase Knickerbocker: Good morning. Thanks for taking the questions. Maybe just to start on the strategic alternatives process. I respect we are not getting, you know, a kind of a formal update. Can you maybe just update us on your thinking as far as now that you can, you know, at least in our model, clearly continue on as a stand-alone company, you know, retire the debt, kind of how you are thinking about the strategic process as we kind of go forward into 2026? Tom McCourt: Our strategic alternatives, and I think because of that, you know, we clearly have a path forward to certainly leverage the revenue that is coming, the increased revenue that is coming off LINZESS, you know, as well as reduce our debt and mobilize the trial. That being said, we are obviously always open to alternatives that would increase shareholder value. You know, there was a lot of interest in Ironwood Pharmaceuticals, Inc. and our assets, but we wanted to make sure that we were really smart with regard to choices we made to make sure that we could protect the shareholders. So I think as we move forward, we will focus on executing as quickly as we can and as strong as we can, and always consider, you know, other ways in which we can increase shareholder value. Chase Knickerbocker: Understood. Maybe just another one for Mike. On STARS II, you know, it seems like timelines, you know, expectations for full enrollment are somewhat similar to STARS I, maybe a little bit shorter. Maybe just talk about some of the assumptions you are making as far as that timeline to full enrollment. You know, I know there is another, you know, large study in the same patient population, you know, at least relative to overall kind of market size. Kind of talk about some of the assumptions that you are making on total enrollment as it compares to STARS? Michael Shetzline: Well, I think that is a good question, Chase. Thanks for the question. I think you are correct. In a lot of ways, we have aligned with how we saw STARS I play out. We thought we did a fair job of executing that study as well, so that is where a lot of the assumptions are based. We certainly think we can achieve that in a STARS II program, and that is what the team is pushing and positioning to do and deliver the trial as we project here for an eventual NDA submission. But it really is grounded in what we did in STARS I, which, as we said, was a very successful study. Tom McCourt: You know, the other thing to consider here, Chase, you know, it is a 24-week trial. So I think when you combine the fact that you have a very, very high probability of success, you have a highly effective, extremely well-tolerated once-weekly therapy in a 24-week trial, I think we are delighted with what Mike has been able to do with the FDA as far as not only get the trial up and running with the design we have, but also, you know, the length of the trial as well, which obviously is a big driver with regard to the time to get to market. Chase Knickerbocker: Got it. Maybe just last for me on, you know, actually going to ask a question on 2027. But just on LINZESS, as we kind of approach that negotiated price, can you maybe just talk to us about what you have seen in the market from prior negotiated drugs as far as actually some volume acceleration as we kind of go into that negotiated price year, and kind of how you think, you know, we should be thinking about 2027 for LINZESS when the negotiated price goes in place? Greg Martini: Yeah, thanks, Chase. This is Greg. So for 2026, we are clearly excited about the improved outlook that we have with our guidance that we provided back in January and reiterated today. We have significant growth we are expecting in LINZESS net sales for 2026. We have not provided any guidance for 2027 and beyond. I would say that we continue to be very optimistic about the future of the brand and its ability to continue to drive strong net sales, which will continue to deliver profits and cash flows for Ironwood Pharmaceuticals, Inc. Operator: Your next question comes from the line of Amy Li from Bank of America. Please go ahead. Amy Li: Is the FDA allowing you to bridge to the STARS dataset as you said, and is your planned enrollment size meant to reference or bridge to a future NDA? And I think people have noted your sample size is slightly higher than your competitor’s, which is enrolling 90 patients. So just curious if the trial size was by FDA request or is it a more conservative decision on your end to have a more robustly powered trial? And finally, given the competitive pressure in SBS-IF and the potential for GATTEX generic, could you potentially add a higher-dose arm to maximize efficacy differentiation? Michael Shetzline: Yep, thanks, Amy. So in terms of the STARS II data, we are hoping to leverage the STARS data as much as possible, honestly. As we said, we are bridging based on the similar dose. The dose is aligned in the STARS II trial with what we put in the original STARS trial, so we are anticipating that we will be able to use the original STARS data in the NDA submission. Now, in terms of the size of STARS II, we certainly did align with the agency on the key elements of the program to take forward, and we believe this current sample size that we have put on the table here, with 124 patients, gives us adequate and robust power along the primary endpoint and secondary endpoints as well. The decision on the sample size was to make sure we had a very robust clinical trial and confidence in the outcome; that is what we wanted to achieve. We recognize there may be differences with some other trials being performed. On the question about the higher doses, we certainly have considered—and continue to consider—the opportunity with higher doses. I think we are well-positioned given the fact that STARS already has very robust efficacy data with the potential best-in-class profile and outstanding GI tolerability and weekly dosing; we certainly want to leverage that going forward. But we do continue to evaluate the opportunity to introduce a higher dose. As you know, not everybody responds in a clinical trial, so there is certainly opportunity to potentially increase the breadth of response. But right now, we are focused on getting fastest to market, and the best way to do that is to bridge with the original STARS dataset and complete this trial and confirm that evidence for an eventual submission. Amy Li: Got it. Thank you so much. Operator: Your next question comes from the line of Mohit Bansal from Wells Fargo. Please go ahead. Mohit Bansal: Great. Thank you very much for taking my question, and congrats on all the progress here. A couple of questions from my side. So one is, did you ever see data from the STARS trial to look at patients who could achieve the optimum dose? Did they benefit more than the other patients who could not get to the optimum dose? That is the first question. And the second question, I would love to understand how you are thinking about market opportunity for aproglutide in the case, you know, you have GATTEX generic potentially reaching the market around the same time. What is the latest on the GATTEX generic at this point? Thank you. Michael Shetzline: How about I start with the first question? Thanks. Good question. On the optimum dose, I think it is a really great question because obviously you raised the point of optimum dose. I think what has been amazing in the original STARS dataset is the robust efficacy in the presence of basically placebo-like tolerability. So that is a pretty amazing outcome in our industry, where you really do not see any really negative consequences, and it was a pretty robust, large trial. So that is quite a big learning. We really think we had a way to get into an optimum dose with the STARS trial. As I mentioned, that came out to be 3.5 mg, which is what we are taking forward in STARS II. I think in the background of your question is kind of what we alluded to earlier: is there an opportunity for greater efficacy? And as you know, we did do some early trials looking at 2.5, 5, and 10 mg from a biomarker perspective. So there clearly is some biomarker evidence that there could be some response out there above 3.5 mg, and as I said, we certainly have been considering that. But for right now, with, again, the optimum outcome we have in the original STARS trial—meaning robust efficacy in a very well-tolerated once-weekly therapy that people like, maintain, and continue, because we still see improvement even a year and two years out in the STARS EXTEND trial—we really think the best opportunity is to take that forward in the confirmatory trial and get to market as soon as possible because, as we are hearing, patients and investigators really like the drug and really want to maintain patients on it, and we would like to get it to market as soon as possible. I think for the market question— Tammy Gaskins: Yeah. Hi, Mohit. This is Tammy. Thanks for the question on the commercial opportunity. Just to echo Mike’s comments, commercially we have very strong conviction in the overall clinical profile of aproglutide and its potential to be differentiated in the GLP-2 class, especially because, as Mike was just talking about, not only did we have a positive Phase III trial, but also in the STARS EXTEND long-term extension study, we continue to see increased improvement in PS volume reduction and days off of PS and even enteral autonomy achievement, which we know is really critical for patients in this market who are burdened by the everyday demands of being on parenteral support. And when we look to, as Tom referenced in the presentation, peak U.S. net sales of greater than $700 million, you know, that assumes that there will be aproglutide and at least one generic teduglutide on the marketplace. But even with that, we still believe in the potential to drive aproglutide to market leadership through expanding utilization of GLP-2 therapies and improved adherence. And we do not think that this would be a multisource generic market because of a lot of the demands required for a small patient size for a rare disease and the demands required to support these patients both clinically and from a reimbursement perspective. So full belief in the commercial opportunity and what aproglutide can do as a differentiated agent within that market. Mohit Bansal: Helpful. Thank you. Operator: Again, if you would like to ask a question, press star-one on your telephone keypad. Your next question comes from the line of Dominic Rose from Inshan Health. Please go ahead. Dominic Rose: I have got two. My first question is, can you help us understand what channel mix effects drove the LINZESS rebate in Q4, and whether we should expect ongoing volatility in pricing this year? And my second question is that the LINZESS commercial volume looks to have fallen at the beginning of the year. So can you tell us what your formulary positioning looks like in this year versus the prior year? Thank you. Greg Martini: Thanks, Dominic. This is Greg. So fourth-quarter pricing was not necessarily impacted by channel mix. It was really based on timing of recognition of gross-to-net rebate reserves. And in 2025, gross-to-net rebate reserves are based on units dispensed in the quarter. In the fourth quarter, we had a higher volume of units dispensed relative to the units sold to wholesalers, so we saw a disproportionate impact from those gross-to-net rebates. So it was not mix; it was really timing of when those rebates were recognized. And if you look across the full year, it really normalized from a timing perspective, and you do not see as significant of an impact on the full-year results as you did in first quarter and fourth quarter specifically, which were unfavorably impacted by that trend. Moving forward in 2026, we do not expect to have the same degree of volatility quarter over quarter. We do expect 2026 will be a bit more consistent sequentially quarter over quarter than what we saw in 2025. And then from an overall payer access, I will have Tammy talk to that in terms of 2026 coverage. Tammy Gaskins: Yeah. So as we have talked about already, of course we issued our full-year guidance, which is significantly improved year over year due to a combination of improved net price as well as anticipated low single-digit demand volume growth. A big part of our decision to lower the list price was also to ensure patient access, and we have maintained broad patient access for LINZESS across our biggest books of business, both commercial and Medicare Part D, which was critical in this. And in terms of the low single-digit growth, we did expect some impact on Medicaid as a percentage of business as states may decide to respond to the removal of the inflationary component of the statutory rebates, but we feel that we have taken the right approach for the guidance and continue to give patients branded prescription-leading market access for LINZESS. Tom McCourt: I think the other question he had was the reduction in volume year over year. And, you know, this drug has been on a linear growth curve since we launched it, and it is remarkable, you know, what sustained growth we have seen. We do see some seasonality in the first part of the year because of the high-deductible plans that there is a reset, so we generally always see—effectively for the last ten years—we saw a reduction in the first quarter versus the prior fourth quarter, then it accelerates through the year. So I think we are right on track from where we said we wanted to be, and we feel very, very good about, you know, what the outlook for 2026 looks like. Dominic Rose: Okay. Thank you. That is very helpful. Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Good morning, and welcome to Clear Secure, Inc.'s fiscal fourth quarter and full year 2025 conference call. We have with us today Caryn Seidman-Becker, Founder, Chair, and Chief Executive; Michael Z. Barkin, President; and Jennifer Hsu, Chief Financial Officer. Before we begin, today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in the documents the company has filed and furnished with the SEC, including today's press release. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. During this call, unless otherwise stated, all comparisons will be against the comparable period of fiscal year 2024. Additionally, the company will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's press release and the most recently filed annual report on Form 10-Ks. These items can be found on the Investor Relations section of Clear Secure, Inc.'s website. With that, I will turn the call over to Caryn. Caryn Seidman-Becker: 2025 was a defining year for Clear Secure, Inc. Becoming the trusted secure identity company is no longer a goal; it is our reality. Clear Secure, Inc. is incredibly well positioned sitting at the intersection of security and the experience economy. In an era where identity has never been more critical, Clear Secure, Inc. is the trusted standard. We are an essential layer connecting and securing the physical and digital world. Over the past fifteen years, Clear Secure, Inc. has built deep expertise as an identity company. We operate in both physical identity and digital identity across regulated consumer and enterprise environments, and have built a trusted brand that stands for high-fidelity, secure identity, privacy, and a frictionless member experience for our nearly 40,000,000 Clear members. We are operating with greater urgency than ever because identity is at an important inflection point. Identity is under constant siege, and it is the tip of the spear for getting security right. As threat actors create greater risk, as identity evolves and identities are multiplying exponentially, knowing that you are you and connecting you to all the things that make you you is crucial to manage and secure access. Clear Secure, Inc. has become the trusted standard and operating system for identity across both the physical and digital world. This is creating significant opportunities in both our B2C ClearTravel business and our B2B ClearOne enterprise business. I wanted to share two of Clear Secure, Inc.'s core pillars this year: enabling identity to transform and secure physical experiences from home to gate in travel, and aggressively scaling ClearOne to secure the enterprise for both the workforce and their consumers or patients in healthcare. In ClearTravel, helping travelers win the day of travel with a frictionless home-to-gate experience is our North Star. Consumers do not want process; they want outcomes. They want to leave their front door and be at their gate with as little hassle as possible. To achieve this, we have doubled down on innovation with our relaunched mobile app, scaling the Clear Concierge program, and our eGate rollout with more to come. Our new mobile app reflects our obsession with the frictionless member experience. Just one tap and you are in. Seamlessly connecting traffic, the speedy Clear lane, and the walk to your gate, you can know exactly when to leave to get to your gate perfectly on time. You can also personalize it, as we all know people who like to arrive at their gate as the doors are closing. Or my mom prefers to arrive two hours early no matter what I tell her. You can now easily add a concierge at almost 30 airports. A beloved Clear ambassador can meet you at the curb and take you straight through security to your lounge or your gate. Live activities will help guide you step-by-step through your journey. This is a total reimagining of how an app can transform and connect your travel experience to help win the day of travel from home to gate and back again. The rapid expansion of our home-to-gate experience reflects our focus on the member experience and future-facing innovative culture. This drives higher NPS, strengthens our brand, and increases long-term retention. When you provide a premium magical experience, customers do not just stay; they become evangelists. Strategic partners also appreciate the importance of a member-obsessed, frictionless travel experience. I am pleased that we are lengthening and strengthening our partnership with American Express. This has been a great partnership for the past five years, and we look forward to continuing to build it from here. Accelerating progress building robust public-private partnership at the federal, state, and local level is also creating more opportunities. We continue to work with the administration and TSA to modernize travel at no cost to taxpayers. When you align private-sector speed with public-sector scale, results for the American traveler are powerful. I love to talk about the “and.” Clear Secure, Inc. is a travel powerhouse, and we are becoming a force in enterprise. ClearOne delivered a record-breaking quarter. This is validation that our principled, multilayered approach to identity is winning. Working to reduce fraud, waste, and abuse in Medicare by building an identity interoperability layer is a testament to our opportunity and our strategy. As the largest healthcare payer in the U.S., CMS is integrating ClearOne to modernize account creation and fraud prevention for millions of beneficiaries. We are helping CMS move toward a patient-centered future by providing a secure, one-and-done identity layer in one of the world's most regulated environments. Beyond healthcare, we are also seeing a pull from the Fortune 100 to secure their workforce, critical infrastructure, and their assets. Many have experienced breaches, data exfiltration, and insider risk. This is a here-and-now problem that is multiplying. From telecom giants to critical banking infrastructure, the world's most sophisticated companies are choosing ClearOne to secure their workforce life cycle. The beauty of ClearOne is its network depth and seamless integration into existing workflows. We do not ask companies to change how they work. We plug into the systems they already use. We verify the human behind the device. We are delivering total identity integrity; in a world of deepfakes and AI-driven fraud, knowing who is who and you are you is the only thing that matters. As we said five years ago in our S-1, at Clear Secure, Inc., we believe in the “and.” We can deliver both growth and profitability. We have done that. The flow-through of the business from revenue to free cash flow speaks to the power of the Clear model, and I am proud of our discipline to accelerate growth and be highly profitable. We have created the foundation and leverage for significant growth ahead. At Clear Secure, Inc., we are building the infrastructure for a world where you are always you. We entered 2026 from a position of strength. We—our fourth quarter acceleration is a direct result of the investments we have made over the past few years and the seeds that we planted that are now growing into forests. We have the cash, the talent, and the momentum to continue scaling. With that, I will turn it over to Michael. Michael Z. Barkin: Thanks, Caryn. A key focus for us over the past year has been improving the member experience, and we have made significant progress. Our strengthening member experience is a rising tide that improves member acquisition, conversion, retention, and our brand for ClearOne and our travel partners. Additionally, we have network expansion opportunities both domestically and internationally, and our strong partnership with the TSA allows us to work together to improve the travel experience in the U.S. TSA PreCheck, Concierge, and ClearOne are businesses that remain in their early innings and are increasingly important contributors to our overall growth. Partnerships remain a strategic part of our business and an attractive member acquisition channel. We are pleased that we have renewed our partnership with American Express, offering CLEAR Plus as an embedded benefit on the American Express consumer, corporate, small business Platinum cards and select other American Express card products. This multiyear renewal reflects the value of CLEAR Plus for American Express cardholders and the strong partnership that Clear Secure, Inc. and American Express have established over the last six years. We look forward to continuing to provide great experiences for our American Express members. The need for secure multilayered identity and infrastructure has been amplified, and we are entering this chapter from a position of strength. Our balance sheet is robust and growing, providing us meaningful flexibility. In a rapidly evolving identity landscape, we believe we have attractive opportunities to develop more partnerships and make disciplined investments that will deepen our home-to-gate ClearTravel membership experience, increase penetration of ClearOne, and shape the future of the identity industry. I will now turn it over to Jennifer. Jennifer Hsu: Thank you, Michael. 2025 was a year of disciplined execution and structural improvement. In Q4, bookings accelerated to north of 25% year-over-year growth, the highest level since Q4 2023, and adjusted EBITDA margins reached well over 30%. In 2025, we generated over $340,000,000 of free cash flow and returned over $240,000,000 of capital to shareholders, all while investing to position us favorably as a leader in secure identity. Our Q4 results reflected our 2025 initiatives, and we ended the year in a significantly stronger position than we began. We improved the member experience, completed a billing system migration, and made meaningful progress against our product and technology roadmaps. Our fourth quarter performance gives us confidence in the step-change growth that we expect in 2026 as we continue to expand margins and generate materially higher levels of free cash flow. In the fourth quarter, revenue grew 16.7% year over year to $240,800,000. Total bookings increased 25.4% to $287,100,000. For fiscal year 2025, revenue was $900,800,000, up 16.9%, and total bookings were $977,200,000, up 17.2% year over year. There are multiple structural drivers that will underpin durable and increasingly profitable growth in 2026 and beyond, including the growing size of our member base; improvements in member experience and policy resulting in strong retention trends; attractive partnership economics; a disciplined approach to pricing; ARPU growth through product expansion and new businesses; as well as the continued scaling of ClearOne. Following a comprehensive review to simplify our reporting, I would like to provide an update on our KPIs. Beginning in 2026, we will discontinue three metrics: total cumulative platform uses, annual CLEAR Plus gross dollar retention, and annual CLEAR Plus member usage. Effective as of Q4 2025, we are renaming total cumulative enrollments to total Clear members, with no changes to the calculation of this metric. Starting in Q1 2026, the KPIs we will report are: total bookings, total Clear members, and active CLEAR Plus members. Q4 active CLEAR Plus members grew to 7,600,000, up 6% year over year, and reflect a one-time cleanup of lapsed accounts as part of a billing system transformation project undertaken during 2025. This had no impact on revenue, cash flow, or any other financial measures. Q4 total Clear members grew to 38,000,000, up 31.5%, demonstrating the sustained momentum in ClearOne. We had our largest bookings quarter for ClearOne, more than doubling year over year. Q4 also marked another record quarter for the largest number of enterprise customers signed. Q4 and full year 2025 represented record profitability for Clear Secure, Inc. Our results reflect our ability to drive growth and deliver strong flow-through to the bottom line. The structural improvements we put in place throughout 2025 delivered over 33% adjusted EBITDA margins in Q4, an increase of 870 basis points from Q4 2024, and position us to continue expanding profitability. In Q4, cost of direct salaries and benefits represented 19.3% of revenue, an improvement of approximately 390 basis points year over year. We delivered sequential expense leverage in every quarter of 2025, and we expect to realize additional efficiency benefits over time. Our G&A trajectory illustrates the operating leverage we can drive while also investing in strategic priorities. Full-year G&A grew at less than half the pace of revenue, and over the last two years, G&A as a percentage of revenue has improved by more than 10 percentage points. In Q4, we generated $53,900,000 of operating income and $79,900,000 of adjusted EBITDA, representing a 33.2% adjusted EBITDA margin and 8.7 percentage points of margin expansion year over year. For the full year 2025, we generated $186,500,000 of operating income and $262,200,000 of adjusted EBITDA, representing a 29.1% adjusted EBITDA margin, 4.8 percentage points of margin expansion year over year, and over 50% flow-through. We continue to deliver strong free cash flow. For the full year 2025, we generated $372,500,000 of net cash provided by operating activities and prudently invested $29,300,000 of capital expenditures, resulting in free cash flow of $343,100,000, significantly ahead of guidance. We have managed dilution consistently and rigorously with stock-based compensation expense as a percentage of revenue decreasing meaningfully since our IPO to 4.3% in 2025. Coupled with our capital return strategy, our total shares outstanding have decreased over time by 14,000,000 shares, or 9%, since our IPO in 2021. We ended 2025 with $703,000,000 of cash and marketable securities, and we expect to exit 2026 with over $1,000,000,000 in cash on our balance sheet and no debt, prior to any capital return to shareholders. Our Board of Directors approved a 20% increase to our regular quarterly dividend from $0.125 to $0.15 per share. In 2025, we repurchased 5,300,000 shares for $106,300,000 at an average price of $23.86, reducing total shares outstanding by 3% to 133,200,000 shares. Our Board has also authorized a $125,000,000 increase to our share repurchase program, bringing the total capacity under the repurchase authorization to approximately $250,000,000. We will continue to take a disciplined approach to reinvesting in the business while returning capital to shareholders. In 2026, we expect accelerating top-line growth and margin expansion, which will translate to significant free cash flow growth. Expect 2026 full-year free cash flow of at least $440,000,000, which would represent an increase of approximately $100,000,000 and at least 28% year-over-year growth. Based on prevailing tax rates and our corporate structure, we expect full-year 2026 GAAP P&L taxes to range between 18–20%. For Q1, we expect revenue of $242,000,000 to $245,000,000 and total bookings of $248,000,000 to $253,000,000, representing 15.2–20.9% growth at the midpoint, respectively. We will now open for questions. Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. Operator: Keys. Operator: We ask that analysts limit themselves to one question and a follow-up so that others will have the opportunity to do so as well. One moment while we poll for questions. Our first question comes from Eric Sheridan with Goldman Sachs. Please proceed with your question. Eric Sheridan: Thanks so much for taking the question and thanks for all the details and the prepared remarks. Caryn, I wanted to put a finer point on some of your messaging this morning and better understand how you see your strategic priorities laying out over the next twelve to eighteen months that can either maintain or build on the momentum you have on the member side and the subscription side in terms of building both investments in the business on the tech side, as well as further connectivity around brand and go-to-market strategy. Thanks so much. Caryn Seidman-Becker: Alright. That was, like, eight questions in one. I respect that, Eric. So we will talk about the two core pillars that I talked about because those really are key drivers for the business this year. When you think about our B2C ClearTravel business, building this home-to-gate experience, right? People do not just want to, you know, get through the security lane, which we are certainly doing that better than ever with higher NPS scores than we have had because of the eGates. But driving a predictable, consistent, nationwide network and member-centric experience drives retention, and you are seeing that come through the fourth quarter numbers. That is a financial driver to 2026. It drives gross adds, it drives conversion, and with, you know, evangelism comes family attach rate and other ways to sell and to partner. And so, you know, the innovation that we have put forth with the app, with the eGate, and more to come are a key driver to financial returns to member growth and also the operating leverage and the flow-through that you see because of the automation when you can enroll on your phone with your passport, when we expand our TAM to now 42 Visa Waiver countries. And by the way, we are only in 75% of the U.S., so network growth as well. Those are big growth drivers on the travel side. And certainly, what we talked about on identity and being the tip of the spear for security and the opportunities that AI is presenting for Clear Secure, Inc. both to drive our own productivity but certainly to drive our ClearOne business. We have invested in that business, so you are seeing the results of that investment both from a top-line growth contract signed, really focused on workforce, healthcare, and GovTech, and we are uniquely positioned for that. And so signing more contracts, net revenue retention in that business of going in with a bigger book of business this year and being able to cross-sell, up-sell, grow that business, have those customers turn into evangelists, and sign more new customers at larger sizes because, quite frankly, the crisis in identity is growing, are our major drivers this year. Some of that are certainly the seeds we planted for the past few years, and then we are planting new seeds this year. And you are seeing that incorporated in our free cash flow guidance, right, is why I love talking about the “and” because we have been investing, we are investing, and we are generating stronger free cash flow. Eric Sheridan: Great. Thank you. Operator: Our next question comes from Cory Carpenter with JPMorgan. Please proceed with your question. Cory Alan Carpenter: Hey, good morning. I wanted to ask about the government shutdowns, maybe Caryn, just how did that impact you guys during the last shutdown? And I think there is a lot of concern that the TSA may shut down any day now. So if that were to happen, could you just discuss how that would, you know, would or would not impact your service? Then I had a follow-up for Jennifer after. Thank you. Caryn Seidman-Becker: Yeah. I think the power of a public-private partnership, and we were very clear in our communications this weekend, which is Clear Secure, Inc. is open. And we are here to serve our airport partners, our travelers, and certainly our airline and government partners. With a winter full of weather, so that not only, you know, is there the government shutdown disruption, but certainly with a winter full of weather and, you know, other travel disruptions, I think what you are seeing is a renewed appreciation for the consistency and the reliability of Clear Secure, Inc. by our members and our partners. Travel continues to be strong. You have certainly heard that from the travel industry with a continued focus on premiumization. And so, quite frankly, I think the power of the public-private partnership and our ability to serve members, our ability to staff up, and our ability to serve our partners is more appreciated and more important today than ever before. Cory Alan Carpenter: Thank you. And Jennifer, the free cash flow guide, it implies a pretty significant acceleration this year. Could you just maybe unpack some of the drivers of that? And then in your prepared remarks, you mentioned, I think, top line accelerating. Is that specific to you expect bookings to accelerate this year? Thank you. Jennifer Hsu: Sure. Hi, Cory. Maybe I will start with top line. I think I would come back to the member experience, and I think the improvements we have made there are really a propellant to really all our key metrics. That includes higher retention, better member acquisition, stronger NPS. All of that ultimately just drives a more durable top-line growth profile for our ClearTravel business. And as you heard Caryn just say, ClearOne is really, we think, reaching escape velocity. We had another record bookings quarter. We again signed our largest number of new ClearOne partners. So we feel incredibly well positioned to capitalize during a time when identity security is top of mind across enterprises. On the free cash flow side, as you said, our guidance implies continued leverage on a business model that is already demonstrating highly strong profitability. I think, importantly, the bigger picture is that we are operating subscription-based businesses with strong recurring revenue in both our B2C ClearTravel business as well as our B2B ClearOne enterprise business. So when our member experience is improving, that is driving higher levels of retention, again both for our members in ClearTravel as well as the net revenue retention from our enterprise partners. So all of that is really a “and,” and we believe will drive better and better economics in our business and ultimately higher levels of profitability and flow-through. Operator: As a reminder, if you would like to ask—our next question comes from Dana Telsey with the Telsey Advisory Group. Please proceed with your question. Dana Telsey: Hi, good morning everyone, and nice to see the solid results. Can you talk a little bit about—you mentioned the American Express partnership was extended. What is different now about the partnership than before? How long is it extended for? And then on the B2B enterprise side of the business, it was good to see the Sinai affiliation yesterday. What else are you looking for as we look through this year? Is it more expansion into healthcare than anything else? And how do the margins compare on those businesses? Thank you. Michael Z. Barkin: Thanks, Dana. Yes, the agreement with American Express extends into a multiyear agreement. We are not disclosing specific terms. But we are really excited to continue to provide our American Express card members with the CLEAR Plus embedded benefit, which we really think aligns the right American Express experience with our travel experience. And we also think the structure of the renewed agreement reflects the value we each bring to the partnership, which of course has been an incredibly valuable one for us over the last six years. We expect that to continue over coming years. So we are really excited to be able to announce that today, and again not disclosing any specific terms of that, but moving forward with that in a great way. Caryn Seidman-Becker: And in terms of ClearOne, Dana, you know, Mount Sinai is certainly an exciting partner, and I think it really does talk to ecosystems that we are building. We have a strong network here in New York in terms of the travel business, in terms of the sports capabilities, and now adding healthcare networks on it are a natural growth for Clear Secure, Inc., and again as we turn into a daily habit for members. It is a really powerful use case. When we think about healthcare, I think it is important to talk about CMS, which is an anchor healthcare contract. It is multiyear in nature. And as we talked about last quarter, that contract connects to the pledge—I think last time we talked about 60 companies that have signed the pledge. I believe that number is, like, up tenfold closer to 600. And so that is creating a network which is driving a pipeline for us in healthcare. So being part of Epic in the identity toolbox, being part of CMS at the identity interoperability layer, makes it easier to sign healthcare partners like Mount Sinai because it is much easier to connect; you are already embedded in it. So we are signing more healthcare partners across the country. And then the other thing is, for the healthcare partners that we have, perhaps we started with workforce but then add patients. Or perhaps we started with patient and then are adding workforce. So it really is this very exciting flywheel. And, obviously, killing the clipboard is something we have been passionate about for many years. If you come to our offices, we actually have a sculpture made of old clipboards that we made many years ago. But now having the administration also aggressively lean into that, you know, means that there is a lot of motivation at the federal level moving on to the state level where there is a whole rural healthcare initiative that is mirroring what is happening at the federal level. So it is a very exciting moment for Clear Secure, Inc. in healthcare, and quite frankly, for patients and for doctors and nurses who work in it. Operator: Thank you. Our next question comes from Michael Turrin with Wells Fargo. Please proceed with your question. Ronit Shah: This is Ronit on for Michael. I just wanted to pick apart the kind of drivers of bookings. Maybe if you could talk through ClearOne versus the kind of core CLEAR Plus and how it impacts bookings, and then how your bookings pipeline looks for 2026? Jennifer Hsu: Hi. Yeah. I would say for Q4, our performance was really strong across the board. We said we had the highest year-on-year bookings growth for CLEAR Plus since 2023, and again, ClearOne had its strongest bookings quarter by quite a distance. And so the performance you saw on the beat relative to guidance was really strength across all our businesses. Ronit Shah: Got it. And just a follow-up. I just had a question on, like, the recent kind of TSA impacts. Has that shown in your business? And do you expect it to be a forward tailwind, especially on, like, the value prop of Clear? Caryn Seidman-Becker: I think, as I talked about a little bit earlier, you are seeing a renewed appreciation of the “and” and the consistency that Clear Secure, Inc. brings. I think that has been improved by the eGates. And I certainly think, and you have seen this throughout the fifteen years, that there are moments of enormous instability in the travel sector; people have come to rely on Clear Secure, Inc., and it is moments like that when I think the appreciation grows. But it is our job to continue to grow the customer experience in a consistent way. I think that is the greatest driver of our long-term sustainable growth. Michael Z. Barkin: And I think I would just add that one of the benefits that we have from the member experience improvements that we have had over the last year in implementing the eGates is that our ambassadors—3,500 strong across our 60 airports—can increasingly focus on hospitality and the customer experience in the airports. And so while there are disruptions in travel, whether that is weather or otherwise, you know, we really believe that part of our member experience is that ambassador hospitality, and with the innovations and technology and improvements that we have made, our ambassadors are increasingly able to focus on that, which becomes really important in building out this home-to-gate experience and membership. Caryn Seidman-Becker: We have always believed that it is technology and hospitality. And so when we talk about sitting at the intersection of security and the experience economy, that is massively important in the travel experience, which is highly fragmented, very challenged. And as we head into the world— Ronit Shah: Great. Thanks. Operator: Our next question comes from Wyatt Swanson with D.A. Davidson. Please proceed with your question. Michael Z. Barkin: Of last year. So the impact of the eGates is still actually relatively new, and many of the airports that got eGates came actually in the later half of the fourth quarter. And so as we continue to season those, have more people experience that, what we are seeing is an immediate impact on our NPS and lane experience scores. And we think what will happen because of that is, as those experience pieces tie in to retention, that we are starting to see the early benefits of that. And so in the guidance that Jennifer shared, we certainly are expecting improvements in retention, which we are already seeing, and we do see that as part of the holistic member experience. And so we are really encouraged by the early results that we are seeing from the eGates, and we think that will only continue to grow as more and more of our members experience those and as we get the coverage across our network in the coming quarters. Caryn Seidman-Becker: If I can just add to that, eGates are an unlock to the home-to-gate experience. And so we think holistically as we look at both the numbers in the fourth quarter, which I think showed early signs of impact on the good work that we have been doing. But when you look at the mobile app, when you look at Concierge, when you look at eGates, when you look at the hospitality, and then you look at our ability to grow our partnerships because of a differentiated premium member experience, the whole thing drives retention. Drives growth ads. Drives conversion, drives the willingness to take on new products, you know, from Clear. So, you know, it is just a really powerful flywheel. Wyatt Swanson: Got it. That is really helpful. And then on the CMS partnership, can you talk about, like, why Clear is suited particularly well to serve CMS relative to other companies out there? And then perhaps some details as to what the contract structure looks like. I believe you mentioned multiyear, but anything else would be helpful. Caryn Seidman-Becker: Right. So multiyear is what I can say. It is an important contract for Clear Secure, Inc. And I love that question of why we are uniquely positioned. We started in a regulated industry. So understanding the importance of privacy, of security, of compliance, of working in a regulated industry, with a trusted consumer brand with an embedded base, as we talked about today, of almost 40,000,000 consumers or patients. Those people are both patients as well as employees in the healthcare sector. It makes it a natural fit. I do not want to say that going into an airport feels a lot like going into a hospital, but I would say that they are both challenged experiences with multiple stakeholders. And so putting patients or travelers at the center, you know, wrapped in compliance and regulation and privacy, is what we are known for. And so I really think that this was a, you know, a natural fit and one that also allows us to continue to drive innovation with other partners as we continue to drive this interoperability layer. And so I just think it was hand-in-glove, and it is a really exciting and aligned moment. We led a big conference—From Pledge to Progress—in December, bringing together over 100 healthcare leaders around the country as well as government. And, you know, we are a convener to drive secure, frictionless experiences, which is exactly what this initiative is. Wyatt Swanson: Okay. Thank you very much. Operator: We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Caryn for closing comments. Caryn Seidman-Becker: Thank you for joining our fourth quarter earnings call. As always, I am deeply grateful for our Clear team and the Clear ambassadors that are delivering our Home2Gate experience every day. We have built the foundation, and we are well positioned to execute against meaningful opportunities in the evolving and emerging identity landscape. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Welcome to Dole plc's fourth quarter and full year 2025 results webcast. This webcast is being broadcast live over the Internet and is also being recorded for playback purposes. Currently, all participants are in listen-only mode. After the speakers' presentations, there will be a question-and-answer session. For opening remarks and introductions, I would like to turn the call over to the Head of Investor Relations at Dole plc, James O'Regan. James O'Regan: Welcome, everybody, and thank you for joining our results webcast. Joining me today are our Chief Executive Officer, Rory Byrne; Chief Operating Officer, Johan Linden; and our Chief Financial Officer, Jacinta Devine. During this webcast, we will be referring to presentation slides for supplemental remarks, and these, along with our earnings release and other related materials, are available on the Investor Relations section of the Dole plc website. Please note, our remarks today will include certain forward-looking statements within the provisions of the Federal Securities Safe Harbor Law. These reflect circumstances at the time they are made, and the Company expressly disclaims any obligation to update or revise any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and press releases. Information regarding the use of non-GAAP financial measures may be found in our press release, which also includes a reconciliation to the most comparable GAAP measures. With that, I am pleased to turn today's call over to Rory. Rory Byrne: Thank you, James, and welcome everybody, and thank you for joining us today as we look back over 2025, discuss our latest quarterly results, and provide our initial outlook for the coming financial year. So turning firstly to Slide 4 for a recap of our key developments for 2025. We are very pleased to deliver strong operating results for the year with EBITDA of $395 million, coming in ahead of our latest guidance. Our two diversified fresh produce segments delivered excellent results and excellent growth, offsetting the anticipated short-term decline in Fresh Fruit due to higher sourcing costs. During 2025, we also achieved several important strategic milestones. A key strategic priority for us was to exit the Fresh Vegetables business, and we are very pleased to have successfully completed the sale of this division in August 2025 for gross consideration of $140 million. This sale has allowed us to fully focus on our core operating divisions and has created greater flexibility in our capital allocation strategy. Continuing with our strategic focus on optimizing our asset base and operations, we announced just before the year-end an agreement to sell our port and port operations company in Guayaquil, Ecuador. We expect to receive net proceeds of approximately $75 million once this transaction closes. Earlier in the year, we also successfully completed a $1.2 billion renewal of our credit facilities, which strengthened our financial capacity and enhanced our flexibility to support future growth initiatives. In November, we announced that our Board had approved a $100 million share repurchase program as part of the development of our capital allocation strategy. This will be used opportunistically and, to date, we have spent $4.5 million repurchasing shares. Another important milestone for the group was the exit of Castle & Cooke as a shareholder in September by way of a registered offering. This removed the overhang of the potential share sale and provided significant additional liquidity to our daily trading volumes. Following on from this theme, we have now transitioned to full U.S. domestic issuer filings. Over time, we believe this important transition will improve our eligibility for inclusion in a broader range of U.S. equity indices. Finally, in October, we had a key operational development with the successful launch of Cladeau Royale, our game-changing new variety of pineapple, and the culmination of 15 years of dedicated R&D at our research facilities on Juris. This conventionally bred variety has a sweeter taste than a typical pineapple, with the added distinction of coconut flavors. It has been extremely well received by both our customers and consumers and has already won multiple awards, including being voted best new product within the fresh fruit category in a recent survey by Newsweek. As volumes continue to come online, we believe this will be an important product within our portfolio. Turning now to the operational review and starting with the Fresh Fruit slide on Slide 6. In Q4, the industry continued to face elevated sourcing costs for bananas, pineapples, and plantains, resulting in lower profitability for this segment compared to the prior year. For full year 2025, we delivered EBITDA of $189 million, a resilient result given the sourcing and market backdrop and indeed the weather-related disruption, not least the knock-on effects of Tropical Storm Sarah's impact on production and supply. Thankfully, the rehabilitation of our Honduran farms is well underway and on track for full recovery later this year. We expect produced volumes and competitiveness to improve over the course of 2026 with the benefit of targeted investments in production and supply chain cost initiatives. Importantly, banana demand remains robust in both North America and Europe, and pineapple innovation, including the well-received Dole Collado Real, is supporting this category. Overall, while 2026 has started with the continuing unfavorable supply dynamic, we do expect the positive demand tailwinds, together with our investments and cost programs, to drive an improvement in profitability as 2026 progresses. Moving on to the Diversified EMEA segment, this segment had a stable final quarter, ultimately delivering an excellent full-year adjusted EBITDA result of $150 million, an increase of 14% year on year. Over the course of the year, we saw particularly strong contributions from key markets. For example, in Spain, our operations continue to benefit from product diversification and market expansion, underpinned by our very strong position in Canary Island bananas. In the Nordics, the benefits of our investments in our distribution and logistics capability continue to drive growth, and in the Netherlands we saw a good recovery in 2025 after some challenges in the prior year. Looking ahead, we expect our strong performance to continue in 2026, supported by further development investments across the segment. And lastly, turning to our Diversified Americas segment. This segment delivered another strong quarter to close the year, consolidating a very positive year of growth. Fourth quarter adjusted EBITDA increased by 32%. For the full year, this amounts to a 21% increase, driven by strong revenue growth, margin expansion, and increased EBITDA contributions from our joint venture businesses within the segment. We benefited from excellent product-led growth in North America in 2025 in products such as kiwis and citrus in particular. Our export teams have demonstrated excellent operational performance, particularly through efficient management of the evolving cherry marketplace during early 2025, and once more at the start of this latest cherry season. Looking ahead, we anticipate the delivery of a good result for this important export season overall. Looking out further into the year, we expect to deliver underlying growth in 2026, complemented by enhanced efficiencies from the Dole Diversified North America Haddafi integration. We also expect growth in our joint venture businesses within this segment. With that, I will hand you over to Jacinta to give the financial review for the fourth quarter and full year. Jacinta Devine: Thank you, Rory, and thank you all for joining our webcast. Firstly, turning to the financial highlights on Slide 10. Overall, our key performance metric, adjusted EBITDA, came in at £72.7 million, which was ahead of our own expectations for the quarter. Compared with Q4 2024, revenue was £2.4 billion and was 9.2% higher on a reported basis and 5.7% higher on a like-for-like basis, due to positive operational performance across all our segments. This growth followed the trend seen over the course of 2025, with full-year revenue increasing 8.2% to £9.2 billion. In the fourth quarter, net income increased to £6 million from a loss of £31.6 million in the prior year. The prior year was impacted by a loss of £61.2 million in the discontinued Fresh Vegetables division. On a full-year basis, net income decreased to £82 million from £143 million, reflecting a number of non-operational and non-cash items. Net income was lower due to a larger loss from discontinued operations as well as non-cash fair value losses on financial instruments, a non-cash discrete tax charge, and impairment charges on certain assets excluded from the Fresh Vegetable sale. 2024 also had the benefit of the gain on the sale of Progressive Produce. Looking now at the non-GAAP performance measures, fourth quarter adjusted EBITDA was modestly lower by £1.9 million compared to the prior year. The reduction was primarily driven by higher food costs in Fresh Fruit. This decrease was partially offset by an excellent performance in our Diversified Fresh Produce Americas and Rest of World segment and favorable impact from foreign currency translation. For the full year, adjusted EBITDA came in at $395 million, which was ahead of our latest guidance and 1% ahead of 2024. Adjusted net income decreased £1.5 million in the fourth quarter, predominantly due to the decrease in adjusted EBITDA as well as higher depreciation expense, partially offset by lower interest expense. For the full year, adjusted net income decreased £5.9 million to £115 million, and full-year adjusted diluted EPS was $1.20 versus $1.27 in 2024. Turning now to the divisional updates and starting with Fresh Fruit on Slide 12. Revenue increased 6.7% due to higher volumes of bananas sold as well as higher pricing of bananas, pineapples, and plantains, partially offset by lower volumes of pineapples and plantains sold. The decrease in adjusted EBITDA in the quarter was due to higher sourcing costs of bananas, pineapples, and plantains, partially offset by higher commercial cargo profits. Now looking at Diversified Fresh Produce in EMEA, reported revenue increased 12.7% primarily due to a favorable impact from FX as well as strong underlying performance in our operations in Spain, France, and South Africa. On a like-for-like basis, revenue increased 4.5% or $41 million. Adjusted EBITDA was in line with Q4 2024, with increased earnings in Scandinavia, Ireland, and Spain, as well as a favorable impact from FX translation, partially offset by lower underlying earnings in the UK and the Netherlands. On a like-for-like basis, adjusted EBITDA decreased by £3.5 million in the quarter. Finally, Diversified Americas had another very strong quarter. Revenue increased 5%, driven by growth in most commodities sold in the North American market, along with growth in Southern Hemisphere export products, primarily driven by higher cherry volumes and higher blueberry pricing. Adjusted EBITDA increased £3.2 million, driven by improved profitability in our joint venture businesses as well as by earnings growth in our Southern Hemisphere export business, driven particularly by the higher cherry volumes. On a like-for-like basis, adjusted EBITDA increased £4.1 million. Now turning to Slide 15. We remain focused on capital allocation and managing our leverage and are pleased that we were able to close out the year at a comfortable level, coming in at 1.5x, a reduction from 1.6x in the prior year. Interest expense has continued to decrease due to lower debt levels as well as lower base rates and came in at £66.5 million for the full year, in line with our latest guidance. Under the assumption that base rates will remain broadly stable in 2026, we expect full-year interest for 2026 to be approximately $60 million. Net cash provided by operating activities was £123 million in 2025. As anticipated, we saw a positive inflow in working capital in the fourth quarter, albeit curtailed this year by the strong volume and revenue growth being seen across the business. In addition, Q4 2024 benefited from accentuated seasonal inflows, which will not repeat to the same extent this year. Cash capital expenditure was £28.4 million for the quarter, and we added a further £700,000 of assets by way of finance leases. For the full year, routine CapEx was in line with our latest guidance of £85 million. Cash capital expenditure was £121.5 million, including the buyout of two vessel finance leases for £36 million that was already reflected in our net debt at the end of 2024. In addition, we added a further £16 million of assets by way of finance lease. Also included within the overall CapEx number was £16 million of expenditure related to the Honduran farm rehabilitations, which was covered by insurance proceeds. For 2026, we are forecasting routine CapEx of approximately £100 million, which is broadly in line with our annual depreciation charge. Free cash flow from continuing operations was £1.7 million for the full year. Excluding the buyout of the vessel finance leases, the Honduran farm rehabilitation supported by insurance proceeds, tax on sale of assets, and the final repatriation tax payment in April, this rises to $81 million. Looking ahead to 2026, we expect to see normalized cash generation, driven by the benefits of the disposal of the Fresh Vegetable business as well as by lower working capital investments and lower tax payments. Finally, we are pleased to declare an $0.085 dividend for the fourth quarter and, following on from the authorization of a $100 million share repurchase program in November, we purchased 300,000 shares at an average price of $15.15 post year-end and for a total consideration of $4.5 million. Now I will hand you back to Rory, who will discuss our outlook for 2026. Rory Byrne: Thank you, Jacinta. We are very pleased with our operating results for 2025, delivering adjusted EBITDA of $395 million, which, as I said earlier, came in ahead of our expectations. The result is a testament to the experience and scale of our management teams and people right across the group, as we navigated a year of macroeconomic uncertainty and many other industry-specific factors. We have made important strategic steps forward during 2025, particularly completing the sale of the Fresh Vegetables business, and today our business is well placed, with strong operational momentum across the group. With this platform, we are targeting growth for the coming financial year, and at this very early stage of the year, we are targeting adjusted EBITDA of at least $400 million. Our presentation sets out our key strategic priorities for 2026, and these are: firstly, executing on our development pipeline while maintaining a disciplined approach to capital allocation; continuing our focus on cost control and delivering operating efficiencies across the group; positioning ourselves to work efficiently in this dynamic macroeconomic and regulatory landscape; and, as ever, strengthening our position in our core business areas and categories. I want to conclude by once again thanking all our outstanding people across the group for their ongoing commitment and dedication to driving our business forward, particularly in light of the complexities faced by us this year. As always, we really appreciate all our essential partners, suppliers, customers, and all other stakeholders for their continued support. With that, I will hand you back to the operator to open the line for questions. Operator: We will now begin the question-and-answer session. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press 9 to raise your hand, and 6 to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Christopher Jayaseelan Barnes with Deutsche Bank. Your line is now open. Please go ahead. Just as a reminder, please make sure you are unmuted to ask a question. Thank you very much. Sorry about that. Christopher Jayaseelan Barnes: Rory, could you elaborate on some of the major puts and takes embedded in your 2026 outlook? Demand trends appear robust, but fruit sourcing costs continue to be a challenge, especially with the dollar weakness and supply pressures last year. It would be helpful to hear a little more about the cost programs you alluded to, whether you see opportunity to take incremental pricing to combat some of this inflationary pressure, and then some further detail around how you see industry supply and demand shaping up over the course of the year. Thanks. Rory Byrne: Thank you, Christopher. Guidance has become increasingly difficult to get the crystal ball out and predict what is going to happen in the next month, let alone in the next year. What we tend to do is look back over the last few years, and I think the base year we are working from, 2024, we had an absolutely exceptional performance, particularly in Fresh Fruit, and when we have a profitable year, we take it, but unfortunately that sets a high benchmark to try to maintain or grow from. Thankfully, we look back at 2025 and we managed to achieve that, so the sum of the parts for the three operating divisions did exceed our very strong 2024 number. It is very early in the year to guide. Certainly, the supply dynamics that we referred to in the script remain. There is a complex supply dynamic, and we are hoping our own Honduran production will come back over the course of this year and gradually get into full production for next year. We are back up and running, but not fully. There are other dynamics like Chiquita's exit out of Panama and reentry that will take some time to come in, and weather issues in Central America, particularly in Colombia, have put a lot of pressure on the exit price out of Colombia and driven up sourcing costs. They are continuing a little bit. We have been going through negotiations. We cannot get into specifics on price, but we are having constructive and sensible dialogue with all of our customers to reflect all of those underlying dynamics. We put all of that into the mix. We also have an exceptionally strong performance in our Americas Rest of the World business, and again it is a bit like 2024 in our Fresh Fruit business. We take it when it is there, and when the market dynamics are good and the supply-demand is good, we take it, but it necessarily sets the benchmark on which the level of growth we achieved was substantial in 2025 on the Diversified Americas division. It is very early in the year. I think there will be a little bit of a shift in the weighting of the profit streams over the course of the quarters, with it being a little bit more heavily weighted towards the back half of the year as well. So early in the year, some factors out there are putting a little bit of pressure on us, lots of positives as well, so we have set the target at a minimum of $400 million for the year, Christopher. Christopher Jayaseelan Barnes: Got it. That is helpful context. And then just one follow-up for Jacinta on cash flow. You mentioned normalized cash generation, but how should we think about the level of conversion relative to the at least $400 million of EBITDA? Do you think you can get back to historical 50% plus conversion, or is that more realistic for 2027 and beyond? Thanks. Jacinta Devine: Thanks, Chris. As I explained earlier on the call, there were some nonrecurring and seasonal items which impacted free cash flow in 2025, and we expect something more normalized in 2026. Generally, we have said free cash flow conversion of between 30%–35% over the longer term. We have outperformed that, Chris, you are quite right, over the last few years. We are targeting more normalized levels, maybe not as strong as we saw last year with a particularly strong inflow at the end of last year, so that makes the comparison a little bit more challenging, but 30% to 35% is the number we generally recommend people consider for the longer term. Christopher Jayaseelan Barnes: Okay. Thank you very much. I will pass it on. Operator: Your next question comes from the line of Pooran Sharma with Stephens. Your line is now open. Please go ahead. Pooran Sharma: Hi. Good morning, and I appreciate the question. Congrats on the results. I just wanted to maybe start off on guidance and dive in a little bit deeper. I was wondering if you could run through the set of factors that maybe get you to either range. You are targeting at least $400 million, so I was wondering what gets you to a higher end. I know you are not saying something explicit, but the higher end of your plan and the set of factors or circumstances that gets you there, and maybe what keeps you more at $400 million. Rory Byrne: I think I have tried to answer Chris's question and give you the overall backdrop to how we determined the very early guidance. We have a number of important seasons in the Diversified Americas division, such as the cherry season. Pricing has been a little bit weaker, but I think with our volume flow, we have probably done okay. That is a key season as we get to the end of the year, and the supply-demand around some of the other products from grapes to deciduous have all been very positive in 2025. We will have to see how that emerges over the course of this year. We have a number of key projects underway where we integrate our marketing activities in North America with the previously named Dole Direct North America, integrated with our OPI subsidiary in North America, and there is a bit of work to do to maximize efficiencies in that, but we are hopeful that it can develop well in the medium term. In Europe, particularly Southern Europe and indeed in Northern Europe as well, we have had lots of rains, so that has affected some of the production areas in Southern Europe, probably affected the impact of demand in things like food service, with people not eating out as often as previously. With some extremely bad weather, you are seeing in North America some weather conditions. We would hope that those kinds of weather impacts, while they might have some impact in the first quarter, tend to balance out over the course of the year. And then on the banana business, it is a little bit early. Our own Honduran production will come fully on stream over the course of the year, and some price modifications will filter in over the course of the year. We hope we do not have any issues around disruptions to shipping schedules. At the $400 million mark. Pooran Sharma: Maybe just around the Ecuador port asset sales. I am wondering, if you were to monetize the business today, how does this— Rory Byrne: It is an asset that has been within the whole food company for quite a long number of years, probably developed during a phase where it needed to be developed to improve our export position. We have found a leading operator—professional, serious, dedicated—and we believe that they can run the port and take advantage of the port in a better way from a commercial point of view than we could do on our own. We think it will be fairly neutral from a cost point of view. In terms of operations, we have entered into a use agreement that will be based on market cost structures and will leave us pretty much line ball in terms of cost. I think the capital allocation is very important. It is a very good business we are exploring. We significantly upgraded our facility to enhance the automation of our processes for our supply and delivery to our main retail customer in Scandinavia. We think that can be a very good model to even give us a strategic advantage, and we can find investments that at least beat the buyback alternative or are positive. James O'Regan: We can seek inclusion into some of the smaller S&P indices and some of the MSCI indices. It is an important part of our information. We are there and we qualify for inclusion, so we will just be working with the indices and seeking to get in there. We believe we should be in a position to join the S&P 600, so we will work towards that initially. And we are already in the Russell Index. Peter Thomas Galbo: Great. Okay. Thanks very much, guys. Operator: Thank you, Peter. There are no further questions at this time. I want to now turn the call back to Rory Byrne, CEO, for closing remarks. James O'Regan: Thank you very much. Rory Byrne: I think we can look back at 2025 with a great degree of satisfaction at the operating level. We certainly had some strong operating performance, with great contributions from all three of our divisions. We have made significant strategic progress in 2025. We believe we are well positioned to continue to grow in 2026. Thank you all for joining us today, and we look forward to the year progressing positively.