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Operator: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Everus Construction Group, Inc. fourth quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. To withdraw your question, press star 1 again. We kindly ask that you please limit your questions to one and reenter the queue for any additional follow-ups. I would now like to turn the conference over to Paul Bartolai. Please go ahead. Thank you. Good morning, everyone. Paul Bartolai: And welcome to Everus Construction Group, Inc.'s fourth quarter 2025 results conference call. Leading the call today are CEO, Jeff Thiede, and CFO, Maximillian J. Marcy. We issued a news release yesterday detailing our fourth quarter and full year 2025 operational and financial results. This release and the accompanying presentation materials are available on our website at investors.everus.com. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which by their nature are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the news release issued yesterday and in the appendix of today's presentation. Today's call will begin with prepared remarks from Jeff, who will provide a review of our recent business performance and an update on the progress against our strategic priorities, followed by Max, who will provide a more detailed financial update before wrapping up with guidance. At the conclusion of these prepared remarks, we will open the line for your questions. With that, I will turn the call over to Jeff. Thank you, Paul, and good morning to everyone joining us on the call today. We are very excited to talk to you today about our record full-year results in our first year as a stand-alone public company. It has been a transformational year for Everus Construction Group, Inc., which is a direct reflection of our highly skilled and dedicated team members across the organization. Through disciplined focus on our forever strategy, we established our structure as an independent public company, generated tremendous financial results, and positioned Everus Construction Group, Inc. for continued success in the years ahead. I am so proud of everything we accomplished during the year, and I am even more excited about our future opportunities. During our call today, I will provide a brief overview of our results, highlight some of our key accomplishments towards our strategic initiatives, and detail some of our key priorities for this year before I turn it over to Max for his financial review. Turning to our quarterly highlights, beginning with slide four. Much like 2025, I am pleased to report that we delivered another quarter of exceptional financial performance reflecting the robust opportunities across our end markets and our outstanding execution capabilities. We delivered fourth quarter revenues in excess of $1,000,000,000 for the first time in our history, up 33% from the prior year period, driven by growth across both our E&M and T&D segments. Our strong revenue growth was complemented by another quarter of strong execution, as fourth quarter EBITDA increased 45% from the prior year period and our EBITDA margin was up 70 basis points. Our ability to execute complex projects safely, on time, and on budget is critical to our clients and is a driving factor in helping us build the deep relationships that are key to our long-term growth strategy. Looking at the full year, our revenues increased 32%, primarily from the continued momentum in our E&M business. While our E&M segment was the key driver in 2025, we remain optimistic about the growth outlook for our T&D business with our recent backlog momentum and favorable industry trends. Due to our strong execution throughout 2025, our full-year EBITDA was $320,000,000, up 52% compared to 2024 after adjusting for incremental stand-alone operating costs. Our strong performance is a direct reflection of the continued focus on our strategic priorities by all our employees across 15 operating companies around the country. Our backlog at the end of 2025 was $3,200,000,000, up 16% from the same period last year with strong growth across both T&D and E&M. While we are benefiting from favorable end market trends, our backlog growth also reflects our strong execution, our deep client relationships, and the value our employees bring to our customers, the key pillars of our forever strategy. Our healthy backlog gives us confidence in our growth outlook for 2026. Importantly, we continue to see a robust project pipeline across diverse markets, including data center, hospitality, semiconductor, transmission, and undergrounding. While we will certainly remain disciplined in our approach to project selection, ensuring we choose projects with the right risk-reward, we expect the favorable market trends and our strong competitive positioning to allow for continued backlog growth. As I reflect on 2025, we have made tremendous progress against our strategic priorities, which enabled us to generate record financial results and, importantly, has positioned us for continued success in the years to come. I would like to take this opportunity to highlight some of our key accomplishments during the year and provide an update on some of our strategic priorities as we look ahead. As I already mentioned, the foundation of our operational framework is our forever strategic priorities. You can see on slide six that our forever priorities are focused on attracting, retaining, and training our most critical asset, our employees; creating value for our customers and shareholders; delivering safe and high-quality execution; and maintaining and growing our customer relationships. Our forever strategic priorities are the basis for everything we do and are designed to deliver value creation through sustained profitable growth, operational excellence, and disciplined capital allocation. Our value creation framework is highlighted on slide seven in today's presentation. We clearly generated strong growth during 2025, with full-year revenues increasing 32% compared to 2024 results. Our strong growth reflects our expertise, discipline, and long track record of success in critical markets that provide data center, hospitality, and undergrounding work. These are markets where we have developed project management expertise, skills, and relationships over the course of decades. An important aspect of our growth strategy is to expand geographically through satellite projects, which was how we entered the Southwest. More recently, as discussed on our last earnings call, we entered a new geography in support of a large semiconductor company. The initial large project is helping us scale up to this new location, which we expect will allow us to follow our previous blueprint to make this a permanent new geography for Everus Construction Group, Inc. Of course, our organic growth initiatives are contingent on our ability to attract and retain skilled labor to execute our projects. We have a long track record of effectively scaling our business, having tripled our workforce over the past 13 years. We ended 2025 with 9,400 employees, up from 8,700 at 2024. Through our strategic focus on attracting, developing, training, and retaining employees, we continue to efficiently grow our workforce by leveraging our union partnerships, our industry relationships, and internal initiatives. While we remain committed to our organic growth strategy, an important part of our growth playbook going forward will be strategic acquisitions. We have strengthened our corporate development team and have a broad and deep pipeline of potential deals we are evaluating. We look forward to updating you on our progress. As a reminder, our acquisition strategy is focused on finding accretive transactions that expand our geographic footprint, diversify our business, or deepen our market presence. We are well below our leverage targets, have ample capacity under our credit facility, and cash on hand, giving us significant financial flexibility to execute our growth initiatives. Now turning to operational excellence. 2025 was certainly a year of strong execution, with our full-year EBITDA margin up 40 basis points as reported and up 110 basis points when adjusting for incremental stand-alone operating costs. Our strong execution is thanks to our people and our strict adherence to our Everus operational playbook, which focuses on project selection, bidding discipline, safety, training, and sharing of lessons learned. We continually look for opportunities to drive execution upside on every project and experienced exceptionally strong execution in 2025. Another important area of focus for us is our prefabrication and modular construction strategy. As we discussed earlier in 2025, we are consolidating and expanding our prefab and modular construction across the country. Notable investments have been made in the Pacific Northwest and Southwest and our latest expansion in Kansas City, which is now operational. We constantly evaluate and expand our capabilities where possible. Prefab and modularization helps improve safety, increases labor efficiency, lowers cost, improves project timelines, and makes project outcomes more predictable. This allows us to enhance margins, increase savings for our customers, and strengthen relationships. And finally, we have maintained our focus on disciplined capital allocation. Our priorities are investments in organic growth, acquisitions, and maintaining financial flexibility. As Max will discuss, we increased our capital spending in 2025 to support our growth initiatives and remain committed to our long-term expectations of investing 2% to 2.5% of our revenues. We have not yet completed an acquisition. Our strong balance sheet positions us to execute on growth strategies. We do not currently have any return of capital programs in place, which reflects our optimism in our growth opportunities and our belief that this is the best use of capital at this time. Our management team, together with our board, will continue to evaluate the highest and best uses of capital over time consistent with our ongoing focus on driving stockholder value. And finally, slide eight details our long-term financial expectations. We outperformed these targets in 2025, which again reflects strong market trends, execution upside, and our focus on our forever strategic priorities. We entered 2026 with strong momentum and remain committed to delivering on these long-term targets to provide value to our stockholders. With that, I will turn it over to Max. Thank you, Jeff. Good morning, everyone. I will provide additional details on the quarter, give an update on our liquidity and balance sheet, and wrap up with our guidance. Beginning on slide 10 of the presentation, revenues for the fourth quarter were $1,010,000,000, an increase of 33% compared to the same period last year. Maximillian J. Marcy: The increase was driven by growth in both our E&M and T&D segments. Total EBITDA was $84,800,000 during the fourth quarter, an increase of 45% from the same period in 2024, driven by solid revenue growth and continued strong project execution. We ended the year with incremental stand-alone operating costs in line with our expectations, with full-year annualized cost of $28,000,000. As a result, our fourth quarter EBITDA margin was 8.4%, up 70 basis points from 7.7% in the prior year period. As for our full-year 2025 results, total revenues increased 31.5% to $3,750,000,000, driven by 44% growth in our E&M revenues. Our full-year EBITDA increased 37.7% to $319,800,000 due to our revenue growth and strong project execution, partially offset by the full-year impact of incremental stand-alone operating costs. At December 31, total record backlog was $3,230,000,000, up 16% from 12/31/2024, even while we delivered record revenue during the fourth quarter. Our T&D backlog was up 41% compared to 2024 due to increases in the utility end market, specifically undergrounding and transmission work, while our E&M backlog was up 13% reflecting growth in data center, hospitality, and high-tech. We remain encouraged by the favorable trends in several of our key end markets, and we remain confident in our ability to generate continued backlog growth. Now, turning to our segment results. Let us first look at E&M where our fourth quarter revenues increased 44% to $791,600,000. The increase was primarily driven by growth in our commercial and renewables markets, with continued strength in our data center submarket a key driver. Our E&M EBITDA was $67,100,000 in the fourth quarter, an increase of 57% compared to fourth quarter 2024. The increase was driven by our strong revenue growth and higher gross margin due to project timing and efficient project execution, partially offset by higher SG&A expense. As a result, our E&M segment EBITDA margin was 8.5%, up 70 basis points compared to 7.8% in 2024. Our fourth quarter T&D revenues were $227,700,000, up 6.8% from fourth quarter 2024, driven by growth in both our transportation and utility segment end markets. We remain encouraged by the broader demand trends in our T&D business, and continue to see growth opportunities. T&D segment EBITDA was essentially flat at $30,500,000 in the fourth quarter, as higher revenues were offset by project mix and higher SG&A expenses. As a result, T&D segment EBITDA margin was 13.4% during the fourth quarter compared to 14.3% in the same period in 2024. Turning to our balance sheet and liquidity. As of December 31, we had $152,700,000 of unrestricted cash and cash equivalents, $285,000,000 of gross debt, and $222,800,000 available under the credit facility. Net leverage, defined as net debt to trailing twelve-month EBITDA, was approximately 0.4 times. Operating cash flows were $150,800,000 for the full year 2025 compared to $163,400,000 in 2024, as changes in working capital to support our revenue growth offset our increased operating results. CapEx was $66,800,000 for 2025, up from $43,800,000 in 2024, consistent with our strategy to increase investments that support our organic growth strategy. The increase in CapEx during the year included purchase of the new Kansas City prefab facility, which we discussed in the first quarter, as well as additional vehicle and equipment purchases in T&D to support growth. We generated free cash flow of $100,000,000 for 2025, down from $128,800,000 in 2024, reflecting our increased investments in working capital and CapEx in support of growth. Now wrapping up with guidance. We were very pleased with our strong 2025 results. Based on the attractive demand drivers in our business and our elevated backlog position entering 2026, we expect the momentum to continue this year. As a result of these factors, we are providing initial 2026 guidance as follows: We are forecasting revenues in the range of $4.1 to $4.2 billion and EBITDA in the range of $320,000,000 to $335,000,000. At the midpoint of our range, our revenue and EBITDA forecast represent growth of 11% and 5%, respectively. Our revenue guidance range is above our long-term target of 5% to 7%, reflecting our strong backlog position and the favorable outlook in several of our key markets, including data center, hospitality, semiconductor, transmission, and underground. Our EBITDA guidance is slightly below our long-term model, reflecting a difficult comparison given the extremely strong project execution we delivered during 2025. However, we think it is worth noting that the midpoint of our EBITDA guidance range reflects growth of 25% on a two-year CAGR basis after adjusting for incremental stand-alone operating costs. Additionally, our 2026 guidance assumes an EBITDA margin of just under 8% at the midpoint of the range, higher than our historical core margin in the mid-7% range, reflecting incremental scale benefits as we grow consistent with our long-term strategy, as well as good visibility into continued execution upside. Overall, we are very proud of our strong performance during 2025, and we remain extremely excited by the continued momentum in our business. Our backlog remains at elevated levels, which provides a high degree of visibility into revenue expectations for 2026, and we feel confident in our ability to deliver on our long-term financial targets. That completes our prepared remarks. Operator, we are now ready for the question and answer portion of our call. Operator: We will now begin the question and answer session. To ask a question, press star then 1 on your telephone keypad. We ask that you please limit your questions to one and reenter the queue for any additional questions you may have. Our first question will come from the line of Ian Alton Zaffino with Oppenheimer. Great. Really good quarter. Ian Alton Zaffino: Question would be on the guidance and the margins. Was there anything in particular this year where you had extremely, you know, great execution that you do not expect to repeat into next year? You know, are you seeing anything different, or are you just being naturally conservative? Thanks. Jeff Thiede: Yeah. Thanks, Ian, for the question. We had exceptional margin upside in 2025, and those were diversified contributions from a number of projects. And the four most notable ones are from four different markets, data center, institutional, transportation, industrial. So, yes, data centers are a big part of our business, and we continue to be anticipatory and looking at other markets to achieve meaningful contributions from those multiple markets. We are going through all of our planning to set the guidance to look at our margins where we are forecasting in 2026. You go back to 2024, and that is a reflection of our ability to execute better. So we have very strong focus on operational excellence, and that is reflected in our results, and we are confident in our ability to be able to hit the 8%, 7.98% in 2026. Ian Alton Zaffino: Okay. Thanks. And then if I was just to address the elephant in the room here, leverage is very, very low. How are you thinking about this? You know, because we talked about M&A. It does not seem like anything is large on the horizon. So how are you thinking about kind of what the optimal leverage is for this company and how you think about it. And then, not to add another question in there, is on cash flow side, I know there is some working capital this year. How do we think about free cash flow conversion going forward? So I am just thinking about how you are going to be levered, call it, in 12 months from now. Thanks. Jeff Thiede: Having a strong balance sheet is very important to us, and not only to support our organic growth, as you have seen our CapEx numbers increase for our operating companies and organic growth, it also positions us for strategic M&A. We are actively looking for opportunities for M&A, and, you know, we see the range of multiples from other public announced deals, which is not a surprise to us. It does fit our expectations. We are looking for the right company at the right price, in targeted markets for both E&M and T&D businesses. And as far as our M&A pipeline, it is much broader and deeper, and our balance sheet is going to support M&A in the future. Maximillian J. Marcy: Yeah. Ian, this is Max. So, you know, the question part of that question was what is the right leverage, right? And I do not think we have changed our tune, right? I think 1.5 to 2.0 times net leverage is still the right long-term leverage level for this company. But we want to make sure we are smart in investing the capital at the right time in the right place. We do not just want to spend your money. We want to invest at the right time, the right place. So when and if we get a deal, that will happen. And I still think 1.5 to 2.0 times is the right place. The second part of your question was about free cash flow conversion. And obviously, we had some pretty significant revenue growth this year, and to support that, we had some increases in some of our working capital. I think they are pretty much in line on a percentage basis with where we have been historically. So with revenue growing next year, I think there will be less of an investment in some of that working capital needs, so we should continue to have good free cash flow conversion, albeit with the step-up in CapEx that we have expected. So on a net basis, where we delivered this year is probably pretty consistent with where we are going to be in the next year. Ian Alton Zaffino: Perfect. Thank you again. I will take one again. Operator: Our next question will come from the line of Brent Edward Thielman with D.A. Davidson. Please go ahead. Brent Edward Thielman: Hey. Thanks. Great quarter as well. Jeff, I mean, you are sitting at record backlog entering 2026. I am wondering if we should think there continue to build any capacity constraints for you just in terms of your ability, the book of business for execution this year? And maybe if you could just talk about the lead times on that backlog relative to recent history. Are you booking into 2027 at this point? Maybe just some color there. Jeff Thiede: Yes. Thank you, Brent. Our record backlog really provides us clear line of sight for 2026, and some of those projects go into 2027. And you look at where those backlog contributions are coming from sequentially, it is not just data centers. It is largely data centers, but it is also hospitality and high-tech and substation transmission as well. So the diversification story does ring true when it comes to the contributions from our backlog. As far as project scheduling and ramping, we pay very close attention to that to see when the backlog gets converted. What we are continuing to see over the last many years is about 80% of our backlog burns off in 12 months. So clear line of sight in 2026 could give us some momentum into 2027, and it is coming from multiple markets where we pursue work. Maximillian J. Marcy: Yeah. So, Brent, you asked about constraints, right? I mean, I think the reality is we have done a good job of being able to add skilled labor to complete the projects that we have in backlog, and I think we are confident that we have the available labor to complete the numbers that we are giving you in guidance today, and I think we feel pretty good about that. Jeff Thiede: And, Brent, just a point I add to what Max said is, you know, we increased our employee count by 8.5%, and I always believe that we are going to be able to plan and bring in the resources to be able to support our financial goals. Constraints on labor are real for our whole industry, but it has been an area that we excel in because we treat our people with respect. We are doing much more outreach over the last three to four years than we ever have, and we are bringing in good quality people not just from our field professionals, craft, but also our support staff and our management and our leadership as well. Brent Edward Thielman: If I could just follow on that, Jeff or Max, I mean, if you potentially pick up more work here in the next few quarters, should we think that is more of a 2027 event, or do you look at the sort of initial guidance range for revenue as reflective of what you have in the book of business today? Maximillian J. Marcy: Yeah. I think it is reflective of the book of business. I mean, some of the backlog does extend into 2027, right? I mean, with 80% burn, naturally, you have some that carries over. If you just do the math on that 80% burn, that implies we still need to pick up a good amount of book-and-burn work for this year. So that is already implied within our guidance. And then we will continue booking backlog the remainder of the year that should start building up that pipeline nicely into 2027. Brent Edward Thielman: Okay. Great. Thanks, guys. Operator: Our next question comes from the line of Brian Daniel Brophy with Stifel. Please go ahead. Brian Daniel Brophy: Yeah. Thanks. Good morning, everybody. I guess you mentioned some of these satellite expansions in your opening comments. How are you thinking about additional opportunities there in 2026, and are there any geographies in particular that kind of jump out to you in terms of opportunities to expand into? Jeff Thiede: Yes. For the question. We have a good playbook on how to do satellite operations, and we have to be very selective when we do that. We always want to make sure that we can have good contract negotiations, want to be able to make sure we bring good core people, and then we also assess the market locally. As we build up into the one area I have mentioned earlier in previous quarters last year, we are building some momentum in a new market, and we are following the management and key field supervisors, and we are starting to see some positive impacts into our financials. Did not see a lot of it in 2025, but we plan on having contribution from that new satellite operation for us in 2026. Maximillian J. Marcy: Yeah. And then just to add on to that, you know, Brian, I mean, you know, obviously, you look at where our footprint is, there are opportunities across the country, particularly as you kind of get down to the South and Southeast. I am not saying that is where we are headed, but those are opportunities if we find the right work and the right set of jobs to expand on there. Brian Daniel Brophy: That is helpful. And then just big picture, kind of large transmission projects. You know, we have seen an acceleration there. You guys have participated in some in the past, maybe a little bit less so recently. But just curious how you guys are thinking about pursuing some of these opportunities that are coming. Jeff Thiede: Yes. We are pursuing large transmission projects, and we are very selective on the type of transmission and distribution projects that we pursue. We have a successful track record on large transmission. And, of course, it all comes down to resource availability, timing, and terms and conditions that are going to factor into our disciplined approach on project selection. But T&D is a really important part of our business. Our margins are really strong. We are proud of our leadership and our field professionals that help contribute to our success in T&D. So we will continue to assess those opportunities, be selective, and ensure good project execution. Brian Daniel Brophy: Thanks. And then just one last one for me. Obviously, this looks like it is going to be another heavier investment year, which, as you guys alluded to, you have talked about needing to invest in prefab and fleet. But I guess as we kind of move forward, to what extent do you guys have visibility on how many additional years of heavier investment do we need from this point? Thanks. Jeff Thiede: Yeah. We look at our three-year strategic planning process with our operating companies, of course, and Everus corporate. We are always looking for means and methods to expand prefab. That is one area, in addition to equipment, in addition to M&A. How do we deploy that capital responsibly? If you look at our success with prefab and modular construction, it has helped us get work. It has helped us contribute to our safety goals, which we had record safety results in 2025, and also production. And when our customers see how we prefab, it puts us in a really good position to secure the work and then execute it successfully. Maximillian J. Marcy: And then, Brian, I mean, this is our normal right now, right? So I think this is how we are planning, to invest this 2% to 2.5% of revenue in CapEx to continue to support what we feel is a good growth environment across the business. Brian Daniel Brophy: Thanks. I will pass it on. Appreciate it. Operator: Our next question will come from the line of Joseph Osha with Guggenheim. Please go ahead. Joseph Osha: Good morning. My compliments. It is always nice to have a stock go up 20% after you announce. A couple of questions. You alluded to craft labor availability. I am wondering if you could comment on labor cost. We hear a lot about that and whether you are having reasonable success wrapping higher labor costs, if they do exist, into pricing for your jobs? Thanks. Jeff Thiede: Labor is crucial for our success, and many of our operating company presidents have experience coming from the field. As leaders of our operating companies, they have experience in contract negotiations. Many of them sit on labor management committees to negotiate contract terms and conditions, so we have clear line of sight on what those potential increases are. So whether it is a cost-plus job or a fixed-price job, we are forecasting those costs into the pricing for those opportunities, and we do not see that as any risk at all as far as any sort of price increases for labor. Joseph Osha: Okay. Thank you. Moving on, you know, obviously, you are underleveraged, which is a good place to be. Kind of two questions there. First, in general, we hear that deals are generally still getting done below 10x. Wondering if you could comment on that and whether there is a red line there for you. And then I am also curious as you think about it, you know, is the bias towards perhaps trying to do one or two larger transactions or maybe, you know, a larger number of, you know, onesies, twosies. Jeff Thiede: We are looking for both. Our prefer is to have an independent stand-alone company to bring into Everus Construction Group, Inc., and our strategic priorities for M&A are to provide or to add a company that provides the same or similar type of services to what we provide today, such as electric, gas communications, underground, and, of course, electrical, HVAC, plumbing, fire protection. Those are the type of companies we are looking for, and what is high on the list is geographic expansion to locations that strategically fit our growth goals. The companies that, of course, have high integrity and are awarded work due to best value, not just price. Price is always important, but also have a commitment to safety and operational excellence and their respect within their communities. Those are the list of items that we consider. There is more I can add to that, but those are the high-level strategic priorities when it comes to M&A. Maximillian J. Marcy: Yeah. And obviously, Joe, this is Max. I mean, you know, as our leverage continues to tick down, I mean, it just continues to broaden and deepen that funnel that Jeff talked about earlier and creates different opportunities. But I think we really want to make sure we are looking at the right deal, looking at the right leverage targets, and looking at the right opportunity for us and for our shareholders. Joseph Osha: Can I get you guys to comment on my multiple question there? Is the market generally around kind of 9x, 10x? That is what I am hearing. Maximillian J. Marcy: I mean, that is what we have seen deals transact for in this space. Right, around those multiples. That is correct. Joseph Osha: Okay. And then I am sorry. One more, and I should know this. My apologies. On the T&D side, would we see you guys potentially try and go after any 765 business, or is it going to be perhaps slightly smaller? Wondering if you can comment there. Jeff Thiede: On large transmission, as I mentioned earlier, we are very selective. And, you know, there are hundreds of miles of type of transmission projects that are available. There is also some interconnect, so we look at where our sweet spot is and the availability of those resources and timing. Meanwhile, we really like our MSA work, and we do not want to abandon our customers, and if you take on one of those very, very large projects, you are bringing a lot of new people into the organization. So as I mentioned, we grew our employment by 8.5%, so when we get a big job, we bring new people in the organization. We are very thorough on orientation and who we bring into the company. So those very, very large transmission jobs are not anything we cannot do, but when you look at the available resources and the current work that we have in our backlog, we take all that into account when we pursue selected projects. Joseph Osha: That is it. Thank you very much for the answers. And, again, congratulations on the outcome today. Operator: And our next question will come from the line of Manish Somaya with Cantor. Jeff, Max, Paul, many, many congratulations on the quarter and obviously also the outlook. Just a couple of questions for me. Maybe this is for Jeff, maybe for Max, but when I think about the E&M and T&D segments, how should I think about margins through a cycle? Maximillian J. Marcy: Yeah. So, you know, I think it is maybe a little bit less about margin through a cycle and more just about us making sure that we continue to grow, do what we can to thin out our fixed cost base, and continue to deliver. So, again, if you think about the way our contracts are, Manish, when you have half your contracts kind of cost-plus, the other half fixed, I mean, I do not think margins really necessarily contract on the cost-plus through a cycle because you are still doing the work. So I do not think it is necessarily a cycle for us. It is more just about how much leverage we can put on our fixed cost base. Jeff Thiede: And if I could add to that, we are very deliberate on the type of work we pursue. About half of our work is cost-plus, and we like that. Those are typically very large, very complex projects, which puts us in position for some fixed-price work as those buildings get completed. We pursue the service work or some of the other smaller projects to keep us in connection with those customers. If you look at our T&D segment, 55% to 60% is MSA work. We like the stability there. We also like the margin uplift opportunities on fixed-price. So we look at this regularly and strategically align our resources and our pursuits towards those goals. Chris Ellinghaus: Okay. That is super helpful. And then you guys mentioned data center and semiconductor exposure is increasing. Can you give us a sense as to what is the composition of those two things in the backlog? Jeff Thiede: We really do not go to that level of detail in our backlog and breaking it down, but I will tell you they have increased, as I mentioned earlier, and they are not the only ones that have increased on our sequential backlog Q4, Q3. Data centers, hospitality, and high-tech in addition to our transportation, substation, and transmission. Maximillian J. Marcy: Yeah. And just to reiterate, data center is the large market of our 2026 backlog, and semiconductor is growing. Chris Ellinghaus: Okay. And then just finally, you talked about target leverage of 1.5, two times. Obviously, you are significantly underlevered. So how should we kind of think of you getting to that threshold? Is it a combination of a lot of tuck-ins, or is it going to be like a blockbuster transaction based on where multiples are? And then related to that, how should we think about free cash flow in 2026? Thank you so much. Maximillian J. Marcy: Yeah. So I think the reality is it has to be the right deal. I mean, I do not think we are targeting multiples or one. I think when we find the right transaction, so long as it fits within our stated leverage targets, I think that would be the right deal. It could be multiple. It could be a larger one. But we are also looking at our risk profile and management's time and our ability to do deals. So it could be across the board, right? But I think we are committed to finding good transactions and investing. In terms of free cash flow, Manish, I kind of addressed it a little bit earlier on the call. But, again, there is probably more of a usage of cash in working capital in 2025 given the really strong revenue growth. We have natural increases in some of our receivables. With the good growth we see next year, it is not as high as 2025. That number should not be as much of a use of cash. Operator: Yep. This concludes our question and answer. I will now hand the call back over to Jeff for any closing comments. Jeff Thiede: Thank you, operator. Thank you all again for joining us today. We are very excited about the opportunities ahead for Everus Construction Group, Inc. and are confident that we have the right strategy in place and the right team to execute on our plan. We will be attending several upcoming investor events, including the Jefferies Energy Conference in New York. If we are not able to connect during the next few months, we look forward to speaking with you on our next quarterly earnings call. Thank you for your time and interest in Everus Construction Group, Inc. This concludes today's call. Operator: This does conclude today's call. Thank you all for joining, and you may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the BlueLinx Holdings Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. And today's call is being recorded. We will begin with opening remarks and introductions. At this time, I would like to turn the conference over to your host, Investor Relations Officer, Thomas C. Morabito. Please go ahead. Thomas C. Morabito: Thank you, Operator, and welcome to the BlueLinx Holdings Inc. Fourth Quarter and Full Year 2025 Earnings Call. Joining me on today's call is Shyam K. Reddy, our Chief Executive Officer, and Christopher Kelly Wall, our Chief Financial Officer and Treasurer. At the end of today's prepared remarks, we will take questions. Our fourth quarter and full year news release and Form 10-Ks were filed yesterday after the close of the market along with our webcast presentation and these items are available in the Investors section of our website, bluelinxco.com. We encourage you to follow along with the detailed information on the slides during our webcast. Today's discussion contains forward-looking statements. Actual results may differ significantly from those forward-looking statements due to various risks and uncertainties, including the risks described in our most recent SEC filings. Today's presentation includes certain non-GAAP and adjusted financial measures that we believe provide helpful context for investors evaluating our business. Reconciliations to the closest GAAP financial measure can be found in the appendix of our presentation. I will now turn it over to Shyam. Thanks, Tom, and good morning, everyone. 2025 embodied grit and determination. Our fourth quarter and full year results demonstrated our ability to grow the business in the face of another year of challenging market headwinds and competitive pricing conditions. Our relentless focus on the company's profitable sales growth strategy targeting both single and multifamily end markets with different disruptive product and service expansion initiatives led to flat net sales and higher volumes at solid margins in 2025 when compared to 2024. Our strategy is working, as it enables us to successfully navigate a market that saw 2025 single family housing starts down 7% year over year. In essence, our disciplined execution of the strategy led to share gains across multiple product lines and customer channels. In terms of M&A, our acquisition of the Distero Lumber Company is going well and performing as expected, which I will speak to in a moment. I would like to offer a few highlights from 2025. We delivered solid full year results thanks to the team's commitment to our product and channel strategies and our business excellence initiatives. As a result, we competed effectively in challenging end markets to win business and achieve solid gross margins of 18% in specialty products and 9.2% in structural products for the year. Our operating cash flow highlights the effectiveness of our disciplined approach to managing inventory in a challenging market environment. Our results reflect the effective commercial and inventory management capabilities we have as demonstrated by our successful efforts to address the inventory build ahead of a normal spring-summer selling season that never emerged. As market conditions improve, those capabilities are expected to translate into materially stronger cash flow. Our fourth quarter results were also solid for the same reasons, though we did have an extra week in the quarter that increased top line, volumes, and SG&A. Revenues rose slightly year over year driven by higher volumes and the addition of the Distero specialty product sales in our financial results, which helped offset continued pricing pressure in structural products that lasted through the end of the year. Specialty and structural gross margins were 18.1% and 10%, respectively, reflecting the strength of our customer value proposition and effective inventory management. Our product strategy remains designed to grow our five key higher margin specialty product categories: engineered wood, siding, millwork, industrial, and outdoor living products. Though our efforts are now more deliberately aligned with the channel growth strategy to yield greater success. Despite market softness, and multifamily sales that generate incremental structural product sales, the specialty products growth strategy led to approximately 70% of net sales and over 80% of gross profit for both the fourth quarter and full year 2025. While our product mix shift objectives remain on track, we are emphasizing strategic channel growth when assessing new product launches and managing working capital, which we believe gives us a competitive advantage. We continue to grow our multifamily channel, fine-tune our builder pull-through efforts with key customers, and expand our national accounts business to more effectively drive sales across key product categories. Our focus on strategic value-added services that align with specific customer needs is also differentiating us in the market, thereby enabling us to gain share and grow in challenging market conditions. We expect the multifamily end market to deliver strong long-term growth as multifamily housing stock is more affordable, which is why we remain committed to investing time, energy, and resources into this channel to augment our institutional sales efforts that ultimately support single family housing starts and repair and remodel activity. Recent year-over-year housing data has reinforced the strategic merits of investing in our multifamily channel, which grew volumes 19% for BlueLinx Holdings Inc. in 2025. From a strategic perspective, it, along with our builder pull-through efforts, provided effective pathways for converting customers to key brands, including Oncenter EWP, Allura fiber cement siding, and GP gypsum products. Naturally, this makes us an even more valuable growth partner to our suppliers, providing opportunities for geographic and product expansion with key partners. On the other hand, multifamily sales have longer inventory cycles and lower gross margins due to sales in a competitive pricing environment. From a vision and long-term competitive perspective, we made significant progress in 2025 on our digital transformation journey to become the provider of choice for both suppliers and customers. These transformational investments are designed to rapidly grow our business at scale with both customers and suppliers by providing an exceptional experience that is highly efficient and effective. These investments will also enable us to drive operational excellence via productivity and efficiency improvements that enhance our gross margins and our EBITDA margins. Phase one was completed in a timely manner and under budget. It included enhancements to our master data management platform and a new Oracle Transportation Management system. Although we successfully launched e-commerce pilots, we decided to place greater emphasis going forward on assisting several of our largest customers with optimizing their more advanced digital marketing platforms, thereby aligning our e-commerce strategy with our channel growth strategy. We currently view AI and current technological advancements as being the broad-based e-commerce solution going forward, rather than traditional e-commerce platforms, though our thinking may change as the fast paced tech environment evolves. As we mentioned last quarter, we are especially excited about advancing our AI initiatives that enable productivity improvements and align with our sales growth strategy and that support our business excellence initiatives. What began as a pilot with a small group in the company has expanded to give most salaried associates the ability to build agentic agents to streamline their work. We have also launched AI agents that help with modeling and data analytics, just to name a couple. We are even developing AI applications that support our core business such as value-add services, inventory management, commercial initiatives, and training. We expect subsequent digital investment phases to further strengthen our commercial, operational, and functional capabilities. Modernizing the business with new technology will set us apart from the competition and accelerate profitable sales growth and operational excellence. From an M&A perspective, we are pleased with the progress we have made with the purchase of Distero, a longtime Portland-based specialty distributor of premium high-margin specialty wood products used in custom homes, decks, and upscale multifamily projects. This acquisition advances our key strategies: increasing our specialty product sales, growing multifamily sales, and strengthening our Western U.S. presence. We believe Distero will be able to grow faster than it otherwise could by leveraging our national distribution network and strong customer relationships. Although it is early, we are pleased with Distero's results and the execution of our integration plan. Our financial position remains strong. We had liquidity of $726 million at the end of the year, including $386 million of cash and cash equivalents. This financial strength gives us the flexibility to reinvest in business initiatives that allow us to increase sales, improve productivity, expand our geographic reach, and provide better service to our customers and suppliers, all while providing us with the foundation to continue weathering soft market conditions. We were also able to opportunistically return capital to shareholders by completing $38 million in share repurchases in 2025. Now for a few more highlights in our full year results, we generated 2025 net sales of $3 billion and $83 million in adjusted EBITDA, for a 2.8% adjusted EBITDA margin. Adjusted net income was $7.8 million or $0.97 per diluted share. We were less profitable in 2025 compared to 2024 due to challenging market conditions and the SG&A impact of investments made to drive our commercial and digital transformation strategies. However, we are pleased that our strategic sales and product expansion efforts led to flat sales and higher volumes at solid margins. Specifically, we experienced 19% volume growth in multifamily, and 17% volume growth with some of our national accounts. Our builder pull-through programs executed in partnership with strategic customers led to key channel and specialty product growth. Our differentiated value proposition led to geographic and product expansion with key suppliers with meaningful year-over-year growth across multiple product lines that align with our channel growth strategy. For example, our EWP sales were roughly flat and our EWP volumes grew by more than 7% on a year-over-year basis despite significant headwinds affecting housing starts. We also delivered solid gross margin performance, despite difficult market conditions and a competitive pricing environment, with specialty products at 18% and structural products at 9.2%. Our relentless focus on the product and channel strategy fueled by our operational and business excellence initiatives such as effective pricing, strong value-add services, exceptional customer service, product expansion gains, and disciplined inventory management helped drive these results. Though the year demanded, our associates remained focused on the profitable sales growth strategy, customer service, and supplier expansion efforts, we did not lose sight of other important strategic levers to drive financial performance and shore up our financial position. For example, we purchased Distero, refinanced our ABL, and executed on certain cost-out and capital improvement initiatives. Now let's turn to our perspective on the broader housing and building product market. The housing market remains soft, pressuring the building materials and distribution sector. Affordability challenges, low housing turnover, and other factors continue to weigh on both housing and repair and remodel activity. We continue to view these pressures as temporary, especially given the persistent housing shortage and potential government policies that could unlock the housing recovery. Long-term fundamentals remain strong for both new construction and repair and remodel work for the foreseeable future, providing a durable value proposition for BlueLinx Holdings Inc. shareholders. Despite lower housing starts and tepid repair and remodel activity in 2025, our product and channel strategies drove share gains, supported by product expansion, builder pull-through, and value-add service initiatives, multifamily efforts, and national accounts attention. Our focus on the company's largest accounts enabled growth, despite low housing turnover and high interest rates. We believe that today's strategy and investments will accelerate momentum across all customer segments when the market improves. Regardless of the near-term market backdrop, we will continue executing our profitable sales growth strategy to gain share at scale today while continuing to make key investments in the business that will position us well for long-term sustainable profitable growth. Lastly, we are also monitoring the various proposals that the administration is exploring to help boost the housing market. While details are still being ironed out, we are optimistic that these proposals could kick-start the housing recovery. In summary, we delivered on our strategic priorities in 2025, as demonstrated by our specialty product expansion results, multifamily channel growth, key national accounts growth, margin performance, digital transformation, the Distero purchase, and our capital allocation initiatives. As a result, we delivered solid results for both the fourth quarter and full year 2025. We believe in our strategy and will continue to execute on it through the current cycle, which will position us for better-than-market growth when the housing recovery begins. I would like to wrap up by thanking all of our associates for their grit, resilience, and dedication during a difficult housing market. Your commitment to our customers, suppliers, and each other continues to drive more profitable specialty and structural product growth across our customer channels in challenging times while positioning us for long-term success. I will now turn the call over to Christopher Kelly Wall, who will provide more details on our financial results and our capital structure. Thanks, Shyam, and good morning, everyone. Let's first go through the consolidated highlights for the quarter. Christopher Kelly Wall: Before we get started, I would like to remind everyone that the fourth quarter of 2025 had 14 weeks versus our usual 13 weeks. As a result, our fiscal year also had 53 weeks versus the typical 52 weeks. Overall, both specialty products and structural products delivered solid volumes and gross margins within a challenging macro environment. Net sales for the fourth quarter of 2025 were $716 million, up slightly year over year. Total gross profit was $113 million and gross margin was 15.7%, down slightly from 15.9% in the prior-year period. SG&A was $102 million, up $10 million from last year's fourth quarter. This increase was mainly due to higher personnel expense, the addition of Distero, the extra week in the fourth quarter, and increased sales and logistics expenses driven by our strategic channel growth, including multifamily. Given the difficult demand environment, we remain focused on rigorous expense management and on identifying opportunities to further improve operational efficiency. Net loss for the quarter was $8.6 million, or $1.08 per share, primarily due to higher net interest expense, higher depreciation and amortization, and M&A-related expenses. Adjusted net loss was $3.7 million, or $0.47 per share. And we had an income tax benefit of 28% of the pretax loss. Adjusted EBITDA for the quarter was $13.9 million. Turning now to fourth quarter results for Specialty Products, fourth quarter net sales for Specialty Products were $505 million, up over 4% year over year. This increase was driven by higher volumes in nearly all product categories and modest price increases in millwork and siding, as well as the addition of Distero, partially offset by volume declines in millwork. Gross profit for specialty product sales was $92 million, up 3% year over year. Specialty gross margin was 18.1%, down slightly from last year's 18.4% primarily due to price deflation in certain product categories, partially offset by the acquisition of the higher-margin Distero business. Sequentially, Specialty gross margin increased 150 basis points from Q3 2025. Based on the first seven weeks of Q1 2026, we expect specialty product gross margin to be in the range of 17% to 18%, with daily sales volumes lower than the Q4 2025 and higher than the Q1 2025, which was heavily impacted by severe weather. Now moving on to Structural Products. Net sales were $211 million for Structural Products in the fourth quarter, down 7% compared to the prior-year period. This decrease was primarily due to lower pricing for both lumber and panels when compared to last year, offsetting the higher volumes we drove in those categories during the quarter. Gross profit from Structural Products was $21 million, a decrease of 14% year over year, and structural gross margin was 10%, down from 10.8% in the same period last year. In the fourth quarter of 2025, average lumber prices were about $378 per thousand board feet, and panel prices were about $438 per thousand square feet, a 12% decrease and a 20% decrease respectively compared to the average in the fourth quarter of last year. Sequentially, structural gross margin increased 70 basis points from Q3. And comparing the fourth quarter of 2025 to the third quarter of 2025, lumber prices were down nearly 8% sequentially and panel prices were down about 1%. Based on the first seven weeks of the current first quarter, we expect Q1 gross margin for Structural Products to be in the range of 9% to 10%, with daily sales volumes down versus the fourth quarter of 2025 and up compared to the first quarter of 2025, once again due to the severe weather experienced last year. For the full year, net sales were $3 billion in 2025, flat compared to 2024, largely due to volume growth in several categories and the Distero acquisition, offset by lower price deflation in both specialty and structural products. Specialty sales were up slightly in 2025 due to higher volumes and the Distero acquisition, partially offset by price deflation in several categories such as EWP and millwork. Structural product sales were down slightly as, similar to specialty, higher volumes were offset by price deflation. Total gross profit was $452 million for the full year and gross margin was 15.3%, 130 basis points lower than the prior-year period. SG&A in 2025 was $381 million, up 4% versus the prior-year period due to the acquisition of Distero, the extra week in fiscal 2025, increased sales and logistics expenses driven by our strategic channel growth, as well as investments we have made in headcount and technology to drive our strategy and long-term earnings growth initiatives. For 2026, we expect our SG&A expense to increase slightly as a percentage of sales due to the addition of Distero, an increase in strategic sales headcount and additional material handlers to deliver on expected volume growth, and overall inflation in wages and other expenses such as fuel and health care costs. Net income was $219,000 for the full year, and diluted EPS was $0.02 per share. Adjusted net income was $7.8 million and adjusted diluted EPS was $0.97 per share. The full year tax rate was not meaningful given the level of our pretax income, and for the full year 2026, we anticipate our tax rate to be approximately 25% of pretax net earnings before $3 million to $4 million of permanent nondeductible items impacting the tax rate. And for the full year, adjusted EBITDA was $83 million. Turning now to our balance sheet. Our liquidity remains very strong. At the end of the quarter, cash and cash equivalents were $386 million, a decrease of $44 million from Q3 largely due to the Distero acquisition, which, as a reminder, was purchased with cash. When considering our cash on hand and undrawn revolver capacity of $340 million, available liquidity was approximately $726 million at the end of the quarter. Total debt, excluding our real property financing leases, was $381 million and net debt was a negative $5 million. Our net leverage ratio, given our positive net cash position, was a negative 0.1 times adjusted EBITDA, and we have no material outstanding debt maturities until 2029. Additionally, given the strength of our balance sheet and continued strong liquidity, we remain well positioned to support our strategic initiatives. These strategic initiatives include continued growth with our largest customers, and in the multifamily channel, with this focus also benefiting our smaller customers, demand pull-through efforts to drive strategic product sales that benefit our customers, continued specialty product expansion with key suppliers, our digital transformation efforts, and other organic and inorganic growth initiatives. Now moving on to working capital and free cash flow. During the fourth quarter, we generated operating cash flow of $62 million and free cash flow of $56 million primarily due to effective working capital management, particularly as it relates to driving our inventory levels lower to be in line with the current demand environment, partially offset by the cash impact of lower earnings in the quarter. For the full year 2025, during the quarter, we incurred $5.4 million of CapEx, generated operating cash flow of $60 million and free cash flow of $33 million. Turning now to capital allocation, primarily related to our digital investments, normal replacement of aging components within our fleet, and the typical maintenance and investment in our branches. For 2026, we plan to manage our CapEx in a manner that reflects current market conditions and allows us to maintain a strong balance sheet. Our remaining capital investments will focus on facility improvements, further replacement of trucks and trailers, and the technology improvements previously discussed. Also, we did not repurchase any shares during the fourth quarter. For the full year 2025, we repurchased shares totaling $38 million. At year end, we had $58.7 million remaining under our previous share repurchase authorizations. Our guiding principles for capital allocation remain consistent with prior quarters. We intend to maintain a strong balance sheet which enables us to invest in our business through economic cycles, expand our geographic footprint, and pursue a disciplined inorganic growth strategy as demonstrated by our acquisition of Distero, and opportunistically return capital to shareholders through share repurchases. We also plan to maintain a long-term net leverage ratio of two times or less. Overall, we are pleased with our solid fourth quarter and full year 2025 results, particularly in light of current market conditions. Operator, we will now take questions. Operator: Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. Once again, to ask a question, please press star followed by the number one. Our first question comes from Jeffrey Patrick Stevenson from Loop Capital Markets. Please go ahead. Your line is open. Jeffrey Patrick Stevenson: Hi. Thanks for taking my questions today. You know, first up, you know, specialty products gross margin reported a nice sequential improvement during the fourth quarter and returned to your previously discussed normalized 18% to 19% range. And I wondered if you could provide more color on what were the primary drivers of the sequential improvement you saw in segment margins during the quarter? Christopher Kelly Wall: Yeah. Hi, Jeff. It is Kelly. So I think part of the improvement, if you recall, we talked last quarter, we had some one-time rebate-related true-ups with one of our vendors and that represented about half of the increase. It is really been normalizing for what we would expect in a typical quarter, and, you know, I guess the rest here is just continuing to maintain, you know, discipline, right, as we continue to price into what continues to be a challenging market. And what I would say is that as we move into 2026, right, we would, you know, kind of similar to the trend that we have seen in the back half of 2025 with the kind of a normalization or flattening, if you will, of the decline that we have seen over the last two or three years in that specialty product margin, we are expecting in 2026 to be relatively flat to the margins that we experienced in the fourth quarter. Shyam K. Reddy: And just to add, Jeff, you know, obviously, with soft market conditions, it is a competitive pricing environment. But given our go-to-market strategy with respect to product and channel, we are really leveraging our value-add services on top of key investments we have made to support those channels to really maintain our pricing at acceptable levels that correspond to the value we are providing, whether it be on project management, takeoff services, certain CapEx investments we are making to drive various product-related value-add services, and so on. So we are really proud of what we have been able to do over the last year in an incredibly challenging housing environment with respect to not only volume growth, but maintaining those margins you were asking about. Jeffrey Patrick Stevenson: No. That is great color, and I appreciate all the detail. And, you know, maybe kind of following up on, you know, specialty product pricing, in addition to some of the initiatives you have done internally, you know, we have heard from, you know, one of your competitors that, you know, EWP price has largely stabilized and, you know, we are likely at the bottom as far as sequential declines go unless the builders' spring selling season comes in worse than anticipated. And, you know, wondered if you would, you know, agree with that from what you are seeing in your business and, you know, maybe, you know, could talk about a broader, you know, pricing outlook in the segment as we move into the '26. Shyam K. Reddy: Yeah. I would say based on, you know, our conversations, well, between looking at macro-level data and conversations with customers, suppliers, and other stakeholders, we absolutely agree with that. We do think it has stabilized. But coming back to our value proposition in the market, there are various, you know, creative programs that we have developed on top of channel focus with multifamily, for example, that puts us in a more competitive position as it relates to driving, for example, EWP volumes while maintaining solid margins and being above the fray when it comes to an incredibly competitive pricing environment due to market conditions. But to your question, yes. We agree with that statement. Jeffrey Patrick Stevenson: Got it. Got it. Understood. And then, you know, lastly, you know, just, you know, appreciate the update on kind of where things stand with your technology investments. And, you know, wondered if you could provide, you know, additional thoughts on, you know, why you pivoted away from, you know, you know, an internal e-commerce, you know, platform, and now that, you know, there is more AI opportunities. And then, you know, moving forward, you know, you talked about, you know, a larger phase two, you know, with things like, you know, warehouse management system. Is that still in the cards over the coming years, Shyam? Shyam K. Reddy: Yeah. So to take your first question on e-commerce, I am sure you are in the same boat as us where you cannot pick up a paper every day or listen to something on the news where AI is rapidly changing the tech environment. So, for example, it is not out of the realm of possibility that people will be able to execute on e-commerce orders via ChatGPT or Claude or Perplex or one of these other AI platforms, or X off OpenClaw, which is all the big rage over the last couple weeks. You know, you have got vibe coding that is taking place as well where people can very quickly spin up new applications in order to drive sales internally as opposed to relying on third-party platforms. All of that is to say that I think it would be foolhardy to spend millions of dollars investing in an e-commerce platform that is based on traditional notions that could be obsolete before we even got through phase one of it. So the idea is to take a step back and invest on the digital e-commerce side in a way that aligns with our channel strategy and where we are driving sales. So with our biggest accounts, being more aligned with them to drive accelerated sales off their platforms and to really accelerate growth from a digital commerce standpoint that way, while continuing to evaluate the landscape and figure out ways to jump in as quickly as possible as the tech landscape changes. As it relates to WMS, we absolutely believe in WMS. In fact, we have a very successful pilot that has shown, you know, promising results. And so the idea would be to invest in a very responsible way over the coming, you know, twelve to twenty-four months, you know, in other facilities beyond what we already have. So, you know, we have bin locations and a variety of other things that support operational excellence and, you know, in a $3 billion top-line distribution business, we have that. The idea is to take it to the next level. And the recent pilot showed that it makes great sense to do so. So that is the plan over the next twelve to twenty-four months to make those targeted investments where it makes the most sense. The good thing is we are now further along in what that solution looks like than we were, call it, two years ago. Jeffrey Patrick Stevenson: Great. Thank you. Thomas C. Morabito: Yeah. Operator: As a reminder, to ask a question, please press star followed by the number one on your telephone key. Next question comes from John McGlade from The Benchmark Company. Please go ahead. Your line is open. John McGlade: Hey, guys. This is John on for Reuben. Just congratulations on the quarter. Shyam K. Reddy: Thanks, John. Thank you. John McGlade: So I just wanted to ask kind of two and a half questions here. First one, just curious with with kind of how the market landscape has been over the past few quarters and how it looks like it is going to head into this year. Could you maybe give us some additional color on how your customer conversations have shifted? Maybe they are viewing the value of your services differently in the way that they are operating day to day. Shyam K. Reddy: Sure, John. Good morning. Yeah. I would be happy to do that. So if I think about the market landscape over the last few quarters, it is not lost on me that beyond just housing starts, whether it be total housing starts or even single family housing starts, that beyond that, if you look at housing expenditures as a percent of overall GDP and where that sits, there have been sequential quarterly declines over the last year. And then if you look at housing burden, the cost of housing burden over the last four quarters, that has continued to go up. And then if you look at personal consumption expenditures, those are also, as it relates to repair and remodel and some other key indicators with housing, those are also very much down. So all of that is to say besides what everybody talks about, there are additional macro statistics that suggest an incredibly weak housing market. All of that said, the fact is we have grown share and we have maintained top line year over year at solid margins because of the investments we have made to drive value-add services. Whether that be, you know, on the multifamily side, the channel focus as it relates to multifamily and certain key customers, we are able to drive greater conversions into our product lines, namely with EWP, for example, or on the siding front. With multifamily, we have converted off, you know, one of the more popular, one of another competitive suppliers out there that we do not carry in the GP DENS product. So the fact is that we have taken our strategy and we have gone out to the marketplace with our customer base and our supplier base to show them that even in soft market conditions, we can actually grow their business. And we have done that, and we have proven it. And as a result, our customers and our suppliers are absolutely seeing the value of two-step distribution as it relates to BlueLinx Holdings Inc. and what we can do to help them grow their business. So on the customer front, it is helping them help their customers grow their business, especially in these tough times. And then for our suppliers, it is really a commercialization play. We are absolutely helping them commercialize their product not only with traditional customers, but also via the multifamily channel and growing their business at a time when they may not have thought it was going to be more difficult. So that value-add opportunity that we provide those two constituent groups is very strong for us, as our results have demonstrated in 2025. And, also, I would add one additional thing to that, which is if you look at the fourth quarter in particular, a number of our customers, if not all of our customers, were very focused on managing inventory levels as tight as they could. In that environment, that is good for two-step, right? Because, you know, we sit here ready to kind of fill their orders, right, that they may not be able to fill efficiently out of the inventory stock that they are currently carrying. Part of the margin increase that we saw on the structural side in the fourth quarter was due to that, right? We had a relatively flat pricing market in terms of input costs, but with our customers at lower inventory levels, they were utilizing two-step more than they did last year. And that is where we saw our volumes increase. We saw a similar thing across key specialty product categories as well. Shyam K. Reddy: Yeah. And just to add on that, absolutely. And so whether it is a destocking or whether it is tough market conditions, two-step can benefit just by buying—we will put aside—just in soft market conditions, customers will buy less more often, right? That is one of the opportunities for two-step distribution. I would say though that if you look at us relative to what may take place at other companies, our ability to meet that less-more-often desire on the part of customers while maintaining optimal inventory levels through our own working capital management capabilities, which I continue to feel are second to none, I think it is a pretty noteworthy competitive advantage we have because we were able to meet our customers' expectations, manage our inventory levels accordingly, end the year with a strong cash balance, especially compared year over year in light of a soft selling year, and yet maintain good margins. Right? We did not have to—because we are able to match up or marry up the inventory levels with the customer demand, while selling the value-add and other services we provide, we were able to maintain those solid margins, optimal inventory levels that did not compromise our ability to grow volumes as demonstrated by the results and, of course, maintain pricing at appropriate levels to ensure year-over-year flat sales in an otherwise tough market. John McGlade: Okay. That is fantastic. I really appreciate the deep dive there. Just one other thing, and I know it has been a focus, and I know last quarter you guys shared just really kind of the exceptional level of service you have been providing in the multifamily sector. It sounds to me like you really may have shifted there before others decided that was going to be more of a priority this year for the end markets. Obviously, those projects have a longer timeline than single family. I was hoping you might be able to give us a rough estimate on when you kind of expect to see that increased activity, increased interest starting to flow through. We have heard from others that it is more of a late Q3, Q4 event for them. Shyam K. Reddy: Sorry. You are talking about multifamily? John McGlade: Yes. Shyam K. Reddy: Yeah. So, yeah. Yeah. So let me just be clear, John, given the affordability crisis in housing, and if you look at housing as a percentage of GDP and where it has been going over the last couple years, especially over the last four quarters, it is clear that multifamily is going to be, in my view, the solve to bending the cost curve as it relates to housing pricing, especially given the demand or the need to put people in homes over the next ten years. So whether it is good or bad, our strategy is designed to take more and more multifamily share and to grow our multifamily business. So it is kind of all over the map. If you look at the forecasting, it changes from month to month and quarter to quarter. When people were running away from multifamily, we were running into the fire because we strongly believe that if you build more faster, against the backdrop of the current regulatory environment, you could help bend the cost curve and get more people into homes. And so we have designed our product strategy and our go-to-market strategy as it relates, from a channel perspective, to take advantage of the multifamily housing starts that are out there, number one. Number two, if you look at kind of the way the financing market works and the instruments that people typically use in order to finance multifamily housing, the rate environment is favorable as it relates to that from a short-term standpoint given the recent rate cuts because their instruments are based on short-term rates by and large. By the way, that is similar with some aspects of our industrial business and the OEM market, like manufactured housing. That is also supportive of kind of where you see that rate environment relative to where long-term rates may be. So the long-winded answer to that question is, I do see multifamily continuing to improve over time, mainly because there is an absolute need for multifamily housing in the context of an affordable housing crisis, number one. Number two, between the rate environment and our channel and product strategy, I am absolutely convinced that we will continue to grow multifamily share over the coming years because we have built capabilities to support that share growth, which came to fruition in 2025 with 19% volume growth year over year. John McGlade: Okay. And I guess I might have thrown you off a little bit there on the initial question. But maybe if I could pin you down and just try and get an idea of, like you said, you guys are running into the fire when everyone else was running out. I guess, how much of a head start do you think that that might have given you? Shyam K. Reddy: I think it has given us a huge head start because if you look at it—okay. So two things. Number one, in order to grow that channel, it truly does take endurance, stamina, and investments in key services that you might not otherwise find elsewhere. So, for example, we have invested in enhanced capabilities when it comes to takeoff services, which is something that historically two-step distribution has not had. And we have those capabilities around takeoff services that allow us to respond to—basically look at plans and be able to drive our product sales through those multifamily projects in a way that we could not have otherwise done a few years ago, number one. So that is just one example. The other is project management services and the working capital management associated with supporting multifamily projects where you have to keep—we have got some—we have ways of making the sales but then managing the inventory through our warehouses with reload services and other working capital management levers that support those multifamily projects in a way that is good for our business. That is not necessarily easy to do overnight, okay? So we have got that, and that supports the project management piece. We have also invested CapEx into specialized equipment that allows us to deliver to multifamily job sites, for example, in urban environments at two in the morning. Right? That was a nuanced approach to our CapEx strategy that aligned with the channel strategy that gave us a head start. And then last but not least, I would suggest that the personnel investments we have made between what we have at a corporate level combined with field resources to drive business development in the multifamily channel distinguishes us from maybe others in the space. And those BD resources, those resources out in the field combined with the scalable capabilities that we are offering from an enterprise-wide basis, allows us to bring our customers into the mix and have channel partners get more closely aligned with those end developers, and ultimately provide us a means by which we can convert jobs into our product offerings, whether it be siding, for example, or EWP, or GP DENS, and so on. So we have a head start because we have invested CapEx and OpEx to drive it, and then there are these value-add services that others do not necessarily have that are enabling, or giving us a competitive advantage, I think. So I do believe we are ahead of the game. John McGlade: Alright. Thank you so much for the color. I took up so much time. I will pass it on now. Shyam K. Reddy: Alright. Thanks, John. Operator: Our next question comes from Aditya Madan from D.A. Davidson. Please go ahead. Aditya Madan: Hi. It is Adi on for Kurt today. Thank you for taking my question and for all the details so far. A lot of my questions have been answered. But a couple of them are around the incremental cost maybe from the AI focus versus the traditional e-commerce platform. What do those incremental costs even look like and is there any rough timeline you have in mind for rolling it out? Shyam K. Reddy: Okay. So Adi, I really appreciate the question. But I think if I gave you a timeline, it would be obsolete a week from now. So I honestly do not know. I will say that the incremental costs are also unknown. But suffice it to say that they would be, in the scheme of things, kind of immaterial relative to traditional costs that would go into a regular e-commerce platform. You know, with AI, as we have all seen, there are virtually zero barriers to entry for all, at least for now. I mean, who knows what it is going to be when the investments catch up down the road that others are making, not us. Aditya Madan: So I— Shyam K. Reddy: You know, as it relates to e-commerce, I do not know, quite frankly. But I do know that the future looks bright. Just if you look at some of the recent announcements with some of the big Fortune 50 companies and their partnerships with some of the most prominent AI platforms, I mean, there is a world where people will just go into a ChatGPT or, you know, Claude and direct it to buy something off one of their, you know, rewards accounts, whether it be a Walmart Plus or, you know, Amazon or something else. And people may never even go to the traditional e-commerce platforms anymore, which is why I do not know what the future looks like. Shyam K. Reddy: As it relates to our AI investments that we have made to drive—which, incidentally, are aligned with our commercial strategy as well as just productivity improvements or giving our employees what I very affectionately describe as an Ironman suit—have really enabled our folks to just be more productive. Do we have any measures on it? Absolutely not. It is too early to know. But as it relates to AI applications, we are— Thomas C. Morabito: We are—you know, we as I said in my remarks— Shyam K. Reddy: We have developed AI tools for people to assist with modeling. So, for example, you know, in the traditional way, someone would normally have to call an associate, one of their teammates in FP&A, to help them with the model. Now there is an actual AI application or AI agent they can use to build a model before they even have the conversation with our FP&A team, which is exciting. You know, from a benefits perspective, we have benefits chatbots that our teammates are able to use in order to answer standard benefits questions or get their arms around something before they might have a call with a benefits specialist. And then, of course, on sales, for instance, you can use our AI agents to help you build sales plans, sales execution plans, especially given the data, the access to data that folks have through our BI intelligence platforms via Microsoft. So all of that is to say there really is not any incremental cost as it relates to our employees using the AI platforms that are part of our Microsoft suite of products. But, you know, as the future continues to develop, I do not know what that is going to be. I mean, there is clear cost associated with software engineering and building connections into the systems that we are still trying to figure out, but for now, we are just focused on making sure that our data architecture is— Aditya Madan: Got it. So it is mainly been, like, an internal focus, yeah, and not external client-facing just yet? Shyam K. Reddy: Is well designed to be able to take advantage of that next frontier of technology. Well, I would not say—so our tools, our folks can use the tools to make them better client-facing teammates. As it relates to someone from the outside accessing an AI agent, for example, to place an order, that does not exist yet, you know? But those are absolutely the kinds of things that we think about. You know, for example, just to give you an example, let's say someone sends in an email— Aditya Madan: Asking for a quote. Shyam K. Reddy: And we set up an inbox to take those quotes, there is a not-too-distant future state where a fax and email message could get routed into an AI agent that takes that information, links with our ERP, i.e., Agility, and then puts forth a quote, generates a quote that one of our sales associates can review and then execute on, right? Whether it is picking up the phone and calling or using the agents and then respond accordingly at scale so that we can process more, faster. Those are absolutely the kinds of ideas that we are exploring. But nothing in action yet. Let us just put it that way. Aditya Madan: Got it. Yeah. That makes sense. And maybe when you are looking at M&A pipeline right now, how are you thinking about growing the acquisition to fill in the white space on the West Coast, specifically maybe to complement Distero versus buybacks? Shyam K. Reddy: Yeah. It is absolutely an important piece of our strategy. So as we think about our M&A strategy, it is two-pronged, and that is grow our specialty product mix, which Distero absolutely did, and, secondly, you know, support geographic expansion. Distero actually accomplished both, more so on the front end with respect to specialty distribution, and then as it related to geographic expansion, it just further strengthened our Pacific West Coast presence. But those are absolutely two prongs. We have got, you know, a pipeline of potential targets that we are regularly evaluating. You know, we use shows like IBS and one-on-ones over the course of the year to continue nurturing those relationships so that we can be opportunistic when the time comes. Aditya Madan: Awesome. Thank you for taking my question. For all the detail. Good luck here in the first quarter. Shyam K. Reddy: Thanks. Thanks, Adi. Operator: And we have no further questions. I would like to turn the call back over to Thomas C. Morabito for closing remarks. Thomas C. Morabito: Thanks, Julian. Thank you again for joining us today, and we look forward to speaking with you in May as we share our first quarter 2026 results. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good day, and welcome to the Newmark Group, Inc. 4Q 2025 public financial results call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jason McGruder, Head of Investor Relations. Please go ahead, sir. Jason McGruder: Thank you, Operator, and good morning, everyone. Newmark Group, Inc. issued its fourth quarter and full year 2025 financial results press release this morning. Unless otherwise stated, the results provided on today's call compare the three months ended 12/31/2025 with the year-earlier period. Except as otherwise specified, we will be referring to our results only on a non-GAAP basis, including the terms adjusted earnings and adjusted EBITDA. Unless otherwise stated, any figures discussed today with respect to cash flow from operations refer to our net cash provided by operating activities excluding the impact of GSE/FHA loan origination and sales. We may also use the term “cash generated by the business,” which is the same operating cash flow measure before the impact of cash used for employee loans. Please refer to today's press release, supplemental tables, and the quarterly results presentation on our website for complete, updated definitions of any non-GAAP terms, reconciliations of these items to the corresponding GAAP results, and how, when, and why management uses them. For additional information on our cash flow measures as well as relevant industry or economic statistics, please see our materials. The outlook discussed today excludes the potential impact of any acquisitions that close in 2026 and assumes no meaningful changes in Newmark Group, Inc.’s stock price compared with the close. Our expectations are subject to change based on various macroeconomic, social, political, and other factors. None of our targets or goals beyond 2026 should be considered formal guidance. Also, I remind you that information on this call contains forward-looking statements, including, without limitation, statements concerning our economic outlook and business. Such statements are subject to risks and uncertainties, which could cause our actual results to differ from expectations. Except as required by law, we undertake no obligation to update any forward-looking statements. For a complete discussion of the risks and other factors that may impact these forward-looking statements, see our SEC filings, including but not limited to, the risk factors and disclosures regarding forward-looking information in our most recent SEC filings, which are incorporated by reference. I will now turn the call over to our host and Chief Executive Officer, Barry M. Gosin. Barry M. Gosin: Good morning, and thank you for joining us. Newmark Group, Inc.’s strong momentum continued in the fourth quarter, as we improved total revenues and adjusted EPS by 15% and 24%, respectively. The investments Newmark Group, Inc. has made in talent and our platform drove double-digit top-line improvement across every major business line, resulting in record total revenues for both the quarter and year. This included our best-ever quarter and year in our recurring revenue and leasing businesses. We increased leasing by 17% in 2025 to outpace the growth of our public competitors and resulted in our first-ever billion-dollar-plus year for the service line. Our leasing success is a result of the investments we have made in areas including industrial, retail, and data centers, which augment our already strong office platform. We expect to generate further growth from normalizing return-to-office trends, repositioning existing product, and limited new construction supporting property fundamentals. The ecosystem around artificial intelligence, digital infrastructure, cloud computing, and elevated investments in energy and manufacturing are creating enormous leasing opportunities for Newmark Group, Inc. and our clients, and our nimble approach has allowed us to get in front of these trends early. We improved our full-year management and servicing revenues by 12% to a new high of over $1.24 billion. We continue to use our deep owner and occupier client relationships to drive growth across these recurring revenue businesses. Newmark Group, Inc. remains on pace to achieve its goal of over $2.0 billion in management and servicing revenues by 2029. In capital markets, Newmark Group, Inc. gained market share in investment sales for the quarter. Our volumes were up 50% compared with 21% industry growth in the U.S. and 15% in Europe. For the full year, our investment sales volumes were up 56% compared with 20% for overall U.S. volumes and 12% for Europe. While Newmark Group, Inc.’s quarterly debt volumes were up 12% compared with 36% for overall U.S. originations, we gained share for the full year. Newmark Group, Inc.’s 2025 origination volumes were up 67% while U.S. industry originations were up 43%. As we continue our international expansion, we expect to grow our market share globally across nearly all our business lines over the next several years. Our strong results validate our strategy of investing in the industry's best talent, leveraging our client relationships to drive recurring revenue growth, and our ongoing global expansion. With respect to how artificial intelligence might impact Newmark Group, Inc., AI-led demand has helped fuel our strong results in areas including office leasing, particularly in New York and San Francisco, as well as data centers, capital markets, and our valuation business. We believe that there is significant white space and enormous opportunity across our service lines with respect to digital infrastructure. We continue to empower our extraordinary talent with world-class research, data analytics, and technology, accelerated by AI, which we expect to continue to produce efficiency and margin enhancement to our business. Newmark Group, Inc., and our other large competitors possess incredible amounts of proprietary data which we can leverage to the benefit of our professionals and clients. In short, we expect AI to provide an additional tailwind for our future results. Given the success of our strategy and the favorable macroeconomic backdrop for commercial real estate, we expect to achieve double-digit top and bottom line growth for the third consecutive year in 2026 while generating our best-ever total revenues, adjusted EPS, and adjusted EBITDA. With that, I am happy to turn the call over to Michael J. Rispoli. Michael J. Rispoli: Thank you, Barry, and good morning. I am happy to report that for the sixth consecutive quarter, Newmark Group, Inc. produced double-digit revenue and earnings growth. Total revenues were up 15.3% to an all-time best of just over $1.0 billion compared with $872.7 million. We increased management services, servicing, and other by 13%, leading to the company's best-ever quarter for these recurring businesses. This was led by strong organic growth from valuation and advisory and property management, as well as contributions from two recent acquisitions. In addition, our high-margin servicing and asset management portfolio surpassed $200 billion for the first time and ended the year with a balance of $211.2 billion. Related fees grew by 10.9% when excluding the impact of lower interest rates on escrow earnings. Leasing was up 13.6%, resulting in a record quarter for this service line. This was led by strong activity in New York and Texas and across retail, office, and industrial. Capital markets increased by 19.2%, reflecting significant activity across office and retail as well as multifamily, which was led by strong gains in senior housing. Turning to expenses, total expenses were up by 15.7%. This reflected commission and pass-through expense growth generally in line with revenue improvement, with the majority of the remaining increase attributed to our global growth initiative as we continue to accelerate our investments in future revenue and earnings. Excluding our 2025 investments in growth, expenses increased by approximately 6%. With respect to taxes, the company's tax rate for adjusted earnings was 8.8% in the quarter and 11.4% for the year. The lower tax rate was driven by our favorable corporate structure, where an approximately 21% increase in our average closing stock price in 2025 resulted in higher tax deductions from grants of exchangeability to unitholders and additional deductions related to the conversion of units into common shares. These also reduced cash paid for tax in 2025, contributing to our strong operating cash flows. Moving to earnings, we increased adjusted EPS by 23.6% to $0.68 compared with $0.55. This was $0.04 above the midpoint of our previous guidance, with $0.10 on better performance and the remainder due to a lower tax rate. Adjusted EBITDA was $214.0 million, up 17% versus $182.9 million. Our adjusted EBITDA margin on total revenues improved by 32 basis points in the quarter and 81 basis points for the full year. Excluding the impact of our 2025 investments in growth, Newmark Group, Inc.’s full-year margins would have expanded by approximately 130 basis points. With respect to share count, our fully diluted weighted average share count was up 0.5% to 254.3 million. On 02/18/2026, the company's Board of Directors increased our share repurchase authorization to $400 million. Turning to the balance sheet, we ended 2025 with $229.1 million of cash and cash equivalents, $671.7 million of total corporate debt, essentially unchanged compared with a year earlier, and improved our net leverage to 0.8x. The balance sheet changes from year-end 2024 reflected record cash generated by the business of $518.4 million. This was offset by $220.2 million of cash used mainly to hire revenue-generating professionals, $127.1 million of share repurchases, $53.4 million of net cash payments for acquisitions, and normal movements in working capital. Our adjusted free cash flow was up 38.4% for the year to $268.9 million. With a healthy balance sheet, strong cash generation, and growing earnings, Newmark Group, Inc. is well positioned to continue investing for growth and to return capital to shareholders. Moving to guidance, our outlook for full year 2026 compared with 2025 is as follows: We expect total revenues between $3.7 billion and $3.8 billion, an increase of 13.8% at the midpoint. We expect capital markets to increase faster than the midpoint, management and servicing growth to be roughly in line with the midpoint, and leasing improvement to be below the midpoint. We anticipate adjusted EBITDA in the range of $635 million to $675 million, an increase of 13% to 20%. We expect our adjusted earnings tax rate to be between 13% and 15% versus 11.4%, and we anticipate adjusted EPS between $1.82 and $1.92, up 12% to 19%. With that, I would now like to open the call for questions. Operator: Star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will take our first question from Alexander David Goldfarb with Piper Sandler. Alexander David Goldfarb: Hey, good morning. Morning down there. So two questions. Barry, first, just the big elephant, AI. In a realistic way, can you just tell us what your view is from the clients that you deal with, whether it is renters or occupiers, how they are thinking about AI vis-à-vis their office needs, employment, staffing? We hear all these different stories and just want to hear exactly what the latest thinking is from the office users. Barry M. Gosin: I think it is very early to have the full story. I mean, the last two months, AI has really revolutionized itself, but we are still seeing increased activity and increased return to the office. You could possibly look at it that people who are working from home are more at risk than people that come into the office, but nobody knows that at this moment. I see AI as an accelerant. For us, I believe this is really a gift. Having AI as an enabler for the great talent that we have to do more and to expand more, to give them the tools and the data to improve their business and accelerate the opportunities that they will see is really well suited for a company of our size. It actually gives us a moment in time to catch up. We all have a certain amount of proprietary data, and we have been very diligently collecting data over a long period of time. We have an incredible amount of proprietary data. So in terms of margin enhancement, there are certainly opportunities. We are excited about the new business opportunities and the ability to create more agents and human beings; if you have the best human beings, they are going to be the producers of the content and the utilization of that kind of AI. It is really an incredible moment. We are excited about it. Alexander David Goldfarb: But, Barry, what you are saying is from office-using jobs, you are not seeing any of your clients talk about reducing? Barry M. Gosin: We are not. I mean, certainly in the primary markets, we do not expect to see that, but time will ultimately tell. Alexander David Goldfarb: And then the second question is on your debt book. Capital markets, 2021 was a monstrous year for multifamily, both in aggressive underwriting and low debt costs, and obviously, that stuff is coming due. Do you expect a surge of refinancing and restructuring over the next 12 to 18 months? Or is your view that while there technically should be a surge of maturities, this stuff takes time to work out, and therefore it is not like we are going to see a sudden ramp in all these loans coming due; they will be processed over time? Just trying to gauge what the opportunity is and what that means for you guys as the market addresses the 2021 multifamily debt maturities? Barry M. Gosin: In general, there is $2.0 trillion of debt coming due over the next three years, about $600 billion a year, and the market titrates between sales and debt. Every time you look at a capital event, you decide: Should I finance more? Should I finance less? Should I raise equity? We think that it is right for the market to take action. People have been sitting on portfolios for way longer than they would have liked, and there is a certain amount of fatigue, which I have said once before—I think I said last quarter. We are seeing the investors want to unleash the opportunity and the capital to go play in the new market at new levels with new opportunities where they could capture promotes. There is a lot of activity, and a lot of that is going to be in debt. So I think that there will be a lot of maturities we will be involved in. Thank you. Operator: We will go next to Jade Rahmani with KBW. Jade Rahmani: Thank you very much. There is a robust debate going on about the commercial real estate services business and essentially the risk of the data that they control becoming public. We know from experience that there is a lot of property-level cash flow data that building owners, lenders, servicers, and brokers keep closely held. I am wondering what you see as the risks of that property-level data becoming truly public, and do you see that risk as greater in the low to middle market, more commodity-type assets or elsewhere in the market? Barry M. Gosin: Certainly, some data is confidential, and owners are going to protect their data. We are seeing every vendor and every person in the business now asking to be able to use data, so we are very aware of that. But we have collected an enormous amount of proprietary data over years, recognizing some of the data we have is confidential, some we could use as derived data, and it drives opportunities for us to do evaluations on a broader scale, and some of it we will not be able to use. We have no shortage of opportunities to use our data to create value for our client. Jade Rahmani: Putting that in context of your leading capital markets team and some of the institutional teams you have acquired, do you see that this proprietary data, in combination with AI, advances those star-quality-type teams, or do you think that the younger teams will have a better chance to compete within a company like Newmark Group, Inc.? Barry M. Gosin: I think you basically hit the nail on the head. The reality is both. The older teams have the credibility of the book that they have been selling and the reputation and the gratitude created over selling product for many, many years. The young people on their teams, the talent on their teams, will use AI to increase margin and increase opportunity. If it takes less time to do certain things and you can put your best people in front of clients and spend more time with their clients, you are going to do more business. We think our whole strategy of hiring the best talent and doing more with less plays into the world that we are living in right now, and we think that is an accelerant for us. Jade Rahmani: Thank you very much. Operator: We will move to our next question from Julien Blouin with Goldman Sachs. Julien Blouin: Thank you for taking my question. Maybe to ask the AI question slightly differently. When I think of Newmark Group, Inc.’s capital markets brokerage business, I think of a platform that operates at the highest tier of transaction size and complexity with the most sophisticated counterparties in the industry. As we think about the disruptive risk of AI, do you believe there is more of a risk to peers or players that are more middle-market focused? Barry M. Gosin: Without question, the smaller deals that could be perceived to be more commoditized would be more at risk. But just the same, it is still about contacts with clients. It is still about marketing opportunities, and it is about having a certain amount of time to find those opportunities and then market those opportunities. I think what is going to happen is the process by which those buildings will be marketed—you will be able to create an offering memorandum and do e-blasts, qualify through a list of qualified buyers, and automate CAs and those kinds of things—will just accelerate the opportunities. I think you will see more business, the same business, done with fewer people, and again, we think that is a good thing for us. Julien Blouin: Thank you. That is really helpful. Moving over to capital allocation, you have been very active in making investments in growth and to expand your platform internationally. Does the recent increase in the share repurchase authorization signal that maybe you will be shifting some of your capital allocation towards being more aggressive on share repurchases given where the stock trades today? Michael J. Rispoli: I think the second part is certainly true—where the stock is today, we will be more aggressive buying back the shares given the outlook and earnings for next year. But we have very low leverage on the balance sheet. We were generating record cash flow in 2025. We will continue to generate a lot of cash flow from the business. We have more room to borrow debt and lever up the balance sheet. So I do not think it is going to slow down in any way our ability to invest. Barry M. Gosin: We have also been very active. We launched Europe 36 months ago. We have 1,200 people in Europe. When we enter a new market, the new market gets excited, because what we bring to the table is a much more talent-friendly, enabling platform. We have done better than we had originally anticipated, and we have opened up Spain and Italy, and we have done a great deal in Germany, the U.K., and France. We are doing it in the Middle East, and we are doing it in Singapore. We are hiring people, and they want to come work for us. As long as the right people want to come to the platform, we are going to continue to hire the right people. It is a really good way to build a platform. In some cases, although the accounting is a little bit different, when you are hiring brokers and it takes time to ramp up, you have the better shot at getting the plums as opposed to the pits—sometimes when you buy a company with a lot of people. Julien Blouin: Thank you for the insights. Alright. Thanks, team. Operator: We will go next to Mitchell Bradley Germain with Citizens Bank. Mitchell Bradley Germain: Thanks for taking my question. Barry, just want to follow up on that comment you said about some of the hiring outside the U.S., and I am curious—you have previously talked about the lag time as many of those producers are sitting on a garden leave. Where are you in terms of productivity with regards to some of that hiring? Are you around 50%, or is that even less in terms of how many are actually up and running and performing for you? Michael J. Rispoli: Mitch, it is Mike. I would say it depends on the country because we started different countries at different times. France started probably two years ago—that should be fully ramped up this year in 2026. Germany, we are still ramping, so it probably comes online at full speed in 2027. Italy, we just started, so that will take a year to a year and a half. It really is market dependent, but we are seeing after 12 to 18 months the producers we hired really starting to produce on our platform. Barry M. Gosin: That is good news. France, even though we started two years ago and we had garden leaves, we are probably a year and a few months in operation. We are breakeven in the first year. That is astounding. We had anticipated that it would take us three years to go cash-flow positive; we have done it in a year and three to four months. The U.K.—we came out of the gate, we did not miss a beat. We built a good business in the U.K. The same in Germany—we have an incredible list of talented people that have come on board after our initial hiring of a very senior broker from another firm. We are getting the calls. People are calling; they want to join. They like what we are doing and how we are doing it, and there is an element of the strategy of more with less—enabling and empowering talent to do more and not necessarily be crowded—that incidentally will work in the AI environment. Mitchell Bradley Germain: Great. That is helpful. In the last quarter, you guys provided some perspective on the RealFoundations transaction. I am curious about the Altus deal and how it fits into the puzzle here. Michael J. Rispoli: We had an opportunity to buy a valuation firm in Canada. Canada is a market that we think is a good opportunity for us to grow. We have some brokers up there. We think this can help us recruit more and better talent and continue to grow the business up in Canada. It was part of a software-focused firm, so I think we will be able to really improve the business and show them some love on our platform, and I think they are going to do great for us. Barry M. Gosin: Right out of the gate, we took the original leader of the company who wanted to join, who left to pursue other avenues but came back. When you think about our appraisal as prototypical of how we have built this company, we hired one person in appraisal. We now have a business approaching $200 million in appraisals with a profitable margin, and all over the world we are building out the appraisal platform. Many of these institutions give global and regional mandates, so having that platform is a great opportunity for us. As we build out the global platform, which we think is somewhere between 18 and 24 months, we will have our ducks in a row, be in all the markets that we need to be in, and in any opportunity where we get an RFP to pitch that business, the gap between us and winning the business will be diminished precipitously. We expect that organic growth as a result of winning business without cost is going to be an avenue of white space where we will achieve great growth. Mitchell Bradley Germain: Congrats. Thanks. Operator: We will move to our next question from Brendan Lynch with Barclays. Brendan Lynch: Great. Thanks for taking my question. Barry, I appreciate all your comments on AI, and not to belabor the point, but it is the theme of the day. It is probably going much beyond office as well. Looking at your industrial and retail leasing businesses, maybe you could talk about some of the top priorities or concerns that you are discussing with clients as they are considering leasing new space. In this AI backdrop, I would imagine there are a lot of elements that Newmark Group, Inc. is helping them navigate regarding power and robotics and flexibility and fulfillment, etc. Any commentary there would be helpful. Thank you. Barry M. Gosin: We have a fairly robust data center business. We are well versed in the issues of power, GPUs, the kinds of things that are necessary, and the locational issues with opening data centers. We can advise our clients on how and where to take data centers. We have been doing that for conventional data center business for 20 years—advising people on where, when, and how, and what the criteria for opening data centers are. It is interesting to see the whole data center business for AI that will be aggregated into six or seven major AI companies and how that will impact the world. Our clients—we have always looked at power as an important feature in any of our financial institution lease negotiations. Now it is just a more important point. Brendan Lynch: Okay. Thank you. Maybe another high-level question. Can you discuss the competitive landscape for talent now and how it has evolved throughout the cycle versus previous cycles and how the recruiting process has changed? Barry M. Gosin: In capital markets, we generally have, whatever the vertical is in the geography, usually one team, because if you have more than one team, it becomes like a mosh pit and it is competitive. We think we have now, in many of the markets, actually accomplished our objectives. There are places where we have white space. In leasing, we have plenty of room to grow in certain areas, and we continue to offer an opportunity for a broker who might be at a firm that is really crowded with internal competition and coverage to come on board and not have as much, and that fits in with our model. We would rather see higher revenue per capita and higher revenue per employee and provide the infrastructure and the research and the data to help them do more business. That is our goal. We are not having a problem recruiting. Brendan Lynch: Great. Thank you. Operator: Once again, ladies and gentlemen, we will move now to Jade Rahmani with KBW. Jade Rahmani: Thank you very much. Just on the revenue growth outlook, 12% to 15%, could you provide any comments as to your expectations on leasing—whether that should be above or below that—management services, and capital markets? Thanks so much. Michael J. Rispoli: Sure. As I said in my prepared remarks, Jade, I think we will be above the midpoint in capital markets. The debt market is expected to grow 20% plus next year and sales double digits, so we will perform really well there and continue to take market share. On the management and servicing business, we expect to be roughly in line with the midpoint of the guide. In the leasing business, a little bit below the midpoint of the guide. Thanks very much.
Operator: Good morning, ladies and gentlemen, and welcome to the Chatham Lodging Trust Fourth Quarter 2025 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. I would now like to turn the conference call over to Chris Daly, Owner of Daly Gray Inc. Please go ahead. Chris Daly: Thank you, Jenny. Good morning, everyone, and welcome to the Chatham Lodging Trust Fourth Quarter 2025 Results Conference Call. Please note that many of our comments today are considered forward-looking statements as defined by federal securities law. These statements are subject to risks and uncertainties, both known and unknown, as described in our most recent Form 10-Ks and other SEC filings. All information in this call is as of 02/25/2026, unless otherwise noted, and the company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at chathamlodgingtrust.com. Now, to provide you with some insights into Chatham Lodging Trust’s 2025 fourth quarter results, chairman, president, and chief executive officer allow me to introduce Jeffrey H. Fisher, Dennis M. Craven, executive vice president and chief operating officer, and Jeremy Bruce Wegner, senior vice president and chief financial officer. Let me turn the session over to Jeffrey H. Fisher. Jeff? Jeffrey H. Fisher: Thank you very much, and I certainly appreciate everyone joining us here for our call today. Before talking about the fourth quarter specifically and our outlook for this year, I would like to spend just a few minutes highlighting some noteworthy as we look back at the last year. Operationally, it was a really good year for us to despite the extreme volatility that adversely impacted the industry and our top line. On the top line, for the fourth consecutive year, though, our RevPAR performance beat the industry, and we continued pushing our other operating profits, other department operating profits higher as well. Despite essentially flat RevPAR, and for this, we were really we were able to limit our GOP margin decline to only 20 basis points by staying laser focused on our staffing levels and improving productivity. Our labor and benefits costs actually declined slightly in 2026, offsetting wage increases of almost 4% in the year. And most importantly, for the first time since the pandemic, we generated the highest operating margins in the industry, reclaiming our top spot among the rankings that we held for an entire decade from 2010 to 2019. Looking ahead to this year, our hotel wages are reassessed in July each year and our wage increase for the 2025 is up only 2% versus the first half of the year, which means wage pressures are moderating throughout 2026. Strategically, we sold four of our older lower RevPAR hotels proceeds to reduce debt at an approximate cap rate of 6% and used those and to acquire shares under the repurchase plan we initiated in 2025. Since announcing the plan, we have repurchased approximately 1,800,000 shares, or approximately 4% of our outstanding shares, at an average price of $6.87 per share, for a total repurchase of almost $13,000,000, or just over half of our $25,000,000 plan. At our average acquisition price, those shares were acquired at an approximate 9.5% cap rate based on our 2026 corporate NOI guidance. And might be the only lodging REIT with an average repurchase price below current trading levels since peers initiated their repurchase plans. Using average multiples for the last 25 years, these repurchases certainly are going to be accretive. On the corporate side, we added 10 rooms to our portfolio by converting excess meeting space and other available spaces, which will deliver the best returns for those spaces in the hotels. We continue to participate in the GRESB Sustainability Benchmark and ranked 29th out of 95 listed companies. We completed the largest and most attractive financing in Chatham Lodging Trust’s history, with total capacity of $5,000,000,000 while reducing our overall borrowing costs, and we used proceeds from the sale of assets and free cash flow to reduce our net debt by $70,000,000 and further reduce our leverage ratio to a mere 20%. By the way, that leverage compares to almost 35% in 2019. All of these accomplishments allowed us to increase returns to our shareholders, and we were able to increase our common dividend by 28% in 2025. Including our repurchase plan and both common and preferred dividends, we returned approximately $35,000,000 to our shareholders. It was truly a great job by our teams at Island Hospitality and Chatham Lodging Trust staying in constant communication and on the same page delivering solid results throughout a very volatile year. As we move forward, we are confident in the industry long term. The supply-demand equation should benefit existing owners as construction costs remain quite high, and development is only justified in certain markets, GDP growth is healthy and should accelerate if even a portion of the trillions of dollars of announced investments in technology and reshoring of manufacturing come to fruition in the United States. Existing hotel owners should benefit via stronger RevPAR growth in the years ahead. We obviously need to be able to push those incremental revenue dollars down to GOP, and really, for the first time in almost a decade, wage pressures are mitigating to the lower single-digit range, which is vital given that labor costs are our largest expense. As we sit here today, we are in a great position to deliver earnings growth and shareholder returns in multiple ways. First, we will continue to repurchase shares and intend to utilize most, if not all, of our $25,000,000 plan this year. Second, operationally, we are positioned to outperform the industry on both top and bottom line. There was a lot of noise in 2025 that impacted RevPAR in some of our key markets, so, hopefully, things calm down this year. And if they do, our operating model is best at driving profits higher as we have demonstrated over and over again. Third, we will continue to opportunistically sell older non assets with the goal of reinvesting those proceeds into share repurchases or hotel investments. And on that front, we were disappointed not to make any external acquisitions in 2025, but sometimes the best deals are the ones that you do not do, and we never had enough conviction on any deals and chose to remain patient. With significant financial flexibility, we are confident that we can make some acquisitions in 2026 as financing costs have lessened and seller pricing expectations have adjusted somewhat from where we were a year ago. The markets, of course, will have to make sense for us. And we are looking for some continued diversification both in markets and demand generators. And of course, yields have to approximate the implied yield on buying our own stock. We want to invest in markets that are going to benefit from increased business investments which is generally the Central and Southeastern US. Lastly, we do expect to commence our Portland, Maine hotel development in the coming months with opening before the 2028 summer. As I stated earlier in my comments, hotel development really only makes sense in certain markets. And Downtown Portland happens to be one of them, especially considering we have no cost basis in the land. Our focus is on increasing shareholder returns and, in addition to the share repurchase program, we believe our initiatives should enable us to return even more money to our shareholders via further increased dividends this year. Before Dennis gets into the fourth quarter details, I do want to spend a few minutes talking about our largest market, Silicon Valley, its performance in 2025, and our outlook beyond. Silicon Valley is our largest market, and RevPAR grew only 1% in 2026. But it was a tale of two halves, as RevPAR was up 5% in the first half of the year and then we were off 4% in the third quarter and less than 1% in the fourth. Our Mountain View Residence Inn was under renovation for the last two months of 2025 and will remain under renovation through March. Also, if you recall from our third quarter call, we lost some business related to pricing strategies around a single corporate client at our two Sunnyvale hotels. Third quarter RevPAR was down 9% in the third quarter, and we did a great job replacing that business, or some of it, in the fourth, with RevPAR only down 1%. We will continue to feel some impacts in the first quarter of this year as to that account. But as the year progresses, our comps will get better, and we will benefit from World Cup schedule, and that sets up very well for our two Sunnyvale hotels. And of course, we remain very constructive on the Valley, and Mountain View, particularly, of course, is anchored by Google, Waymo, LinkedIn, Intuit, and several other firms that certainly provide a good steady source of demand for that hotel. Sunnyvale is quickly rebounding from the post-pandemic slumber. Sunnyvale's office market is rebounding faster than any other Silicon Valley market, and had 1,400,000 square feet of positive absorption last year. In 2025, Apple increased its square footage by over a million feet, and LinkedIn added to its campuses, and Applied Intuition, which is a $15,000,000,000 software company for self-driving cars, moved into Sunnyvale. And, of course, our largest client, Applied Materials, is building a $4,000,000,000 chip facility that is only a block or two away from our two Sunnyvale hotels. So we certainly look forward to continued better times over the next few years in the Valley. With that, I would like to turn it over to Dennis. Dennis M. Craven: Good morning, everyone. Some additional RevPAR information. Occupancy at our four Silicon Valley hotels was 72%, and ADR was up 2.5% in the quarter, despite that shift in business that Jeff talked about in Sunnyvale from the third and fourth quarters. Our six predominantly leisure hotels, which account for approximately 20% of our EBITDA, produced RevPAR growth of 50 basis points in the quarter. And the shutdown’s impact on our three DC-area hotels accounted for about 60% of our quarterly RevPAR decline. Some more color on our larger markets: California, which is home to two more of our top eight markets in addition to Silicon Valley, Los Angeles and San Diego. San Diego RevPAR declined 8% in 2025 as the market retracted from an all-time best convention calendar in 2024. Additionally, demand slipped due to the opening of the nearby Gaylord, as well as the shutdown of the border, which reduced our government business at our hotel. The 2026 convention calendar sets up similarly to 2025 with 43 conventions in 2026 versus 46 in 2025. In LA, RevPAR at our three hotels is up 4% in 2025 due in part to the significant fire-related business we received, especially at our Woodland Hills Home2, which benefited basically from January through the early parts of May. Now, obviously, in the LA area for the balance of the year, it was generally softer of 2025 due to the general unrest in the LA area. Hopefully, that also settles down in 2026, and similar to Sunnyvale, we should benefit from World Cup demand given the proximity of our Marina del Rey and Anaheim hotels to the stadium in LA. In other large markets, our Coastal Northeast hotels have better 2026 comps due to renovation impacts in 2025, and our DC-area hotels have much easier comps after January due to all the shutdown-related businesses or pauses in 2025. Our Bellevue Residence Inn also should continue to benefit from increasing corporate demand. In Texas, all three markets have felt the impact of convention demand fall off, with Dallas and Austin's convention centers under renovation and expansion, while San Antonio just did not have a great convention calendar in 2025. Dallas will have tough convention comps through the first quarter, but we will see demand from the World Cup in the second and third quarters, as Dallas not only hosts nine games, which is the most of any city, but the nearby Kay Bailey Convention Center will host up to 5,000 media professionals as it is serving as the International Broadcast Center for the World Cup Research Center. And then, in a very encouraging development for our two Austin hotels at The Domain, a planned $3,000,000,000 MD Anderson Hospital in recent that was previously expected to be built downtown is now expected to be built at The Domain with groundbreaking starting in 2026. Outside of our top markets, at our Home2 in Phoenix, as a reminder, it opened in 2024, and we acquired the hotel in May 2024. RevPAR was up approximately 17% in the quarter as we continue to gain market share as we have been able to partner with the nearby baseball stadium, the arena, and the convention center to participate in business blocks that were, you know, generally reserved far in advance of the stay dates. Charleston and Savannah continue to grow due to rising corporate demand in South Carolina, and in Savannah, coming out of a really great renovation, it has really done well with getting additional corporate demand and leisure demand to the hotel. Our top five RevPAR hotels in the quarter were our Residence Inn White Plains with RevPAR of $200, our Residence Inn Fort Lauderdale at $186, and Residence Inn New Rochelle, New York at $185, followed by our Residence Inn Anaheim, our Hampton Inn Portland with RevPAR of $166. For 2025, our top RevPAR hotels were the Hampton Inn Portland, with RevPAR over $200, and, of course, that is great news for our pending development, followed by our Hilton Garden Inn Marina del Rey, Residence Inn White Plains, Fort Lauderdale, and San Diego Gaslamp, all five with RevPAR over $185. As Jeff remarked in his opening comments, we were pleased with our ability to mitigate our margin loss throughout 2025. During the fourth quarter, our GOP margins only declined 30 basis points despite RevPAR declining almost 2%. We were able to hold the year-over-year increase in labor and benefit cost to just under 2% in the quarter, which was the primary driver behind limiting the decline in that department’s profit to only 1%. Most other operating line items were relatively stable year over year, with non-departmental expenses flat at approximately $21,000,000, and the only other major item to note was guest acquisition-related commission cost were down a couple hundred thousand dollars and aided our margins by approximately 20 bps. Our hotel EBITDA margins benefited from some one-time property tax refunds, and then they actually grew 70 basis points in the quarter. Property insurance was down 3% in the quarter, and great news on our renewal is that those premiums are projected to decline a further 15% on a same-store basis in 2026. For the year, our GOP margin decline was limited to a mere 40 basis points. Labor and benefits only increased 1.2% on a per-occupied-room basis for the quarter and actually declined slightly from last year to 2025. For the 33 comparable hotels, our headcount decreased 13% from a year ago. For the quarter, our top five producers of GOP were all Residence Inns. In fact, the top seven were all Residence Inns, but leading the way was Residence Inn Gaslamp with $1,600,000, followed by our Residence Inn Anaheim, both Sunnyvales, and White Plains. For the year, our Gaslamp Residence Inn led the way followed by our Residence Inn Sunnyvale number two, Sunnyvale number two, and Bellevue hotels. And then rounding out the top five were our Embassy Suites Springfield, despite all of the government shutdown impacts and threats, and lastly, our other Sunnyvale hotel. So just to point out, despite a volatile last two quarters in Sunnyvale, the fact that both of those hotels, as well as our Bellevue Residence Inn, were in our top five of GOP producers in the year is pretty encouraging from a corporate demand standpoint. On the CapEx front, we spent approximately $4,000,000 in the quarter, and during the quarter, we had commenced renovations at our Residence Inn in Austin and Mountain View, California, and those will be wrapping up as Jeff talked about shortly. Our CapEx budget for 2026 is approximately $26,000,000, basically the same as 2025, and includes three renovations at a cost of approximately $717,000,000. The three hotels scheduled for renovation in 2026 are our Gaslamp Residence Inn, our Hyatt Place Pittsburgh, and our Homewood Suites Farmington, all three scheduled to commence in the fourth quarter. Lastly, when you look at our guidance, I wanted to note the projected performance of our top markets. Silicon Valley RevPAR is projected up 3% to 5% in 2026 with increasing business travel demand as well as a favorable World Cup schedule, as nearby Levi's Stadium is hosting six games. Los Angeles is down 1% to 3%, again primarily due to the tough comps caused by the LA wildfire demand in our hotels in 2025. Our Coastal Northeast portfolio is projected to be between flat to up 2%, with our Greater New York hotels essentially projected to finish flat for 2026. In DC, we are projected up 2% to 4% as we lap overall the shutdown effects. San Diego is projected to be down slightly, again due to the decline in conventions from 46 to 43. And Dallas is projected to be down mid-single digits due to the lost business related to convention center expansion and renovation that is ongoing. And lastly, of our top markets, Bellevue is expected to grow mid to upper single digits as it laps over renovation comps, but also increased business travel demand and a little bit of World Cup as well. Jeremy? Jeremy Bruce Wegner: Thanks, Dennis. Good morning, everyone. Our Q4 2025 hotel EBITDA was $22,400,000, adjusted EBITDA was $20,200,000, and adjusted FFO was $0.21 per share. We were able to generate a GOP margin of 40.2% and hotel EBITDA margin of 33.2% in Q4. GOP margins for the quarter were only down 30 basis points from Q4 2024, despite the 1.8% RevPAR decline in the quarter due to outstanding expense control and stabilizing inflationary increases, and hotel EBITDA margins increased by 70 basis points due to $550,000 of property tax refunds in the quarter. In late December, Chatham Lodging Trust closed the sale of the Homewood Billerica for $17,400,000, and over the course of 2025, Chatham Lodging Trust completed four asset sales for a total of $71,400,000. These asset sales, together with the successful refinancing and upsizing of Chatham Lodging Trust’s revolving credit facility and term loan in late September, have helped Chatham Lodging Trust achieve its lowest ever leverage level and highest ever level of liquidity. Chatham Lodging Trust’s strong balance sheet puts the company in an excellent position to continue actively repurchasing shares and to grow opportunistically through accretive acquisitions. Turning to our 2026 guidance, we expect RevPAR of minus 0.5% to plus 1.5%, adjusted EBITDA of $84,000,000 to $89,000,000, and adjusted FFO per share of $1.04 to $1.14 for the full year. This guidance reflects our decision to exclude noncash stock-based compensation expense from our adjusted FFO effective 01/01/2026, so that our presentation is comparable to how the majority of lodging REIT peers report this measure. Our guidance reflects the sales of the Homewood Billerica, Homewood Brentwood, Courtyard Houston, Hampton Houston, Homewood Billerica, which closed in 2025 and collectively contributed $2,100,000 to Chatham Lodging Trust’s 2025 EBITDA. You should also note that Chatham Lodging Trust’s 2025 EBITDA and FFO included approximately $2,600,000, or $0.05 per share, of one-time benefits from property tax refunds, workers' compensation refunds, and payroll tax refunds, which are not expected to repeat in 2026. Reflecting the asset sales completed in 2025, our 2025 RevPAR would have been $130 in Q1, $156 in Q2, $154 in Q3, $131 in Q4, and $142 for the full year. In 2025, our RevPAR increased 4.4% in Q1 before declining 0.4% in Q2, 0.9% in Q3, and 1.8% in Q4, so year-over-year comparisons will generally be challenging in Q1 2026 before getting easier over the rest of the year. We generally expect that Chatham Lodging Trust’s Q1 2026 RevPAR will be low single digits and then be positive for the rest of the year. Also note that our capital structure includes $200,000,000 of floating-rate debt, and our guidance assumes that SOFR will decline based on the current forward curve, which reflects the assumption of rate cuts in 2026. So our guidance assumes quarterly interest expense will decline over the course of 2026. While our guidance does not reflect any share repurchases or acquisitions, our plan is to continue repurchasing shares and, over time, to reinvest asset sale proceeds into accretive acquisitions. This concludes my portion of the call. Operator, please open the line for questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question is from Gaurav Mehta from Alliance Global Partners. Your line is now open. Gaurav Mehta: Yes, thank you. Good morning. Wanted to ask you on some other dispositions that you have made in 2025. As you look into your portfolio, do you think there is room to start any more assets in 2026? Dennis M. Craven: Hey, Gaurav. This is Dennis. Nice to talk to you. Listen, I think, you know, we probably have one or two more that we will opportunistically look at selling. But, you know, I think certainly the half a dozen hotels we have sold over the last 18 months or so kind of, you know, did a good bit of trimming. So we will always look to do a couple here and there, but with the purpose of certainly reinvesting those dollars. Gaurav Mehta: Okay. And maybe on the, I guess, acquisition side, I think in the prepared remarks, you said maybe there is some improvement in the pricing. And just wondering if you could maybe provide some more color on, I guess, deploying some of the disposition proceeds from last year and maybe taking leverage up back to historical levels? Jeffrey H. Fisher: Yeah, this is Jeff. We are certainly comfortable since we have been at this for a long time with leverage levels, you know, that we have had from 2010, for example, to 2020. So, yes, we are, you know, we have been digging in here and doubling down on our efforts. I think generally what we are seeing in the market since RevPAR has flattened out, and this always seems to be the case, sellers seem to get a little bit more realistic about, you know, what their hotel may or may not really be worth, and have a little more incentive, I think, to transact if they have got, you know, flat RevPAR and, you know, an EBITDA going down a little bit, such as, you know, occurred during 2025 and, you know, the prospect by most companies in the category that we like, you know, as you know, is kind of a flattish RevPAR outlook. Again, we think for us and maybe for others, that is a very conservative outlook, but we are going to take advantage of that outlook by owners as well and try to make a few deals. Gaurav Mehta: Alright, great. Thanks for those details. Maybe on, I guess, the expense and margin side, where do you expect to see some pressures in 2026? I think on the rate side, it seems like it is coming down to mid-single digits, maybe outside of wages, other expense line items. Dennis M. Craven: Yeah, I mean, listen, I think especially early in 2026, utilities have a little bit of pressure on them just because of the cold storms that have hit, whether it was the Central and Southeast last month and now, or earlier this month, but also now you have the Northeast. So I think you are probably all of will have a little bit of utility pressures here in the first quarter. But really outside of that, Gaurav, I mean, I think it is really how much you can control the labor on an inflation, you know, wage increase basis. So really, everything else is fairly stable from an operating expense standpoint. Gaurav Mehta: Alright. Thank you. That is all I had. Dennis M. Craven: Thank you. Operator: Thank you. Your next question is from Ari Klein from BMO Capital Markets. Your line is now open. Ari Klein: Thanks and good morning. Maybe just following up on the expense side. You have had a lot of success there and you have, you know, generated some real productivity improvements. Just curious how much room you think is left on that front, you know, and the ability to kind of, you know, keep a lid on cost just from those productivity improvements. Dennis M. Craven: Hey, Ari. I mean, listen, I think we would certainly love to say there is always more. But, you know, I think as I talked about in my prepared remarks, our headcount is down about 13% year over year. Both Chatham Lodging Trust and Island are spending a lot of time literally adjusting models every day based on, you know, trends, and it was very volatile in 2025. So I think, you know, given the fact that we are hopeful that, you know, as Jeff talked about with wage increases kind of averaging right at 2% from the first half of the year to the last half of 2025, you know, that we have not seen anything that has changed that over the first almost two months of 2026. So, you know, for us, it is all about controlling wages and headcount. And, you know, we are going to continue to do that throughout the year. And hopefully, helps, you know, us do a little bit better down the road. Jeffrey H. Fisher: Yeah. I mean, the focus there is not trying to continue to find cuts that probably do not exist, but it is to flow, you know, if it is a nominal RevPAR increase, it is to flow that money to the GOP and to the bottom line. And I think we have proven, you know, that Island has been pretty successful in doing that. So really, that is for this year. If we get some upside, we want to see that flowing right to the bottom line, you know, to enhance those returns for everybody. Ari Klein: Thanks. Appreciate that color. And then maybe just a couple of quicker ones. You gave a lot of detail on your market level expectations for 2026. Curious just, you know, overall, the impact from the World Cup and your expectations around that, given that you do have a number of markets that seem well positioned there? And then just on the Portland, Maine development, just the cost associated with that, and I do not believe that is included with CapEx. Just wanted to confirm that. Dennis M. Craven: Yep. Yeah, so I will start with Portland. The cost is not included in our CapEx number. We will come out with official guidance on that probably at our next earnings call, Ari, with respect to dollars and especially the timing of the flow of those dollars over the project to make sure everybody at least has it modeled correctly. And then with respect to the World Cup, I mean, listen, I think we have, you know, certainly you look at it by market, we are going to be fairly conservative at the outset. And just to give you a specific example, you know, the International Broadcast Center at the Kay Bailey Convention Center in Dallas, you know, just within the last few months, we had a smaller group that basically canceled for the hotel. I think you probably, you know, you hear that, you know, in some locations there is, you know, concerns about demand and tickets and who is coming in and everything like that. So, you know, yes, it is going to be very good for the markets in general, but at least where we sit here today, we are going to be, you know, we are still going to be a little bit conservative about how that ultimately translates because there is still, you know, some uncertainty over demand related to events in certain cities, whether that is, you know, LA, Seattle, and even in Dallas. Operator: Alright. Thank you. Thank you. Thank you. You once again please press 1 should you wish to ask a question. And your next question is from Tyler Batory from Oppenheimer. Your line is now open. Tyler Batory: Just want to expand on the RevPAR guide a little bit, and you gave some details on and whatnot. But just really trying to get a good sense on the cadence that we should expect for the year. I think you said down single digits in Q1 and then up the rest of the year. I mean, how much of that is just the comps? You know, maybe, you know, remind us, you know, some company-specific building blocks this year that are contributing to the growth in the last three quarters of the year compared with the first quarter? Okay, great. From a revenue management perspective, how are you thinking about the mix of occupancy ADR in 2026? And how is that influencing your margin expectations for the year? So, switching gears to capital allocation. You have been pretty active repurchasing shares. Assume you still view the stock as undervalued given where shares are today. How aggressively do you expect to deploy the rest of that authorization? And just help us think about your balancing potential buybacks with what you might do in terms of acquisitions. Dennis M. Craven: Yeah. I mean, I think, you know, basically, if you look at first quarter this year, tough comps due to one inauguration last year and the wildfires. And then for the last three quarters of the year, you know, you are kind of looking at a zero to two-ish, one-and-a-half-ish RevPAR growth for the balance of the last three quarters. A lot of that is due to the effects of, you know, whether that was in DC with the three hotels with all shutdowns, you had a lot of uncertainty and unrest in LA that really pulled back some demand that, you know, I think should aid us this year. We have a couple of, like, one-time events. Obviously, Pittsburgh is hosting the NFL Draft in the second quarter right outside the doors of our hotel, so that is going to be a plus in the second quarter. And I think from a, you know, a summer perspective, if you look at it, we are trading off a Ryder Cup out on Long Island with a US, I believe it is US Open at Shinnecock. So that really should not affect much. But I think in general, you know, across some of our larger markets where, you know, there was some should be some easier comps the last three quarters of the year. Dennis M. Craven: Yeah. I mean, I think, you know, I think generally speaking, it is mostly ADR growth for 2026. Think it might be just a—yeah, it is really all—yeah. Yeah. It is basically kind of flattish occupancy, so strictly ADR. Dennis M. Craven: Yeah. I think, Tyler, I will start. I mean, I think with respect to the repurchase plan, you know, we intend to utilize most, if not all, of it in 2025. If you look at kind of the portfolio and the free cash flow from 2025 and 2026, after CapEx and after dividends, you know, it is essentially, we are using all of that over the last, you know, between those two years to utilize the entire repurchase, which we think is just a, you know, it is how it should be done. Right? You are generating excess cash flow after dividends, and we believe we are undervalued there, and we are going to buy it back. So, and I think, listen, from an external perspective, buying hotels, you know, as we have thought, we have not really done. The last hotel we bought was Phoenix in May 2024, so it has been almost two years. We have been very, you know, just patient and understanding not only from the financing and what Jeremy did with the balance sheet over the last couple years. That was a lot of work. But we are in a great position from a debt perspective to hopefully do some deals, and of course, it has got to be at a cap rate that makes money, especially in, you know, makes sense in light of where we are trading. But, you know, that is why we have been pretty patient. So we are hopeful to be able to execute on that a bit more here in 2026. Tyler Batory: Okay. That is all for me. Thank you for the detail. Dennis M. Craven: Thank you, Tyler. Operator: Thank you. There are no further questions at this time. Please proceed. Jeffrey H. Fisher: Well, I think we can wrap it up by saying thank you all for being on the call and being attentive. Good questions. As I said, hopefully, this guidance is conservative. And we do have the benefit of some, you know, as Dennis explained, some positive attributes for this year on the top line that should come to fruition and flow that to the bottom line as the focus. So we will look forward to talking to you for the next quarter. Thanks. Operator: Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.
Operator: This is our bankruptcy hold music. Greetings, and welcome to the Gulfport Energy Corporation fourth quarter and full year 2025 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jessica Antle, Vice President of Investor Relations. Thank you. You may begin. Jessica Antle: Thank you, Melissa, and good morning. Welcome to Gulfport Energy Corporation fourth quarter and full year 2025 earnings conference call. Speakers on today's call include John Reinhart, President and Chief Executive Officer, and Michael Hodges, Executive Vice President and Chief Financial Officer. In addition, Matthew Rucker, Executive Vice President and Chief Operating Officer, will be available for the Q&A portion of today's call. I would like to remind everybody that during this conference call, the participants may make certain forward-looking statements, as actual results and future events could differ materially from those that are indicated in these forward statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we may reference non-GAAP measures. Please refer to our most recent earnings release and our investor presentation for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. An updated Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to John Reinhart, President and CEO. John Reinhart: Thank you, Jessica, and thank you for joining our call today. I will begin my comments with a discussion of the 2026 development program we announced yesterday with our earnings release, followed by an overview of the 2025 results. Building on our consistent operational execution, successful discretionary acreage acquisition programs, and strong financial performance, our 2026 outlook is centered on prioritizing our most attractive opportunities and allocating capital to maximize value. This year's development program is focused on sustaining the company's exposure to a constructive natural gas environment, and as such, we plan to center the majority of our development efforts in the dry gas and wet gas windows of the Utica. These development areas represent our highest-return wells at today's commodity prices, and we forecast more than 75% of our 2026 turn-in-line program to be weighted to these two areas. As a reminder, the Utica wet gas, which ranks as the most economic development area in the company's portfolio, has been a key focus of our inventory adds over the past few years, and this planned development activity reinforces our success of adding high-quality, high-return inventory that supports near-term development. We remain consistent in our capital allocation framework and continue to believe the most attractive uses of our available free cash flow are discretionary acreage acquisitions, highlighted by today's announcement of the expected successful results of our existing program, and the continued repurchase of our undervalued equity. We expect to maintain an active repurchase program through 2026, and our strong financial position provides maximum flexibility as we intend to utilize both our adjusted free cash flow generation and available capacity on our revolving credit facility to opportunistically repurchase our equity while maintaining an attractive leverage ratio of approximately one times or below. This includes our announced plan to deploy more than $140,000,000 towards repurchases in 2026, reflecting our confidence in the value of our business and the upside we see in our equity today. Total capital spend for the year is projected to be in the range of $400,000,000 to $430,000,000, which includes $35,000,000 to $40,000,000 of maintenance land and seismic investment. Embedded in this program is approximately $15,000,000 targeting base production improvements across both basins, which includes highly accretive workovers aimed at enhancing long-term well performance and reducing natural production declines. In addition, we plan to invest an incremental $10,000,000 in the Marcellus North development area when compared to our 2025 full-year spend, directed at drilling two wells in Jefferson County, Ohio during 2026 and then to be carried as DUCs into 2027. This activity is aimed at confirming phase window and production mix, which will support future development planning and midstream evaluation across our substantial inventory positions in both Jefferson and Belmont Counties. With respect to our maintenance land and seismic investments, this spend includes approximately $5,000,000 directed towards acquiring proprietary 3D seismic in 2026 that will facilitate improved well planning in our targeted Monroe County discretionary buy area. The company currently forecasts approximately 60% of our drilling and completion capital will be deployed in 2026, with the activity trending slightly lower in the third and fourth quarters. We will continue to execute on our current discretionary acreage acquisition program, primarily in Belmont and Monroe Counties. Driven by our recent success, we now expect to achieve the high end of the previously provided range, investing approximately $100,000,000 in total, of which $62,900,000 was deployed at year-end 2025. We plan to conclude this program during 2026, and upon successful completion, we expect to add over two years of core drilling inventory at our current development pace. These acquisitions are being made at approximately $2,000,000 per net location, well below recent valuation metrics implied in larger inorganic transactions in the immediate area, and reinforce the significant value uplift we are capturing through these attractive organic leasing efforts. Since 2022, our targeted discretionary acreage acquisitions, successful execution of new development on our Utica position, and delineation and development efforts in the Marcellus have collectively unlocked substantial value across our core assets. The discretionary acreage acquisition and new development initiatives by the end of 2026 will have added over 5.5 years of high-quality net locations, in addition to the four years of delineated net Marcellus locations. In total, the company will have expanded our growth inventory by more than 40%, and we will continue to monitor opportunities to further expand our resource depth. Turning to production, we forecast our development program will deliver 1.03 to 1.055 billion cubic feet equivalent per day in 2026, relatively flat over our full-year 2025 average. This outlook incorporates several temporary factors, including known production downtime associated with simultaneous operations of an offsetting operator, as well as planned third-party midstream maintenance in 2026. In addition, winter storm Fern created weather-related downtime that modestly impacted full-year volumes and is incorporated in our full-year production guidance. Importantly, these impacts are short-lived, and as we move through 2026, we expect production levels to strengthen as new wells come online and these production impacts abate, positioning the company attractively for an improving commodity environment. Reflecting this momentum, we forecast fourth quarter 2026 production will increase approximately 5% compared to 2025. In our investor deck on Slide 11, we include a more detailed outlook on our expected 2026 capital and production cadence. Shifting to the company's 2025 performance, Gulfport delivered another year of strong operational and financial performance, strategically expanding our high-quality resource base and remaining consistent in our commitment to returning capital to shareholders. After adjusting for free cash flow utilized for discretionary acreage acquisitions, the company returned more than 100% of our adjusted free cash flow to shareholders through common stock repurchases during the year, all while maintaining a solid financial position with leverage below one times year end. Full-year 2025 capital expenditures, excluding discretionary acreage acquisitions, totaled approximately $463,000,000, including $354,000,000 of base operated D&C capital expenditures and $35,000,000 of maintenance land spending, with production for the full year averaging 1.040 billion cubic feet equivalent per day. In the fourth quarter, we completed the drilling and completion of our first U development wells in the Utica. These wells were successfully drilled, fracked, and recently brought online during the first quarter. Early results are encouraging, with the performance tracking in line with expectations and consistent with recent traditionally developed dry gas offsets. In closing, 2025 represented a solid year of execution for Gulfport, with operational performance supporting attractive adjusted free cash flow generation, inventory expansion, and consistent capital return through equity repurchases. As we move into 2026, our story remains the same: our highest-return opportunities deepen our high-quality resource base and grow sustainable free cash flow that can be used to continue delivering meaningful returns to our shareholders. I will now turn the call over to Michael to discuss our financial results. Michael Hodges: Thank you, John, and good morning everyone. I will start this morning by summarizing the key components of our fourth quarter financial results, which highlight the company's strong financial position as we closed out 2025 and began 2026 with considerable momentum that has translated to an excellent start to the year. Net cash provided by operating activities before changes in working capital totaled approximately $222,000,000 in the fourth quarter, more than double our capital expenditures for the quarter. We reported adjusted EBITDA of $235,000,000 and generated $120,000,000 of adjusted free cash flow during the quarter, with this strong cash flow generation supporting our significant common share repurchases and active discretionary acreage acquisition program, all while maintaining the strength of our balance sheet at year-end leverage of 0.9 times. Total cash operating costs for the fourth quarter totaled $1.25 per Mcfe, in line with our full-year 2025 guidance range and supporting our outstanding margins for the quarter. As John mentioned, we continue to prioritize development of our high-return Utica wet gas assets, which resulted in a higher weighting of NGLs in our production mix in late 2025 that we expect to continue into 2026. As a result, we are forecasting a slight increase to our 2026 per-unit LOE and midstream expenses, including gathering, processing, transportation, and compression costs, over the full year of 2025, from the continued development of our high-margin liquids-rich assets. We currently forecast per-unit operating costs to be in the range of $1.23 to $1.34 per Mcfe in 2026, with the top-line value contribution from increased NGL production and our improving gas price differentials, which I will highlight shortly, more than offsetting the slight change in operating costs and ultimately leading to rising cash flows. Our all-in realized price for the fourth quarter was $3.65 per Mcfe, including the impact of cash-settled derivatives, and a $0.10 premium to the NYMEX Henry Hub index price. While we have experienced significant volatility over the past several months, we continue to believe we are entering an exciting period for the natural gas market, supported by LNG export growth and increasing natural gas-fired power generation driven by rising power demand from the build-out of new data centers. These more permanent structural shifts, along with the recent price strength following winter storm Fern, are expected to drive meaningful improvements in our natural gas price realizations going forward. As such, based on our marketing portfolio for our natural gas and current forward markets, we have tightened our forecasted natural gas differential for full-year 2026 by 25% compared to 2025, and we currently forecast to realize $0.15 to $0.30 per Mcf below NYMEX Henry Hub for the full year 2026, further bolstering our free cash flow outlook for 2026. With respect to EBITDA and adjusted free cash flow generation, the rise in expected natural gas prices and our improving outlook for realizations, when combined with our returns-focused capital allocation, position 2026 to provide incremental growth for Gulfport from a cash flow perspective. Based on current strip pricing, we forecast our adjusted free cash flow has the potential to grow significantly when compared to 2025, providing substantial financial optionality and allowing us to allocate additional free cash flow to the most accretive opportunities and further strengthen our already top-tier free cash flow yield relative to our natural gas peers. Turning to the balance sheet, our financial position remains strong, with trailing twelve-month net leverage ending the year at below one time. As of 12/31/2025, our liquidity totaled $806,000,000, comprised of $1,800,000 of cash plus $804,300,000 of borrowing base availability. The strength of our balance sheet and our strong financial position today provide tremendous flexibility, as we are positioned to be opportunistic should situations arise that allow us to capture value for our stakeholders. When coupled with the meaningful growth in our expected free cash flow generation in 2026, we are well positioned to continue our track record of returning capital to shareholders through our equity repurchase program and investing in highly accretive discretionary acreage acquisition opportunities. During the fourth quarter, we repurchased 665,000 shares of common stock for approximately $135,000,000, ahead of our previously announced plans in November and inclusive of a direct repurchase of common stock from our largest shareholder, totaling approximately 46,000 shares, which allowed us to capture a larger block of unrecognized equity value at a discount to market prices without impacting our public float. As of December 31, and since the inception of the program, we have repurchased approximately 7,400,000 shares of common stock, including the preferred redemption in September 2025, at an average share price of $125.19, nearly 35% below our current share price. We believe our consistent and disciplined approach to repurchases has created substantial value for our shareholders, and we will continue to evaluate opportunities where the return profile is clearly compelling. Given our current valuation and the strength of our underlying fundamentals, we see continued share repurchases as an attractive allocation of capital. Accordingly, and despite our normal front-weighted capital cadence, we announced our plan to allocate more than $140,000,000 to repurchases in 2026, to be funded from adjusted free cash flow and available revolver capacity, all while maintaining leverage at or below approximately one times. Assuming successful repurchases during the first quarter, we will have repurchased approximately 7% of our current market capitalization in just the fourth and first quarters alone. In summary, Gulfport exited 2025 with strong operational momentum, a resilient balance sheet, and an asset portfolio that continues to improve in both quality and depth. Our disciplined approach to capital allocation, combined with an increasingly constructive natural gas backdrop, positions us to deliver meaningful adjusted free cash flow growth in 2026. This financial strength provides us significant flexibility to continue returning capital to shareholders and to invest in highly accretive opportunities and enhance long-term shareholder value. With that, I will turn the call back over to the operator to open up the line for questions. Operator: Thank you. We will now open for questions. Our first question comes from the line of Neal Dingmann with William Blair. Please proceed with your question. Neal Dingmann: Good morning, guys. Thanks for the time. Michael, maybe just something on the forecasted improved forecasted price realizations. Is this you just were talking about and was very positive. Are you locking in now some basis hedges? Are you doing other things now to these improved realizations? I guess that is kind of my first point. And then remind me again, make sure I understand what is giving you all the confidence for these improved realizations or these improved price realizations. Michael Hodges: Yes, Neal, thanks for the question. I will hit the first part. Certainly, we are active with our basis hedging program. I think we have got some disclosures out in our release that indicate, yes, we have been doing some basis hedging. I think that has been a part of our program over the last few years, and we have an idea of where we think there is value to capture there and tend to be opportunistic around those moves and certainly have seen some improving opportunities. I think that really leads into the second part of your question, which is what gives us confidence. I mean, it is a few things. Right? I mean, I think we have seen rising demand in those kind of local Northeastern basis markets. I think that is starting to flow through to some of the indexes. So if you think about where some of the most liquid Northeast indexes trade, we have seen those come in, and I am talking about kind of in the out years, we have seen those come in $0.15 or $0.20 over the last 30 to 60 days. I think that is an indication of that rising demand. So that is giving us additional confidence. I think the winter storm that we saw in the first quarter, I think a number of operators realized some benefit from that. I mean, I do think sometimes that we forget that those periods of volatility provide a lot of value when they occur. They are certainly unpredictable, but I think you will see that flowing through into our realizations. And then I think we are always on the lookout for ways to maximize value through our marketing team, and there have been some opportunities to do some smaller deals. I know some of our peers sometimes look for the big wins, but we have had some opportunities to do some smaller deals with some folks that aggregate gas in order to provide supply, and those typically provide an uplift to the index price as well. So I would say it is a combined effort from those things, but we do feel good that going into this year, we should see a meaningful improvement in our realizations. Neal Dingmann: Great. Great details. And then secondly, John, maybe for you or Matt, just question on sort of infrastructure and things you were talking about today. You mentioned, I guess, even again today, some potential downtime and know you have talked about sort of some third-party issues in the past. You know, what could you talk about, I forget that you say today, you will have some near-term production impact and then, you know, again, seems like you guys have been addressing a lot of these internally, things that you have been addressing. You know, so what gives you the confidence that that a lot of these issues will just be near term or, you know, what should we think about sort of those third-party issues? John Reinhart: Yes, Neal. Thanks for the question. I guess first of all, set out, it was discussed in the last quarter how we are going to plan to mitigate this out, you know, these kind of occurrences that have happened. Really, last year was the first initial meaningful one that happened. What I will say is outside of just close coordination with our contractors and vendors, we are really focused on just creating optionality within our development program in various areas in the dry gas areas and the wet gas areas. We cover a lot of ground over these areas, and I think just building in some flexibility with how you develop these wells and how the offset operators are developing, it also helps the midstream partners kind of plan around a flatter type growth profile, more manageable. So how you mitigate it long term is really just create more optionality, and we do that through planning and through our discretionary acreage program. I think overall, whenever we talk about the impacts to 2026, they are short term and they were planned. We forecast those out. We voiced what those generally would be in the first quarter, and that is just generally around midstream downtime maintenance, compression maintenance. It is substantial whenever you think about the duration of five to seven days at a time, and then you have to bring on wells, the volumes are pretty impactful, but it is only for a week or so given a couple of different maintenance items. The winter storm warning in combination with these planned maintenance and SIMOPS downtime, Neal, it is around approximately 10,000,000 cubic feet impact per day for '26. That is built into the budget. So it was a more meaningful impact in, certainly late Q1 and then into early Q2, but that is represented in our slides in our public deck when you look at production cadence. We certainly, as you look out through the year, expect those to abate. And then with additional turn-in-lines, you see a significant improvement in our production phase from Q4 to Q4 of about 5%, which really positions us for 2027 well for winter pricing and what we feel like is going to be a constructive environment. Neal Dingmann: Great details. Thanks, John. John Reinhart: Alright. Thanks a lot, Neal. Operator: Thank you. Our next question comes from the line of Carlos Escalante with Wolfe Research. Please proceed with your question. Carlos Escalante: Hey, good morning, team. Thank you for having me on. I wonder if we could take Neal's question a step further because, obviously, we all realize and commend you for your efforts on improving your differentials year on year. But it has been clear after a few weeks of listening to your peers that there is an overall unwillingness from them to take an improving basis at the back of growing local demand. It seems like most of them are positioning to grow with proactive discretionary capital ready to be deployed. So I was wondering if you can perhaps elaborate on your game plan on that context and maybe, on the basis of do you consider growing at some point in the future? Thank you. Michael Hodges: Yeah. Hey, Carlos. This is Michael. I will take the first part, John can certainly jump in. But I mean, I think it is a good question. Right? I think when we look at pricing and think about the right development cadence for Gulfport, we are thinking about, to your point, not just index pricing, but also differentials. And so the move that I have described this morning on the differential side, it is meaningful for us. On the other hand, I mean, for us to consider significant changes to our development cadence, we would be looking out the curve and probably for a more significant change that would incentivize some kind of growth. So if you look back at our history, we have traditionally been, call it, a flattish, low-single-digits type company that maximizes free cash flow. And I think that played out really well for us. I think that it helps us to kind of be consistent in our messaging, and I think that a lot of our investors like what they get from Gulfport. I think if you saw a structural shift that was, again, longer term and that was more meaningful, maybe you see some index price change beyond just what the strip shows out the curve. I think that is always an option to the company, but I think maybe why you are not hearing that from some other peers is that it has been a pretty subtle change to this point. I do feel bullish about it going forward, but I think we need to see more of that before we would likely adjust our strategy in the future. Carlos Escalante: Thank you. Appreciate the color, Mike. And then for my follow-up, a quick one. Housekeeping item. Can you, perhaps this for you, I think, Matt, give us an update on what you are seeing on the tail end of the type curve for the Hendershot and the Yankee pads? Just wondering how those are developing now a few months out of their first production. And maybe if you can provide any color on if you have seen any kind of similarities in your Northern Marcellus position relative to these. Thank you. Matthew Rucker: Sure. Yeah, Carlos, happy to take that. I think last quarter, we showed kind of the 60-, 90-day plus on those. Obviously, the cumulative plot looked very strong and attractive, and similar to the Hendershots, if not slightly better on initial cume. For us, it is really just confirming the type curve. These are both pads that are on decline. They are in their natural decline state. They mirror kind of the type curve that we built for that area as part of our development planning. And so no significant upside changes, obviously, in a decline environment, but also for us, they are holding in very strong. And so they support the long-term type curve on our well spacing and our development plan for that area. As you think about the Marcellus North, we think it approximates, we think, you know, that acreage is on par, obviously, with our south position and has been delineated by some other operators a little bit further to the north. And so leading into this kind of discretionary area spend this year will really just be, to John's point earlier, more for us to get a better handle on the well liquids mix, which will enable us to then look at our midstream contracts and negotiations where we can then deploy full-scale development there like we did in the South. Carlos Escalante: Terrific. Thank you, guys. Michael Hodges: Thanks, Carlos. Operator: Thank you. Our next question comes from the line of Zach Parham with JPMorgan. Please proceed with your question. Zach Parham: Hi. Thanks for taking my question. You mentioned buying more than $140,000,000 in shares during 1Q. That comes on the back of buying a lot of shares during 4Q. Can you just discuss that decision a little bit more? How did you decide on the amount of stock to buy during 1Q? And could you just comment on how much of that you have bought already quarter to date? Or have you been active in the market? Just trying to get a sense of how aggressive that buyback is going to be over the next month. Michael Hodges: Yeah. Hey, Zach. This is Michael. Happy to dive into that a little bit more. It is a great question. So I think from our perspective, we have been consistent buyers of the equity over a long period of time. I think we do have a bit of, I will call it, a changing cadence in our free cash flow. We have not been formulaic in our repurchase activity. So I think when we got to fourth quarter of last year and then again here in the first quarter of this year, we wanted to give a little bit more color around what our intentions might be, given that first quarter for us sometimes, with our capital cadence, is a little bit less free cash flow. And I think we want people to understand that we are not married to just the back quarter's cash flow and that we are going to be opportunistic when we see the ability to buy the equity at an attractive value. So winding back to last year, we announced that we would target around $125,000,000. We actually were able to do a little bit more than that, which was great. I mean, we saw an opportunity there to surpass that number slightly, and that is why we have done that again this quarter. Again, that is just a way to be a little bit more transparent about our intentions there. As for what we have done so far in the quarter, I will probably defer that question just given that we did not announce that yesterday and it is probably something that we will keep close to the vest. But we do feel really confident that we will succeed with the repurchases that we announced, and as we go forward, we are going to keep the balance sheet really healthy. So certainly, we will continue to monitor what the right way to think about it is and try to be clear when we communicate with the investment community. Zach Parham: Thanks, Michael. My follow-up is just on the production cadence. Based on your updated slides, production is going to bottom in 2Q and then peak in 4Q of 2026. That is a bit of a different trajectory than you have had in the last few years. Could you just talk about that shift and give a little color on how your volumes could trend headed into early 2027, given that you will exit 2026 at the highs for the year? Matthew Rucker: Yes, Zach, this is Matt. I can take that and let Michael and John hop in. That dip in 2Q, you are right, a little bit different than historical. The primary driver there is we have got the four-well Marcellus pad coming online in that quarter as part of our development cadence. And so think about that, that is lower IP on a relative basis than what a dry gas or wet gas would be. And then we kind of pick up towards the back end of 2Q into 3Q with more of our wet gas/dry gas turn-in-lines. That is really what is driving that. It is really the development cadence side of things with our Marcellus. Zach Parham: Any comment on what that can do as you enter into 2027 in the winter? Can you sustain that level of production? Or anything you could add there? Michael Hodges: Yeah. Hey, Zach, I am glad you followed up there because I think it is an important point. I think when you are leaving 2026 with, call it, 5% more production based on our expectations than you had in 2025, I think it sets you up really well for 2027. I mean, obviously, it is a little bit early to comment on, you know, what the well mix will be next year, what, you know, which pads will come on early in the year, later in the year. I think it is to our advantage to be exiting into what is typically a higher-price season with a really strong quarter. So you can see on the slides that we put out, we do think fourth quarter is going to be pretty strong for us. And yes, I think maybe where you are going with that is we feel really good with that momentum that will carry us forward. And then obviously, we will have to come back later with some more details around what 2027 really looks like. Zach Parham: Great. Thanks, Michael. Thanks, Matt. Operator: Thank you. Our next question comes from the line of Noah Hungness with Bank of America. Please proceed with your question. Noah Hungness: Good morning. For my first question here, you guys are increasing your drill lateral lengths this year to 16,900 feet from last year that was 13,500 feet. That is a pretty significant increase. Could you maybe talk about what is driving that and what that means for D&C efficiencies and costs? And then how can we think about average lateral length development in future years? Matthew Rucker: Yes, sure. Noah, this is Matt. You are right, yes, an increase year over year around that. I think primarily speaking, as we think about lateral lengths, for us, we try to optimize in that 15,000- to 18,000-foot lateral length as we plan out future development in areas where we have more of a blank canvas. As you know, Ohio starts to get more developed. We have existing PDP wellbores in and around us, and so a little bit of the decrease last year, the lower lateral lengths, was just in regards to the land position and some of the wells that we drilled in and around existing areas. Again, really highly economic wells, a little bit shorter in lateral. This year, we are getting into some more of our discretionary acreage programs in the wet gas area that kind of gives us that runway to optimize development. So we have got some longer lateral lengths in the program to be more efficient on the D&C side on a dollar per foot and realize those gains. So I think for us that 15,000 to 18,000 is a good spot to be. In some cases, may be longer than that. We have certainly drilled 20,000-footers and a little past, and sometimes we may be shorter just depending on the land position down in that 12,000-foot range. So really a mixed bag there from last year, a little bit more on the longer side this year, but that 15,000- to 18,000-foot range is kind of where we target now. Noah Hungness: Great, thanks. And then for my second question here is just on the reserves. Your guys’ year-end proved reserves PV-10 that you give the pricing sensitivity as well, it seems to be up year over year from 2025 versus 2024. Could you maybe talk about some of the moving parts there and what is driving the PV-10 increase? Michael Hodges: Yeah. Hey, Noah. It is a good question. So, I mean, if you think about the way the reserves are put together, you have got a component of PDP and some PUDs as well. And so as we are out converting PUDs into PDP and, you know, spending the capital to do that, you are certainly removing that cost out of the reserve base and converting those PUDs into PDP. So you will see that you have added value there even at the same deck, as you pointed out, just because of that conversion. So there are always other inputs in there, and keep in mind that is an SEC reserve base. We certainly have reserves that go well beyond that five-year rule that the SEC limits you to. But I think you picked up on something important there, that we are adding value, we feel like, year over year even at a consistent price deck. So I appreciate you pointing that out. Noah Hungness: Well, I guess also the question is, you know, it seems like your PDP number is increasing even though your production year over year here is flat. Does that mean that you are turning in line more productive wells than were turned in line before? Michael Hodges: Yeah. I think that you can read through to that. I mean, as you convert wells, you produce some of the reserves, you are certainly converting more reserves than just what you are producing. So that PDP volume does go up as you convert wells from PUD to PDP. But yes, I think to your point, we are, you know, continuing to improve with what we are developing. And I think you are seeing that flow through to the numbers. Noah Hungness: Great stuff, guys. Thanks. Operator: Our next question comes from the line of Peyton Dorne with UBS. Please proceed with your question. Peyton Dorne: Hey, good morning, everybody. Thanks for having me on. On the operating side, it looked like you had made some pretty solid gains on your drilling efficiency. If you could just maybe touch on what some of the drivers of those gains were. On the completion side, it looked like maybe 2025 took a slight step back. Are there any changes you have in store for 2026 to maybe get that metric back up a bit? Matthew Rucker: Yeah, sure, Peyton. On the drilling side, we continue to get incrementally better, to your point. I think where we made the most progress in 2025 was more on our top-hole drilling efficiencies and some slight improvement on our curve and lateral. So the team was able to shave down really a couple of days per well on our top-hole design, and then some incremental gains on just curve and lateral, higher ROPs on the wells we drilled. So great job by the team there on delivering and continuing to find ways to eke out some more days of reduction. On the frac side, we did have a dip this year, a lot of things playing into that for us. I think just to keep in mind, we averaged around 18 hours pumping per day, which is pretty impressive and, quite frankly, comparable to a lot of the best peers we have in the basin. The year prior, we were averaging 21 hours a day, and that was an incrementally great year for the company and a really hard bar to consistently achieve, I would tell you. But we are always striving to get there and maintain. So a little bit in the last year, started the year a little bit slow with a drought in Ohio that caused some water sourcing issues for us, kind of the first quarter and the second quarter. That was relative to everybody in the basin as well. And then throughout the year, utilizing more spot crew work, got off to a little bit of a slow start on some spot crews to help kind of keep our production cadence in line and take advantage of the short cycle time opportunities that we saw in our development program last year. So this year, we expect that to be at or above that 18 hours, and the team is already off to a good start in achieving that. Peyton Dorne: Great. Appreciate all that color. Then I just wonder if you could touch on some of that base improvement spending that you have budgeted for 2026. I know it is a smaller amount of CapEx, but I wonder just how this was different from normal workover spending and kind of how you see the base decline rate shaping up for Gulfport in 2026? Thank you. Matthew Rucker: Yes. So on the workover side, good point. We did start that program last year. So not as much, kind of more in the back end of the year. As a company, we have seen the opportunity set here just with increasing commodity prices to take advantage of really strong near-term economic attractiveness. And so identifying those with the production teams, the operations teams, to then go deploy that capital for the incremental flattening of the base production is a huge win for us. These projects are targeting kind of less than twelve months payout, if you can think about that. So they are really highly economic. They do help us support the base decline and increase that over time, which inevitably kind of flows through our flat to then kind of quarter-over-quarter exit growth throughout the year. And so it is a good program for us. It is $15,000,000 in the total year, so not crazy high, but incrementally has been more than 2025, and we will look to continue to find more of those projects kind of throughout 2026 and into 2027. Peyton Dorne: Great. Thank you very much. Operator: Thank you. Our next question comes from the line of Nicholas Pope with Roth Capital Partners. Please proceed with your question. Nicholas Pope: Good morning, everyone. John Reinhart: Good morning. Good morning. Nicholas Pope: Hoping you could talk a little bit on the acreage acquisitions. I think the discretionary acreage acquisitions, the program that was put in place, $100,000,000, the big push to kind of build inventory there. You know, it sounds like the expectation is that is going to run through first quarter. And as you complete kind of this portion of the program, curious how you are thinking about acreage going forward and kind of what Gulfport is thinking about, kind of the lay of the land and the potential of kind of re-upping a program or continuing acreage acquisitions beyond kind of 1Q once you kind of finish this big push? John Reinhart: Yes. So Nick, appreciate the question. I think this is a part of the program over the past three years we are really, really proud of. I mean, we have seen a substantial growth in our inventory, up 40% gross locations since 2023. This has been a mainstay every year because just inventory improvements, having a durable runway that we can call on, has a lot of optionality. But even what is more important outside of the 4.5 years of discretionary picks up, this is really high-quality acreage. And the fact that we are drilling in this wet gas area that we just bought a few years ago, this is our third pad this year. So it is very good to add that inventory, but just the low breakeven, high quality, we are picking it up in bulk where we can go out and develop and drill, and we can do it very quickly. And so this is a really high-value use of our free cash flow. So we really like it. So leading into that, we have had a lot of success with this program that has ended up in Q1. Clearly, we have a lot of confidence that that number is going to hit at the high end. Again, this is a continuation in Belmont and Monroe of just really good quality acreage. As we complete this program and look forward, I will tell you that we view this as a very favorable, again, investment for the company. So we are not certainly ready to guide to that, but I will tell you that as the land team is up in Q1, when we get line of sight on what is next in that particular realm for spend, we will come to the market, kind of roll it out. But we like the spend, we think the investors like it, and we like the optionality that the inventory brings, and especially inventory that we can jump on really quick from a development standpoint. So appreciate the question. Nicholas Pope: I appreciate it. That is great. Shifting a little bit towards the north. You highlighted that, you know, there is some data collection that you all are going to be working on kind of ahead of, you know, anticipated second half kind of drilling further north in the Marcellus. Just I would love to hear which, I guess, kind of what data is needed, where maybe you guys are, and I guess kind of what information is already kind of in hand as you kind of move and try to kind of de-risk some of that potential further up north in your acreage position. Matthew Rucker: Sure. Yeah. If you are talking about the Marcellus North, we will be drilling those wells. There will be some science collected during that process with some sidewall cores and some logging and some tests. Really, that is just geared around us ensuring that we have all the data necessary for us to properly design our fracs. We do not anticipate it being much different than the Southern Marcellus, but while we are there and have the opportunity, it is a cheap way to gather that data and make sure we are looking at it the right way as we go to complete those wells and kind of the ’27. So that is really the work that is going on there. Data that we have taken before, but more in our southern core area, and just an opportunity here to take some more while we are drilling this year in the Marcellus North. John Reinhart: Yes, Nick, I will add on to that too. This drilling is not a delineation effort. I mean, there are a lot of wells just to the east of us across the state. There are wells to the north, and we have got our own development down, you know, down in that Belmont and, you know, the southern area, what we call Southern Monroe. So for us, this is not a delineation effort. But what we do want to do before we go wholesale development is really get a handle on the production mix, a little bit more data on the production profile, what it might look like, what the pressures look like. So we will be blending this first pad into a dry gas line to be able to assess that. And that really helps us design and come up with our plans with regards to midstream infrastructure, processing agreements, what we need, what kind of capacity we need. So I would think about it more as a production mix test and less so as a delineation effort because we have all the confidence in the world that 50 wells, that is real. And we just need to set it up for full development. So this is the first step in that process. Nicholas Pope: Got it. That is very helpful. I appreciate it. Michael Hodges: Thanks, guys. Yep. Operator: Ladies and gentlemen, that concludes our question and answer session. I will turn the floor back to Mr. Reinhart for any final comments. John Reinhart: Thank you for taking the time to join our call today. Should you have any questions, please do not hesitate to reach out to our Investor Relations team. Have a great day. Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning. Welcome to the Archrock Fourth Quarter and Full Year 2025 Conference Call. Your host for today's call is Megan Repine, Vice President of Investor Relations at Archrock. I will now turn the call over to Ms. Repine. You may begin. Megan Repine: Thank you, Bella. Hello, everyone, and thanks for joining us on today's call. With me today are Brad Childers, President and Chief Executive Officer of Archrock; and Doug Aron, Chief Financial Officer of Archrock. Yesterday, Archrock released its financial and operating results for the fourth quarter and full year 2025 as well as annual guidance for 2026. If you have not received a copy, you can find the information on the company's website at www.archrock.com. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on our current beliefs and expectations as well as assumptions made by and information currently available to Archrock's management team. Although management believes that expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted EPS and cash available for dividend. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8-K furnished to the SEC. I will now turn the call over to Brad to discuss Archrock's fourth quarter and full year results and to provide an update of our business. D. Childers: Thank you, Megan, and good morning, everyone. 2025 was an incredible year for Archrock, one that leveraged a multiyear transformation of the business and demonstrated the strength, durability and scalability of our strategy against what continues to be a robust outlook for our business. Before I review our fourth quarter and 2025 performance, I want to thank our employees across the organization for their tireless focus on safety, customer service and execution. This was another extremely busy year, and our team delivered. The results we're reporting today simply do not happen without the commitment and excellence of Archrock's amazing team. We achieved much across the business in 2025. Compared to 2024, we increased adjusted EPS by 68% and adjusted EBITDA by 51%. Importantly, with strong Q4 results, we delivered adjusted EBITDA above the midpoint of guidance after raising our outlook twice during the year. Building on the progress we've made in pricing, efficiency and cost discipline, our contract operations and aftermarket Services segments delivered outstanding adjusted gross margins. Contract operations achieved 70% plus adjusted gross margins for the fifth consecutive quarter, underscoring excellent execution in a tight market. We continue to enhance and standardize our fleet through disciplined portfolio actions, completing our second accretive acquisition in 18 months while executing asset sales of 325,000 horsepower for $192 million, which we redeployed into high-return new build investments. Taken together, these actions drove 8% operating horsepower growth compared to 2024. Our high-quality fleet has maintained full utilization of 95% or higher for the last 11 quarters, underscoring the strength of demand for our equipment, our services and the reliability of our operations. We translated this performance into meaningful value for shareholders, returning $212 million through dividends and share repurchases during 2025, up over 70% year-over-year. We also concurrently drove our year-end leverage ratio to 2.7x, demonstrating our cash-generating capacity. Overall, 2025 was a year of exceptional earnings growth, balance sheet strengthening and capital returns, providing a strong foundation as we enter 2026. As we look ahead to 2026, our strategy is grounded in the role natural gas continues to play as a critical component of the global energy mix. Our strategic focus for 2026 centers on 3 priorities. First, capturing opportunities to invest in our natural gas levered transformed energy infrastructure and compression platform by helping our customers move more gas to market more efficiently, safely and with lower environmental impact. We continue to allocate capital toward large horsepower and electric motor drive compression, where we see durable demand, strong returns and clear benefits for both our customers and our shareholders. Second, maximizing the reliability of our service for our customers. Reliability remains our central value proposition. We're continuing to standardize our field operating model and further enhance adoption of the technology we've implemented across the business. We're deploying advanced digital tools, analytics and machine learning to improve service quality, streamline workflows for our customers, optimize maintenance execution and expand our remote monitoring capabilities. These initiatives are designed to increase equipment reliability and safety, reduce unplanned downtime and drive higher fleet utilization and operating efficiency. Third, maintaining disciplined returns-based capital allocation and prudent financial management. As we reach a higher level of sustained free cash flow generation, our priorities remain balanced and consistent, investing in high-return growth opportunities we see in this durable growth cycle and returning capital to shareholders while also maintaining a strong balance sheet. This approach has strengthened our portfolio, improved our financial flexibility and positioned us to continue delivering superior returns on capital. Importantly, while performance over the last few years, including 2025, has validated the strength of the strategy I just outlined, we believe there is meaningful earnings growth still to be captured as we grow our business and realize the benefits of fleet mix, utilization durability, a more automated platform and disciplined capital allocation, which continue to compound over time. Natural gas production continues to increase steadily, and we expect production to reach record levels for the sixth consecutive year in 2026. In the near term, U.S. natural gas volumes are expected to increase incrementally in 2026. Importantly, for Archrock, our exposure is weighted toward faster-growing gas basins, particularly the Permian, where gas volumes are expected to grow at mid-single-digit rates. In the Permian, oil production is expected to remain relatively flat, while associated gas volumes continue to increase, supporting sustained demand for compression. This growth is being complemented by meaningful additions to takeaway capacity totaling 4.6 billion cubic feet per day, particularly in the second half of the year, which should improve basin economics and support continued producer activity. At the same time, U.S. LNG exports are expected to continue to grow in 2026 with a 2 Bcf a day of additional FID project export capacity coming online. LNG remains a key driver of incremental natural gas demand and reinforces the need for investment across natural gas production, transportation and compression infrastructure. LNG projects that have already reached final investment decision represent 14 Bcf a day of additional export capacity expected to come online through 2030 with further projects possible beyond that. These developments support sustained demand and a long runway for natural gas infrastructure investment and growth. In parallel, AI-driven power demand is moving from long-term forecasts into the early stages of infrastructure development, creating another source of incremental demand for natural gas-fired power generation over time. These dynamics support what we believe is a durable multiyear earnings growth opportunity for Archrock. We have a substantial backlog for 2026, which is 85% contracted, and we've already booked units for 2027 delivery. Now moving to our segments. Contract operations delivered outstanding performance, supported by excellent execution and continued high demand for our compression fleet. Our fleet remained fully utilized during the quarter, exiting at 95.5%. Maintaining utilization above 95% for 11 consecutive quarters is unprecedented for our business and reflects continued growth in natural gas demand, the high quality of our fleet and strong operational execution. Stop activity remains at historically low levels, and our equipment is staying on location longer. Based on 2025 data, the average time an Archrock compressor remains on location is now 73 months or more than 6 years. That's up 61% since 2021. When isolating large horsepower compression, time on location extends even further relative to the blended fleet average. Average time on location is 97 months or more than 8 years for units with 1,500 horsepower or more, reflecting their use in midstream applications. As we continue to invest in this highly profitable and sticky segment of the market, we expect time on location to extend further over time. At quarter end, we had 4.6 million operating horsepower. Sequentially, operating horsepower declined by approximately 80,000 as new build deliveries during the quarter were more than offset by the sale of approximately 123,000 horsepower, including 84,000 active horsepower, which we completed at year-end. For the year, compression asset sales totaled 325,000 horsepower, including 175,000 active horsepower, generating $192 million in cash proceeds and net gains on asset sales of $47 million while reducing estimated 2026 adjusted EBITDA by about $18 million. Monthly revenue per horsepower moved higher on a sequential and year-over-year basis. In 2026, we expect to benefit from a full year's impact of rate increases from 2025, and we also expect additional price increases in 2026, though at more modest levels. We achieved a quarterly adjusted gross margin percentage of 78%. Strong pricing and solid cost management drove underlying operating profitability to 71.5% in the quarter, up from 70% in the third quarter of 2025, excluding the impact of prior period cash tax settlements and credits in both periods. Results reflect lower make-ready and lube oil costs and efforts to mitigate inflation in labor and parts through ongoing cost management. Fourth quarter 2025 adjusted gross margin further benefited from $23 million in prior period cash tax settlements and credits, which is the driver of the gross margin percentage increase from the 71.5% level to the reported 78% level. Moving to our Aftermarket Services segment. Performance remains solid despite the typical seasonal slowdown in the fourth quarter. Aftermarket services continued to deliver consistent margin performance with adjusted gross margin percentage remaining firmly above 20% and well above historical levels despite normal fluctuations in activity. This reflects our continued focus on higher quality, higher-margin work, disciplined cost management and reliable execution. Turning to capital allocation. Our framework remains disciplined and returns focused with growth investments and shareholder returns as our top priorities supported by a strong and resilient balance sheet. First, on growth investment. We previously stated that we expected 2026 growth CapEx would be a minimum of $250 million. And last night, we refined our guidance to between $250 million and $275 million. This level of CapEx reflects continued strong demand as well as a deliberate and disciplined approach. It also represents a similar level compared to the previous 2 years, especially when factoring in the 2025 growth capital expenditures included acquired new horsepower investment backlog from both the TOPS and the NGCS transactions. At this level of growth capital, we expect to generate substantial free cash flows, both before and after dividends, supporting our strategy of increasing returns to shareholders over time. Most recently, our confidence in the outlook for the business and our financial position supported an increase in the fourth quarter dividend to $0.22 per share. This was up approximately 5% compared to the prior quarter and up 16% year-over-year as we focus on maintaining a well-covered dividend that grows along with the profitability increases in our underlying business. This dividend increase still provides flexibility for additional shareholder returns. This includes $117.7 million of remaining authorization under our share repurchase program as of year-end, which we expect to continue to use as a tool for value creation for our shareholders. Our strategy has been to buy back shares on a regular basis while being more active during periods of market dislocation from the strong fundamentals we see ahead. We've returned over $92 million to stockholders since program inception at an average price of $22.72, including $70 million during 2025 compared to $13 million in 2024. From a balance sheet perspective, we exited the year below our long-term leverage target range of 3 to 3.5x, and we currently expect to operate below 3x in the near term. We're comfortable operating at these levels, which reflect the strength and durability of our cash flows and provide significant flexibility to pursue future organic and inorganic growth opportunities while continuing to return capital to shareholders. In summary, Archrock is delivering standout performance, driven by consistent operational execution and the successful advancement of our strategic initiatives. As we look ahead, we believe we have additional opportunities to continue monetizing our transformed platform with earnings growth driven by disciplined execution and capital allocation and further supported by durable market tailwinds across the natural gas infrastructure. With that, I'll turn the call over to Doug to walk through our fourth quarter and full year financial performance and provide additional detail on our 2026 outlook. Douglas Aron: Thank you, Brad, and good morning, everyone. Let's look at a summary of our fourth quarter and full year results and then cover our financial outlook for 2026. As we review the quarter, it is important to note that results included a few discrete items, which I will walk through briefly. We've also provided supplemental slides on our website with additional details, which bridge the results we reported last night to both 2025 guidance as well as our 2026 expectations. Net income for the fourth quarter of 2025 was $117 million and adjusted EBITDA was $269 million, bringing net income for the full year 2025 to $322 million and adjusted EBITDA to $901 million. Underlying business performance exceeded expectations in the fourth quarter, and fourth quarter results further benefited from a $23 million cash net benefit to contract operations cost of sales related to prior period sales and use tax audit settlements and credits as well as a $32 million of net gains from the sale of compression and other assets, which occurred at the end of the year. These 2 items were not included in the 2025 annual guidance we provided on our third quarter call. And excluding them, we would have delivered full year 2025 adjusted EBITDA of $846 million, above the midpoint of our most recent guidance range of $835 million to $850 million. Turning to our business segments. Contract operations revenue came in at $327 million in the fourth quarter of 2025, consistent with the third quarter of 2025. Average operating horsepower was down slightly from the third quarter of '25, primarily due to asset sales and pricing ticked up incrementally. We expanded our adjusted gross margin percentage to approximately 78%. Underlying operating gross profitability was 71.5% in the quarter, up from 70% in the third quarter of '25, excluding the impact of out-of-period cash tax settlements and credits in both periods. Results further benefited from $23 million in prior period cash tax settlements and credits, which, as noted earlier, was the driver of the gross margin percentage increase from the 71.5% level to the reported 78% level. In our Aftermarket Services segment, we reported fourth quarter 2025 revenue of $50 million, down compared to the third quarter, but higher compared to the $40 million a year ago. The sequential decline reflects typical seasonal softness. Fourth quarter AMS adjusted gross margin percentage was 24% compared to the third quarter and prior year period of 23%. We exited the year with total debt of $2.4 billion and strong available liquidity of $579 million. Long-term debt was down $149 million in the quarter compared to the third quarter of 2025, reflecting strong operating cash flow and further support from asset sales. We have taken meaningful steps to extend our maturity profile and further derisk our sector-leading balance sheet. First, we redeemed $300 million of our outstanding 2027 notes at par in November. Second, in January of this year, we closed an upsized $800 million 8-year bond issuance priced at 6%. We believe this represented the lowest rate ever achieved in the compression sector and one of the tightest yields in energy high-yield deal history. Pro forma for the offering, our liquidity was over $1.3 billion. With this issuance, we have effectively prefunded the redemption of our 2028 notes, which are callable at par in April of 2026. This provides additional flexibility as our nearest bond maturity would move to 2032 following the call of our 2028 notes. Our leverage ratio at year-end was 2.7x calculated as year-end 2025 total debt divided by our trailing 12-month EBITDA. This was down compared to 3.3 in the fourth quarter -- 3.3x in the fourth quarter of '24. As Brad mentioned, we currently expect to operate below 3x in the near term, which provides significant flexibility to pursue additional growth opportunities while continuing to return capital to shareholders. The strong financial flexibility I just described continued to support increased capital returns to our shareholders. We recently declared an increased fourth quarter dividend of $0.22 per share or $0.88 on an annualized basis. This is up 5% from the third quarter dividend level and 16% versus the year ago period. Cash available for dividend for the fourth quarter of 2025 totaled $189 million, leading to an impressive quarterly dividend coverage on the increased dividend of 4.9x. We introduced our full year 2026 guidance with yesterday's earnings release. As I walk through guidance, I want to again point you to the supplemental slides on our website, which bridge 2025 performance to our '26 adjusted EBITDA outlook and help isolate items impacting year-over-year comparability. We announced 2026 adjusted EBITDA guidance of $865 million to $915 million or $890 million at the midpoint. In contract operations, this outlook reflects continued strength with growth in horsepower, revenue and profitability. In aftermarket services, we expect performance to remain near historical peak levels, second only to 2025, which benefited from a small number of onetime items. This robust level of performance is supported by sustained service activity and the durability of the margin improvements achieved over the past several years. The bridge highlights several items that create noise in our year-over-year comparisons, most notably asset sales and tax-related items, which together have a $98 million impact when comparing 2025 to 2026 adjusted EBITDA. First, tax-related items. 2025 adjusted EBITDA included a $33 million benefit from sales and use tax audit settlements and credits. Second, asset sales. The year-over-year comparison from '25 to '26 is impacted by both the $47 million adjusted EBITDA gains recognized in 2025 and the reduction of associated EBITDA in '26, which we estimate would have totaled approximately $18 million. Of this $18 million, $12 million related to the horsepower sold late in the year and announced alongside our earnings and thus, are not yet factored into analysts forward estimates. Now turning to capital. On a full year basis, we expect total 2026 capital expenditures to be approximately $400 million to $445 million. Of that, we expect growth CapEx to total between $250 million and $275 million to support investment in the new build horsepower and repackage CapEx to meet continued customer demand. Maintenance CapEx is forecasted to be approximately $125 million to $135 million, up compared to 2025 due to increased planned overhaul activity. We also anticipate approximately $25 million to $35 million in other CapEx, primarily for new vehicles. Total capital expenditures are expected to be funded by operations with the potential for more modest additional support from nonstrategic asset sale proceeds as we continue to high-grade our fleet. Before we open the line for questions, I'll close by reinforcing that Archrock enters 2026 with strong momentum and a very solid financial foundation. The performance we delivered in 2025 reflects the durability of our business model, disciplined capital allocation and the strength of demand for our compression services. Looking ahead, our outlook is supported by a consistent growth capital profile, expanding free cash flow and a continued focus on execution. As Brad outlined, our priorities remain clear: investing in high-return growth opportunities and returning capital to shareholders. As we execute on those priorities, leverage will continue to move lower naturally, and we are comfortable operating below the midpoint of our target range as an outcome of strong performance, not as a change in our strategy. We believe this framework positions Archrock well to support growth, maintain a resilient balance sheet and continue creating long-term value through cycles. With that, Bella, we are now happy to open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Doug Irwin with Citi. Douglas Irwin: Just wanted to start with the growth CapEx guidance here. Just wondering if you could talk about how much organic horsepower you see that translating to being added this year? And then maybe if you could just help fine-tune just the cadence of fleet additions throughout the year. D. Childers: Yes. Doug, thanks for the question. We -- the CapEx should translate into about 170,000 horsepower that we expect to take delivery of in 2026. And as far as the impact through the year, while it's generally ratable over the 4 quarters throughout the year, we are somewhat front-end loaded and expect about 60% of that horsepower to start up in the first half of the year, which is beneficial and just shows the strength of continuing demand that we see in the market and that we are receiving from our customer base. Douglas Irwin: Got it. That's helpful. And as a follow-up, maybe just around lead times. We've heard some peers talk about lead times getting longer here to start the year. Could you maybe just talk about what you're seeing today and then how that maybe impacts the way you're thinking about both build costs moving forward and kind of the balance of your pricing power and where you might see gross margin trending in a tighter environment over the next few years? D. Childers: Lead times have definitely extended. Right now, the long lead time item, the gating item for gas drive equipment is Caterpillar. And for the large horsepower equipment that is the bulk of what we are investing in, it's out to 110 to 120 weeks. For larger horsepower, it's not even further. So lead times have definitely extended as the market is in full pressure and demand for natural gas infrastructure, including compression, which we're very happy and excited to be a part of. As far as the impact on us, fortunately, looking at 2026, we are booked to meet our customers' needs for the year. We are -- that horsepower is 85% committed to go to work. So we have only a little bit left in the year that would be available for new bookings. And we've already started booking horsepower into 2027. And we expect that we will fully be able to meet our customers' needs for growth through that period of time. So while the supply chain is definitely extended right now, showing the high demand in the market, we believe we will have access to the equipment to meet our customers' needs in 2026, 2027. It's way too early to talk about any years beyond that. As far as the impact on pricing, it's an interesting market right now. There's a slight pause in some oil activity, and that's moderated, I think, some of the immediate pressures for the overall industry and for our segment. And so while we expect to see price increases on our installed base in 2026 at a more modest level, as I think I mentioned in my prepared remarks, we do see price increasing in the year. On the current market, it's at a more moderate level for sure, just because we've all caught up with inflation and the current demand in the market is basically well priced. And as you can see, we and we think the industry is operating at a high level of profitability. Operator: Your next question comes from the line of Jim Rollyson with Raymond James. James Rollyson: Brad, following up on your comments on lead times. One would think as far out as they've stretched to for someone like Caterpillar that usually more material price increases on their front come down the road. I'm curious your thoughts there just because as you talk about more moderate price increases from your end in '26, if they obviously hike prices for future deliveries into '27 and beyond, presumably, that affords you the ability to catch up with that to maintain your returns. So I'm just curious your thoughts on that. D. Childers: First, we have not seen any significant change or received any significant change in Caterpillar's overall pricing strategy impacting us. Second, we have also not really seen a tremendous change in the pricing from our packagers for the total compression package that's been passed on to us. But the good news is that when we do see that, we will have the full flexibility to price that into our forward pricing with our customer base. One of the main impacts, most interesting impacts of this period we've gone through where over the last 5 years or so, we've had significant inflation impacting our fleet is it has certainly made the existing equipment we've invested in over the prior period -- over the prior years, a lot more valuable. And a lot of the returns that we can generate in our business are from the value we get from those prior investments the pricing power we receive in the current market because of the high demand for compression. And so that value creation that we come from the installed base way outweighs what's going to happen from an inflationary perspective coming through the system from Caterpillar or from the packagers in the near term, all of which we can price in and pass on. James Rollyson: That was exactly why I asked the question. Appreciate that answer. And then following up, I can't recall a time when you've been in quite this position from a leverage and free cash flow generation perspective even after dividends. And as you kind of look forward over the next 2, 3, 4, 5 years, obviously, the gas backdrop is such that you've got a nice runway of annual organic growth there, but your cash flow is going to be far exceeding your ability to spend it, it seems like in this. I'm just curious, as you think about this, you run out somewhat a run out of obvious M&A candidates in your main fairway. Do you return more to shareholders? Do you look at -- you've had a couple -- at least one of your peers enter into another business line as a means to deploy incremental capital. Just how do you think through that because you're in a very enviable position, and I'm just kind of curious how you guys think about that outlook? D. Childers: I think you could have asked a bigger question, but I'm not sure how. There's a lot to unpack there. I'm going to try to pick a couple of points to make. The first is that we have had worse problems in the past than having to figure out what to do with a lot of free excess cash flow for the benefit of our investors. So we're excited about the position we're in. We think that it demonstrates the strength of this segment. It demonstrates the strength of the natural gas infrastructure sector overall, which is going to continue to grow, and it generates a lot of cash as we're seeing right now. And right now, it's generating on a sustained basis. A lot of this is the benefit of the capital discipline that we've had in the overall energy sector, we've had in the midstream sector, we've had in the compression space, particularly. And as long as that holds, that level of discipline is going to continue to be rewarded by generating great cash returns for our investors. So we're excited to maintain that. To the M&A question you posed, look, we've demonstrated both the desire and ability to grow organically as well as inorganically. And we've digested in just 18 months, 2 very nice acquisitions with great equipment and great teams and a great customer base to expand our business. And we were able to do that on an accretive basis and pass that accretion on very promptly to our investors through dividend increases. We will continue to be looking for those opportunities. And to the contrary to maybe what you were thinking, we think that there are more compression companies in the space today that will be available for us to look at and will want to think about changing their platform and/or with ownership that we want to monetize in the coming years. So we do see that as a continuing opportunity. And if we can find assets that align with our desire for large equipment, electric motor drive equipment that are well maintained, we will be in the game and competing hard for those assets. And then I'll close with the last thought, which is that we did note that one of our competitors has entered into the power market. And I'd say a few things about that. The first is that there are some synergies when you think about the supply chains, the equipment, the maintenance practices and the fleet management practices, clearly, there is some overlap and some synergies on how to do this. Second, on how to do that segment. Second, what we've noticed is that we believe the returns are largely comparable to what we can achieve in the compression space. And so there's a lot of, I think, industrial logic to the expansion there. On the other hand, we haven't seen asset packages that have come to market that offer the same level of infrastructure, long-term application investment that we're looking for, whether it's in compression, which is we're looking for there or in power, we want to see those longer-term applications and infrastructure position. But when we see those asset packages, we will be working those hard as well. Operator: Your next question comes from the line of Nate Pendleton with Taxis Capital. Nate Pendleton: Congrats on the strong quarter. Can you provide some detail on the units sold and perhaps some insight into how your team decides what assets are noncore to the go-forward business? D. Childers: Yes. A couple of thoughts. First, having a disciplined program that both invests in our fleet as well as dispose of assets that we no longer want to operate in the fleet is a core competency in our business. And so when you look at the level of asset sales that we've had over the prior 5 years, we've been averaging something like 270,000 horsepower per year over that 5 years. So the level of activity that we had in 2025 is not much larger than just the run rate we've had in the kind of nip and tuck of disciplined asset management practices for our fleet. The only -- the other thing I'd say is that we did have one sale that was totally nonstrategic around high-pressure gas lift units. And there was another business, the buyer was very much in that business. And so that just made great strategic sense for both companies. That made the number -- that was a contributor to the size of the number in 2025. And we had one customer that wanted to purchase some horsepower. They acquired operations in an acquisition. And as part of that acquisition, it came with horsepower from us. And that's a customer that likes to own their horsepower as opposed to outsource as much of the horsepower. And so they were aligned with -- they wanted to buy that horsepower for that reason. And for us, when we looked at that horsepower, it was an average age of 17 years and was in the perfect condition to maximize our overall cash generation of that horsepower by selling it. So when we look at the fleet overall, we're always looking to improve the standardization, the quality of our fleet. We are happy to engage with customers that want to buy horsepower and sell, especially when it's horsepower that has already earned a great return and served us well over time. Nate Pendleton: Got it. And then as my follow-up, Brad, in your prepared remarks, you mentioned continued opportunities that you see in electric motor drive compression. Can you provide more detail on how you see the adoption of the electric compression trending as you look at your 2026 and early '27 order book? D. Childers: Sure. We still see demand for electric motor drive. It's definitely competing. Our customers are now facing more competition for power, and that is a gating item for electric motor drive. So in the past, we've had electric motor drive, I think, in 2025 was as much as 30% of the equipment that we had on order. We are seeing that moderate to more in the 20% to 30% range, but it's lumpy and it's inconsistent. It really varies not just with power being a gating item, but also with the prioritization of the customer and how well they can get equipment and how well that fits into their overall long-term strategic focus. But on the good news front, we still see nice demand for electric motor drives. We're very proud to be the leader in the industry in that segment, and we expect to see good growth for electric motor drives ahead still. Operator: Your next question comes from the line of Eli Jossen with JPMorgan. Elias Jossen: You talked a bit about extended supply chain lead times and tightness there. But maybe just thinking about the growth CapEx figure, if you guys are able to make opportunistic procurement of horsepower or you see kind of swelling demand from your customers, could we see upside to the growth CapEx figure? And what kind of visibility do you have there given strong customer demand? D. Childers: In a word, yes, but it's going to be tough because shop space is pretty full for 2026. So getting more through the system is going to be a challenge. That said, there are avenues to do so. And if we see the opportunity and the need with our customer base, we will be ambitious in capturing that. Elias Jossen: Great. And then maybe just thinking about basin focus. I know the business has increasingly shifted to being liquids-rich Permian basin Eagle Ford. Are you guys kind of still pressing ahead there? Have you looked at expanding within other basins? Or what's the overall geographic strategy? D. Childers: Yes, we have looked at -- fortunately, we have what is the most diversified footprint in the industry. We operate in every natural gas producing basin, every producing basin in the U.S., and we have an excellent footprint throughout all of them. But everything compels with the CapEx vacuum cleaner that is the Permian Basin today for the industry. And so like with others, our focus is on ensuring that we grow where our customers want us to grow, where they're putting their CapEx and their growth and that -- the Permian Basin remains in the lead. With that, though, looking back on 2025, we had net horsepower growth in a total of 6 basins, one of which was the Permian. So we've seen net growth in other plays, including in dry gas plays, which are seeing a little bit more energy and reactivation right now given the gas price trade-off with the oil price. So it's been a focus of ours to remain prudently diversified as well as we can and at the same time, not miss the incredible opportunity for the most efficient oil production in the country, which is coming in the Permian. Operator: Your next question comes from the line of Selman Akyol with Stifel. Selman Akyol: Nice quarter, nice outlook. Two quick ones for me. So in your opening comments, you talked about 11.25 of running at higher utilization, 95%. And then you went on to talk about how your equipment is staying on location longer, especially as you skew towards the higher horsepower. So the question directly is this, '26 probably is another lock for the 95% sounds like '27 is as well. So how far, how long do you see that extending at that high utilization rate? D. Childers: Selman, we appreciate that you think we could possibly answer that question. That's nice for you to suggest. -- number one, no one knows, and we don't either. But what we see right now with the level of demand for natural gas to feed the LNG beast ahead, which I described in our comments, and we include our best market take in our deck all the time. What we see for power demand in the U.S. for data centers, what we see for pipeline exports to Mexico is that this is a very durable cycle. And it's hard to see what is going to change that within the next 5-plus years. So we expect that our business has just a tremendous growth opportunity. to expand our infrastructure footprint with our customers for an extended period of time. But we're not smart enough to call when the cycle turns, sorry. Selman Akyol: Okay. Appreciate all that. And then just kind of going back to the consolidation, when you talked about it, you sort of referenced other companies, but is there anything out there from potentially buying packages from your customers? D. Childers: Reflecting on the acquisitions we've done, we've actually had success doing that. Going back pretty far back. There was a time when we acquired what was primarily the compression operations of Chesapeake, which we completed in 2 separate transactions. When we acquired the Elite assets back in 2018, that was primarily the asset packages that we were supporting and organized by affiliates of Hillcorp, but it was run in a separate company and the primary customers in that were both Hillcorp and Marathon as we discussed at the time. So we've seen success in acquiring packages that were organized for sale in that way. That said, in other instances, we've seen this to be a very hard area to get a lot of traction between the operating teams and the financial teams within our customer base. And so while we've had success in the past and we have those discussions ongoing with our customers, -- it hasn't fit the mold of a high volume of steady transactions that would be a purchase leaseback machine. So while there are opportunities out there, we think they're going to be structured more like traditional M&A. Operator: Your next question comes from the line of Steve Ferazani with Sidoti. Steve Ferazani: I was pleasantly surprised by the SG&A guide given the growth in the fleet, given the growth in cash flow, you certainly could be looser on spending, but it looks like you're even getting tighter. And obviously, we're seeing that in your margin guidance on the contract operations where it looks like you're more than offsetting any kind of inflationary pressures. Can you talk a little bit about your actions there and what you're trying to do in a growth market containing those costs? D. Childers: On the SG&A front, first and then on OpEx -- the nice thing about this business and our platform is our SG&A is very scalable. We can add quite a bit to our operational activities without expanding our SG&A proportionately. So what you're really seeing is the benefit of the full year acquisition benefits coming from the NGCS transaction and the expansion of our organic horsepower, and we just -- we have a great SG&A platform that can grow our activity without growing our SG&A investments. So it's just a very scalable position to be in. We expect to benefit from that in the future. And that's why you're seeing -- when you think about SG&A as a percent of revenue, you're seeing that continue to come down nicely. On the OpEx side, I'm going to point out a few things that are really long-term focused from a strategic perspective, and we're seeing the benefits now and so are our customers. Over the last several years, we focused hard on our fleet mix, expanding into large horsepower, expanding into electric motor drive. These are the 2 most profitable segments of the market. And by shifting that mix, if you look over a long period of time, you're going to see that our OpEx per horsepower costs have remained super flat for a long time, notwithstanding inflation because we've been fighting off inflation and some of these pressures by engaging in these strategies of adopting a different fleet mix focused on large engines and motor drive. Second, we've been adding technology to our platform. And so we've invested hard into digitization, automation and just great telemetry into our system, and that's driving a lot of savings in activity, a lot of efficiency and optimization into our activities in the field. So those are the big threads that we're reaping the benefits from. And candidly, so are our customers because we've been able to actually manage the concurrent improvement of customer service, maximizing uptime for our customers and at the same time, managing our costs, which we get to pass some of that on to them in the form of very competitive rates. So those are the biggest drivers that I can think of on how we're attacking costs even in this market. Douglas Aron: Yes. I would maybe just make one more point on SG&A, which is that, look, '25 levels were elevated just a little bit, candidly, in recognition of the incredible performance delivered by both the management team and also all of the operating team. And so you saw our short-term incentive and longer-term incentives flow through a bit into that, something that we're glad to share up and down throughout the entire company. But with stronger performance comes stronger expectations in '26. So that level for guidance was reset to more of a target level. I think Brad otherwise summed that up well. Steve Ferazani: That's really helpful. I always try to get a question in about aftermarket, Brad, the guidance there, look, I know '25, you benefited from equipment sales and you pointed out how that can affect margins. I'm just curious about the growth opportunities given that U.S. compression third parties is growing as well. At any point, do you become waiver constrained to meet third-party service demand? Or can you continue to grow that business? D. Childers: I actually really appreciate getting a question on AMS because it has been a standout performer for us for a couple of years now. And that team has just done an excellent job in improving the profitability of the business. But one of the strategies to improve the profitability of the business is to be more selective on the jobs that we take and the customers that we work with. So I do think that the growth in that business has -- we've demonstrated that it's constrained. And I also think that access to labor is going to further be a constraint in that business as it is in contract operations. But what we're really seeking is to have the right business. We're trying to make sure that it's as profitable as it can be as value adding to our customers as it can be, and we will grow it prudently. But given the nature of it, I do not expect it to grow in leaps and bounds. I expect we're still going to see sharper levels of growth in the infrastructure side of the business in contract operations. Operator: Question comes from the line of Elvira Scotto with RBC Capital Markets. Elvira Scotto: So just a couple of follow-up questions for me. The first one, you talked about your investments in technology over the years, telemetry, big data, et cetera. Can you talk about how much more margin improvement or uptime or what you can drive over time? What inning are we in, if you will? And are there other AI initiatives you can undertake to drive incremental margin improvement or uptime for your customers? Any additional color there? D. Childers: Yes. Thank you. the overall strategy around our technology investments really had 3 goals as our top line priorities. Number one, we've got to continue to drive improvement to the uptime, our customers' experience to service quality, and that's all of the above from a communication perspective, speed of response perspective as well as run time. We want those priorities to come through to our customers. Number two, the market has labor challenges. And so ensuring our labor, our mechanics have the access to the best tools, the best information, best communication to make their lives better and to make their work more easier to perform is the second priority around that initiative. And third would be that if we succeed in both of those, we knew we would drive improvements to profitability. So with that lens on how we think about technology, we do believe there is still more to come, especially in driving improvement to the service quality that our customers get to experience, just enhancing the customer experience. We are deploying AI in a couple of ways throughout our business, both to make sure our mechanics have the best information at their fingertips and candidly at their laptop and on their iPhone as they can. So the speed of how they can ask questions and receive information is something we're working on quite a bit. Second, we can also make our machines smarter and tell us more. And so getting great the data machine to have great analytics capability and using AI to sort through the noise to identify the most actionable items coming from the alarm system within all of the telemetry and all the sensors we have on the equipment is something we're absolutely working on. And last, there's more ahead of that. We believe that there's also additional sensor technologies, vibration technologies and acoustic technologies that can utilize AI on the equipment, and we're working hard to figure out how to bring those to market. So that's what we are working on. We are really pleased with the progress we've made to date, the improvement it's had to our operations. But I can't even call the inning in this because I think technology is a continuous improvement exercise, and we are going to focus on driving continuous improvement in the operations that we have at the company. Elvira Scotto: Great. That's very helpful. And then just my quick follow-up. Are you seeing any change in your customers' desire to in-source compression more or outsource compression more? Any change to that dynamic? D. Childers: We have not seen a change or shift in the dynamic of in-sourcing and outsourcing. We believe that the customers' primary decision-making around what they're going to do with their compression is driven by their own capital availability, capital allocation and a buy-lease analysis of how long they think they can earn a return on that asset. And all of those factors still favor significant outsourcing, we believe, in the market today. When you think about where we're at, where our large horsepower stays on location on average about 8 years, -- if that is a unit that the customer was considering to purchase and they only had 8 years of use for it, it doesn't make a lot of sense for them to make a 30-year investment for 8 years. So we still think that the overall buy lease analysis is informed by how long the customer expects to be able to utilize that equipment. And what we see in the outsourced industry is that we can amortize our 30-year investment over a broader geography over a broader customer base. And so we have -- that's the driver of our value proposition, and we haven't seen a change in that. Operator: Your last question comes from the line of Nick Ami, I'm sorry, with Evercore... Nicholas Amicucci: Just one quick one from me and actually a follow-up and just a clarification on another one. But just given kind of the significant kind of sentiment shift that we've seen from the hyperscalers and just in the AI complex to more of a behind-the-meter solution, just specifically in West Texas, I mean, we had a couple of companies yesterday kind of call out the Permian as kind of an area of ripe for opportunity just given the lack of regulatory constraint. Just wanted to see like has that kind of come to fruition? Have you guys been seeing that level of demand on your end? Have you seen that kind of true inflection of demand yet? Or is there kind of inevitably more to come on that? D. Childers: If I'm understanding the question fully, what we're seeing is that -- let me just ask for a clarification. that a question for the demand for power, provision for power or translating into compression? Could you clarify for us, please? Nicholas Amicucci: Translating into compression, just given that the vast majority of all of these -- all of this demand, right, is going to be powered by -- through natural gas through natural gas generation. So just kind of reading the tea leaves, it would kind of imply that we'd have some significant demand in that area. D. Childers: Yes. Thank you. That's really helpful. What we are seeing just overall is the demand for in-basin gas supply is something we're seeing an increase in. And I think a lot of it is driven by more in-basin use of natural gas rather than needing to find a long-haul pipeline to get it out to support other markets. So yes, we are seeing that translate in demand. But it's translating into more -- to be direct, more future demand than it is immediate current demand. Nicholas Amicucci: Got it. Perfect. And then just kind of touching quickly on the aftermarket, the AMS segment again. So I understand that it's probably -- you guys are taking more of a prudent approach. But just given that we are seeing kind of the units, the assets run harder for longer and kind of the constraints within the supply chain, is there a meaningful kind of price opportunity that could be there, especially given that you guys are taking more of a prudent and deliberate approach like unit economics? Just trying to figure that out from a margin perspective. D. Childers: We're really happy actually with the returns we're achieving right now and the 24% gross margin for the prior quarter is something that we're pretty excited about. That said, we do see opportunities that we're not going to go into detail on for other reasons, you can imagine, to continue to improve both the stability, quality and earnings in that business. But what I'd say is that if you think about a business that has very low barriers to entry and a ton of competition, that would -- the aftermarket services might be in the dictionary under that heading. And so finding the right strategy to execute both with excellence with the right customer base and on the right jobs becomes -- remains a priority for us in operating that business. Operator: There are no more questions. And now I'd like to turn the call back over to Mr. Childers for final remarks. D. Childers: Great. Thank you all for joining us today and for your continued interest in Archrock. By nearly every measure, 2025 was a standout year for the company, and we're encouraged by how 2026 is shaping up as we benefit from strong U.S. gas production trends and the result -- and the returns from our continued investment in a first-class compression platform. We appreciate your support and look forward to updating you on our progress next quarter. Thank you. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Everyone, have a great day.
Operator: Fourth quarter 2025 earnings conference call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Andrew Tutt, SVP, Investor Relations and Capital Markets. Thanks, Mariana. Andrew Tutt: Hello, and thank you for joining ExlService Holdings, Inc.'s fourth quarter and full year 2025 financial results conference call. My name is Andrew Tutt, and I am the new SVP of Investor Relations and Capital Markets for ExlService Holdings, Inc. On the call with me today are Rohit Kapoor, Chairman and Chief Executive Officer, and Vivek Jettley, President and Head of Insurance, Healthcare and Life Sciences. Maurizio Nicolelli, Chief Financial Officer, will not be on today's call as he is tending to a family matter. We hope you have had an opportunity to review the fourth quarter earnings press release we issued yesterday afternoon. We have also posted a slide deck and investor fact sheet on our Investor Relations website. As a reminder, some of the matters we will discuss this morning are forward-looking. Please keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, general economic conditions, those factors set forth in yesterday's press release, and those discussed in the company's periodic reports and other documents filed with the SEC from time to time. ExlService Holdings, Inc. assumes no obligation to update the information presented on this conference call today. During our call, we may reference certain non-GAAP financial measures we believe provide useful information for investors. Reconciliations of these measures to GAAP can be found in our press release, slide deck, and investor fact sheet. With that, I will turn the call over to Rohit. Rohit Kapoor: Thank you, Andrew, and good morning, everyone. Welcome to ExlService Holdings, Inc.'s fourth quarter and full year 2025 earnings call. I am pleased to be with you this morning to share our financial results. We delivered another strong quarter, exceeding expectations for both revenue and EPS for Q4 and the full year. This reflects sustained double-digit growth momentum and strong execution of our data and AI strategy. For the full year 2025, revenue increased 14% to nearly $2,100,000,000 and adjusted EPS grew 18% year over year to $1.95 per share. These results reflect strong market demand for our data and AI services and solutions and reinforce client confidence in ExlService Holdings, Inc. as the partner of choice to embed AI directly into mission-critical workflows. In the fourth quarter, revenue reached $543,000,000, representing 13% year-over-year organic growth. Our dollar volume of wins in the quarter was more than double that of any other quarter in 2025. While Q4 is seasonally strong from a client activity perspective, we saw accelerated decision-making to advance transformation initiatives planned for 2026. Increasingly, clients are selecting ExlService Holdings, Inc. as an outcome-focused partner that can modernize data foundations and operationalize AI end to end at scale. Our revenue is split across two categories: data and AI led, and digital operations. Our data and AI led revenue includes data analytics, AI solutions and services, and it also includes data and AI led operations. In the quarter, our data and AI led revenue grew 21% year over year and now represents 57% of total revenue. Digital operations represents 43% of our business, and grew 4% year over year. As previously shared, our digital operations revenue excludes data and AI led operations revenue. In order to provide greater transparency, we have enhanced our investor fact sheet with a total operations view. The total operations revenue includes data and AI led operations and digital operations revenue. In Q4, total operations grew 11% year over year and 14% for the full year. Our deep domain expertise and proven ability to embed AI in the workflow continues to be a strategic advantage as clients modernize operations using an integrated approach to data, AI, and human-in-the-loop solutions. I will now walk through our fourth quarter performance across each of our four operating segments along with key wins. First, Insurance. The Insurance segment grew 7% year over year and 3% sequentially. Insurance is our largest vertical, representing a third of our revenue, and we see good momentum in the growth rate going forward. Insurance carriers are accelerating adoption of AI-powered solutions to drive growth, optimize costs, and improve customer experience. A notable Q4 win was with a large North American insurance carrier that selected ExlService Holdings, Inc. as its enterprise transformation data and AI partner. As part of this multi-year initiative, we will deploy agentic AI directly into operational workflows, build a comprehensive data strategy powered by exldata.ai, and deliver end-to-end customer experience transformation. Second, Healthcare and Life Sciences. This segment represented approximately a quarter of Q4 revenue and was once again our fastest growing segment with 26% year-over-year growth. This growth was broad based and was driven by strong demand for data and AI solutions, continued growth in payment services, data analytics, and expanded digital operations across both new and existing clients. Our solutions are well positioned to help healthcare organizations manage rising costs, navigate regulatory complexity, and improve outcomes. One of our largest wins in Q4 was with a top five healthcare payer. This client has been with ExlService Holdings, Inc. for many years, already embracing our technology platform and AI-powered payment integrity analytics. In a significant expansion of that relationship, the client selected ExlService Holdings, Inc.'s AI-powered payment integrity solution to reengineer its clinical auditing processes to improve yield, productivity, and operational alignment. Third, our Banking, Capital Markets and Diversified Industries segment grew 11% year over year, representing nearly a quarter of Q4 revenue. Clients in this segment are turning to ExlService Holdings, Inc. to deliver measurable business outcomes by applying data and AI across the value chain in areas such as credit risk, fraud, collections, and customer experience. In Q4, we renewed and expanded our multi-year engagement with a leading financial services company with an expanded scope of AI services that spans risk strategy, regulatory modeling, forecasting, collections, and fraud. In addition, ExlService Holdings, Inc. will design and deliver the company's first-ever governance framework for generative AI models, setting a new benchmark for responsible AI adoption within a global financial institution. And fourth, our International Growth Market segment grew 8% year over year in Q4, representing 17% of our total revenue. International markets are an important driver of our long-term growth and global expansion strategy. During the quarter, we won several new deals across insurance, banking and capital markets, and energy in this segment. Next, I would like to highlight the market opportunity we see in AI and our strategy for growth. Enterprises are under intense pressure to extract real value from AI and are challenged to successfully apply it across the enterprise. The gap between AI's technical promise and real-world impact is significant. This gap is where ExlService Holdings, Inc. stands out. Through our mastery of domain processes, understanding of complex regulatory environments, and expertise in data and AI, we are seen as a trusted partner that orchestrates enterprise workflows and makes AI real. Let me share how we are executing on this strategy across three areas. First, deepening our data, AI and services capabilities. Second, expanding our partner ecosystem, and third, developing AI talent at scale. 2025 was a milestone year advancing our data and AI capabilities. We drove rapid innovation with new agentic industry solutions, embedded AI directly into our core platforms, and grew our AI services capabilities. Launched in Q4, exldata.ai, our agentic data solutions suite, is resonating very strongly in the market. Clients recognize that an AI-led enterprise starts with getting the data foundation right. We help clients move from data to context to AI by governing and managing enterprise data, capturing business context, and then activating AI use cases on top of that foundation. One recent exldata.ai win was with a leading consumer lending fintech where ExlService Holdings, Inc. modernized the full technology stack from legacy on-prem systems to a cloud-native platform and operationalized the new solution in just four months. Another win was with a large healthcare payer where exldata.ai is being used to create a centralized, governed contract repository spanning structured and unstructured data. This enables stronger alignment between contract terms and claims adjudication, reducing manual effort, minimizing payment discrepancies, and improving speed and accuracy. Importantly, this is broadly applicable well beyond healthcare, anywhere where contracts and policies drive downstream operational decisions, from supplier and pricing agreements to customer and partner terms. In addition to building innovative new data and AI solutions like exldata.ai, we continue embedding AI into our core platforms. In Q4, we introduced a new set of AI agents on our industry-leading life and annuities platform, enabling insurers to automate complex tasks such as product setup, correspondence, and data mapping, and launch innovative new products in weeks instead of months. Finally, we are seeing accelerating demand for AI services. This represents a large addressable market and an important growth engine for ExlService Holdings, Inc. AI integration is a fundamentally new technology challenge, particularly for complex, data-intensive industries. Our data and analytics capabilities and our investments in AI give us clear advantage for winning AI services contracts. We support clients across the full AI lifecycle from AI strategy and adoption to models orchestration and making data AI ready. Our partner ecosystem is a critical enabler of scale. In 2025, we accelerated co-innovation with AWS, Databricks, Google, Microsoft, NVIDIA, and Genesys. This included partnering with NVIDIA on its new AI blueprint for fraud detection, integrating our AI capabilities for CX into Genesys, and completing the migration of our life and annuities platform to AWS. Co-selling momentum has increased with 16 ExlService Holdings, Inc. solutions now on marketplaces with AWS, Microsoft, Databricks, and Genesys. For example, we collaborated with AWS to deploy agentic AI for Sonos' IT service management workflows, aiming to create a new benchmark for efficiency, operational intelligence, and risk mitigation. These efforts earned industry recognition, including becoming a globally managed Google Cloud strategic services partner and being named AWS's 2025 AIML Market Disruptor of the Year. Finally, our growth strategy is powered by our talent. We are building an AI-native workforce with deep expertise across engineering, generative AI, and 10 new U.S. patents awarded over the past twelve months. Innovation is central to the ExlService Holdings, Inc. culture. We continue to invest in training, certifications, and tools such as our AI playground, enabling colleagues to explore, experiment, and build with agentic technologies. Our second annual Idea Tank competition generated more than 11,000 employee-submitted ideas, a seven-fold increase from last year. From these, 200 ideas were shortlisted for dual development on our sandbox, with winning ideas receiving development resources to launch new capabilities. In summary, while AI is reshaping the services industry, we view it as a clear opportunity for ExlService Holdings, Inc. Our integrated approach to AI is creating better business outcomes and growth for our clients, thereby resulting in new revenue streams for ExlService Holdings, Inc. AI is driving revenue expansion for our clients and has become a growth engine for EXA. ExlService Holdings, Inc. enters 2026 with strong momentum and clear strategic focus. Our data and AI pivot is well underway, representing 57% of our revenue. Demand for our data and AI led services and solutions remains robust, and we continue to strengthen our competitive position through investments in capabilities, partnerships, and talent. Our client base is diverse, our pipeline is strong, and we have high renewal rates. More than 75% of our revenue is recurring or annuity-like. This provides revenue stability and predictability. We have excellent visibility into 2026. Turning to our outlook for 2026, we expect revenue to be in the range of $2,275,000,000 to $2,315,000,000, representing 9% to 11% in constant currency organic growth. Adjusted diluted EPS is expected to be in the range of $2.14 to $2.19, representing a 10% to 12% increase over 2025. I want to thank our clients for their trust, our partners for their collaboration, our employees for their continued innovation and commitment, and our shareholders for their ongoing support of ExlService Holdings, Inc.'s vision. Lastly, I would like to call your attention to two upcoming events. We look forward to hosting our annual AI in Action virtual event on March 11, followed by our investor strategy update on May 13, in New York. With that, I will turn it over to Vivek, who is stepping in for Maurizio. Vivek Jettley: Thank you, Rohit. And thank you everyone for joining us this morning. I will provide insights into our financial performance for the fourth quarter and for the full year 2025, followed by our outlook for 2026. We continued our growth momentum in the fourth quarter, with revenue of $542,600,000, up 12.7% year over year on a reported and 12.6% on an organic constant currency basis. This increase was driven by double-digit growth in our data and AI led services, which grew 20.7% year over year on a constant currency basis. Our adjusted EPS was $0.50, a year-over-year increase of 15%. All revenue growth percentages mentioned hereafter are on a constant currency basis. Now turning to the fourth quarter revenue by segments. The Insurance segment grew 7.2% year over year and 2.9% sequentially, with revenue of $185,800,000. This growth was primarily driven by expansion in existing client relationships. The Insurance vertical, which includes revenue from International Growth Markets, grew 6.7% year over year, with revenue of $215,200,000. The Healthcare and Life Sciences segment reported revenue of $142,200,000, representing growth of 26.2% year over year and 5.1% sequentially. The year-over-year growth was broad based, driven by higher volumes in our Payment Services business and expansion in existing client relationships. The Healthcare and Life Sciences vertical, including revenue from International Growth Markets, grew 26.1% year over year, with revenue of $142,500,000. In the Banking, Capital Markets, and Diversified Industries segment, we reported revenue of $122,600,000, representing growth of 10.8% year over year and sequentially 1.3%. This growth was driven by the expansion of existing client relationships primarily in Banking and Capital Markets, and new client wins. The Banking, Capital Markets, and Diversified Industries vertical, including revenue from International Growth Markets, grew 10.6% year over year, with revenue of $185,000,000. In the International Growth Markets segment, we generated revenue of $92,000,000, up 8.1% year over year. This growth was primarily driven by higher volumes with existing clients in Banking and Capital Markets and new client wins. SG&A expenses as a percentage of revenue increased by 130 basis points year over year to 21.2%, driven by investments in sales and marketing. As expected, our adjusted operating margin for the quarter was 18.8%. This was flat year over year. Our adjusted EPS for the quarter was $0.50, up 15% year over year on a reported basis. Turning to our full-year performance. Our revenue for the period was $2,090,000,000, up 13.6% year over year on a reported and constant currency basis. This increase was driven by double-digit growth in our data and AI led, which grew 18% year over year on a constant currency basis. The adjusted operating margin for the period was 19.5%, up 10 basis points year over year. Our effective tax rate for the year was 21.6%, down 70 basis points year over year, driven by higher profitability in lower tax jurisdictions. Our adjusted EPS for the year was $1.95, up 18% year over year. Our balance sheet remains strong. Our cash, including short- and long-term investments as of December 31, was $331,000,000, and our revolver debt was $299,000,000 for a net cash position of $32,000,000. We generated cash flow from operations of $31,000,000 in 2025, up 30.6% year over year. This improvement was primarily driven by higher profitability and better working capital management. During the year, we spent $53,000,000 on capital expenditures, and repurchased approximately 7,500,000 shares at an average cost of $42.30 per share, for a total of $317,000,000. Now turning to our outlook for 2026. Supported by strong momentum, our current visibility, and a robust pipeline, we expect 2026 revenue to be in the range of $2,275,000,000 to $2,315,000,000. This represents a year-over-year growth of 9% to 11% on a reported and constant currency basis. In November, the Government of India consolidated existing legislations into a unified framework referred to as the New Labor Code. However, the changes did not have a material impact on the income statement for the quarter. They resulted in a one-time increase of $10,300,000 in our defined benefit liability in the balance sheet, with a corresponding increase in accumulated other comprehensive income. We expect a prospective increase in employee costs for the year, resulting in an approximately $0.02 to $0.03 dilution to adjusted EPS, which is incorporated in our guidance. We expect a foreign exchange gain of approximately $2,000,000, net interest expense of approximately $1,000,000, and our full-year effective tax rate to be in the range of 21% to 22%. We expect capital expenditures to be in the range of $50,000,000 to $55,000,000. Our Board of Directors authorized a $500,000,000 common stock repurchase program effective February 28, 2026, for a two-year period. This is in line with our capital allocation strategy. This new authorization of $500,000,000 represents confidence in our ability to continue our growth trajectory and generate significant free cash flow. We anticipate our adjusted EPS to be in the range of $2.14 to $2.19, representing year-over-year growth of 10% to 12%. This includes a 100-basis-point impact due to the implementation of the Indian Labor Code. To conclude, we delivered industry-leading financial performance in 2025, demonstrating our strong competitive position in embedding AI across client businesses. Our leading indicators remain positive, and our robust pipeline visibility positions us for a strong start to 2026. With that, Rohit and I would be happy to take your questions. Operator: Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts one question and one related follow-up today. We will wait one moment to allow the queue to form. Our first question comes from Puneet Jain at JPMorgan. Your line is open. You may unmute and ask your question. Puneet Jain: Yeah. Hi. Thanks for taking my question. So I wanted to ask about all the recent news flow around agentic solutions. Like, Rohit, you also talked about how you are seeing the accelerated decision-making at your clients. Could that accelerated decision-making be a result of all that news flow which might be causing more urgency on clients to act and to move forward with AI? Or if not that, what would you attribute that accelerated decision-making to? Rohit Kapoor: Sure, Puneet. So we saw accelerated decision-making in the fourth quarter. And frankly, the client conversations in 2026 continue to be very active. I think what we are seeing is a greater propensity from enterprise clients to adopt and leverage AI. And I think that fits in really well with ExlService Holdings, Inc.'s capabilities and our engagements with our clients. As you know, in 2025, most of the engagements ended up being proof of concepts, and there was not really an enterprise and a scaled-up adoption of AI. That seems to be changing at this point of time. There is also a change in terms of shifting the focus from a cost takeout to growth. And I think using AI for growth allows companies to be a lot more competitive and to be able to build up their businesses. So frankly, from our perspective, the environment has become a lot more active, and it allows us to engage with our clients even more strategically to help them in these implementations and to help them in the adoption of AI. Puneet Jain: Got it. Got it. No, that is very helpful. And thanks for sharing disclosures around data and AI led within operations. Could you share, when a traditional operations management client decides to implement AI in their processes, what happens to the overall revenue, including the typical range of efficiency gains that you pass on to the client, and incremental work that might come your way in form of maybe data services, or managing additional workflows, or servicing more processes to that client? What happens when an operations management client decides to implement AI with ExlService Holdings, Inc.? To revenue. Rohit Kapoor: Sure. So, first of all, we have now disclosed our total operations revenue and shared with you the growth of total operations that we are seeing quarter on quarter with our clients, and we think that growth is very positive and very supportive of the total company's growth rate. There are a few points that I would like to highlight for you and everybody else around operations management. Number one, the penetration rate of outsourcing of operations management by clients in general continues to remain low at about 15% to 20%. So what that means is that there is a lot more that clients can outsource, and particularly with the engagement of AI and technology coming in, a number of more complex processes and more intertwined processes can now be outsourced, and that creates a huge amount of opportunity for us. The second part of this is that as AI and intelligence is being put into the operations, what clients are looking for is a trusted AI-enabled operator of their business. And ExlService Holdings, Inc. is uniquely positioned to serve as a trusted AI operator for our clients and therefore, their confidence in entrusting us with more work is being reflected in our revenues and in our financial statement. The AI certainly is able to provide productivity benefits associated with the use of that technology in operations, and the question really is, can a partner make that productivity benefit real for the clients and result in tangible business outcomes being delivered to the client and get them the ROI. ExlService Holdings, Inc. has been in the fortunate position of actually executing to that and making good on that promise, which clients themselves on their own struggle, and other providers have struggled as well. We understand the domain. We understand the data. We have expertise in applying AI into the workflow. And therefore, our ability to deliver value to the customer and real tangible outcomes is what is creating ExlService Holdings, Inc. to be able to grow at a much more differentiated pace than all of our other peers and competition. I hope that helps you. Puneet Jain: Yes, it does. Thank you. And I totally appreciate that the AI within operations is growing at 40% to 50%, much faster than the overall industry and ExlService Holdings, Inc. overall. So appreciate it. Thank you. Andrew Tutt: Thanks, Puneet. Our next question comes from Bryan Bergin at TD Cowen. Please go ahead with your question. Bryan Bergin: Hi, guys. Good morning. Thank you. I wanted to ask on the 2026 growth guides, and really I am just trying to reconcile 2026 versus what you did in 2025. You know, you are obviously bringing more AI IP to the market. I hear strength of the AI-related services and the strong pipeline. You guys are growing well ahead of comps. But you are guiding annual growth two points lower than you initially did last year. I am trying to reconcile that. What would you say is the biggest difference now versus one year ago? Is it parts of the client budgets or programs that are just seeing some more pronounced pause or pressure because of the AI initiatives? Is it potentially factoring some added uncertainty in the forecast? Just help us reconcile that, please. Rohit Kapoor: Sure, Bryan. Let me clarify for you. In 2025, when we gave guidance, that included inorganic growth. We had done an acquisition for ITI Group, and our guidance included inorganic growth. From our perspective, the guidance that we are giving you today for 2026 is exactly the same as the guidance that we gave to you in 2025 on an organic constant currency basis. Now, in terms of our visibility and our backlog associated with this, the visibility is about the same as what we had last year. The backlog is actually a little bit stronger. What I will tell you is a difference for 2026 revenue guidance is we are exiting 2025 very strong, and you can see that being reflected in a slight uptick in our growth rate. We have also shared with you that we had client wins in Q4 which are more than twice the pace at which we signed up clients in all of 2025. So, frankly, our expectation is that we are going to have a much stronger start to the year in 2026 than we had in 2025. And so we feel very good about our guidance. And we feel very good about the visibility associated with our guidance. Bryan Bergin: Okay. That is good to hear. If we go a layer deeper here, can you give us a sense on how you are thinking about data and AI led growth potential versus digital ops, and any important considerations as you move through the year, a standpoint of growth as you go through the quarters? Thank you. Rohit Kapoor: Yes, absolutely. You know, as you know, our data and AI led business is 57% of our portfolio, and it is likely to grow much faster than the corporate average. Our digital operations business continues to grow, and we continue to see demand for that from our clients. It is going to grow at a pace which is lower than the corporate average. And, you know, I think the portfolio mix that we have is actually really, really foundationally strong because it allows us to be able to learn from the operations business, build new AI services and solutions for our clients, and be able to accelerate the growth rate of our data and AI led business. We are seeing a tremendous amount of strength on data management, we are seeing a tremendous amount of strength on AI services, we are seeing our analytics business be the leading edge to get converted into AI services. So frankly, the engagement with clients is very, very good. And we are very actively engaged in conversations with them as to how they can deploy AI. Andrew Tutt: Thanks, Bryan. Operator, next question. Operator: Our next question comes from David Grossman at Stifel Europe. Please go ahead with your question. David Michael Grossman: Thank you. Good morning. So, Rohit, I think you already gave some pretty good color on visibility and growth in 2026. I am just curious, how should we think about the cadence of growth over the course of the year? Do you expect it to be relatively even throughout the four quarters, or are there some things that we should be attentive to that may skew one quarter over another? Rohit Kapoor: Sure, David. So at this point of time, clearly, the visibility into 2026 is much better than the, you know, 2026, just because of the timing perspective. And what we have already shared is that we are going to be starting out strong. You can see what our growth rate was in 2025. We think 2025 is going to be a good growth rate for us. So, frankly, with the current guidance, the way it kind of sets up, we are going to start off strong, and we are going to wait and see how the visibility develops in the second half of the year. And based on that, we will update our guidance accordingly. David Michael Grossman: Got it. And you mentioned some of the things that differentiate you versus some of the IT services companies, as well as other peers in the space and why you are growing faster. I am just curious. You mentioned that you had a large win with an existing client, one of the top five payers in the U.S. for payment integrity during the quarter. So if I got that right, payment integrity is actually one of the areas that people thought would be most vulnerable to some of the innovations coming with AI. So can you just give us any insight into that process, what they were thinking, why they re-upped with you and expanded scope given some of the newer technologies that are out there? Vivek Jettley: Thanks, David. This is Vivek. I will take that question. So as you can see, Healthcare was a very strong growth driver for us all the way through 2025 and including in the fourth quarter. And now what distinguishes Healthcare for us is that we are seeing broad-based growth in Healthcare across our multiple offerings. So if I were to call it out, there are really three pillars for growth in Healthcare right now, one of which is our AI led operations, the other is the work that we do in AI services and analytics, and the third one is payment integrity. Now we have got good visibility for all three, and we expect to see growth for all three as we go through the year. Your point about the cost pressures for payers and what does that mean for payers actually points to a tailwind for payment integrity. Because what happens is right now as the payers start facing more costs on their medical loss ratios as well as on their admin costs, they are going to be forced to become more efficient and manage those costs in a better way, and ExlService Holdings, Inc.'s payment integrity offerings is one of those things that they will turn to in order to optimize that. Our win in Q4 is actually an illustration of that because it is someone who is looking to say, look, I want to use the AI, bring it into what I am doing with my payments and try and optimize my overall cost base. And we see that trend continuing. David Michael Grossman: Right. I guess the question, Vivek, is, is there any consideration at the payers, who have got fairly substantial IT budgets and operations, to try to start doing this themselves, given the availability of some of the newer technology? And if not, are there subjugating items to them doing that? Vivek Jettley: So we are not seeing any of those trends right now. In fact, what we are seeing is that the payers are actively talking to us, and to other partners, in terms of looking at what is it that they need to do to refine their algorithms and what is it that they need to do to create more saves. So we are not seeing any initiatives at this point in trying to take it in house. Rohit Kapoor: So David, let me just add to Vivek's comment on that. Clients at this point of time are concerned with business outcomes. And if you can drive superior business outcomes than what they can get with other providers, or by their own internal teams, they are going to allocate the business to that provider that is delivering better business outcomes. You can see in the same example that we have quoted, this was a client that has capability, of course, of doing this work in house. They have been working with us for several years, but based on our capability which is demonstrated and proven, they decided to award us the single largest win for us and give us even more business because they want to get the better business outcome. And that is what is going to be, I think, quite different in this AI world where business outcomes will matter a lot more than a promise or any other statement, because everybody will be making statements and claims. It is which entity can actually deliver that business outcome, and that is what we are seeing is reflecting in our growth rate being much higher than others. David Michael Grossman: Great. Thank you very much. Rohit Kapoor: Thanks, David. Our next question comes from Eleanor Dyke at William Blair. Please go ahead with your question. Eleanor Dyke: Hi. Thank you. This is Ellie Dyke on for Margaret Nolan. I wanted to ask about the win in the fourth quarter with the large North American insurance carrier. Can you talk about the nuances of that process? Like, was it competitively bid? Was it new or existing? And what were the pricing dynamics there? Just wondering if you had any takeaways from the process about pricing or revenue cannibalization or accretion? Vivek Jettley: Sure. First of all, this was a brand new customer for us. This was a new client that we acquired. So there is no existing revenue and therefore no cannibalization. But what really stood out for us in this deal was that the client actually is engaging with us on a complete enterprise transformation. The work that we are taking on is a data and AI led transformation of their overall data infrastructure. We are using exldata.ai for that, and then using our AI capabilities and accelerate.ai capabilities to go in, transform what they are doing with their CX, transform what they are doing with their back office, and transform what they are doing in terms of the overall end-to-end process that they are running. The deal really stands out for us because what they have done is chosen us as the enterprise AI partner that is going to come in, do all of the transformation, and then pick up the operations and operate it in an AI plus a human manner, bringing in our outsourced capabilities. It is a really interesting deal for us. The other part of your question was in terms of pricing. And in this deal, what really stands out for me is the fact that ExlService Holdings, Inc. is able to start charging for our IP. So we built in a component here which is an explicit pricing for the capabilities that we are bringing in and deploying, and that is over and above what we have got in terms of time and material. And I imagine you are going to start seeing more deals of this type going forward. Eleanor Dyke: Thank you. And then also, I was wondering, are you seeing a shift in client priorities between cost takeout mandates versus long-term digital transformation, including AI? And how can you pivot to capture either? Vivek Jettley: So I think AI right now actually works across the spectrum. Right? So you could actually walk into every functional group within a client and they are looking at saying, how can I deploy AI in a better way and bring that into my business? And what is it that I can do right now with agentic AI? So it is across the board. It is on the revenue line. It is on customer management. It is on cost. It is on audit and controls, what have you. So from our perspective, we have the capabilities right now within our verticals of talking to CXOs across those different areas and bringing to them the right AI-led value propositions. And that is, I think, what you are seeing a little bit in terms of the pipeline and in terms of the wins that we talked about. It is that value proposition kind of resonating in the marketplace. Eleanor Dyke: Great. Thank you. Andrew Tutt: Thanks, Ellie. Our next question comes from Robbie Bamberger with Baird. Please go ahead with your question. Robbie Bamberger: Yeah. Thanks for taking my question. So just thinking about types of employees being hired, how should we think about which employees are being hired? Are they higher revenue per employee AI-trained? And then maybe also the expected cadence of employee growth through 2026. Any color on that revenue per employee through the year as well? Rohit Kapoor: Sure. I think the first point I would like to make is that our employee headcount growth rate is much lower than the growth rate of our revenue, and we think that trend will continue. So we will see a differential between our revenue growth rate and our employee headcount growth rate. Second, in terms of the skill sets, our goal is to make sure that every single employee of ExlService Holdings, Inc. can be provided the opportunity to get trained, certified, and practically apply AI as confidently and as comfortably as one needs to be in this new age of AI. So that is something which we are investing a huge amount of effort and resources to be able to train and skill our employees to be proficient with AI and work with AI as an AI-enabled operator, as well as create new solutions leveraging AI. Lastly, we are hiring, of course, a lot of people, particularly around data management, around working with AI services, and creating a lot more of engineering talent that can deploy AI solutions in the enterprise. I will tell you this, that our data and AI led business today is constrained for growth due to talent. And that is something which we are working very actively on to make sure that we have adequate talent resources to be able to leverage the full potential of the data and AI piece. Andrew Tutt: Awesome. Just to add to Rohit's comments, I will just substantiate that with the data. So it is part of our fact sheet, but the headcount growth for the full year in 2025 was less than 10%. It was 9.8%. And you see that the revenue growth that we delivered against that was closer to 14%. So that is where we are creating that leverage in terms of revenue per headcount. Robbie Bamberger: Yep. Super helpful. And just in terms of guidance, just wondering what operating and gross margins you have embedded in 2026 guidance? And maybe the cadence through the year as well and how that Indian labor code impacts margins throughout the year as well. Vivek Jettley: Sure. I mean, you had already heard from Maurizio about our viewpoint in terms of how to manage adjusted operating margin going forward. Our adjusted operating margin for Q4 was 18.8%, which was flat to what we were in 2024. This is something that we had already talked to you about, and this was because of investments in the front-end sales and support and in solutions and services. For the full year, our adjusted operating margin actually went up to 19.5%. Our expectation is that we are going to keep it flat for next year, and which includes the impact of what is going on with the new labor codes in India. So the number would have gone up were it not for the new labor code. But net of that, we are going to keep it flat. Robbie Bamberger: Helpful. Thank you. Operator: Our last question comes from Vincent at Barrington Research Associates. Please go ahead with your question. Vincent Colicchio: Hello. I am sorry. Can you hear me now? Rohit Kapoor: Yes. Vincent Colicchio: Hey, Rohit. I am interested in an update on the competitive landscape on the AI side. Are you seeing any new competitors? And if so, is there any impact on your win rates? Rohit Kapoor: Yes, Vincent. We are seeing new competitors come in. And that is something which we have been seeing for a while now. So it is no longer just the traditional services companies that we compete with. We are seeing some of the hyperscalers get in here. We are seeing some of the technology providers getting into the space. And there certainly are a number of other consulting firms who are trying to go into this space. So the set of competition has certainly changed, and it has changed for a while. Our advantage really is the fact that we have this integrated approach to helping our clients embed and use AI across the enterprise in a very disciplined way that delivers much better business outcomes. So our knowledge and domain expertise about the industry and our clients' business, our mastery of data and applying AI and ML techniques to the adoption of AI, and our understanding of the workflow, these all make it very, very easy for clients to adopt AI. Then finally, keep in mind that a large percentage of our client portfolio is in regulated industries. And our knowledge and understanding of regulations and the ability to keep our clients fully compliant with regulatory requirements, that is a big standout, and that is why they trust us for being that AI-enabled operator and the AI implementation partner for them. And so we stand out, though others are certainly coming into the space. And they are certainly coming at it from a standpoint of either having the technology or having the foundational model and trying to leverage that capability and bringing it to enterprise. Vincent Colicchio: And could you update us on your acquisition priorities? Rohit Kapoor: Sure. So one of the good things about ExlService Holdings, Inc. is that we have got a very strong balance sheet. And we have got a tremendous amount of capital available to do acquisitions. And at this point of time, some of the valuations and some of the assets are becoming quite attractive. And therefore, for us to be active in the M&A space, that is something that you should expect. The prioritization for us is going to be to continue to further our strategy around helping clients with AI. And so what that means is investing in capabilities around data, and making data ready for AI. What that means is having the engineering skill sets to apply AI to enterprise workflows. What that means is for us to be acquiring new capabilities that we can take to our clients. And then finally, geographic diversification. So those are some of the areas that are important priorities for us from an M&A perspective. And in this environment, I think the targets are becoming a lot more accessible, approachable, and hopefully affordable. So that is something which we are hoping that we can take advantage of. Vincent Colicchio: Thank you, Rohit. Operator: We have no further questions at this time. This concludes our call. Thank you, and have a good day.
Operator: Good day, and thank you for standing by. Welcome to Avista Corporation Q4 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 *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *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, Stacey Walters, Investor Relations Manager. Please go ahead. Good morning. Stacey Walters: Thank you for joining us for Avista Corporation's fourth quarter 2025 earnings conference call. Our earnings and 2025 Form 10-Ks were released pre-market this morning. You can find both documents on our website along with the presentation that accompanies our remarks this morning. Joining me today are Avista Corporation President and CEO Heather Rosentrater and Senior Vice President, CFO, Treasurer, and Regulatory Affairs Officer, Kevin Christie. We will be making forward-looking statements during this call. These involve assumptions, risks, and uncertainties, which are subject to change. Various factors could cause actual results to differ materially from what we discuss in today's call. Please refer to our Form 10-Ks for 2025 for a full discussion of these risk factors, which is available on our website. On this call, we will also discuss non-GAAP utility earnings. Our fourth quarter earnings presentation is posted on our website and includes definitions and reconciliations for all non-GAAP disclosures, including non-GAAP utility earnings. Our non-GAAP utility earnings are comprised of results from our Avista Utilities and AEL&P segments. The unrealized gains and losses that have historically made up the majority of our nonregulated other business earnings can be significant, but they are difficult to predict and outside management's control. The shift to discussion of non-GAAP utility results and earnings guidance reflects management's focus on the core utility business. Let me begin with a recap of the financial results presented in today's press release. Our 2025 consolidated earnings were $2.38 per diluted share compared to $2.29 in 2024. Our 2025 non-GAAP utility earnings were $2.55 per diluted share compared to $2.38 per diluted share in 2024. For the fourth quarter of 2025, our consolidated earnings were $0.87 per diluted share compared to $0.84 per diluted share for the fourth quarter of 2024. Our non-GAAP utility earnings were $0.88 per diluted share for the fourth quarter of 2025 compared to $0.89 per diluted share for the fourth quarter of 2024. I will now turn the call over to Heather. Heather Rosentrater: Thank you, Stacey. And as I reflect on my first year as CEO of Avista Corporation, I am struck by how it combined opportunities for growth and investment with an unprecedented level of uncertainty. Yet, just as we have for the last 136 years, our teams leaned in and sustained their focus on executing our strategies. Before I get into the details, I want to start with how we are thinking about this last quarter. While our results were impacted by a few specific items, our sustained focus led to progress on key priorities. That includes progress on our request for proposal, or RFP; continued discussions with potential large load customers; and steady regulatory activity. All of this supports the strength of our utility over the long term. We remain committed to delivering safe, reliable energy to the communities we serve and creating value for our shareholders. As we close out 2025, Avista Utilities' results were impacted by both the one-time adjustment of Colstrip-related investments, which on its own decreased our earnings per share by $0.07, and other timing-related items. Even with those headwinds, we were able to land within the original utility guidance range. And excluding those factors, utility results would have been above the midpoint of our 2025 utilities earnings guidance. With 2025 concluded, we are excited to look ahead to 2026. Last month, we filed a four-year rate plan with the Washington Utilities and Transportation Commission. This filing reflects how we are thinking about supporting safe and reliable service over the long term. Among other considerations, our proposal addresses rising costs related to grid modernization, clean energy compliance, purchased power, hydropower infrastructure investments, and emerging risks such as wildfires and extreme weather. By filing a four-year case rather than a two-year case, we aim to reduce the frequency of regulatory proceedings, provide greater stability in our cost recovery and shareholder returns, and provide more transparency and predictability for our customers. Last month, we announced the projects we selected from our RFP process. The first selection is an upgrade to existing natural gas turbines which will add 14 megawatts of capacity without increasing carbon emissions. Second, we selected a 100-megawatt battery energy storage system to be located in Eastern Washington and to be built and transferred to Avista Corporation under a build-transfer agreement. Finally, we selected a 200-megawatt power purchase agreement for wind from Montana and approximately 40 megawatts of demand response programs across our service territory. These projects will bring valuable, resilient energy solutions to our portfolio. Since we first reported on our queue of interest from potential new large load customers last year, we have continued to work through conversations with these potential customers. And I am happy to announce that we have a significant deposit from a data center developer intending to locate in our service territory in Washington. The initial load is expected to be 125 megawatts, quickly ramping up to a maximum of 500 megawatts. We expect the initial load to come online by 2030. We will keep you updated as we make progress. As expected, as we have worked with customers in our queue to evaluate their projects, we are narrowing in on the most feasible opportunities. At present, including the customer just mentioned, approximately 1,700 megawatts remain in our queue of potential large load customers. We continue to receive inbound interest and we expect to begin curated recruiting to attract additional interest that could align with specific geographic and electric infrastructure areas of the system that are best suited for large load interconnections. We know affordability is critically important. And as we look to add new large load in our service territory, it is our expectation that agreements we reach both with our current negotiations and future prospective customers would make a significant contribution to customer affordability. We have also made significant strides in expanding our energy assistance programs for our customers in need. These programs help make energy bills more affordable for those that most need the support. Recent enhancements to our best-in-class programs have expanded our reach for energy assistance to as much as four times as many customers in need in the last two years. These programs are fundamental to how we think about serving our communities now and into the future. The opportunities that were a highlight of 2025 continue into 2026. The Washington Commission has encouraged Avista Corporation to explore early acquisition of resources to capitalize on tax credit opportunities. We are still evaluating several other RFP bid projects, exploring the acquisition or long-term contracting of these projects to take advantage of tax credits, serve large loads, and enhance flexibility until Avista Corporation has a need for serving more load. Beyond generation, additional transmission is needed to move energy from generation resources to load centers. The North Plains Connector is one such project that supports this need. And we have significant additional opportunities closer to home that would improve regional grid reliability and resilience as customer demand evolves. Finally, earlier this month, the Board of Directors raised the dividend for our shareholders to $1.97 per share. Our dividend is an important component of shareholder return. And for 24 consecutive years, the Board of Directors has raised the dividend for our shareholders, resulting in compound annual growth of more than 5% over that time period. We remain committed to the importance of returns for our shareholders and to the financial strength of our company. We are now targeting a competitive payout range of 60% to 70% which is in line with our peers. And for the last few years, we have been a bit above our target payout range, which was 65% to 75% during that period. As a result, we expect that our dividend growth rate will be less than the growth in our earnings per share until we reach our target payout range. And now, I will hand the call to Kevin for additional discussion of earnings. Kevin Christie: Thank you, Heather, and good morning, everyone. In each of the last four quarters, I have shared with you how strong our utility performance is and how our utility earnings form the foundation of our business and future plans. And that is still true today. We are focused on delivering results at our utility. Of course, we are disappointed by the order we received late in December from the Washington Commission requiring us to adjust recovery of needed investments at Colstrip. Were it not for the impact of that order, Avista Utilities would have reported earnings above the midpoint of our 2025 earnings guidance for the segment. I want to emphasize that our utility earnings in 2025 reflect the strength of our operational execution and the continued diligence in the cost management that we have reported in each of our 2025 earnings calls, alongside constructive regulatory outcomes, with the exception of the Colstrip order in December. We have had a quiet fourth quarter in our nonregulated business results, and it appears that valuations have steadied from earlier in 2025. Alongside our other initiatives, regulatory outcomes are key to our success. As Heather mentioned, in January, we filed a four-year rate plan with the Washington Commission. The single largest driver of our requested rate increase in rate year one is power supply cost. Setting an appropriate baseline for power supply cost is pivotal to the success of our rate plan. We believe the workshops undertaken with the parties after our last rate case provided an understanding of the shifts in our regional power markets. We will continue to work through the regulatory process beginning with the initial settlement conference set for May 22 and the evidentiary hearings in September. We continue to invest in our utility and infrastructure to support customer growth and maintain safe and reliable service. Capital expenditures at Avista Utilities were $553,000,000 in 2025 and are expected to be $585,000,000 in 2026. From 2026 through 2030, we expect capital expenditures of $3,400,000,000, a base capital compound growth rate of 5%. This reflects the addition of $164,000,000 to our capital plan associated with the self-build natural gas combustion turbine upgrades and build-transfer battery energy storage system selected from our 2025 RFP. We continue to estimate a potential capital investment of up to $350,000,000 associated with integrating a new large customer that would be incremental to the $3,400,000,000 five-year expenditure plan. Integrating that investment in our five-year projection would result in a compound capital growth rate of 12%. Our base capital plan does not include incremental transmission projects like regional grid expansion, or additional generation pulled forward from our 2025 RFP. In 2025, we issued $120,000,000 of long-term debt and $78,000,000 of common stock. For 2026, we are updating our funding plans and now expect to issue approximately $230,000,000 of long-term debt and up to $90,000,000 of common stock, compared to $120,000,000 of debt and $80,000,000 of common stock disclosed in Q3. This increase reflects higher capital expenditures in 2025 as well as additional debt to support liquidity, given the recovery timing of deferrals while maintaining a prudent capital structure. We are initiating non-GAAP utility earnings guidance with a range of $2.52 to $2.72 per diluted share for 2026. As Stacey mentioned, utility earnings include earnings from our Avista Utilities and AEL&P segments, with no other adjustments. The closest GAAP measure is consolidated earnings, and since we are removing the impact of our nonregulated businesses, we are required to refer to utility earnings as a non-GAAP measure. Last year, we set guidance for these other businesses at zero, and indicated that we expected variability in results due to ongoing costs, dilution, and periodic valuation updates. As a management team, we cannot control public policy and the valuation losses we experienced in 2025 were the direct result of shifts in public policy and sentiment due to the administration change. By discussing our non-GAAP utility earnings, and giving you guidance that is focused where we as a management team are focused, we are striving to limit the noise in our results and communicate with you about where we are headed as a business. In 2024, a large industrial customer in our service territory contracted with us for electric service. This customer owns transmission rights and has access to procure their own energy. They sought relief in a period of high market power prices through service with us. As market prices have since declined, they notified us earlier this year of their intent to return to procuring their power independently in the power market sooner in 2026 than what we had expected. Our 2026 non-GAAP utility earnings guidance reflects a one-time decrease of $0.12 as a result of this departure. Our guidance includes an expected negative impact from the energy recovery mechanism of $0.10 at the midpoint in the 90% customer, 10% company sharing band. While our current hydro forecast shows normal levels of generation for the year, even if we were above or below normal, there would be no material change to our position in the ER. Over the long term, we expect that our earnings will grow 4% to 6% from the midpoint of our 2025 consolidated earnings guidance. We are raising our long-term expected return on equity at Avista Utilities to approximately 9% excluding any impact from the ER. This reflects expected structural lag of 60 basis points. Now we will be happy to take your questions. Operator: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press *11 on your telephone, wait for your name to be announced. To withdraw your question, please press *11 again. Our first question comes from the line of Shar Pourreza of Wells Fargo Securities. Your line is now open. Whitney Wutalama: Hi. Good morning. This is Whitney Wutalama on for Shar. So, just to take a step back and think about the financing, there are just multiple moving pieces in 2026, from the customer departure to the headwind variability, and obviously, the Washington rate case. How are you sequencing financing decisions? What would cause you to pull forward or push out equity issuance? How much flexibility do you have to bridge with debt or hybrids without pressuring the credit profile? Heather Rosentrater: Hi, Whitney. Kevin Christie: Hi, Whitney. Kevin Christie: Well, for the guidance that we have expressed here for 2026, we have incorporated the base plan that we have described. So that includes the capital investment. And to the extent that we had additional capital investment opportunities, we would need to reassess how much debt and equity we would issue. We issue our equity through a periodic offering program, and so you would see steady progress throughout the year towards that $90,000,000, again barring some kind of additional investment opportunity, which would be a positive thing if we had that opportunity. Kevin Christie: As far as using other mechanisms, again, we would likely stick with our periodic offering program unless we had a much more significant investment opportunity, and then we would have to reassess whether we would visit other mechanisms or vehicles. Whitney Wutalama: Got it. Okay. Understood. And then just following up on the incremental CapEx, I think it is $250,000,000 to integrate a new large load customer. So what is the internal go-or-no-go threshold before you commit to that type of incremental build? How do you ensure existing customers are insulated if the large load does not fully materialize? Kevin Christie: I would start by saying that the next step now that we have a significant deposit on board from that potential customer is moving towards an MOU. And we would expect to move towards that MOU in the next 90 or so days. And as we work forward there, we would likely have ongoing conversations with the customer. And again, I want to emphasize a point: to the extent that we are able to add this customer, they would make a significant contribution back to the system and our existing customers such that it would help with affordability. And we would ensure that those same customers would not be negatively impacted to the extent that the customer were to start conversations with us, maybe even go to construction, and then walk away. We would have in place, in addition to the deposit, collateral and security to protect our business and our customers. Significant amounts such that we would expect no impact if they were to walk away. Now that is not the intent. We would expect them to go forward and contribute revenue to the system on an ongoing basis for many years into the future. Whitney Wutalama: Well said. Thank you. Kevin Christie: Thank you. Operator: Our next question comes from the line of Julien Dumoulin-Smith of Jefferies. Hi. Good morning. It is Brian Russo on for Julien. Brian Russo: Good morning. Hey, just to follow up on the financing plan for the potential $350,000,000 upside CapEx. Should we kind of generally model that as a 50-50 debt and equity? And would you possibly consider hybrids? Kevin Christie: Yeah. To be clear, we would expect that spending to start maybe in earnest to the extent that we are able to proceed sometime later this year, but really in 2027–2028 and into 2029. And we would expect a 50-50 capital structure or funding approach with incremental capital beyond what we have described here. And to your question around hybrids, we would consider that option if we were able to move forward with that much additional capital beyond the base plan. Brian Russo: Okay. And would you also consider monetizing the other businesses, which according to the 10-K, have an equity interest value of $148,000,000 as of December 2025? I am wondering because of, you know, your shift in reporting, it just seems that there is a much bigger focus on the utility. And are any of those investments considered noncore, so to speak? Kevin Christie: Yeah. I appreciate you noticing all of that, Brian, and that is exactly the intent here. We would look to monetize some of our nonregulated investments to the extent that there is an opportunity to do so with a material gain, and if that were to take place, that would help offset equity, meaning that we would issue less equity on a go-forward basis. That would be the likely plan. Brian Russo: Okay. Great. And one more question. Just to be clear, the 4% to 6% long-term EPS CAGR correlates to the 5% rate base CAGR. Therefore, this 12% hypothetical rate base CAGR would, in theory, be accretive to the 4% to 6%. Correct? Kevin Christie: Yeah. Let me walk you through that. So the way I think about it is the 5% CAGR on our capital investment plan over the next five years, you will notice from the graphic that we were displaying that we have an increase in the middle due to the RFP. And so to call it 5%, I would say that is a bit conservative. We have a significant increase from, you know, year one through three when we execute on the investments related to the RFP in 2028. And then in the back end, we would expect to have additional investment opportunities, hopefully the large load and more, and then that would pull us up to the 12% rate base CAGR. If we had that opportunity and all those investments came to fruition, that would help pull us up to the top end of the 4% to 6% range. I do not have exact figures, and we do not know yet all the investment opportunities that we might have in subsequent quarters, whether we could get above the 6%, but we would talk to you about that in subsequent quarters. Brian Russo: Okay. Great. Thank you very much. Operator: Thank you. Thank you, Brian. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. Our next question comes from the line of Chris Hark of Mizuho. Your line is now open. Chris Hark: Hi. Good morning, everybody. How are you? Heather Rosentrater: Good. Good morning, Chris. Chris Hark: I just have a follow-up question on the CAGR there. Just given the low result in 2025, do you still expect to be in a 4% to 6% range? And then what kind of ROE are you using to get to the midpoint of 2026 guidance? Kevin Christie: Yeah. We certainly believe that we can get to our 4% to 6% growth. 2025 was our baseline, and although we fell short there, over the next three, four, or five years, we would expect to be in that 4% to 6% range. So that is the plan, and we think we can get there. What was your second question, Chris? Chris Hark: And then the ROE that you are using to get to 2026 guidance. Kevin Christie: Assumed ROE? Well, again, we have expressed here that we expect to be at, on a long-run basis, 9%, which is an increase from 8.8%, and that incorporates the ER—or does not include the ER, I should say. So in 2026, as we have described to you here, we are going to have pressure on that 9% due to the fact that we are likely to be, as we have said here, $0.10 or so negative. And then we continue to have structural lag around 60 basis points. We also lost that large customer which has an impact. So overall, we would expect to be in the low to mid 8s in 2026 from a utility ROE. Chris Hark: Okay. Thank you. Super helpful. And then just one last thing. Just looking for some clarity on the rate base CAGR. Have you included that upside CapEx in the CAGR at all? Kevin Christie: The upside CapEx is not included. We are using the incremental $350,000,000 related to a potential large load for how it could help from an overall investment opportunity. And to the extent that we are able to pull forward additional items or investments from the RFP, and we have the opportunity to invest in additional transmission, that would all be incremental to that base. Chris Hark: Okay. Thank you. That is it for me. Have a good one, guys. Kevin Christie: Great. Thanks, Chris. Operator: Thank you. I am showing no further questions at this time. I would now like to turn it back to Stacey Walters for closing remarks. Stacey Walters: Thank you all for joining us today and for your interest in Avista Corporation. Have a great day. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good morning, everyone, and welcome to BKV Corporation's fourth quarter and full year 2025 earnings conference call. As a reminder, today's call is being recorded. A brief question-and-answer session will follow the formal presentation. I would now like to turn the call over to Mr. Michael Hall, Vice President of Investor Relations. Please go ahead. Michael Hall: Thank you, Operator, and good morning, everyone. Thank you for joining BKV Corporation's fourth quarter and full year 2025 earnings conference call. With me today are Christopher Kalnin, Chief Executive Officer; Eric Jacobsen, President of Upstream; and David Tameron, Chief Financial Officer. Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements, which are subject to certain risks, uncertainties, and assumptions. Actual results could differ materially from those in any forward-looking statements. In addition, we may refer to non-GAAP measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, including those associated with the recently completed power JV transaction or the integration of recently acquired upstream assets, as well as the reconciliations of non-GAAP financial measures, please see the company's public filings included in the Form 8-Ks filed today. I would also point listeners to the updated investor presentation posted this morning on our Investor Relations website. We encourage everyone listening to review those slides and our forthcoming annual report to be filed with the SEC for further information on our business, operations, results from the quarter and full year, and details on our 2026 guidance. I will now turn the call over to our CEO, Christopher Kalnin. Christopher Kalnin: Thank you, Michael, and thank you, everyone, for joining us to discuss our fourth quarter and full year 2025 results. As we close out 2025, I am proud to report that BKV Corporation delivered a transformational year that exemplifies our “said-did” culture and positions the company for sustained, long-term profitable growth. We generated strong earnings, maintained a fortress balance sheet, and delivered strong growth. 2025 marked our first full year as a public company, and we executed across each pillar of our closed-loop strategy. Our business lines of upstream natural gas, natural gas midstream, carbon capture, and power deliver premium, low-carbon energy solutions that are increasingly sought after in today's energy markets. In our upstream business, we exceeded expectations throughout the year, and our performance across the Barnett and Northeast Pennsylvania showcased the depth, durability, and competitiveness of our upstream assets with approximately 8% exit-to-exit organic production growth on upstream development capital well within cash flow and with top-tier F&D costs. The successful close of the Bedrock acquisition in the third quarter was executed in line with our plans. The transaction materially expanded our footprint in the Fort Worth Basin and added high-quality assets. We added more than 100 MMcfe/d of production and nearly 1 Tcfe of proved reserves to our leading position in the basin. Our upstream business remains foundational to our growth strategy. We believe we have built a scalable, repeatable, and disciplined operating model for extracting value from mid-tenured shale basins. Our team is at the forefront of driving efficiency by leveraging technology, data, and AI to optimize development and performance across our portfolio. This is a model that we believe wins in mid-tenured gas basins over the long term. In our carbon capture business, we had meaningful progress in 2025. Earlier in the year, we secured a transformative partnership with Copenhagen Infrastructure Partners (CIP), who committed up to $500 million for joint investment in carbon capture opportunities. We are working hand in hand with their team to scale this business profitably. Our flagship Barnett Zero facility continues to operate efficiently and has achieved cumulative injection of over 311,000 metric tons since first injection in November 2023. Further, we have announced multiple new projects during the year, including projects in Texas with a large midstream operator and Comstock Resources. We recently signed definitive agreements with Comstock Resources to sequester CO2 from their Bethel and Marquet facilities in the western Haynesville play. We expect to commence commercial operations in 2028. I would like to thank Jay and his team for their continued strong partnership in these projects. BKV Corporation has taken a clear leadership position in carbon capture and materially advanced the projects in our pipeline towards commerciality. On the back of that momentum, we are refreshing our near-term CCUS injection target to 1.5 million tons per annum within 2028. We believe this volume run rate will enable the business to contribute materially to our financials. Carbon capture remains a key growth driver in 2026 and beyond. We remain on track with the start-up of our Cotton Cove and Eagle Ford facilities in 2026 and are excited about the future opportunities in this business. Our power business is a core growth engine within our closed-loop strategy. On the back of our recent power JV transaction, which closed on January 30, we now hold a 75% majority ownership in the 1.5 gigawatts of low heat rate generation capacity at the Temple plants, which are located at the center of ERCOT's accelerating AI and data center boom. BKV Corporation’s power assets performed well during Winter Storm Fern. Within ERCOT, natural gas supplied nearly 60% of power generation through periods of peak load. This represents nearly four times the next closest source and reinforces the central role of natural gas in ensuring grid reliability. We are well positioned to deliver capital-efficient growth from these assets as we seek to secure long-term fixed offtake agreements in the form of power purchase agreements (PPAs). In 2025, we continued to advance our structured and competitive process to secure a long-term offtaker for our Temple Energy Complex. We are currently evaluating proposals from multiple counterparties which have shown strong interest in our offering. The broad participation in this process has reinforced our conviction that our Temple Energy Complex is uniquely positioned to provide near-term power solutions to some of the largest technology companies and infrastructure developers in the country. We remain confident in the timelines we previously outlined and continue to target a potential PPA in 2026 to early 2027. BKV Corporation’s position in the state of Texas is ideally situated to benefit from the confluence of some of the biggest megatrends in energy. The Barnett Shale in the Fort Worth Basin sits underneath one of the fastest-growing markets for power and industrial growth in the country. We believe Texas is set to attract significant investment dollars in data center and other infrastructure over the coming years. BKV Corporation is working closely with state regulators, policymakers, and stakeholders to ensure investments in power and other forms of energy generate win-win outcomes for the state. Our strategy is backed by a systematic investment approach, which combines the winning formula of gas, power, and carbon capture to generate premium margins from our energy portfolio. Our carbon sequestered gas product, which we expect to hit the market this year, is a prime example of the unique energy products that BKV Corporation’s closed-loop strategy can bring to the market. BKV Corporation is excited about the future as we believe our differentiated strategy will create leading risk-adjusted returns for our shareholders. With that, I would like to hand the call over to BKV Corporation’s President of Upstream, Eric Jacobsen, to discuss our upstream and CCUS operational performance for the quarter and full year. Eric Jacobsen: Thanks, Chris. 2025 was an outstanding year for our operations, capped by a strong fourth quarter that highlighted the depth and quality of our asset base, the strength of our team, and the disciplined, efficient approach we apply across the business. For the full year 2025, our upstream business delivered, and in many cases exceeded, the targets we previously set, including the following highlights. We delivered robust organic production growth of 8% exit-to-exit while spending well within upstream cash flow and driving continued cost efficiencies. We beat and raised our full year legacy production guidance twice in the year, by 4% at midyear and then by another 1%, all within our initial development capex and while maintaining LOE at the midpoint of guidance. We achieved a step change in completions efficiency, setting multiple internal records above 22 horsepower-hours per day. We drilled several company-record laterals, including the longest well in the history of the Barnett Shale. We delivered top-tier performing new Barnett wells, with three ranking among the highest in the entire history of the basin based on first-month production. We lowered D&C cost per lateral foot to a gas peer-leading $545 per foot. We achieved consistent and sustained positive offset well, or POW, production, a unique advantage in the Barnett, which we discuss further in our investor presentation. We delivered the lowest base decline amongst our peers, supported by our extensive dataset and application of AI technology. We seamlessly integrated our recently acquired Bedrock assets, adding scale and inventory to our leading Barnett position. And we ended the year with approximately 6 Tcfe of 1P reserves valued at 10% of $3.1 billion. The fourth quarter was a continuation of the results we had seen all year. We again outperformed guidance across key metrics, punctuated by zero reportable safety incidents; production that outperformed the upper end of our guidance range at 940 MMcfe/d; we delivered our first NEPA well to production for the year and drilled three additional wells with completions expected in 2026; and we had over $6 million invested in rapidly progressing Bedrock development, landing full year 2025 development capital spend at $245 million. To note, we invested $319 million all-in corporate capex, which was below the initial low end of full year guidance. And we executed our first post-acquisition completions on the Bedrock assets, including two DUCs and two refracs, with strong results. One more example of Barnett competitiveness and an important proof point in the continued optimization of the Barnett development is what we refer to as positive offset wells, or POW. In addition to new wells outperforming type curve expectations, we are consistently observing a material and sustained uplift in parent well performance across our DSUs following new completions. Based on early analysis across approximately 30 new wells and their offsets, we have seen an approximate 22% uplift above type curve on average through the first 150 days of production. Roughly half of this outperformance is due to POW. Whether POW, peer-leading D&C cost, structurally lowered operating costs, or applying big data and AI, these and more combined validate our comprehensive operating approach of delivering durable value over the long term. And there are more innings yet to go. It is a model that we believe wins in every mid-tenured gas basin. We are applying that model to our Bedrock acquisition, which has proven to be everything we anticipated and more, with integration progressing ahead of pace. The assets fit seamlessly with our existing acreage position, creating further opportunities for lateral extensions, inventory additions, and multiple optimization levers. As an example of further accreting value, or what we call torque, we are actively evaluating over 60 equivalent 10,000-foot Tier 1 locations compared to 50 underwritten, and over 100 refrac candidates compared to 80 underwritten. Importantly, value creation from the acquisition is exceeding our underwriting assumptions in development counts, early-time performance, day-one LOE reductions, and other areas, reflecting our ability to apply torque to the asset and unlock incremental synergies and value. These assets complement our low base decline, attractive economics, and highly competitive and accretive inventory opportunities, which are all trademarks of our dominant Barnett position. Our performance throughout 2025 confirms that the Barnett is not only alive and well, but highly attractive and ideally positioned relative to other shale plays with advantaged access to the heart of the Gulf Coast gas market. Looking ahead to 2026, we expect continued strong performance from our upstream operations enhanced by the full integration of our Bedrock assets. While the impacts of Winter Storm Fern resulted in significant and unanticipated downtime, we still expect strong production in the range of 900 to 930 MMcfe/d during Q1. Development capex spend in the first quarter, we anticipate to be in a range of $70 to $100 million. For the full year 2026, we are guiding to 935 MMcfe/d of production on $240 million of development capital spend, right in line with our 2025 development program. Our upstream business continues to serve as the backbone of our closed-loop operations model, generating the cash flow that enables growth across all our business lines while maintaining operational excellence and capital efficiency. Turning to carbon capture, 2025 was a year of strong, accelerating momentum for the business. Against the backdrop of growing market demand and supportive policy tailwinds, we advanced multiple projects across our portfolio, progressing them through critical stages of evaluation, development, and execution. Key highlights from the continued expansion and maturation of our development pipeline include our Eagle Ford and Cotton Cove projects, which continue to progress as planned with commencement of operations at both locations on track. At our East Texas project, where we are working with the same large midstream company as we are in the Eagle Ford, we have reached internal FID and are currently scheduled to begin drilling the injection well in the first half of this year. And we also plan to drill our High West stratigraphic test well in the first half of the year. In addition, as Chris mentioned, we have recently executed definitive agreements with Comstock to add CCUS to their Bethel and Marquet facilities in the western Haynesville play in East Texas. We continue to advance discussions on additional CCUS opportunities with new partners and emitters, with a focus on larger projects that offer greater economies of scale. Several of these opportunities are referenced in our updated investor presentation, and we look forward to providing updates as appropriate. Our flagship Barnett Zero facility continues to maintain exceptional reliability, providing the operating model that we will apply to our soon-to-be-commissioned projects. Given our continued execution and expanding project base, our path to achieving 1.5 million tons per year run-rate CO2 injection during 2028 is well within reach. In addition to the projects currently underway, we have commissioned several studies to evaluate the feasibility and cost profile of deploying post-combustion carbon capture technologies. Demand signals continue to strengthen across power and industrial markets as customers seek reliable, low-carbon energy solutions, and we are positioning the business to remain a leader in this space. I will now turn the call over to our CFO, David Tameron, for a review of our power business and financial results. David Tameron: Thank you, Eric. 2025 was a year of meaningful progress for BKV Corporation as we continued to execute and deliver on our promises. We had significant transactions in upstream, power, and CCUS. We strengthened our balance sheet and improved our capital structure, issuing our first-ever bond while also increasing float and improving liquidity in our stock. We entered 2026 with significant momentum and are well positioned to capitalize on our strategic initiatives. In our power business, we delivered consistent performance throughout 2025, with the Temple Energy Complex maintaining high availability factors, minimal unplanned downtime, and strong operational execution. The Temple plants achieved a combined average capacity factor of 57% during the fourth quarter of 2025 and 59% for full year 2025, generating over 7,600 gigawatt-hours. During the fourth quarter, power prices averaged $49.69 per MWh, with natural gas costs averaging $3.55 per MMBtu. This resulted in an average quarterly spark spread of $24.54 per MWh. For the full year, power prices averaged $48.86 per MWh with natural gas costs averaging $3.31 per MMBtu. This resulted in an average full-year spark spread of $25.36, underscoring the growing power demand in ERCOT. Average spark spreads for the full year were up over 15% versus the prior year. Power JV adjusted EBITDA was $31 million for the fourth quarter and $127 million for the full year, of which BKV Corporation had a 50% interest. Reflecting our new controlling ownership stake, beginning with our first-quarter 2026 results, we will consolidate the power JV. For the first quarter, we expect gross power JV EBITDA of $25 to $35 million, reflecting typical seasonal patterns, capture of storm-related power pricing, and strong operational performance thus far in the quarter. Importantly, we weathered Winter Storm Fern without any related downtime. This is an important proof point for the reliability of our Temple assets as we engage in PPA offtaker discussions. For full year 2026, we are guiding to a power JV EBITDA range of $135 to $175 million. This outlook reflects the strength of the platform we built, continued operational execution, and confidence in the earning power of our Temple assets. Turning to our 2025 corporate financial performance, these results clearly demonstrate our team's relentless focus on execution and ability to consistently deliver. Combined adjusted EBITDAX attributable to BKV Corporation was $109 million in the fourth quarter and $390 million for the full year. This represented a 19% increase quarter over quarter and a 47% increase year on year. For the fourth quarter, adjusted net income was $27 million, or $0.29 per diluted share. For full year 2025, adjusted net income totaled $120 million, or $1.40 per diluted share. Capital expenditures totaled $102 million for the fourth quarter and $319 million for the full year. This full year result is below the low end of our original guidance, reflecting highly competitive capital efficiency and our ongoing attention to capital discipline and cost optimization. Importantly, after fully funding all capital investments across our business lines, and excluding any cash contribution from our power JV, we generated positive free cash flow for the entire year, and we did this while further strengthening our balance sheet and improving our liquidity. At year-end, total debt was $500 million, with the only debt outstanding reflecting our recently issued senior notes. Net leverage ratio was 0.9x. Cash and cash equivalents totaled $199 million, and total liquidity stood at $984 million, more than double the prior year. Looking ahead, our 2026 capital investment program is structured to lay the foundation for a multiyear phase of disciplined growth. There are three key components of this program. First, total gross capital expenditures of $410 to $560 million, including an anticipated $135 million of gross strategic power capital. This power investment reflects the constructive conversations we are having with multiple potential PPA offtakers. Second, on a net basis and excluding our power growth capital, we are targeting a net capital investment midpoint of $324 million, effectively flat year on year. Third, and importantly, based on current strip pricing and just as we did in 2025, we expect our total full year net capital expenditures to be fully funded within cash flow. This approach reinforces our commitment to disciplined capital allocation while positioning the company for sustainable, long-term value creation. Regarding hedging, our program continues to provide downside protection while allowing participation in favorable market conditions. In our upstream business, our total 2026 hedge position protects just over 60% of forecasted production, with gas hedged at $3.85 per MMBtu and NGLs hedged at $22 per barrel. In our power business for 2026, we have hedged 40% of our ERCOT generation capacity through heat-rate call options, or HERCOs. These HERCOs include substantial premium revenues that help mitigate annual earnings volatility. We have also locked in fixed spark spreads on roughly 100 megawatts, while retaining meaningful merchant exposure across the balance of the platform. For the remainder of our 2026 guidance, please refer to our complete schedule, which can be found both in the press release and our latest investor deck. With that, I will turn the call back to Chris for his closing remarks. Christopher Kalnin: Thanks, David. As we conclude our discussion of 2025 and look ahead to 2026, I want to highlight what truly differentiates BKV Corporation. We have built a distinctive, winning strategy connecting natural gas production, power generation, and carbon capture into a virtual closed-loop platform uniquely positioned to serve the evolving needs of the energy market. This strategy is operating today, delivering results, and positions us to shape solutions for the evolving needs of hyperscalers, data center developers, and industrial customers. Looking ahead to 2026, we see clear growth vectors. Increased control of our power JV is expected to enhance earnings and cash flow while enabling tangible strides towards executing a PPA. Our CCUS business is accelerating momentum, with additional projects coming online soon and with an increasingly high-graded portfolio of attractive projects in development. Our upstream business remains a reliable, repeatable cash engine with leading corporate decline rates and F&D metrics. Finally, I want to thank our exceptional BKV Corporation team for their commitment to our values, our safety culture, and their focus on the execution of our strategy. We enter 2026 with strong momentum, clear line of sight to growth, and confidence in our ability to create long-term, risk-adjusted shareholder value. Operator, we are now ready to take questions. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press 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. We ask that analysts limit themselves to one question and a follow-up so that others have the opportunity to do so as well. One moment, please, while we poll for questions. Our first question comes from Betty Jiang with Barclays. Please proceed with your question. Betty Jiang: Hi. Good morning. Team, congrats on just strong execution across all segments in your first year. I want to start with a question on the strategic power growth capex. Can you, Chris, speak to what specifically is that spending on? Clearly, it is not maintenance, and it is aligned with the progress in the conversation that you are seeing. So can you just give us a bit more color on is it spending ahead of contract that you are expected to sign later this year or early next year? Thanks. Christopher Kalnin: Yes. Hey, Betty, thanks for the question. So you are correct. The power investments are strategic. As you can imagine right now, as you discuss long-term offtake agreements with potential customers, those designs are going to be in a private use network type setup. That is the assumption here. And so as part of a private use network, you need to invest in transformers, switches, power lines, generation equipment, earthworks, pipelines, water. And that infrastructure then gets recovered over the life of a contract. Right? And so what we are guiding here is that we have got designs and/or investments that need to be made to enable this, and that is really where you see that capital. When you think about the existing Temple 1, Temple 2 capex, you can imagine historically that has been in that sort of $5 million-ish per year level, and we expect that to continue. So the vast majority of what we are guiding here to is really for establishment of a private use network type setup, and that is, again, we think incredibly important to accreting value in a very capital-efficient manner for BKV Corporation. David Tameron: Yes, Betty, just if I could tack on one thing. Just keep in mind that all this is going to be funded within cash flow. Our entire 2026 program, including strategic power capital, is going to be within cash flow for 2026. Betty Jiang: Got it. And it also sounds like you recover this capex in that PPA contract down the line as well. Christopher Kalnin: Exactly. It works just like a lease, Betty. If you invest and a landlord puts in infrastructure, then they recover it in the rent. It is the same concept. In a PPA, you basically amortize the cost of your capital over the life of a contract as part of the investments you make. Betty Jiang: Got it. That makes sense. My follow-up is on the CCS business. It is really good to see that million-ton-per-annum target getting raised to 1.5. Clearly, momentum on that asset. Can you speak to the financial implication of that business going forward? Maybe help us with maybe dollar-per-ton margin on that business. And what are you seeing in the market to drive that confidence to raise that long-term target? Eric Jacobsen: Hi. Good morning, Betty. This is Eric. Thanks for the question on CCUS. It is a good one, and we have signaled before, on the back of the passage of the One Big Beautiful Bill Act, some expanded commercial interest. We continue to see that, and that commercial interest and the subsequent projects like Comstock that we were excited to announce definitive agreements reached upon, in total, has given us the confidence to raise that target to 1.5 million tons run rate within 2028. So we are stair-stepping into that already this year with two more projects coming on in the first half. We will be drilling another injection well, a High West stratigraphic well, and then advancing these commercial agreements like Comstock towards FID. You can think about the economics of these projects in the kind of $48-per-ton EBITDA range, and those are the kind of solid economics we use as we march forward towards that 1.5 million tons. Betty Jiang: That is great. Thank you. David Tameron: You bet. Operator: Our next question comes from Scott Gruber with Citigroup. Please proceed with your question. Scott Gruber: Yes. Good morning, and I will echo the congrats on a strong performance last year. Given multiple vectors of growth here, Chris, I wanted to come back to power. You are investing in a private use network. It sounds like that is separate from the grid, so just wanted to confirm that. And then there are discussions happening at ERCOT around alterations to their grid connect approval process. How is that impacting your discussions with potential customers for a longer-term PPA? Christopher Kalnin: Hey, Scott. Thanks. Good questions. On the private use network, the setup would be ultimately to connect it back into the grid. So you can imagine it is a behind-the-meter setup. You would hypothetically connect into a data center directly from your generation assets, but then you would have a switching yard that would feed a substation which is grid-connected. And those timelines may not match up one-to-one, and so, as we have mentioned, this is probably where you are going to see the market move with co-located power generation over the next few years. The reason for that is manyfold, but a lot of it has to do with transmission congestion. One of the biggest constraints in the market—this will get to your second question—is the ability to move electrons in sizable form in and out of localized areas. Having co-located power in a private use network setup really does solve a lot of the issues associated with that. It optimizes the amount of capex that needs to be incorporated in the grid. That is really where we see the market going. In terms of the regulation specific for Texas and ERCOT, I think it is overall bullish. Texas is going big on data center infrastructure. It is open for business. There is a very strong feeling here in the state to promote investments in the power grid. We think Texas is one of the states that is really going to figure this out quickly, and BKV Corporation is taking a leadership position in power in Texas. With regards to the regulations themselves, the major concerns of the grid operators are: one, we want to ensure grid reliability—so how are you considering that; two, we want to make sure rates are fair and equitable to existing customers across the state; and three, we need to make sure that new investments are built into the system or are encouraged. The regulations are orienting towards large load—that is the SB 6 regulation that everyone is talking about here—and we think it is incredibly constructive because what they are doing is creating a framework to high-grade projects that address all those three things: grid reliability, ability to ensure equitable rates to existing customers in the state, and then adding grid generation assets. Our designs that we have been describing, including the capex I mentioned, address those three key points. We think this is going to high-grade the projects that are real, that have real customers, that have real funding behind them, and weed out those projects which are speculative and not as real. Overall, we are active with the regulators and the stakeholders here in the state, and we think that Texas figures this out very quickly. A lot of customers have that same view. Scott Gruber: I appreciate all the color. I also want to turn to the Comstock deal. Good to see that across the finish line. Can you walk through the injection ramp at those facilities, as well as the timing of the associated capex? And is there capex associated with those projects in the second half of this year, for instance? Just some color there would be great. Christopher Kalnin: Yes. Thanks, Scott. It is a good question. I appreciate Jay and his team really working with us on this project. If you think about what we have guided to, we are expecting to be injecting in 2028. So that is when we are going to commercialize these projects. We did not guide to a volume ramp. Obviously, that is something that we are working with Comstock and we will figure out. You can think about the volume as multiples of our current injection amounts, so it is a significant amount of injection volume. If you think about the spend curve, most of these projects follow a typical construction S-curve. So within the last 12 months before injection, that is when you see a majority of the capex get spent. We have historically guided to a couple hundred dollars per ton of capital that has to go into investment. That is not a bad way to think about it. You should expect that spend to be more back-end loaded, and then the volumes themselves to be multiples of what we are currently injecting. Scott Gruber: Great. Exciting. I appreciate the color. Thank you. David Tameron: Thank you. Thanks, Scott. Operator: Our next question comes from Jonathan Martini with KeyBanc Capital Markets. Please proceed with your question. Jonathan Martini: Hi. Good morning. Thank you for taking our questions. On power, on slide seven, you referenced a potential PPA execution on 4.5 terawatt-hours of unutilized capacity. Can you just clarify whether this implies a PPA covering just a portion of the Temple plants' capacity, with the remainder being sold into merchant markets? Or just how you are seeing the structure of a PPA shaping up based on your latest discussions? Christopher Kalnin: Yes. Jonathan, it is Chris here. It is a good question. When you look at Temple today, we have two identical power plants in Temple 1 and 2, each 750 megawatts. Today, we hedge roughly half of the complex—so one power plant–equivalent worth of power. There are several reasons you do that. Oftentimes, you can sequence your maintenance to be down on one plant and be fulfilling your power obligations off the other, and so we see a PPA in a similar type structure. A PPA effectively is a long-term hedge on power prices. You could imagine that you are going to always be looking at about half your capacity being contracted and the other half being floated so that you can manage around your maintenance schedules and have resiliency as well. The balance of the volumes that are not contracted, you are absolutely right, from a behind-the-meter setup, you would be able to feed that into the grid and sell that, and you are able to load balance. If you have additional power that the customer is not using, you would theoretically sell that additional power into the grid as well. When you think about these agreements, they are structured like long-term offtake agreements that you would see potentially even for an LNG contract. They are substantive. You can imagine something like 750 megawatts over 10 to 20 years with a structured price, which is somewhat a capacity payment blended with an energy payment, and at a price that is typically about strip. These are the structures that we see in the market today and are good reference points. You are starting to see the announcements on the gas side for these. That is how you can envision something like this coming together. Jonathan Martini: Okay. That is great context. Appreciate that. Just moving on to CCUS, on the sequestration outlook for a 1.5 million ton annual run rate by 2028, it is an increase from the prior 1.0 million tons you saw by 2027. Just on that gradual ramp, can you help us understand how you see those volumes scaling throughout 2030? Eric Jacobsen: Sure. Hey, good morning, John. Eric here. For the ramp through 2030, I will start with the ramp into 2028—the 1.0 million tons, as you referenced, we have updated and upgraded that on the back of a lot of commercial interest, as I mentioned earlier, following the One Big Beautiful Bill. We have taken that commercial interest and translated it into projects like the Comstock project and others in the making that we are progressing towards FID. As I mentioned, we have the two this year, we are drilling some more wells, and we are really excited about this steady cadence of capex to get us to that 1.5 million tons by 2028. Then, as we ramp from there into 2030, the volumes start to ramp significantly on the back of some of this commercial interest in bigger projects that we are navigating now. On the back of the seven Class VI permits that we filed—six of which are in Louisiana, all of which are progressing nicely—you will remember in Louisiana, our High West project is surrounded by 30 million tons of CO2 emissions within a 30-mile radius. You can see the size and magnitude of projects that help us start to scale this business dramatically past 2028 on the back of these existing Class VI permits, roughly 50,000 acres we have under pore space lease, and a really nice platform to grow post-2028 as we deliver on the 1.5 million tons run rate within that year. Jonathan Martini: Understood. Appreciate the context. I will leave it there. Operator: Our next question comes from Michael Furrow with Pickering Energy Partners. Please proceed with your question. Michael Furrow: Hello, good morning. Thanks for taking my questions. It seems like the company's willingness to develop the Temple 3 plant, if it is underpinned by an offtake agreement, is a positive indicator for your outlook on the PPA market as a whole. So would you say that your confidence level has improved in signing a quality PPA, and therefore, the potential for a Temple 3 plant has improved? Christopher Kalnin: Yes. Hey, Michael, good question. Absolutely right. If you look at what I have just described in terms of the way the regulators are thinking about the large load applications and the overall SB 6 process, having additional generation assets co-located with additional data center infrastructure is, in our minds, very critical. You need to be able to show that you are going to not only take power from the grid, but you are also going to contribute power to the grid and add to grid resiliency. That enters the concept of Temple 3. We believe that Temple 3 does contribute to that. It adds additional resiliency to the Temple Energy Complex. Originally, Temple was designed for three power plants. There is sufficient space, water, gas infrastructure, etc. It makes a lot of sense that as you start to design a private use network, you would include the construction and development of additional generation assets in the form of a, hypothetically, Temple 3. We are excited about that. Again, it would be backed by commercial arrangements. In the same vein as the capital we are spending on the power side, you are looking for a return on that capital as part of an agreement, and we would not move forward without those agreements in place. As you have highlighted, the optimism around what is happening in Texas and the overall amount of data center infrastructure that we expect to be built is, I would say, really accelerating, and BKV Corporation is at the forefront of that. Michael Furrow: I appreciate that detail. As a follow-up, I would like to hear on the Upper Barnett appraisal program that is targeted for this year. The breakeven costs appear higher than the core Lower Barnett position. So what are the company's ultimate goals here with this program? And maybe you can provide us with a well count that the company plans to test this year. Eric Jacobsen: Yes, sure. Hi, Michael, it is Eric. Thanks for the good question on the Upper Barnett. We are excited about the future of the Upper Barnett as included in our inventory counts. We will be testing one well at least this year, possibly two. At the moment, our breakevens are slightly higher than our average for the Lower Barnett. But on the back of the success we have had in Lower Barnett—dramatically lowering dollar-per-foot cost by 30% over the last three years; enhancing and advancing completions; negotiating gathering, compression, processing, transport for the Upper Barnett; and our ability to execute—we have proven to execute in the high $0.40s per Mcfe F&D cost. We will translate all those learnings into the Upper Barnett this year. We will drill the one well, we will evaluate it, and we may drill a second by the end of the year. Then we will have a steady dose of Upper Barnett wells as part of our program going forward. We absolutely expect to delineate and confirm those 100 wells this year. We are excited about those on the back of the older vertical wells and some refracs we have had in the area. We really think the Upper Barnett is prospective, and we look forward to sharing some more results by midyear to the second half of the year. Thanks for your time. Operator: Our next question comes from Jacob Roberts with TPH and Company. Please proceed with your question. Jacob Roberts: Good morning. I wanted to start by circling back to the power capital, and I guess my question is maybe in context of slide 25. When we think about that guidance, is that a function of the number of potential PPAs? Is it a function of the scale of the agreement or even maybe the geographical distance from Temple? Christopher Kalnin: Morning, Jake. Yes. Thanks, Jake. Good question. I think the slide is meant to show the activity around Temple. If you think about where people are building massive amounts of data center infrastructure, they are looking for a few things. One is the ability to add generation assets and grid interconnect—that is critical. Number two, they are looking for proximity to existing fiber lines and/or data center clusters that are already in existence. Number three, they are looking for a buildable, friendly environment where licensing, contracting, and regulations are streamlined. Temple sits right between the Dallas–Fort Worth area and the San Antonio cluster, and this slide is meant to show the amount of activity in Temple. The city of Temple itself has been astronomical in the last, especially 24 months, around that, and it is for the reasons that I just mentioned. It is flat land, it is buildable, it is Texas, it is grid-connected, there are three 345 kV lines. That is the intention. In terms of how you would actually design, the closer to the generation assets, the better, as you build. You are going to see more and more of this co-located power design that I am describing here. That is critical because of what I mentioned around grid congestion. If you are pulling huge amounts of megawatts, the more localized you can match that demand and supply, the less taxing amount of infrastructure you rely on the grid. That is where you are seeing loads in the past in that 200 to 300 megawatt level for data centers—now folks are talking about gigawatt plus. When you are talking about a gigawatt interconnection, you really do need localized generation support. You can imagine the closer you are to generation assets, you optimize your capex more and you get better bang for buck in terms of the overall design. That is where this goes, and you are seeing that in this slide here on ’25 with 1.5 gigawatts of generation capacity. Jacob Roberts: Thanks, Chris. That is helpful. And then maybe taking a longer-term view on the gas marketing side of things, could you remind us on how your Barnett takeaway contracts are currently structured? And maybe in terms of the ability to eventually shift more of those volumes toward what could become more valuable hubs, specifically Katy and Ship Channel. Eric Jacobsen: Yes. Sure, Jake, this is Eric. Thanks for the question on the contractual nature of our marketing. As we show in our slide deck, right now from the Barnett anyway, roughly 40% of our gas goes to Houston Ship Channel, 30% to Katy, and 30% to Transco. We receive a very nice uplift from the Transco Station 85 on a typical run-rate basis. Over time, a lot of firm contracts are expiring over the next two or three years, enabling us opportunities to sell the gas into multiple markets, and this is exactly why we are so very excited to be positioned in the Gulf Coast. We can sell to our own power plants or other power plants. We can sell locally to the DFW area. We can expand some of our contracts to these existing hubs, directly to industrials in the Gulf Coast corridor, and then, of course, the big boom of all, the LNG expansion that is hitting to the tune of, in our estimation, multiple Bcf over the next four or five years. Being positioned in the Gulf Coast, having access to multiple points and hubs, as well as infrastructure that was built to handle far more than the Barnett is producing today as a basin, and the contractual nature of our expiries that allow us the flexibility, we are very excited for margin enhancement—what we call alpha margin—as a result of our marketing coming out of the Barnett and really increasing the commercial generation of cash flow and margin from our company. David Tameron: Yes, Jake, it is David. It is something we are actively managing. We spend a lot of time on that internally. You have heard Chris talk about it. At the end of the day, we want to be the highest dollar-per-molecule provider out there, and this is part of that. You will see us over the next six to nine months offer more color around our marketing efforts, and I think it will be well received by you and the Street. Jacob Roberts: Thanks, Eric. I appreciate your time. Operator: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Fu Fang with Roth Capital Partners. Please proceed with your question. Fu Fang: So I just have a question about the East Texas project. In the last quarter, you said that the target FID was going to be in first half 2026, but this quarter, you said it is going to be in the internal FID in December. So is that project still waiting for FID, or is it ready? That is one question. Eric Jacobsen: Yes. Thank you. This is Eric. Thank you for the question, Fu, about our East Texas project where we reached internal FID. Yes, we are very excited about that. That is stage one in our trajectory towards our final investment decision, which we have not put out a timeline on just yet. What I can say is we are progressing that project with the same major midstream operator for which we are doing the Eagle Ford project about to start. All of the documents and agreements are in place. We will be drilling the injection well this year, with an anticipated start-up sometime in 2027, as we have signaled. FID is forthcoming on that. We will be drilling the well. We are very excited for that here in the first half of the year, and we look at that as a continuation of our kind of sweet spot so far in these Class II natural gas processing projects, generating that $48 per ton in EBITDA margin and stair-stepping into additional projects in our ramp to 1.5 million tons. Fu Fang: Thank you. And just my second question about the M&A. After Bedrock acquisitions, what are the constraints on the M&A right now? Christopher Kalnin: Yes, Fu, it is Chris here. I think we have shown this is a company that knows how to do M&A. The Bedrock acquisition is going incredibly well in terms of just being able to integrate those assets and really absorb them into the Barnett. The Barnett remains our core M&A target. There is a natural roll-up on the upstream side. There are a number of players that we have shown in the past. There is over a Bcf of M&A opportunities in the basin, and we will continue to prioritize those. More broadly speaking, we are always looking in the M&A markets. We think this business model for mid-tenured gas basins is ideally positioned, and we really are mastering it. We manage some of the oldest shale wells in the entire country, and we understand how to manage them really, really well, and we have demonstrated that. As we look in the Gulf Coast at basins and evaluate the rise, we will be active evaluating and analyzing opportunities and looking for accretive, risk-adjusted transactions so that BKV Corporation can continue to scale our business model in line with the winning formula of gas, power, and carbon capture. Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Christopher Kalnin for closing comments. Christopher Kalnin: Thank you, everyone. I appreciate your time. BKV Corporation is positioned for growth along all our three vectors. We are very excited about 2026, and we look forward to future announcements around that. Thank you, everyone. Michael Hall: Thank you, Maria.
Operator: Good morning. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation fourth quarter 2025 and full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. Thank you. Blake Kolo, you may begin your conference. Blake Kolo: Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the fourth quarter and full year 2025 UWM Holdings Corporation earnings call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning. Our commentary today will also include non-GAAP financial measures. For more information on our non-GAAP metrics and the reconciliation between the GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today, as well as our filings with the SEC. I will now turn the call over to Mathew Ishbia, Chairman, President, and CEO of UWM Holdings Corporation, United Wholesale Mortgage. Thanks, Blake, and thank you everyone for joining. Appreciate you guys being here. 2025 was an amazing year at UWM. You know, reflecting the strength and consistency of our business model, we executed a high level and delivered industry-leading results throughout the year, still investing in the long term. Mathew Ishbia: It was our fourth consecutive year as the number one overall lender in America, and our eleventh consecutive year as the number one wholesale lender. This has never been done in the history of the mortgage industry, and we are really proud of our success and our dominance across the industry in wholesale and overall. Now, for the year, we delivered $163.4 billion originations, which is up 17% from 2024; $244 million in net income, and that included a $435 million MSR write-down. Our adjusted EBITDA was over $697 million. So we delivered an amazing quarter, $49.6 billion originations, a phenomenal year across the board. Now turning to the fourth quarter, which is up 28% year over year. Our gain margin was 122 basis points, and our net income was $164.5 million. That included a $28.8 million write-down of MSRs. You know, on top of that, adjusted EBITDA was $232.8 million. It was just really strong across the board. An amazing fourth quarter. Really proud of what we did, and now we are going to continue to dominate going forward. Now, our process of bringing servicing in-house is on track. Our partnership with BUILT is going fantastic. We are so excited about what is going on right now. Going to deliver the best consumer experience in the industry just like we do on the mortgage side, on the lending side. We are going to do it on the servicing and also keep our brokers connected and engaged to their consumers’ lives going forward. So we are really excited about this. BUILT is going to allow our brokers to not only acquire consumers earlier and expand the volume, the top of our funnel for lead flow, but also keep the mortgage brokers top of mind through the whole process. So BUILT-UWM servicing process is off to an amazing start, and we are really excited to give you more information about that as it goes forward. Now, the pending Two Harbors acquisition and process of bringing servicing in-house are strategic inflection points, not just operational improvements. Together, these initiatives position us to expand our dominance, deliver high-quality leads to our brokers, increase the recapture rate while lowering cost per recaptured loan, and more data-driven personalization tools for our brokers. You can think about our servicing platform as both a growth and retention engine. We will continue to capitalize on where the market is going. More consumers are entering the broker channel, driven by rate shopping, optionality, speed, and a mortgage broker’s ability to guide them. Our 100% broker model at our scale is both unique and a tremendous advantage. We put our business in position in a more organic way to dominate than any of our competitors, and we are excited about the growth going forward. I will now turn the call over to our CFO, Rami Hasani. Thank you, Mathew. Q4 was a strong quarter. Rami Hasani: Reported total revenue of $945 million in Q4. Up from $843 million in Q3. Income was $164.5 million in Q4, up from $12.1 million in Q3. We also continue to maintain our MSR portfolio with a UPB of approximately $241 billion, a fair value of $4.1 billion, and net servicing income of $186 million in Q4, up from $169 million in Q3. For the full year, we reported total revenue of $3.2 billion in 2025, up from $2.7 billion in 2024. Net income was $244 million, down from net income of $329 million in 2024. We also delivered servicing income of $725 million in 2025, up from $637 million in 2024. As we have said consistently, supporting long-term growth means continuing to invest in our people, processes, and technology, and doing so in a way that strengthens our operating capacity. In 2025, we continued to focus on investing to be prepared for growth, as we have mentioned before. We remain firmly on strategy with our investments, including bringing servicing in-house, which positions us to capitalize on significant market opportunities as volumes continue to normalize and grow. From a capital and liquidity perspective, we remain well capitalized with total equity of $1.6 billion. We also continue to be in a strong liquidity position, with total available liquidity of $1.8 billion at the end of Q4. While our liquidity position was higher at the end of Q3, it was due to the timing of the $1 billion senior unsecured bond issuance in September and our proactive liability management with the use of proceeds prior to the mid-November bond maturity. Net available cash and our leverage ratios as of the end of Q4 remained relatively consistent with Q3. Going forward, we expect to continue to maintain our capital, liquidity, and leverage ratios within what we believe to be acceptable ranges. And upon completion of our acquisition of Two Harbors, we expect that our capital, liquidity, and leverage ratios will be further enhanced. In summary, Q4 and 2025 delivered strong performance, and we are excited for 2026, bringing servicing in-house and completing the Two Harbors acquisition to further strengthen our business for long-term growth and success. I will now turn things back over to our Chairman, President, and CEO, Mathew Ishbia, for closing remarks. Mathew Ishbia: Alright. Thanks, Rami. I will close with a few quick points. We are very optimistic on the mortgage and housing industry. You know, there is a big tailwind behind all of us. A lot of it is tied to the market, the administration, HUD, FHFA, Treasury, all these leaders in the country and in our industry are trying to find a way to help affordability and lowering rates, help more consumers. UWM Holdings Corporation will be the clear beneficiaries of all these changes, and we are excited about what is going on. Now, we expect to stay number one in the growing market, excited about how our AI implementation drives expenses lower while driving production much higher. The opportunity is there right now, and we are seeing it happen. Our model is unique. As with the lowest cost of energy, and with servicing in-house, the BUILT experience and pending Two Harbors acquisition, we now have a closed-loop platform that will help position us to accelerate broker channel growth and drive consumer retention for us and the channel. Now, on these calls, I have always taken questions. We have gone through the process, and we believe our industry’s superior business model that the short Q&A does not necessarily do it justice, really make it to explain the complexity of business. So I am not going to go through the question process today, but I do encourage you to read the SEC filings for more information about our business and strategy. UWM Holdings Corporation has had such a dominant 2025. We are going to have an even more dominant 2026, and I am really, really excited about it. So the year 2025 was about execution, disciplined investment, continued leadership. We are well positioned operationally, financially, and strategically for 2026 and beyond. We remain focused on the long-term focus of dominating this industry, taking care of our consumers, our team members, our brokers, our shareholders, and we are going to do just that going forward. Thanks for the time today. Have a great day, and we will talk soon. Operator: This concludes today’s conference call. You may now disconnect.
Operator: Greetings. Welcome to the Atlanta Braves Holdings, Inc. Fourth Quarter and Year End 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. As a reminder, this call is being recorded. At this time, I would like to turn the call over to Cameron Rudd, Vice President of Investor Relations. Before we begin, we would like to remind everyone that on today’s call, Cameron Rudd: management’s prepared remarks may contain forward-looking statements. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today, including those set forth in the risk factors section of our annual and quarterly reports filed with the SEC. Forward-looking statements are based on current expectations, assumptions, and beliefs, as well as information available to us at this time, and speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events. During this call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA. The full definition of non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained in the Form 10-Ks and earnings press release available on the company’s website. Now I would like to turn the call over to Terence McGuirk, Chairman, President, and CEO of Atlanta Braves Holdings, Inc. Terence McGuirk: Welcome, everyone, and thank you for joining our fourth quarter and year end 2025 call today. With spring training underway, we are energized about the year ahead. I have been to our North Port, Florida spring training facility over the past two weeks, and I am pleased with the progress of the team and the pieces we have in place. Walt Weiss, our new manager, is working hard and building team momentum as we look toward opening day. We believe we are well positioned with a strong team and the organizational depth to be competitive this season. We continue to focus on improving our team with the ultimate goal of competing and winning another World Series for our fans. As I stated on our last call, we are driven to return to our long tradition of winning and championships, and Alex Anthopoulos, our President of Baseball Operations, has done an excellent job navigating this offseason and adding some key free agents to the team. To that end, we are excited about the addition of Robert Suarez, who was just named by ESPN as the number one reliever in baseball and will form one of the best back ends of a bullpen in the Majors when paired with Raisel Iglesias. We also have Jorge Mateo and Mauricio Dubon, who both can play anywhere on the diamond and will be anchoring the shortstop position until mid-May when Gold Glover and newly signed Ha-Seong Kim returns from a finger injury. Dubon has also won a Gold Glove as a utility infielder in two of the last three seasons. We were also pleased to strengthen our formidable bullpen with the signings of Tyler Kinley and Joel Payamps. We are adding these talented players to an already elite roster that includes reigning National League Rookie of the Year, Drake Baldwin, reigning Gold Glove winner, Matt Olson, former National League MVP, Ronald Acuña Jr., and former Cy Young winner Chris Sale, who we signed to an extension earlier this week, along with the standout players and fan favorites Austin Riley, Spencer Strider, and many, many more. Also, catcher Sean Murphy is recovering nicely from hip surgery last September and is making great strides toward rejoining the team in the early part of the season. We firmly believe we have all the pieces we need to make a postseason run this year and compete for a World Series title. We are not alone in that belief. FanGraphs picked us to compete for a World Series title and named us the number two preseason team in the entire Majors in their power rankings just behind the Dodgers. Now let me address one more important issue that emerged as we started this year: local media broadcasts. As you all know, the industry has been working through the ongoing saga of the decline of Main Street sports. With Main Street out of the way, the Braves now have our local TV rights back, and instead of going through a third-party regional sports network to monetize these rights, we will be stepping into the Main Street role and directly handling the distribution, production, and revenue generation of the full season of games ourselves. We are fortunate to have much of this expertise in-house at the Braves and are confident that we will be able to produce, distribute, and deliver our games and additional Braves content in a way that is compelling and serves our fans very well. We have one of the largest television territories in baseball, spanning multiple states, which affords us the opportunity to optimize our financial outcome, a factor that provides us an advantage that no other Main Street team has. Our goal is to be sure that every fan who wants to watch an Atlanta Braves game can do so. The demand for our product remains incredibly high, which makes the job of reengineering the distribution system much easier. Yesterday, we announced the launch of our new distribution and streaming platform, PraiseVision, introducing our fans to the new platform for Praise broadcasts. Before I turn the call over to Derek, I would like to thank our fans, our team, the entire organization for their continued support and efforts, and recognize that it is through hard work and dedication that we continue to be one of the elite franchises in all of Major League Baseball and across all professional sports. With that, I will turn it over to Derek to walk through our operating performance, ticketing trends, and outlook, including more detail on the local media rights topic. Derek G. Schiller: Thank you, Terry, and good morning, everyone. I will start with one of our most pressing topics as we head into the final weeks before the start of the regular season. For our organization, our priority throughout the whole process around media rights has been clear. We wanted to maximize reach and availability for fans while protecting our economics given the popularity and value of our team. As Terry mentioned, we are excited to launch Brave Vision, a multimedia platform owned and operated by the team, which will serve as the official home of our local television broadcast beginning this season. In bringing our broadcast back under control, our initial focus in 2026 will be our pregame show, our in-game presentation, and postgame content. Importantly, we will maintain full creative oversight of the production as well as the sales, marketing, and distribution of the venture. We have an experienced team that is talented and motivated, so we are confident in our ability to deliver for our fans and excited to see what our operating team can do. Ray’s vision will allow fans to watch us on multiple platforms, including many of the same television providers where fans are used to watching our games, with all games available on a streaming platform in partnership with MLB. Importantly, Gray Media will remain our partner. Starting already with spring training, Gray Media will broadcast 15 spring training games, a 50% increase after the successful partnership last year. In addition, Gray will partner with Gray Media to simulcast a selection of regular season games alongside Braves Vision. These free over-the-air telecasts will be available on Peachtree TV’s Atlanta CW and Peachtree Sports Network in Atlanta and throughout the Southeast through Gray’s network of broadcast stations. This broadcast partnership highlights the Braves’ commitment to engaging fans across Braves Country. In addition to local Braves television broadcasts, the team will appear in nationally televised games this season with various MLB broadcast partners, including Fox, FS1, ESPN, TBS, NBC, Peacock, and Apple TV. As we have said in the past, there is tremendous value in our expansive fan base, and serving our fans is our top priority. We believe this is also in the best long-term interest of our team and our shareholders. With this resolution in place, our focus now shifts to execution, optimizing outcomes across subscriber reach, distribution, advertising, and streaming options while continuing to ensure fan access. I would like to turn now to last season and what we are taking from it as we head into the new year. Despite the season on the field in 2025, we delivered record-breaking regular season ticket sales and sponsorship revenue, underscoring the enduring strength of the Braves brand and the unwavering passion of our fans and partners. We also sold the fourth-highest number of tickets in the past 25 years, which reinforces the tremendous loyalty we have from our Braves Country fan base. Heading into the 2026 season, we are encouraged by strong ticket demand, having already sold more than 1,900,000 tickets across seasons, groups, hospitality packages, and single-game inventory. Our premium clubs continue to be sold out, and there is a robust waitlist on all season product offerings, exemplifying one of the most sought-after season ticket memberships in MLB. Within ticketing, we have also been able to optimize our process through a combination of pricing strategy, product segmentation, and improved inventory management. We are continuing to invest in ticketing analytics so we can better measure demand elasticity by game, opponent, day of week, and seating category. That work is already improving marketing efficiency and conversion, helping us put the right offer in front of the right fan at the right time. Importantly, it also supports our premium and group strategy, which we view as meaningful levers for revenue quality. Looking ahead, we are focused on improving our on-field competitiveness while also building momentum in The Battery Atlanta as a multiuse destination that drives year-round engagement and revenue. We see our business and baseball strategies as aligned. A competitive team supports demand, and our broader development platform supports durability across cycles. The Battery also continues to perform as a multiuse destination, and our strategy centered on diversifying demand drivers and broadening our calendar to increase repeat business visitation is working. With over 380 total events and concerts held in 2025, we reinforced The Battery Atlanta and Truist Park as a premier destination in the Southeast even outside of the Braves’ home schedule. Of these 380, we hosted 144 events across the common areas of our campus, held 147 events at the Coca-Cola Roxy, and added another 95 game day and Truist Park events. This breadth of year-round events is another shining example of why we believe we operate with the most unique partnerships in professional sports. To that point, we continue to expand our non-game day schedule of events throughout the season. As an example, after a successful two-game series last year, we are excited to host the Savannah Bananas for three games this year, further expanding this unique experience at our ballpark. We also recently announced that we will be hosting Braves Country Fest on June 13 in partnership with Live Nation. This features performances by Cody Johnson, Bella Langley, Ernest, and Mackenzie Carpenter, among others. And in addition, Noah Kahan will be performing at Truist Park on July 27. These examples and more reiterate our ability to attract top-tier events to our ballpark and campus throughout the year, and we look forward to continuing our positive momentum with additional concerts, community events, and other activations. Looking forward to 2026, we are confident in our ability to deliver to our fans across Atlanta and across the entire Southeast. We continue to focus on improving our fan experience at the ballpark as well as the overall experience across our campus. The launch of Brave Vision is something that we believe will be a defining moment for our franchise and our fans. Our expansive television market territory is one of the largest in professional sports and gives our team options that few others do. With our media rights resolved ahead of the season, we are excited about the future this brings and focusing on creating the best possible product. With that, I will turn it over to Mike to provide updates on The Battery and our real estate strategy. Mike: Thank you, Derek, and good morning, everyone. Let me start by reinforcing Derek’s comments on our real estate strategy. We continue to view The Battery as a long-term platform that diversifies our business, broadens our audience, and supports durable growth over time. In 2025, we welcomed nearly 9,000,000 visitors to The Battery, mostly in line with our levels from 2024, even as baseball attendance was softer last season. For us, that is a strong indicator that our awareness is increasing given all the events we have hosted and other offerings we have added around The Battery, and that the destination value proposition is resonating beyond game days. From a tenant perspective in The Battery, 2025 was a record year. Our tenants collectively achieved a new annual sales milestone of approximately $137,000,000 across just 30 doors, which we believe ranks among the most successful mixed-use operations in the country. We also continue to strengthen our tenant lineup with the openings of the new Truist Securities building, Walk-On’s Sports Bistreaux, and Shake Shack, among others. We are excited about J. Alexander’s joining The Battery in 2026. From a portfolio standpoint, PennantPark was a key contributor this year. We successfully acquired and closed the property and ended the year at approximately 90% occupancy, an impressive increase from the low 80% range at closing in April. In the fourth quarter alone, we closed just under 50,000 square feet of new deals and have a very strong tenant pipeline into 2026. Across The Battery more broadly, we had a strong year of continued transformation, including meaningful capital investments aimed at improving the guest experience and long-term functionality of the campus. The pedestrian bridge connecting The Henry project to The Battery is nearing completion, which will further enhance connectivity, expand our parking operations, and improve overall flow throughout our growing footprint. We are still opportunistic as we evaluate future transactions and believe our record speaks for itself as we look to optimize the portfolio over time. Importantly, we continue to command rent premiums across our retail, office, and hotel assets with rates above market supported by demand, engagement, and performance. Tenant engagement also remained strong. We continue to secure early lease extensions and receive daily inbound interest from prospective tenants, which gives us confidence in the depth and quality of our pipeline. From a financial standpoint, I am pleased to report that mixed-use development revenue continues to perform well and represented approximately 13% of the company’s total revenue in 2025. We are currently generating over $100,000,000 in revenue on an annualized basis as our mixed-use development revenue continues to expand its role as a meaningful contributor to our team and franchise value. With that, I will now turn over the call to Jill to walk through our financials in detail. Jill L. Robinson: Thanks, Mike. Before I begin, I want to remind everyone that a majority of our revenue is seasonal and is aligned to the baseball season. Our final 2025 home game was in the third quarter. We are pleased to report that 2025 was a strong financial year for our organization. Total revenue in 2025 was $732,000,000. This is an increase of nearly $70,000,000 from $663,000,000 in 2024. As a reminder, the company manages its business based on the following reportable segments: baseball and mixed-use development. Baseball revenue was $635,000,000 in 2025, up from $595,000,000 in 2024. This revenue increase was driven by a combination of increased event, broadcasting, and other revenue. Baseball event revenue was $358,000,000 in 2025, up from $348,000,000 in 2024, primarily due to contractual rate increases on season tickets and existing sponsorship contracts, as well as new premium seating and sponsorship agreements, offset by attendance-related reductions in revenue. Broadcasting revenue, which includes national and regional revenue, was $189,000,000 in 2025, up from $166,000,000 in 2024. Other revenue was up by $8,000,000 to $42,000,000 in 2025 compared to $34,000,000 in 2024, primarily due to events held at Truist Park, including two Savannah Bananas games. Next, our mixed-use development revenue was $97,000,000 in 2025, a $30,000,000 increase from $67,000,000 in 2024. This was primarily driven by a $27,000,000 increase in rental income due to new lease commencements and in-place leases acquired with PennantPark and, to a lesser extent, sponsorship and parking revenue. Adjusted OIBDA was $108,000,000 in 2025, an increase of nearly $70,000,000 from $40,000,000 in 2024. This improvement was driven by an increase of $44,000,000 in baseball OIBDA and an increase of $23,000,000 in mixed-use development adjusted OIBDA due mainly to the increases in revenue in both segments and reduced baseball operating costs. Mixed-use development adjusted OIBDA serves as a proxy for net operating income. Additionally, we have invested in two Battery hotel properties as 50% joint ventures, which are accounted for as equity method investments. Our share of earnings in these investments is not included in mixed-use development adjusted OIBDA but still represents an important part of our operations. Our operating loss was $14,000,000 in 2025 compared to a loss of $40,000,000 in 2024. This improvement was primarily due to increased revenue, partially offset by a $30,000,000 noncash impairment expense associated with the termination of the long-term local broadcast agreement and increased depreciation and amortization. As of 12/31/2025, the company had $100,000,000 of cash and cash equivalents. Nearly all of our cash and cash equivalents are invested in U.S. Treasury securities, other government securities or government-guaranteed funds, AAA-rated money market funds, and other highly rated financial and corporate debt instruments. And with that, Operator, let us open the line for questions. Operator: Thank you. We will now begin the question and answer session. Your first question today comes from the line of David Joyce from Seaport Research Partners. Your line is open. David Carl Joyce: Thank you. Congratulations on standing up Brave’s vision. I was wondering what sort of OpEx or CapEx was reflected in your financials for getting that up and running, or is it more going to be reflected here in the first quarter? And then secondly, if you could remind us, please, on the blackout rules for the local TV. It is TV and streaming opportunities. I know that your press release mentioned that there were some no-blackout issues, but just remind us of that, please. Thanks. Jill L. Robinson: Hi, David. This is Jill. In response to your first question about OpEx and CapEx for the broadcasting business, historically, we have not shared information at that level in our financial statements. We do share with you broadcast revenue, so I really cannot speak to that at this time. Looking forward, as we launch Bravevision, you should expect to see more detail about the financial results of this new operation starting in Q2. Derek G. Schiller: Yeah. And I will take the second one. It is Derek. The blackout rules and the way that we reference them really pertain primarily to the streaming platform. So as we launch brave.tv, which is in partnership with Major League Baseball, in effect if you are a subscriber of graves.tv, you can watch anywhere inside of the territory as part of our local broadcast opportunities. And should you leave the home television territory outside of the Southeast or five, six state area, so long as you are a braves.tv subscriber, you will be able to watch the Braves games wherever you travel inside of the United States. If you are an MLB.tv subscriber, so you have an out-of-market package, you can watch both inside and outside the territory, which is why we referenced the blackout restrictions the way that we did. David Carl Joyce: Appreciate it. Thanks. And if I could kind of follow on to the media rights aspect, obviously, with the CBA coming up later this year and other leagues looking to redo their national rights deals, what are updated thoughts on how things are evolving? What is the probability that Major League Baseball would want to perhaps negotiate back these local media rights from you later on? They are handling a number of other teams. Thanks. Terence McGuirk: Hi. This is Terry responding. As you know, our next national media opportunity is 01/01/1929. That will be the next time all of our national rights come up. Rob Manfred, the Commissioner, has been quoted, I think, in saying that if, you know, our best, our best opportunity to possible best opportunity would be to aggregate all of our rights like the NBA, like the NFL, like hockey, and that is still a strategy that is not clear yet as to how we will play that. But the Commissioner will be leading that negotiation in that strategy discussion among the owners. And we will surely keep our shareholders and our analysts up to speed when that happens. Operator: Next question comes from the line of Barton Crockett from Rosenblatt Securities. Your line is open. Barton Evans Crockett: Okay. Great. Thanks for taking the question. Let me see. One of the things that I, you know, just stepping back, I am just kind of curious about in terms of the financial cash flow profile of the Braves this year versus years past. You know, in this year, you just reported, you know, the free cash flow was, I guess, a negative $25,000,000 or so if I have got that right. And, you know, when you look ahead to 2026, you know, there is $100,000,000-ish or so of local broadcast revenue that might, you know, be somewhat less as you go through this transition, maybe, maybe not. And then you have got some incremental tax impacts that could be coming up from the tax laws that, you know, limit kind of deductibility of salaries to high-paid employees like, you know, your star baseball players. And so I am just wondering if you could talk a little bit about how you see free cash flow trending going forward and if there is a deficit, how you see kind of financing that? And, you know, given your position as kind of a public company versus others, you know, where you have got the pockets of billionaires to kind of finance it, you know, does this put any pressure on you guys competitively, do you think? Jill L. Robinson: Yep. Thanks for the question. As we think about cash flows, we do tend to think about this in terms of our two businesses: baseball and the real estate business. On the baseball side, what we have said on a few occasions is that our goal is always to reinvest the profit from our team performance and from the operations of baseball into the team. We believe the team is the biggest asset we have that can drive top-line growth for the company, and that is generally what our focus is. Now that said, over the past couple of years, we have launched a master planning project across the stadium where we are adding increased offerings to the stadium, specifically in premium areas and other hospitality areas. We believe those things are already driving great returns and paying dividends for us. On the baseball side, we think of things a little bit differently as we are continuously evaluating opportunistic investments in real estate that we can add to our portfolio, similar to what we did last year on PennantPark. Now as you look forward, I think without disclosing too much here, you may see a difference in how the cash flow comes in with us running the business now as opposed to outsourcing the media business to FanDuel. Like I said earlier, you will begin to see a little bit more of how that plays out when the business really begins to operate in Q2. Barton Evans Crockett: Okay. But, you know, I guess I will leave some of that aside. Maybe just one more kind of detailed question. You know, I think there has been some discussion about the changes in tax laws around deductibility of high-salary kind of employees, and, you know, that being a new kind of tax impact for maybe a publicly traded sports franchise like the Braves that the private-owned franchises do not face? I was wondering if you could talk about the materiality of that for you guys and, you know, given that there is at least, you know, maybe another corporate enterprise out there that has some teams that is publicly traded, is there any possibility for you guys to get together with others to lobby for that law to be treating both private and public ownership more fairly? Derek G. Schiller: Burton, it is Derek. I will jump in on this one. You know, we are obviously aware of the 162(m) issue that you are referencing. We have looked into it. We understand, you know, what is out there, and we are working on that. I do not think it is appropriate at this point in time to comment on that, because we are still in the midst of those discussions and what we are trying to do with that. But certainly, certainly aware of what is out there and what we need to do to try to figure that out. Barton Evans Crockett: Okay. Alright. Well, I appreciate the answers. Thank you. Operator: And at this time, there are no more questions in queue. I will now turn the call back to management for closing remarks. Derek G. Schiller: So I will close it out. It is Derek. On behalf of the entire management team, I want to thank everybody for participating in today’s call, and we look forward to seeing you and hearing from you again soon. We are 30 days from opening day. Hope you are all paying attention. We are excited to get the season started and look forward to seeing you on March 27 for our opener. Operator: Bye-bye. This concludes today’s conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, and welcome to the Icahn Enterprises L.P. Fourth Quarter 2025 Earnings Call with Andrew Teno, President and Chief Executive Officer; Ted Papapostolou, Chief Financial Officer; and Robert Flint, Chief Accounting Officer. I would now like to hand the call over to Robert Flint, who will read the opening statement. Robert Flint: Thank you, operator. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements we make in this presentation, including statements regarding our future performance and plans for our businesses and potential acquisitions. Forward-looking statements may be identified by words such as expects, anticipates, intends, plans, believes, seeks, estimates, will, or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of Icahn Enterprises L.P. and its subsidiaries. Actual events, results, and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties, and other factors that are discussed in our filings with the Securities and Exchange Commission, including economic, competitive, legal, and other factors. Accordingly, there is no assurance that our expectations will be realized. We assume no obligation to update or revise any forward-looking statements should circumstances change, except as otherwise required by law. This presentation also includes certain non-GAAP financial measures, including adjusted EBITDA. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures can be found on the back of this presentation. We also present indicative net asset value. Indicative net asset value includes, among other things, changes in the fair value of certain subsidiaries, which are not included in our GAAP earnings. All net income and EBITDA amounts we will discuss are attributable to Icahn Enterprises L.P. unless otherwise specified. I will now turn it over to Andrew Teno, our Chief Executive Officer. Andrew Teno: Thank you, Rob, and good morning to everyone on today's call. Fourth quarter NAV decreased by $654,000,000 compared to the third quarter. The excellent performance in our funds, up approximately 11% for the quarter, was offset by share price declines in CVI. Regarding CVI, we do not believe there are any material changes to CVI's outlook. Rather, we remain optimistic on the medium-term refining outlook. The two positive factors are: one, limited capacity expansions globally; and two, multiple new pipeline projects that will move Mid-Con and Gulf Coast barrels to the West Coast, which should help improve regional profitability for CVI. On a company-specific level, CVI is focused on improving its capture rates, which should drive improved profitability even if industry crack spreads remain constant. Now turning to the funds. In the fourth quarter, we were up approximately 11% including refining hedges and up approximately 9% excluding refining hedges. The big contributors for the quarter were EchoStar, the refining hedges, and Sentry. Our lone big detractor was Caesars. For the year, we are about flat including refining hedges and up 7% excluding refining hedges. In terms of our top positions, AEP is an electric utility that is benefiting from the AI infrastructure buildout and a new world-class management team. During their third quarter call, AEP disclosed a new $72,000,000,000 CapEx plan that would drive its asset base to grow at a 10% CAGR and its earnings per share to grow at a 9% CAGR through 2030. Already, after only a few months, the company is seeing opportunities to add an additional $5,000,000,000 to $8,000,000,000 of projects that would further grow its asset base and earnings per share. Southwest Gas is a gas utility that we exited subsequent to the quarter. I am proud of the work that we did in collaboration with the Board and management team. The company is in a much better position today than when we first invested given the Great Basin Pipeline Expansion Project, path to improve return on equity, and best-in-class balance sheet. Turning to EchoStar. The company sold additional spectrum to SpaceX in exchange for additional SpaceX common equity, further demonstrating the value of EchoStar's spectrum portfolio. We believe meaningful upside remains and that the IPO of SpaceX could serve as a meaningful positive catalyst. Sentry, a utility infrastructure services firm, is firing on all cylinders, reporting base revenue and EBITDA growth of 25–28% in Q3. The combination of the organic growth and a recent equity offering has led to leverage declining to mid 2x EBITDA, giving the company significant financial flexibility, further enabling it to continue capturing the tremendous growth in energy infrastructure investment. IFF is a high-quality consumer staple company where the refreshed management team continues to impress. IFF announced a formal sale process for its food ingredients business and gave 2026 guidance for mid-single-digit comparable EBITDA growth as portfolio optimization and investment in product innovation drive volume growth and performance. One name that fell off the top five list is Caesars, where the stock has underperformed our expectations. We continue to believe that Caesars is undervalued given the significant owned real estate portfolio and the growing digital business powered by iCasino. Using consensus estimates, Caesars trades at approximately a 20% free cash flow yield, which is expected to be used to repurchase shares and pay down debt. If I step back and speak a bit more broadly, we are taking a slightly more cautious view of the market. With all the wild swings in sectors that are deemed at risk of AI, we are happy to be in defensive names that should benefit from the AI buildout with a significant war chest to take advantage of opportunities as they arise. As of year-end, we had approximately $750,000,000 in cash at the funds. More recently, our cash balance at the funds has increased and is greater than $1.2 billion. Subsequent to the quarter end, we have taken steps to reduce our IEP corporate debt balance, and we called in the remaining balance of the 2026 maturities. Lastly, the Board declared an unchanged distribution at $0.50 per depositary unit. I will now pass it to Ted to talk about our controlled businesses. Ted Papapostolou: Thank you, Andrew. Energy segment's adjusted EBITDA was $51,000,000 for Q4 2025 compared to $99,000,000 in Q4 2024. The fertilizer business was negatively impacted by low utilization caused by the turnaround at the Coffeyville fertilizer facility and a three-week downtime event caused by the facility's third-party air separation plant. During December, CVI completed the reversion of the RDU at the Wynnewood refinery back to hydrocarbon processing. And now turning to our automotive segment. Q4 2025 automotive service revenues decreased by $1,000,000 compared to the prior year quarter. Same-store sales paint a better picture, having increased by 5% as compared to the prior year quarter. We are pleased with this positive revenue trajectory, but there is still a lot more work to be done. We continue to focus our efforts on product, pricing, labor, and distribution strategy. Now turning to our other operating segments. Real Estate's Q4 2025 adjusted EBITDA increased by $6,000,000 compared to the prior year quarter. The increase is primarily driven by income from the assets that were transferred from the auto segment, of which $9,000,000 is intercompany income from the auto segment and $3,000,000 from third-party tenants. Food Packaging's adjusted EBITDA decreased by $8,000,000 for Q4 2025 as compared to the prior year quarter. The decrease is primarily due to lower volume, higher manufacturing inefficiencies, and disruptive headwinds from the restructuring plan. During Q4, we made a change to the CEO position and brought back Tom Davis, who was the CEO of this case previously and has a successful track record with the company. With his knowledge of the industry and the business, we feel he is the right person to lead this case through this transformative period. Home Fashion's adjusted EBITDA decreased by $5,000,000 when compared to the prior year quarter, primarily due to softening demand in our U.S. retail and hospitality business. The tariff uncertainty has created opportunity for the company as new business has entered into the bidding pipeline, and we are hopeful this will have a positive impact for the segment in 2026. Pharma's adjusted EBITDA decreased by $4,000,000 when compared to the prior year quarter, primarily due to reduced sales resulting from the generic competition in the anti-obesity market. The TRANSCEND trial preparation for our PAH drug is on schedule, and the first patient will be dosed in the next 60 to 90 days. The physician community is excited by the potential for disease-modifying designation. And now turning to our liquidity. We maintain liquidity at the holding company and at our operating subsidiaries to take advantage of attractive opportunities. As of quarter end, the holding company had cash and investment in the funds of $3,500,000,000, and our subsidiaries had cash and revolver availability of $913,000,000. We continue to focus on building asset value and maintaining liquidity to enable us to capitalize on opportunities within and outside our existing operating segments. Thank you. Operator, can you please open up the call for questions? Thank you so much. Operator: And as a reminder, to ask a question, press *11 on your telephone and wait for your name to be announced. To remove yourself, press 11 again. Again, that is *11 if you have a question. All right. Thank you so much. This concludes our Q&A. I will pass it back to Andrew Teno for final comments. Andrew Teno: Right. Well, thank you, everyone, for joining today's call, and we will speak to you next quarter. Operator: Thank you. And this concludes our conference. Thank you for participating, and you may now disconnect.
Operator: Greetings, and welcome to Centuri Holdings, Inc.'s fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nate Tetlow, Vice President, Investor Relations. Please, you may begin. Nate Tetlow: Thank you, Angeline, and hello, everyone. This morning, we issued and posted to Centuri Holdings, Inc.’s website our year-end 2025 earnings press release and investor presentation. Please note that on today’s call, we will address certain factors that may impact this year’s earnings and provide some longer-term guidance. Some of the information that will be discussed today contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are as of today’s date and based on management’s assumptions and are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions and regulatory approvals. A cautionary note, as well as a note regarding non-GAAP measures, is included in today’s press release and the investor presentation and in our filings with the Securities and Exchange Commission, which we encourage you to review. Also provided are reconciliations of our non-GAAP measures to related GAAP measures. These risks and uncertainties may cause actual results to differ materially from statements made today. We caution against placing undue reliance on any forward-looking statements, and we assume no obligation to update any such statement, except as required by law. Today’s call is also being webcast live and will be available for replay in the Investor Relations section of our website shortly after the completion of this call. On today’s call, we have Christian Brown, President and Chief Executive Officer, and Greg Izenstark, Chief Financial Officer. I will now turn the call over to Christian. Christian Brown: Thank you, Nate. Hello to all, and thank you for joining our call today. In 2025, we delivered $3.0 billion of revenue, a record for Centuri Holdings, Inc. We improved our base profitability and produced adjusted net income of $39 million, which was a 49% increase over the prior year. Christian Brown: As a reminder, when speaking of base revenue and base gross profit, we are referring to the measures that exclude the impact of storm restoration services. We believe that base results provide our stakeholders with information that is helpful in evaluating fundamental business performance and provide relevant period-over-period comparisons. In 2025, base revenue increased by 18% and our base gross profit increased by 35% year over year. This exceeded expectations and reflects the strength of our company, the dedication of our teams across the U.S. and Canada, and their unwavering commitment to safety, productivity, and delivering exceptional customer service. I will start with a commercial update. Coming into 2025, we set a goal to achieve a 1.1x book-to-bill ratio. We did not just exceed our goal; we shifted it, delivering a 1.5x book-to-bill for the year. In total, our bookings surpassed $4.5 billion. The mix of bookings included 34% bid work, 21% of new or expanded scope of work on our MSAs, and 45% MSA renewals. Our strong emphasis on business growth was evident with more than half of the bookings representing true incremental, accretive work to our business. We maintained our 100% MSA renewal rate and are actively working to secure new customers and add new work scopes and geographies with existing customers. In 2025, we added new MSAs across Texas, Oklahoma, Arizona, Georgia, Indiana, Wisconsin, and several other states. On the new bid work, we secured over 600 awards with an average size of $2.4 million. A few notable bid awards included a significant natural gas pipe replacement project, major substation upgrade work to strengthen grid reliability and increase capacity, a mechanical vapor recompression system for an ethanol plant, construction of a renewable natural gas facility, several projects to rebuild and construct utility-scale transmission lines, several data center awards with varying scopes of work, and additional scopes of work that include substations, transmission work, heat pump installation, compressor work, HVAC removals and installs, plus many others. We anticipate continued strong bookings due to the multiyear tailwinds within our end markets and our $13.0 billion opportunity pipeline. Christian Brown: Our renewal success and our consistent win rates support our desire for growth. Through February 2026, we have booked approximately $1.1 billion, which includes approximately $800 million of MSA renewals, nearly $150 million of new MSAs, and more than $150 million of bid work. So we are off to a very good start in 2026. For the year, we are targeting a book-to-bill ratio of 1.1x to 1.2x. Christian Brown: Our opportunity set includes about 580 bid opportunities, which collectively amount to $6.7 billion, or just over half of our current opportunity pipeline. At year-end, we had $2.8 billion of near-term opportunities, which are active proposals with award decisions expected by the end of the second quarter. These include about two-thirds of new bid work and one-third MSAs, with over 75% within our electrical segments and the remainder in gas. If we consider our year-to-date bookings, remaining active proposals, and prospects submitted in the new year, the current near-term opportunity sits around $1.3 billion. On data centers, we are actively executing several scopes of work at several data center sites. In our opportunity pipeline, we have more than 20 opportunities with an aggregate value of approximately $1.4 billion. We also have dozens of prospects that are not yet included in our planned pipeline figures because they are early in the evaluation process. We believe the total value of these prospects could reach as high as $2.0 billion. Data center opportunities offer a variety of work scopes for Centuri Holdings, Inc., including power delivery services like simple-cycle turbines, substations, compressors, or metering stations, plus core electric work like switchgear, transformers, UPS units, and generators. On the mechanical side, we handle chiller and HVAC system installs. Additionally, we will bid on traditional infrastructure work like gas, sewer, and water lines, plus telecom and fiber conduit. Now moving over to the backlog. At year-end, our backlog is approximately $5.9 billion, an increase of $2.2 billion, or 59%, from last year. This year-end backlog is forecast to provide over 85% of our 2026 base revenue guidance. Christian Brown: More details on bookings, backlog, and the opportunity pipeline are on slides eight and nine in the investor presentation we have posted. Now moving to margins. In 2025, we reported a base gross margin of 8%, an increase of approximately 100 basis points over 2024. We have several initiatives underway focused on further margin improvement. First, we have initiated a plan to address the first-quarter seasonality in our gas business. The focus is expanding the volume of work in warmer geographies and securing more indoor work. Our goal is to fully address the seasonality over three years, with 2026 year one. Halfway through this current quarter, we are on track to deliver year-over-year improvement, a good first step towards our three-year goal. Second, we are working to improve fleet efficiency through enhanced supplier pricing, improved utilization rates, and optimized allocation across our business units. Through these efforts, we are aiming for at least 20% improvement in the efficiency of our fleet. Third, we are driving improved crew efficiency in our nonunion electric segment, which has delivered significant growth over the last 12 months. As crews gain experience and jobs mature, we expect improved productivity. Base margins in this segment were up in the fourth quarter, and we expect to see more progress throughout 2026. Finally, given the growing number of bid opportunities and our current win rates, we expect our average weighted bid margin to expand over the very near term. Higher bid margins are the first part of the equation, and we will continue to drive operational execution to capture this favorable market dynamic and drive further margin growth. Beyond the commercial and financial success, 2025 also included several important milestones. In September, we became fully separated from our former parent after completing four successful follow-on offerings. In November, we closed the acquisition of Connect Atlantic Utility Services, giving us a Canadian electric service platform, which we can grow and expand our customer relationships. We also made significant strides reducing our leverage, ending the year with net debt to adjusted EBITDA of 2.5x. We are not only driving significant growth in our business, we are doing so on the foundation of a stronger balance sheet and our ownership base. We are extremely well positioned to execute in 2026 and look forward to delivering for our shareholders. I will now turn the call over to Greg to discuss the results. Greg Izenstark: Thank you, Christian, and thank you, everyone, for joining us today. Greg Izenstark: I will start with the fourth quarter, which included another company record for revenue and overall strong financial results. Revenues totaled $859 million, a 20% increase from the same quarter last year. Base revenue was $855 million, which was 28% higher than the fourth quarter 2024. Gross profit for the quarter was $80 million, compared to $71 million last year, and the gross profit margin was 9.4%. Base gross profit was $80 million, which was a 50% increase year over year. Net income attributable to common stock in the quarter was $30 million, or $0.32 per share, compared to $10 million, or $0.12 per share, last year. Fourth quarter net income was impacted by a $23.7 million income tax benefit related to deferred tax asset allocations from our former parent. Adjusted net income in the fourth quarter was $16 million, or $0.17 per share, compared to $18 million, or $0.21 per share, in the same quarter last year. Adjusted EBITDA for the quarter was $78 million, compared to $71 million last year. Our cash flow from operations was $84 million and free cash flow for the quarter was $106 million. The remainder of my comments will focus on full-year results. Greg Izenstark: Revenues totaled $3.0 billion, a record for Centuri Holdings, Inc., and a 13% increase from 2024. Greg Izenstark: Gross profit was $247 million, compared to $221 million last year, and gross profit margin was 8.3% in 2025. Base revenue was $2.9 billion, or 18% higher year over year. Base gross profit was $234 million, up 35% compared to 2024. Base gross profit margin was 8% in 2025, compared to 6.9% last year. Net income attributable to common stock in 2025 was $23 million, or $0.25 per share, compared to a loss of $7 million, or a loss of $0.08 per share, in 2024. Adjusted net income in 2025 was $39 million, or $0.43 per share, compared to $26 million, or $0.32 per share, in 2024. And finally, adjusted EBITDA for the year was $249 million, compared to $238 million last year. Now to our segments. Greg Izenstark: U.S. Gas revenue was $1.3 billion, an increase of 5% compared to 2024. Greg Izenstark: This reflects solid growth in MSA volumes and bid projects, demonstrating the underlying strength of our customer relationships and market position. Gross profit margin was 5.4% in 2025, consistent with prior year. We continue to focus on expanding MSA work and the seasonality initiative that Christian mentioned earlier. Canadian operations revenue was $247 million, up 25% over 2024. Operational performance in this segment remains strong against the solid demand backdrop. Gross profit margin was 18.6%, compared to 15.9% in the previous year. Union Electric base revenue was $800 million, an increase of 21% year over year, and base gross profit margin was 8.7% for the year, an increase of 110 basis points over the prior year. Growth has been fueled by robust activity and projects serving industrial end-user segments, substation infrastructure, and data center-related work. Our nonunion electric segment had base revenue in 2025 of $569 million, an increase of 51% over 2024. This growth reflects the significant expansion in MSA activity. Base gross profit margin was 8.5%, compared to 5.9% in the prior year. As Christian mentioned, in 2026 we are focused on performance management and improving crew efficiency. Now turning to fleet investments and CapEx. Greg Izenstark: In 2025, we began shifting away from the historic practice of purchasing all fleet equipment to a balanced approach that targets 50/50 buy versus lease. The new funding mix drives better free cash flow generation and more balance sheet flexibility. In 2025, we invested a total of $135 million in fleet assets and funded the investments through $55 million of operating leases, $38 million of sale-leasebacks, and $42 million of net CapEx. For 2026, we forecast fleet investments of $150 million to $180 million, with funding expected to be approximately 50/50 buy versus lease. Moving to the balance sheet. Greg Izenstark: In November, we executed an underwritten equity offering and concurrent private placement, raising net proceeds of approximately $251 million. We used $58 million of proceeds to fund the Connect acquisition, with the remainder used for net debt reduction. We ended the year with a net debt to adjusted EBITDA ratio of 2.5x, down from 3.6x at year-end 2024. In 2026, we plan to further delever and forecast net debt to adjusted EBITDA of around 2.0x by year-end. Last month, we repriced our Term Loan B, securing a 25 basis point rate reduction. Based on our current debt level and lower interest rates, we expect 2026 interest expense to be about 30% lower than it was in 2025. Finally, turning to our outlook. Greg Izenstark: Today, we initiated full-year 2026 financial guidance. As we have talked about, base revenue and base gross profit exclude impacts from storm restoration services. For 2026, we expect base revenue of $3.15 billion to $3.45 billion and base gross profit of $255 million to $285 million. Revenue, adjusted EBITDA, and adjusted net income are measures that include storm restoration services. Guidance to these measures includes storm restoration services using a three-year average of $88 million in revenue and $28 million in gross profit. For 2026, we expect revenue of $3.24 billion to $3.54 billion, adjusted EBITDA of $280 million to $310 million, adjusted net income of $55 million to $75 million, and lastly, net CapEx is expected to be between $75 million and $90 million. I will now turn it back to Christian to wrap up our prepared remarks. Christian? Christian Brown: Thank you, Greg. Christian Brown: 2025 was a pivotal year for Centuri Holdings, Inc. We demonstrated our ability to identify opportunities, to secure substantial bookings, to expand our footprint and capabilities, to deliver earnings growth, to grow base margins, and to strengthen the balance sheet. The hard work of 2025 has positioned Centuri Holdings, Inc. for continued success going into 2026. The market backdrop remains very strong across multiple years, with our end markets showing no sign of slowing. Centuri Holdings, Inc. offers top-tier growth while maintaining the low-risk profile you expect from us. Our growth has come and will continue to come by focusing on our core capabilities, delivering for our customers, and staying disciplined to who we are. We have a diverse, high-quality, large utility base across gas and electric, union and nonunion, and supported by a high percentage of long-term MSA contracts. In 2025, 78% of our revenue was generated under MSA contracts, and our year-end backlog included 82% MSA work. While we absolutely expect bid work revenue to grow at a faster rate than MSA revenue over the next few years, it is important to note that the scope of work under bid projects is consistent with the services that we deliver under MSAs. It is the same capabilities, only executed under a different type of agreement. Our bid work portfolio is also well diversified, with 285 different projects and an average remaining project value of $3.8 million. For further context, the largest 25 bid projects in the pipeline are expected to contribute about 15% of our total 2026 base revenue. We believe Centuri Holdings, Inc. represents a compelling investment opportunity carrying high growth in strong end markets with a notably low-risk profile, with further potential to drive margin expansion and capital efficiency through solid execution. Christian Brown: In closing, I want to commend our workforce who are executing day in and day out. Your dedication to operational excellence, to safety, and customer service is what earns our reputation as a leading provider of high-quality infrastructure services. I thank you all. We appreciate everybody’s time and interest today. I will hand to the operator so we can start Q&A. Thank you. Operator: In a moment, we will open the call to questions. If you would like to ask a question, you may press number 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. Kindly limit your participation to one question and one follow-up only. One moment, please, while we poll for questions. The first question comes from Sangita Jain with KeyBanc Capital Markets. Please go ahead. Sangita Jain: Good morning, Christian, Greg. Thank you for taking my questions. For the first question, I want to find out—you are including a three-year average storm revenue in your guidance. How much of that was already realized in the January storm? Christian Brown: Good morning. We did, when you refer to adjusted EBITDA and total revenue, include some level of storm. The storm impact thus far this year has been pretty minor. It is largely in line with what we did last year, so nothing unexpected or significant. Sangita Jain: Oh, you mean in the January winter storm? That was what I was referring to? Christian Brown: Yeah. And I would say that the deployment activity we have done thus far is largely in line with last year. Nothing of a significant nature. Last year had been a quiet year, Sangita. Sangita Jain: Okay. Got it. Thank you. And then on the guidance, if I look at the core guidance, if I exclude storms for a minute, then the gross margin seems to be lower versus this year. Am I reading too much into that? Is there a mix impact that I am misinterpreting? Can you help me understand? Greg Izenstark: No. The gross profit margin would be largely in line with this year, up a little bit on an annualized basis. Sangita Jain: Got it. Thank you. Operator: Thank you. The next question comes from Justin Hauke with Robert W. Baird. Please go ahead. Justin Hauke: Oh, great. First of all, thanks for all the color on the awards and the new disclosure. It is helpful for understanding things, so thank you for that. I wanted to follow up on the margin expectations and the guidance. Maybe you could talk a little bit about the seasonality. I know one of the things you talked about as an initiative is reducing that seasonality for the gas segment. I think you said you were expecting margins to be up year over year in 1Q, but I am just curious how much of a gap you are narrowing. I mean, last year there was a little bit of a loss. Are we more likely to breakeven this year? Or what is the expectation for how to think about the seasonality as we go through the year? Christian Brown: So, Justin, I will answer the question and then pass over to Greg for any additional commentary. We are striving to be predictable and consistent and then build continual improvement, and that should be reflected in everything that you have seen of us over the last few weeks and few months. So, when it comes to margins, it is like our confidence level. We feel very good about being able to deliver it. It reflects the current backlog. It does not assume that we have got lots of things to do to get to that margin. So there is an element of conservatism, just to be consistent, that we have in our margins. Then I will go specifically to the initiatives to improve margin. Where is the margin improvement going to come from? The seasonality, which you just mentioned, on the gas business, and where are we at? It is only one month in, but we see many positive signs in our ability to find work, to win work in the gas business, and push that through to the revenue and the income line, to the P&L. It is only January numbers. We are really just getting to February numbers now, but I think we are going to make a big dent in that three-year program to actually make the seasonality in the gas business not exist across the four quarters. I cannot give you much more than that at the moment for obvious reasons, but we are pleased as we close out the January results, and we are pleased with the volume of work that we are tracking. Then the bid work, which drives the margins upwards, we are very selective now in opportunities and the margin that those opportunities can deliver to us, and that is institutionalized across all of our individual businesses that tender work every day, and, as you see in the slides, we have got very good backlog, very good coverage to deliver our budget as well as the guidance this year. There is an opportunity, therefore, with any additional awards to drive margin improvement. It will take a little bit longer. And then the third thing is the efficiency throughout fleet and the indirect costs associated with it. We have mobilized the resources we need. Our priority was to get the funding of our fleet aligned with better industry practices so that we can generate more free cash flow to invest in the business. So we have done that last year, and that has followed through into 2026. And the focus of the team now is to actually figure out better ways to get more return on the existing asset fleet we have got across all of the businesses operated under Centuri Holdings, Inc. I guess the last comment, we did allude to it in the comments, is on the nonunion electric side. We had a massive growth year over year with pretty much a negligible amount of storms. There was a massive mobilization in the second quarter. In the third quarter, we saw, as we signaled to everybody, an improvement in margin. Those margins continued into Q4. The workforce now is really stable and functioning very efficiently, and I suspect we will see further improvement across the nonunion electric as we close out the first quarter and the way through 2026. Justin Hauke: Okay. Thank you. My second question before I turn it over would be on the awards front. Data centers are something, obviously, you guys highlighted as newer or tangential to what you were doing. Last quarter, you won $140 million in 2025. You talked about this pipeline, $1.4 billion. I think that is actually up a little bit for the data center versus what you called out last quarter, and I know that you had a fair amount of work that was currently out for bid at the time, and I am just curious on the status of the win rates and how those have come in 4Q and year to date, and the expectation for that pipeline, when those awards will come in over the next couple of quarters. Christian Brown: Just to answer your question, I do not typically look at the win rates just on a quarterly basis. It is more of a trend, and our win rates actually have continued to go up all the way through to where we sit today going into February. So if you go back to the 13 months that we have been really driving performance throughout the sales pipeline, we have seen an improvement. I think the win rates—we are happy where they are. Specifically to data centers, your observations are quite right. I think I have spoken about $2.0 billion of opportunity that we could see, of which we are very disciplined on what we will assume in our forecast and what we really put capital behind to go win and resources to go win, because you can chase a lot of work that actually does not conclude with an award that can pay the bills. So the overall focus on data centers remains very much targeted on those customers that we know have capital, that we know are going to award contracts, and that can deliver our returns and our margins. The wins in data centers so far this year are a little slower than expected, but we have a number—getting into commercial sensitivities—awards that are in our near-term pipeline of about $1.5 billion to $1.6 billion that we are negotiating or tendering now. Thank you. Operator: The next question comes from Joseph O'Dea with Wells Fargo. Please go ahead. Joseph O'Dea: Hi. Good morning. In the release, you talk about how the organization has proven its ability to identify and secure growth opportunities over the course of 2025 and certainly see it in terms of the backlog growth. But can you just outline—this happened pretty quickly—can you outline some of the key changes that were implemented in the business in 2025 to drive this, and how you think about the room and opportunity to further advance those in 2026? Any specific initiatives underway? Christian Brown: Joe, thank you for your question. I will take you all back to the beginning of 2025, and I talked about the block and tackling that was needed in the business. The block and tackling was we needed to get a very effective sales pipeline to predict in a more thoughtful way what work was in the pipeline, what was not in the pipeline, and where we need to find more work so that we could drive growth into the business. So the interaction around all of the opcos on a consistent basis, the pipeline, the institutional sales pipeline across the company is now part of what we do day to day without any hesitation. We speak about that daily, weekly, and monthly. That will continue, and that has driven the predictability in our revenue growth. It has driven the predictability on margins, and it has driven the predictability on what we speak about in forecasting as a business. The second thing we implemented was the business cadence on a weekly and monthly basis—really tight block-and-tackling oversight—and that has allowed us to not only drive accountability, it has also allowed us to identify opportunities to do better and create more returns. So those have been the two operational things which will continue into perpetuity with tweaks along the way. The third thing was capital efficiency. We were funding our fleet with all balance sheet cash year over year. We were cash negative, probably for our prior years. As you have seen from this year’s results, we have managed to fund growth in the fleet using leasing while still being able to improve margins in the base business. So those three block-and-tackling items have just become institutionalized in the last 12 months and will continue to drive growth. Now looking forward, if you look at slide nine in the deck, we have given more color around backlog and pending awards. You can see the shift in the amount of work we have got coming into the fiscal 2026 year, and that has continued to grow. You can add the blocks up. We were over $3.0 billion going into 2026, $2.0 billion of backlog going into 2025, and we are now higher. Our drive now is to capture these market tailwinds in our pipeline to build up more backlog to not only do more this year, but build a bigger backlog going into 2027. So the block and tackling is fundamental to being a predictable service provider, which is our desire and our commitment, and then using the pipeline to continue driving growth across all our opportunities and all of our businesses such that we have a greater backlog going into 2027, and we have committed to double-digit growth year over year, and we still stand by that. We believe the pipeline affords that opportunity without relying upon things we cannot control, like storms, and we will continue to drive the businesses to at least meet that obligation. Joseph O'Dea: That is great color. And maybe sticking with that last point, when you talk about 2025 backlog and the bookings you have had to date this year representing 85% of the 2026 base revenue, you think about how the organization is sized today relative to that 2026 base revenue. What kind of investments are you making, and if the demand backdrop supports something better than the base revenue guide, are you sized for that today, or what kind of additional investments will be required? Christian Brown: I think we have got—if you look at slide nine again and refer back to it, we are not sized to capacity. We have got more capacity that we build, we find, we add to the organization every day of every week. What probably goes unsaid is the work our resourcing teams across the nation do every year. We added over 12%—in fact, it is nearly 15%—headcount in the last 13 months, and our desire is to continue to hire at that rate or better. That is apprentices, that is veterans coming into our veterans program, it is resourcing from parts of the country where we can see people coming out of other adjacent industries, it is cross-training and cross-developing. So in terms of capacity, we will commit in our guidance a conservative level of performance that we know we can meet based upon the backlog we have, the resources we can see and have, and things we can control. We are constantly seeking to add capacity so that we can drive better margins and more volume through the business. So there is upward potential there as our teams continue to build capacity, mainly on the people side. I am less worried about fleet. We can add fleet as much as we need, and we can fund it efficiently, while still being able to generate positive cash flow. But on the people side, it is our focus, and we are doing a number of things, some of which I alluded to on the last call, to operate as one Centuri Holdings, Inc. and not as individual opcos, meaning that we can have a more longer-range plan, a more wholesome one-company approach to resourcing across the entire continent. We think we can, therefore, do better in terms of hiring more than 12% to 15% more headcount per year. Joseph O'Dea: Helpful detail. Christian Brown: Thank you. Operator: The next question comes from Manish Samaya with Cantor. Please go ahead. Manish Samaya: Good morning, Christian, Greg, Nate, thank you for getting me in the queue. Greg, I had a question for you on guidance. I just want to be very, very clear on this, that I understand this right. On the base guidance that you have given, the midpoint of the gross margin is 8.2%. And I guess including the storm, you have an EBITDA range, and I was hoping maybe if you can help us with apples-to-apples comparisons and maybe just tell us what that gross margin would be with storms, just like the way you showed it for the base guidance. Just to help us out, please. Greg Izenstark: Yeah. So we said in our earnings release that the gross profit we are assuming is about $28 million on storm revenue of about $88 million. So when you factor that in, on our midpoint, you would get something higher than 8.2%. I do not have that number handy—but at the midpoint, it is about 8.8%, so just shy of that. Manish Samaya: Okay. That is super helpful. That is the number I was guesstimating. I just wanted to confirm that. I appreciate that. The other question, maybe for Christian, is obviously we talked about this huge opportunity—I think $13 billion of opportunities is a fairly big number—through the end of the second quarter. I think $2 billion plus, closer to $3 billion. I know, Christian, you do not talk about win rates, but how should we think about what is baked into the full-year guidance when you look at these opportunities, when you look at this funnel? Thank you so much. Christian Brown: Manish, I could be probably a little bit more direct. If you look at slide nine—we told you within the slide the amount of backlog we have—and then there is a component in addition to that in the histogram of anticipated MSA renewals in 2026. If you add the three blocks up, that takes you to—we do not put the exact scale on it—but it takes you to about $3.2 billion of backlog for this year across the three categories, and that is exactly where we sit today. So how do we do more than the $3.2 billion of backlog? That secured backlog is very predictable. We have got a good handle on that forecast, so I would argue that is as certain and secure as any backlog could ever be. So where is the upside potential? The upside potential is going to come from winning new bids, and we have added within that histogram the work that we have currently bid in addition to awards expected in the first quarter. What is not in there are other opportunities that will pull up through the pipeline and into the bidding during the course of the remaining 10 months of this year. Manish Samaya: Okay. Thank you. Thank you. That is super helpful. Christian, thank you. Operator: Thank you. The next question comes from Sherif Al Sabahi with Bank of—please go ahead. Sherif Al Sabahi: Hi. Good morning. I just wanted to turn to free cash flow for a moment. I understand your attempt to be more capital efficient with your fleet, but what parts of working capital are limiting cash-from-operations flow-through currently? How do you plan to improve them? And then where do you think cash from ops can go in 2026 as a percent of sales? Greg Izenstark: Good morning. So from a free cash flow perspective, we have done a number of things to improve in 2025, from the fleet efficiency to the refinancing of the debt. We are still hyper-focused as a team on reducing our DSO and working with our customers to bill our revenue quicker and get collected quicker. And so that is the primary focus of 2026. From a free cash flow perspective, beyond the capital efficiency work that we have already discussed, we think we can make some pretty meaningful progress and improvement on that front. From a conversion perspective, we look at it on a free cash flow conversion of adjusted EBITDA. And we look at where our peers are, and we think on a longer-term basis, 50% conversion is where we can target. Thank you. Operator: The next question comes from Avi Haraldlowitz with UBS. Please go ahead. Avi Haraldlowitz: Hey. Good morning. Thank you. So I saw that you highlighted a fiber project for a data center in the slides. Can you remind us what the base of communications is for your business and what type of growth you are expecting to see from communications this year? Christian Brown: Avi, thank you for the question. I think we have tried to demonstrate in the illustrated diagrams in the deck and maybe some of the talking points that we are not actually bidding very much standalone fiber telecom work. There is a little bit actually north of the border in Canada, but what we are finding is that, as part of the data center scopes of work, customers are rolling in a number of discipline types of work, including fiber, gas connections, electrical connections, and all of the other scopes where you see them. We are not building out a telecom business within Centuri Holdings, Inc. at all. It is mainly complementary to what we already do for those customers. Avi Haraldlowitz: Okay. Understood. Appreciate that. And then, as we think about the bid work awards that you are thinking of for this year, would you expect it to have a similar revenue-burn phasing as the bid work that you were awarded last year, or could we see that timing differ materially this year? Christian Brown: It is a very good question. I think you will see—it will be exactly the same profile or very similar. Why is that? The average contract size is not changing. The size of the pipeline is mainly remaining very solid. Our teams are very much focused on booking through the four quarters and taking away booking seasonality. So I think the profile will look very similar to last year. I do not see any of the underlying inputs that will change it materially at all. You have got a couple of differences—the MSAs are slightly different, but not the bid work. I think we closed out the year with 30% of the bid work going to the revenue line. If you go back and look at the third quarter numbers—so really nine months of the year—it was a higher number. So clearly, we are booking work earlier in the year. We have to look at it. The big contracts we are booking in the fourth quarter typically are really for 2026, or the following year, which is why the percentage went down from 45% to 30%. Avi Haraldlowitz: Right. Okay. Makes sense. Christian Brown: Thank you. Operator: The next question comes from Chris Ellinghaus with Siebert Williams Shank. Please go ahead. Chris Ellinghaus: Hey. Good morning, guys. Christian Brown: Morning, Chris. Chris Ellinghaus: Christian, when you talk about reducing the Q1 seasonality, are you trying to get smoother across the year? And in general, is the goal to make Q1 look a lot more like a traditional Q2? Christian Brown: The answer to the question, Chris, is yes. Our desire is to deliver 7%+ gross profit margin in our gas business for four quarters of the year. We are currently doing it in three quarters. And that is the driver. We absolutely have had some successes on the bookings. You have seen them. We have announced them. We just need to do more. You cannot do it all in the six to seven months that we have been working at it. So the desire is, as you state, to get rid of seasonality across our gas business and deliver 7%+ gross profit each quarter for four quarters of the year. And that is the commitment. Chris Ellinghaus: Gotcha. What are you guys seeing—you did the acquisition towards the end of the year—what are you seeing in general in M&A, and what sort of aspirations for tuck-ins do you have at this point? Christian Brown: Again, I will be pretty consistent with what you have heard from me in the past. I think we really like our platform, where we are. We have got good scale. We have got good ability to grow organically. So we are not short of scale in the business. Tuck-in acquisitions, to which you refer, again, I will be consistent. I think we have got some white space in the Midwest. I think we could do with more capability there, and that lends itself to a possible acquisition. And I think on the electrical transmission and, to a lesser degree, the distribution, I think we do need a little bit more of a geographic presence in that end market. So that lends itself to some tuck-in acquisitions. So our focus would be on finding acquisitions that could fit into those two needs that support the business. Chris Ellinghaus: Okay. Great. Vis-à-vis the data center potential, what is in your pipeline? Have you got much visibility into timing, and do you expect to have some more tangible bookings throughout 2026? Christian Brown: Yeah. Chris, I will tell you—and I need to be a bit crisper in my commentary—we are very disciplined on what we put into our sales pipeline that forms the basis of our forecasting, and when it comes to data centers, we are hyper-disciplined because there are so many opportunities around that really do not have funding—just developers who are trying to create an option that may never lead to anything. So when I talk about data centers and the discipline, the only thing that goes into the pipeline that we follow are those data centers where we have got dialogue engaged with the developer or with the end user who has capital and is going to deploy capital, and it is a real project. And where we cannot get that confidence does not mean to say we walk away from it. It just remains as a lead within our sales pipeline with no value against it. So there are two numbers I have given out—three numbers, actually. There is about $2.0 billion that we see in the pipeline where we feel there is a high probability that that will get funded and there will be real projects which will allow us to generate revenue and good, solid, high profits from it. Of the $2.0 billion, $1.3 billion is real today where we have got comfort that the client has funding, all the permits are in place, and it is a real contract. We are tendering that $1.3 billion as we speak. We would expect our first share of bookings from that $1.3 billion in the first six months of the year. Chris Ellinghaus: Okay. That helps a lot. Lastly, in the guidance for potential storm work, that is kind of the historical norm. But you scaled the nonunion side significantly. So should there be a really good storm season in some year, is the way to think about it that the potential for storm revenues has increased proportionately with your capacity, or are you just going to try to stay within some kind of range? Christian Brown: Go back to principles of how we are explaining our business and how we are driving our business. We cannot control the weather, but we can control our base business—the work we do for our customers 365 days a year. The nonunion business has increased by over 50% year over year. The majority of those resources, almost all year, work on doing the day-to-day work for our customers. The fact that we have increased that headcount in the nonunion business doing the day-to-day services on-system for our T&D customers—if there is a weather event, that gives us more upside potential for the business to generate higher margins and higher revenue from storm. Yes. Chris Ellinghaus: Okay. That definitely is clear. Alright. I appreciate it. Thanks for the details, guys. Christian Brown: Thank you, Chris. Operator: Thank you. We have reached the end of the question-and-answer session. I will now turn the call over to Nate Tetlow for closing remarks. Please go ahead. Nate Tetlow: Thank you all for joining us today and for your interest in Centuri Holdings, Inc. Please feel free to reach out to me with any follow-up questions. This concludes today’s call. Operator: Ladies and gentlemen, this is now the operator. Today’s conference is concluded. You may now disconnect the call. Thank you.
Operator: Thank you for your continued patience. The meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. If you need assistance at any time, press 0, and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, press 0, and a member of our team will be happy to help you. Good morning, everyone. Welcome to today's SLR Investment Corp. fourth quarter 2025 earnings conference call. At this time, participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note this call is being recorded. It is now my pleasure to turn the meeting over to Michael Gross, Chairman and Co-CEO. Please go ahead, sir. Michael Gross: Thank you very much, and good morning. Welcome to SLR Investment Corp.'s earnings call for the quarter and year ended 12/31/2025. I am joined today by my long-term partner, Bruce Spohler, our Co-Chief Executive Officer, as well as our Chief Financial Officer, Shiraz Kajee, and members of the SLR Investment Corp. Investor Relations team. Shiraz, before we begin, would you please start by covering the webcast and forward-looking statements? Shiraz Kajee: Thank you, Michael. Good morning, everyone. I would like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of SLR Investment Corp., and that any unauthorized broadcast in any form is strictly prohibited. This conference call is also being webcast on the events calendar in the Investors section on our website at slrinvestmentcorp.com. Audio replays of this call will be made available later today as disclosed in our February 24 earnings press release. I would also like to call your attention to the customary disclosures in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections. These statements are not guarantees of our future performance or financial results and involve a number of risks and uncertainties. Past performance is not indicative of future results. Actual results may differ materially as a result of a number of factors, including those described from time to time in our filings with the SEC. We do not undertake to update any forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website or call us at (212) 993-1670. At this time, I would like to turn the call back to our Chairman and CEO, Michael Gross. Michael Gross: Thank you, Shiraz, and thank you to everyone for joining our earnings call this morning. We are pleased to report that SLR Investment Corp.'s fourth quarter results solidified a strong year for the company, showcasing another quarter of broad stability in our portfolio, slow but steady portfolio growth, and a shift to asset-based lending investments with primarily liquid current assets as collateral that are supported by actively monitored borrowing bases. For those who have been following us for the last two years, we have shared a cautious view with our stakeholders about the increasingly fierce conditions within sponsor finance from the oversupply of capital. The broader investor community and media are now signaling concern of these conditions, the potential risk to forward returns, and ultimately an expectation of a wide dispersion in manager performance. While 2025 can be characterized by a surprisingly resilient U.S. economy that withstood tariff uncertainty, geopolitical tensions, and a government shutdown, the year in hindsight can also be marked as the beginning of a sea change in the maturing private credit industry. Sitting here today, with investor concerns and skepticism running high, we feel relatively insulated from many of the risks facing many of our peers because of our deliberate decision to hold the line with our underwriting standards, particularly in the overcrowded sponsor finance market, to safeguard SLR Investment Corp.'s performance and capital. We attribute the stability in our fourth quarter and full-year results to our multi-strategy approach to private credit investing, discipline, and our tactical asset allocation framework, which enables us to maintain investment and diversification across asset classes. Importantly, we are able to say no and pass on investment opportunities that do not meet our conservative lending standards. As credit investors, we are obsessively focused on downside protection. Turning to our fourth quarter results, SLR Investment Corp. reported net investment income, or NII, of $0.40 per share and net income of $0.46 per share. Net investment income per share was flat quarter-over-quarter, and net asset value per share of $18.26 as of December 31 increased both quarter-over-quarter and year-over-year from both unrealized and realized gains. Our net income for the quarter equated to a 10.1% annualized return on average equity. For the full year 2025, we generated net income of $1.70 per share, representing a 9.3% return on average equity, which we anticipate should compare favorably to publicly traded BDC and non-listed BDC peers as well as the broadly syndicated loan markets. During the fourth quarter, we originated $462 million of new investments across a comprehensive portfolio and received repayments of $445 million for net funding of $70 million, resulting in a year-end comprehensive portfolio of $3.3 billion and annual growth of 7.2%. New originations were the second-highest level achieved on record, increasing 36% year-over-year and 3% quarter-over-quarter, continuing the strong origination momentum we have delivered throughout this year. Originations for the year totaled $1.84 billion. The primary driver of new originations continued to be led by our commercial finance strategies, which we believe currently offer more attractive risk-adjusted returns. The company's strong commercial finance originations furthered our portfolio mix shift to asset-based specialty finance strategies over the last couple of years, which we believe provide greater downside protection from strong credit agreements, borrowing bases, and underlying collateral. As of 12/31/2025, more than 83% of our portfolio investments were in senior secured specialty finance loans, which represents the highest percentage in our 20-year history. Our direct industry exposure to the software industry remains low. So low, in fact, that the approximate 2% exposure as of December 31 is among the lowest industry exposures among publicly traded BDCs. For investors concerned about the uncertainty of technology obsolescence risk, enterprise value destruction for the software industry, and the burgeoning threat of artificial intelligence, SLR Investment Corp.'s portfolio, with its lack of software exposure, can be viewed as a safe haven. Overall, we remain pleased with the steady expansion and further diversification of the portfolio, which has produced an annualized growth rate of 10.1% since 2020 and a risk profile that is highly differentiated from other middle market lenders. Direct corporate asset-based lending, or ABL, a strategy we have been in since 2012, contains high barriers to entry due to the complexity of both underwriting and collateral monitoring. This makes it difficult for private credit managers who are latecomers to the strategy to build a book of asset-based loans that can withstand the pressures of changing economic and borrower conditions. We believe this difficult-to-replicate expertise in our 20 offices spread across the country makes us the first call for both sponsors and non-sponsors who are seeking corporate financings for ABL solutions. For the fourth quarter, asset-based lending originations of $247 million were almost double the originations in the prior-year period. Our originations for the full year of $1.1 billion were close to double the originations in all of 2024. SLR Investment Corp.'s ABL strategies continue to offer all-in returns of SOFR plus 600. As a reminder, early in Q4, we hired a well-known, respected industry veteran as President of Asset Based Lending at SLR Investment Corp.'s investment advisor. Mac Fowl is focused on expanding SLR Investment Corp.'s asset-based lending capabilities beyond the platform of the existing ABL franchise. We believe our investment in people and infrastructure over the last couple of years has contributed to our expansion in investment opportunities and a greater recognition of SLR Investment Corp.'s leadership in the ABL marketplace. SLR Investment Corp.'s ABL platform provides the infrastructure and strategic growth capital to further grow our comprehensive investment portfolio, including through potential portfolio and business acquisitions as well as geographic and industry expansion. With sponsor finance conditions competitive and illiquidity premiums tight, we passed on the refinancings of several cash flow investments in our incumbent portfolio, allowing our sponsor finance portfolio to further shrink. With cash flow loans representing just 14.5% of the comprehensive portfolio, the allocation of cash flow loans remains at the lower bounds of our historical mix. We will, however, continue to approach the investments in cash flow lending opportunistically. Our deep industry expertise in the healthcare sector, along with trends in private equity fundraising at dedicated healthcare-focused sponsors and deal activity, should continue to present selective opportunities for us to be active in attractive cash flow lending during 2026. Moreover, our healthcare industry expertise in cash flow lending serves an important information resource and referral source for SLR Investment Corp.'s life science and healthcare ABL investment teams. Overall, we remain pleased with the composition, quality, and performance of our portfolio, a direct result of SLR Investment Corp.'s multi-strategy approach to private credit investing. At year-end, approximately 95% of our comprehensive investment portfolio was comprised of first lien senior secured loans, 100% of our investments at cost were performing with zero investments on non-accrual, and PIK income continued to comprise a de minimis percentage of total income. We believe these credit quality metrics compare very favorably to peer public BDCs. At December 31, including credit facility capacity at SSLP, and our specialty finance portfolio companies, we had over $850 million of available capital to deploy. Our liquidity profile puts us in position to take advantage of either stable economic conditions or a softening of the economy. I will now turn the call back over to Shiraz, our CFO, to take you through the fourth quarter highlights. Shiraz Kajee: Thank you, Michael. SLR Investment Corp.'s net asset value at 12/31/2025 was $996 million, or $18.26 per share, compared to $18.21 per share at 09/30/2025, and $18.20 per share at 12/31/2024. At year-end, SLR Investment Corp.'s on-balance-sheet investment portfolio had a fair value of approximately $2.1 billion in 100 portfolio companies across 31 industries, compared to a fair value of $2.1 billion in 109 portfolio companies across 31 industries at September 30. SLR Investment Corp.'s investment portfolio is funded by a combination of revolving credit facilities and the issuance of term debt in the unsecured debt markets to institutional investors. The company is investment grade rated by Fitch, Moody's, and DBRS, and more than 40% of the company's debt capital is comprised of unsecured debt at December 31. During the quarter, the company was active in the management of various credit facilities with multiple banks, including the closing of a new credit facility at the SSLP that enhanced the joint venture's borrowing flexibility and reduced the spread by 75 basis points. These actions, combined with others taken during the year, have improved borrowing flexibility via better advance rates, expanded the unsecured investor base, and extended maturities. The company does not have any near-term refinancing obligations, with the next unsecured note maturity occurring in December 2026. We expect to continue to prudently access the debt capital markets and issue unsecured debt as and when needed. At December 31, the company had approximately $1.2 billion of debt outstanding with a net debt-to-equity ratio of 1.14 times, which was within our target range. We believe we have ample liquidity to support our unfunded commitments. Moving to the P&L, for the three months ended December 31, gross investment income totaled $54.5 million versus $57.0 million for the three months ended September 30. Net expenses totaled $32.9 million for the three months ended December 31. This compares to $35.4 million for the prior quarter. Accordingly, the company's net investment income for the three months ended 12/31/2025 totaled $21.6 million, or $0.40 per average share, the same as the prior quarter. Below the line, the company had a net realized and unrealized gain for the fourth quarter totaling $3.5 million versus a net realized and unrealized gain of $1.7 million for the third quarter of 2025. As a result, the company had a net increase in net assets resulting from operations of $25.1 million for the three months ended December 31, compared to a net increase of $23.3 million for the three months ended September 30. On February 24, the Board of SLR Investment Corp. declared a Q1 2026 quarterly base distribution of $0.41 per share, payable on 03/27/2026 to holders of record as of 03/13/2026. I will now turn the call over to our Co-CEO, Bruce Spohler. Bruce Spohler: Thank you, Shiraz. As Michael shared, we have continued to shift the portfolio toward our specialty finance strategies throughout 2025 due to their more attractive risk-adjusted returns. Our pipeline also reflects this continued momentum. Our specialty finance strategies currently offer higher pricing than sponsor finance loans, and greater downside protection through their underlying collateral support and tight documentation. We view these more favorable terms as a complexity premium that we earn through investing in structures that require significant expertise and infrastructure that most private credit firms do not have. Turning to the portfolio, at year-end, the comprehensive investment portfolio consisted of approximately $3.3 billion with an average exposure per borrower of $3.8 million. Measured at fair value, approximately 98% of the portfolio consisted of senior secured loans, with 95% invested in first lien loans. The 3% of our portfolio invested in second lien loans consists entirely of asset-based loans with underlying borrowing bases and no second lien cash flow loans. At year-end, our weighted average yield on the portfolio was 11.6%, which was down from 12.2% in the third quarter and 12.1% at the end of 2024. The sequential decline in yield was primarily due to two factors: the decline in base rates in the fourth quarter that began to impact results as well as timing due to the funding of our new investments towards the end of the December month and receipt of repayments earlier in the quarter. Overall, we believe our portfolio has been less impacted by changes in base rates and spread compression compared to the BDC peer group because of our lower allocation to cash flow loans, made possible through our current focus on the less competitive specialty finance investment sectors. Based on our quantitative risk assessment scale, our portfolio continues to perform well. At year-end, the weighted average investment risk rating was under two based on our one-to-four risk rating scale, with one representing the least amount of risk. Just under 98% of our portfolio is rated two or higher at year-end. Importantly, 100% of the portfolio was performing with no investments on non-accrual. Now let me touch on each of our four investment verticals. Starting with our Specialty Finance segments, as a reminder, we dynamically allocate across our strategies based on market and economic conditions, which allows us to source attractive investments across market cycles. Let me first discuss asset-based lending. Given current market volatility as well as investor sentiment, I would like to take a moment to review the investor protections inherent in our ABL asset class that serves as the bedrock of our conservative investment philosophy. In old-school ABL lending, which we define as bilateral corporate lending by teams with significant infrastructure support as well as experience in evaluating and monitoring collateral, we are able to structure credit agreements and borrowing bases with terms that have not integrated in lockstep with the ballooning of private credit cash-flow-focused AUM. We are also able to maintain greater visibility and influence during the life of our investment. Simplistically, with cash flow lending, we are viewing portfolio companies through a quarterly rearview mirror, whereas in asset-based facilities with borrowing base requirements, we are essentially using binoculars. We can get to the table at the first sign of a problem. Our teams have decades of experience structuring our investments to ensure that the value in loan-to-value sufficiently covers our principal, even in severe downside scenarios. Old-school ABL requires significant investment in both people and infrastructure. We began this buildout in 2012 with our first control stake acquisition, which was then followed by eight additional tuck-in acquisitions. Our collaborative ABL and equipment finance strategies provide a moat that newer entrants cannot easily create. At year-end, our ABL portfolio totaled just under $1.5 billion across 252 issuers, representing approximately 45% of our comprehensive portfolio. For the fourth quarter, we originated approximately $250 million of new ABL investments and had repayments of approximately $235 million. In the fourth quarter, the weighted average asset-level yield of the ABL portfolio was 12.6%. Now let me touch on equipment finance. At quarter-end, this portfolio totaled just under $1.1 billion, representing approximately a third of our comprehensive portfolio. It was highly diversified across 585 borrowers. The credit profile was unchanged quarter-over-quarter. During the fourth quarter, we originated just over $150 million of assets, with the majority of them coming from our business that provides leases predominantly to investment grade corporate borrowers for their mission-critical equipment, and had repayments of just over $120 million. The weighted average asset-level yield for this asset class was just under 11%. We remain encouraged by some of the trends we are seeing in our equipment finance business. Our investment pipeline has expanded, and we are seeing demand from our borrowers and sponsors to extend existing leases on equipment rather than buy new equipment at higher tariff-adjusted prices. Now let me turn to Life Sciences. Over the last few years, the life sciences venture debt market has been characterized by fierce competition as asset managers look to make a splash in perceived adjacencies. As we see it, this influx of capital into life science lending has led to the prevalence of stretch deals where some market participants prioritize enterprise value methodology over credit discipline. Throughout this time, we have chosen to maintain a strict late-stage investment approach, with a focus on drug discovery and medical device companies that are in or approaching commercialization and that possess structural protections that have historically mitigated risk throughout market cycles and FDA risks. The broader life science industry has seen a surge in healthcare services IT transactions, which are predominantly software company loans to healthcare borrowers. We have intentionally avoided this segment. In contrast to the high FDA barriers that are present in drug discovery and medical devices, which entail several-year-long FDA approval processes, the barriers to entry in software are lower and IP protections are more limited. As a result, the reliance on software IP as collateral presents elevated risks of technological obsolescence and valuation volatility in life sciences that we have avoided. Given those market dynamics, we have consciously allowed our life science portfolio to shrink across the SLR platform. In 2025, we made first lien term loan commitments of approximately $500 million and partnered in the origination of $60 million of ABL facilities for life science borrowers issued by our healthcare ABL team. During that same period, we had over $400 million in repayments. Looking ahead, our pipeline of opportunities is notably larger than it was at the beginning of last year. We think the drug discovery pipeline is poised for reacceleration after a period of relative sluggishness in public market valuations. Despite ongoing uncertainty regarding the FDA's direction, a recent wave of high-profile acquisitions has significantly bolstered public market valuations for bioscience companies. Furthermore, the integration of AI technology holds the promise of shortening drug development timelines and creating a more dynamic investment opportunity set, although we acknowledge that this will take time to evolve. We will remain disciplined, leveraging our 25-year track record to identify late-stage development companies with robust clinical data and a clear path to commercialization. At year-end, our life science portfolio totaled approximately $180 million across seven borrowers. Importantly, 100% of these portfolio companies are revenue generating with at least one product in the commercialization stage, which significantly de-risks our investment. During the fourth quarter, the team funded $26 million to a new borrower and had just under $60 million of repayments. At quarter-end, the weighted average yield on our first lien life science portfolio, including success fees but excluding warrants, was 12.3%, consistent with the prior quarter. Now, finally, let me turn to our cash flow lending business. Middle market sponsor activity improved modestly in the fourth quarter, and the momentum appears to be carrying over into 2026. Yet competition for quality assets remains intense, and the looming 2026–2027 maturity wall continues to shape borrower behavior. In cash flow lending, all eyes are currently on software exposure. Michael has already provided specifics on our underweighting to that sector. I will touch on the why and how we avoided this sector. As the software sector was experiencing its heyday in the COVID economy era, and private credit leaned into the massive capital deployment opportunity, we, too, evaluated the potential for developing a core expertise in the software sector. However, we determined that loans to SaaS businesses do not offer the same downside protection as our existing investment strategies. For example, unlike in our life science strategy, where loans are backed by IP that takes typically 10 to 15 years to create and hundreds of millions of dollars of investment, the technology backing IP software faces a far greater risk of obsolescence. The risk-reward profile of software loans is less attractive also to our asset-based lending strategies, which are typically backed by accounts receivable or liquid inventory. Additionally, we viewed our existing healthcare expertise across cash flow lending, healthcare asset-based lending, and late-stage life sciences as a means of capitalizing on an investing edge that we possess in an essential sector. In short, our existing strategies have enabled us to avoid the software industry, while still delivering portfolio growth and steady income. If software leads to broader cash flow dislocation, we, too, will be opportunistic investors once again in the cash flow market. At quarter-end, our sponsor finance portfolio was just over $475 million across 27 borrowers, including the loans held in our SSLP, or just 15% of the total portfolio. With 100% of our cash flow loans invested in first lien loans, we believe that we are well positioned to withstand tariff or economic headwinds. Our borrowers have a weighted average EBITDA of just over $100 million and carry low LTVs of approximately 40%. Our borrower fundamentals are trending positive, with portfolio company average EBITDA and revenue growth in the mid-single digits year-over-year. Overall, our portfolio companies have successfully managed the transition to an environment with higher cost of capital as well as input prices. Weighted average interest coverage on our sponsor portfolio was 2.3 times, up from the prior quarter. Additionally, 1.1% of our fourth quarter gross investment income is in the form of capitalized PIK from our cash flow borrowers, resulting from amendments. During the quarter, we made new investments of $37 million in cash flow loans and experienced repayments of approximately $30 million. At quarter-end, the weighted average yield on the cash flow portfolio was just under 10% compared to just over 10% the prior quarter. Lastly, let me touch on our SSLP. During the quarter, the SSLP revolving credit facility was refinanced, lowering our interest rate from SOFR plus 2.90% to SOFR plus 2.15%. Adjusted for one-time credit facility charges associated with this refinancing, the company would have earned $1.5 million in the fourth quarter, representing an annualized yield of 12.6%. During the quarter, SSLP invested $13 million and had $19 million of repayments. Net leverage was just under 0.9 times. We expect to continue to rebuild this portfolio this year. At quarter-end, we had roughly $55 million of undrawn debt capacity. Now let me turn the call back to Michael. Michael Gross: Thank you, Bruce. With hindsight, we think 2025 has the appearance of being marked as a consequential year for the private credit industry and for the value proposition of SLR Investment Corp. Over the last couple of years, we have been vocal about how the seemingly limitless access to private credit for investors can lead to the unsatisfactory achievement of marketed outcomes, especially given that the two key drivers of outperformance in private credit investing come from avoiding and minimizing credit losses and the use of leverage. As we see it today, the markets are clearly demonstrating an understanding of the private credit market’s maturation and recalibrating expectations to a more normalized default loss experience. While the private credit landscape has shifted dramatically, our core philosophy remains unchanged. Stakeholder alignment drives every decision at both SLR Capital Partners and SLR Investment Corp. Last year, SLR Investment Corp. surpassed its 15-year history as a publicly traded company, and this year SLR Capital Partners will surpass 20 years of operating history. As co-founders of SLR and co-CEOs of SLR Investment Corp., Bruce and I continue to lead a team that has largely worked with us since the start and are now responsible for more than 300 employees, including professionals at the five specialty finance affiliates within SLR Investment Corp. Our platform's value proposition has attracted very high-quality senior talents such as Mac Fowl from JPMorgan and others. Based on our team’s investment experience through multiple cycles over the past 30-plus years and our multi-strategy approach to private credit investing, we believe we are well equipped to continue outperforming across shifting private credit markets. SLR Investment Corp. achieved a net income ROE of 9.3% in 2025 and a total economic return of 8.1% over the last three years, which we expect to be at least 200 basis points wide of the public BDC peer group average when results for year-end 2025 are fully released. We believe that the discipline we have exercised through SLR Investment Corp.'s history can be seen through the backward-looking lens of performance as well as a forward-looking lens of portfolio quality. With credit quality top of mind today, we remain pleased with our portfolio, which sits at the midpoint of our target leverage, is 100% performing, has exposure to software of approximately 2%, and has restructured PIK income of approximately 2% of total investment income. Moreover, our portfolio companies continue to experience both top-line and EBITDA growth and should benefit from recent reductions in SOFR. We continue to acknowledge that our results are not fully immune to the impact of recent reductions in base rates by the Federal Reserve in Q4, but we believe SLR Investment Corp.'s earnings sensitivity to changes in base rates is one, if not the lowest, amongst our peers. Fourth quarter 2025 originations and our pipeline in 2026 continue to reflect new investment opportunities at spreads that exceed our cost of capital. Our North Star continues to be protecting capital, avoiding losses, and not chasing higher spreads at the expense of structural protections. While maintaining dividend coverage is important as many of our investors rely on distribution of our income, we believe it must be done in a way that does not compromise credit quality. We have made significant investments and resources across the platform and continue to see some levers to pull at SLR Investment Corp. that can help offset base rate declines. Importantly, we have the available capital to be opportunistic in market dislocations. In closing, SLR Investment Corp. trades at approximately an 11.2% dividend yield as of yesterday's market close, which we believe presents an attractive investment for both income-seeking and value investors and offers a more diversified investment portfolio compared to direct-lending-only private credit strategies. Our investment advisor's alignment of interest with SLR Investment Corp. shareholders continues to be a hallmark principle. The SLR team owns over 8% of the company’s stock and has a significant portion of their annual incentive compensation invested in SLR Investment Corp. stock each year. The team's investment alongside fellow institutional and private wealth investors demonstrates our confidence in the company's profile, portfolio, stable funding, and earnings outlook. Thank you again for all your time today, and we hope to see you in person at a conference in 2026. Operator, will you please open the line for questions? Operator: Certainly, Mr. Gross. We will now open for questions. Once again, that is star one for questions. We will go first this morning to Erik Edward Zwick of Lucid Capital Markets. Erik Edward Zwick: Thanks. Good morning, all. Thank you for all the detailed comments on the individual lending verticals and outlooks there. A bit of a follow-up in terms of the pipeline within the ABL and equipment finance and more from the inorganic perspective. I know sometimes you review opportunities to acquire portfolios and/or lending teams. I am wondering if you could just update us on any recent activity or outlook for 2026 there. Bruce Spohler: Yes, great question. We have been very active. We do not win them all, because we are as disciplined in our acquisitions as we are in our individual investments. But I will say that the quality of potential opportunities is high, and as you may recall, one of the strategies that we have is to lend into some of these potential platforms as a way to get to know each other and see if there is an opportunity to bring them onto the SLR platform, rather than just lend them capital. So we have a number of those in the pipeline that are currently in portfolio that we have an active dialogue with. Those take time to germinate. So I would say that we do not see anything imminent, but we are very actively engaged in potential acquisitions. Erik Edward Zwick: Thanks for the update there. And then I am just curious, in terms of the tight spreads that are being witnessed in the public debt markets, are those impacting the spreads in the ABL and equipment finance opportunities you are seeing today, or because of some of the structural defense mechanisms you have in place, have you been able to maintain new spreads relative to the existing portfolio? Bruce Spohler: Yes. As Michael mentioned, the overall return has come down a little bit across all the strategies, but we still believe 11.5% or so compares extremely favorably to the market more broadly, and specifically the cash flow market. So we still like the opportunities. The structural protections help us on the risk side. Really, as we touched on, the lack of capital flows coming into these markets allows us to maintain our competitive position. Plus, the peer group here is smaller, but also extremely disciplined. Our peers share the same decades-long experience in asset-backed lending and appreciate that discipline is critical for their performance. So we find people to be very disciplined and not many new entrants. Erik Edward Zwick: And the last one for me, just your portfolio remains very clean from a credit perspective from almost any metric you would choose to look at it. I am curious, are you seeing anything that might be an early signal in terms of greater amendment requests or increased revolver usage, or anything noteworthy from that perspective? Bruce Spohler: The short answer is no. Private credit is a business of not sleeping at night, worrying about every name in your portfolio. As we mentioned, we do have a watch list; it is roughly 2%, and that is a constant. But what I would say is in our ABL strategies, and we touched on this in the comments, you have metrics that allow you to see more real-time the underlying performance of your borrowers and get a window into the broader economy domestically. Specifically, we get to see inventory turns, we get to see receivable collections, because we are monitoring those underlying pieces of collateral on a weekly and monthly basis. I would tell you that we are not seeing any themes coming out of that. It is very idiosyncratic—a one-off borrower here or there—but nothing that we can call a theme. Erik Edward Zwick: That is great to hear. Thanks for taking my question today. Bruce Spohler: Thank you. Operator: We will go next now to Rick Shane of JPMorgan. Rick Shane: Hey, guys, thanks for taking my questions. Look, one of the advantages that you guys have is that your leverage is relatively low and you have capacity to flex that as you choose. You also talked about being opportunistic during market dislocations. If we sort of stay in this environment right now, should we expect you to be opportunistic, or should we expect the portfolio and leverage to be roughly flat, and you would be waiting for a more severe environment to take advantage of that liquidity? Bruce Spohler: I am going to answer it two ways. Part of what we are doing, to Erik’s questioning, is we always try to have a little bit of dry powder for potential acquisitions, and so that does inform how we look at the leverage ratio at any moment in time based on what we are seeing out there on the acquisition front as well as individual investment opportunities. We are blessed that we have multiple strategies. We are seeing good opportunities in the specialty finance strategies, particularly ABL, although we did mention that we are seeing life science pick up, and we also could see, as we get deeper into 2026, cash flow dislocation create opportunity for us, as we took advantage of back in 2023 when there was a dislocation in the cash flow market. So we are happy to take leverage up either through acquisitions or individual investments throughout 2026 to the high end of our target range, which is 1.25 times. Whether that will happen or not, we will see, because the other side of that equation is obviously repayments. As a lender, we celebrate repayment—that generates a memo internally. We are not so focused on deployment; we are more focused on getting repaid. As you can see, we have had an elevated level of repayments, and that has been very intentional where we have the ability to make that decision—do we stay or do we get repaid. By and large, we have been choosing to get repaid because either terms or structures or pricing have been less attractive than we would like. So that is the unknown for this year, although our crystal ball says we probably will see less repayments because I do see less capital coming into the market and a bit more discipline. So, long-winded way of saying we would like to see that leverage ratio come up in this environment because of the very attractive opportunities. Rick Shane: Got it. Okay. Not long-winded—fine. I have asked a few long-winded questions in my time, so appreciate the answer. Bruce Spohler: Thanks, Rick. Operator: Thank you. We go next now to Heli Sheth at Raymond James. Heli Sheth: Good morning. Thanks for the question. You mentioned M&A opportunities in the ABL business remain high. Any sort of shift in sentiment or outlook there? Does it seem more or less likely that some players may be willing to sell with all of the recent market noise? Michael Gross: Dislocation always forces people to rethink their business and access to capital. So if we go through a period of time like this for quite some time, I think we will see more opportunities and at better pricing. We have a team that is actively looking at many situations all the time. So we are hopeful something happens in the relatively near term. Heli Sheth: Got it. Thank you. And then could you quantify how much spillover you have as of year-end? Michael Gross: We do not have any to speak of. Heli Sheth: Okay. Thank you. Operator: Thank you. And gentlemen, it appears we have no further questions today. Mr. Gross, I would like to turn things back to you, sir, for any closing comments. Michael Gross: No closing comments at this time other than to thank you for all your time today. We realize it is a busy earnings season, and with all the turmoil in private credit, it is quite busy. If anyone has any questions, or people who are listening to this call after the fact, please feel free to reach out to any of us to continue the dialogue. Thank you. Operator: Thank you, Mr. Gross. Again, ladies and gentlemen, that will conclude today's SLR Investment Corp. fourth quarter earnings conference call. Thanks so much for joining us, and we wish you all a great day. Goodbye.
Operator: Good morning, ladies and gentlemen, and welcome to the Talos Energy Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all lines are in a listen-only mode. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded today, 02/25/2026. I will now turn the call over to Clay P. Jeansonne, VP, Investor Relations. Please go ahead. Clay P. Jeansonne: Thank you, operator. Good morning, everyone, and welcome to our fourth quarter and full year 2025 earnings conference call. Joining me today to discuss our results are Paul Goodfellow, President and Chief Executive Officer, and Zachary Dailey, Executive Vice President and Chief Financial Officer. For our prepared remarks, please refer to our fourth quarter 2025 earnings presentation that is available on Talos Energy Inc.’s website under the Investor Relations section for a more detailed look at our results and operations update. Before we start, I would like to remind you that our remarks will include forward-looking statements subject to various cautionary statements identified in our presentation and earnings release. Actual results may differ materially from those contemplated by the company. Factors that could cause these results to differ materially are set forth in yesterday’s press release and our Form 10-Ks for the period ending 12/31/2025 filed with the SEC. Forward-looking statements are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present GAAP and non-GAAP financial measures. A reconciliation of certain non-GAAP to GAAP measures is included in yesterday’s press release, which was furnished with our Form 8-Ks filed with the SEC and is available on our website. I will now turn the call over to Paul. Paul Goodfellow: Thank you, Clay. Good morning to everyone joining us on our call today. I would like to start by thanking the entire Talos team for their hard work dedication and unwavering commitment to safety and delivery of our business during 2025. The results we will discuss today are a direct result of their effort. First, we are pleased to report continued strong safety performance with no serious injuries in 2025, underscoring our steadfast commitment to the health and well-being of our employees and contractors. Additionally, our environmental stewardship remains a core focus with a spill rate significantly below industry averages, underscoring our commitment to protecting the communities and environment where we live and work. 2025 was the start of a transformation journey for Talos Energy Inc. The year was defined by a revamped strategy, operational excellence, and strong financial delivery supported by a new leadership team. High production, greater capital efficiency, and lower operating costs resulted in significant free cash flow generation, which led to meaningful return of capital via share repurchases. All of this was accomplished while navigating a weakening commodity price environment throughout the year. As we look ahead to 2026 and beyond, we intend to build on the momentum we have created, executing our strategy while balancing the inherently volatile business and long-cycle nature of offshore oil and gas. In June, we introduced a new corporate strategy. Our strategy is anchored on three core pillars built to deliver results now while also positioning Talos Energy Inc. for the medium and long term, and underpinned by a disciplined capital allocation framework. Since announcing this strategy, our team has been laser-focused on executing and building the foundation to be a leading pure-play offshore E&P company. Under the first pillar of the strategy, improving our business every day, the teams rose to the challenge to think creatively, and we realized approximately $72 million in free cash flow improvements in 2025, far exceeding our initial target of $25 million. These savings were generated through more than 80 initiatives spanning margin enhancement, capital efficiency, commercial opportunities, and organizational improvements. About half of that $72 million was a one-time benefit in 2025, while the other half is structural and recurring, which gives us solid momentum heading into 2026. The team has many initiatives in flight, and we look forward to updating you on our progress throughout the year. Our relentless focus on efficiency has strengthened our position as the low-cost E&P operator in the Gulf Of America, in addition to delivering top decile EBITDA margins across the sector. Over the past three years, while the industry trend for E&Ps in the Gulf Of America has been an increased cost structure, Talos Energy Inc.’s proactive management of its cost base and increasing production have resulted in a reduction in operating cost on a unit basis. In fact, for 2025, our operating costs are on average 30% lower than the offshore peer group average. This advantaged cost structure has helped us to generate top decile EBITDA margins in the E&P sector for 2025. These achievements reflect disciplined execution and a culture committed to continuous improvement. Within the second pillar of our strategy, growing production and profitability, we continue to advance organic growth throughout the year, achieving first production at Sunspear and Katmai West number two. Our teams continue to deliver outstanding operational results at our Katmai field, where production flows through three subsea completions tied back to the Talos Energy Inc.-owned Tarantula facility. Katmai West number one continues to be a standout performer, ranking among the top 10 producing wells in the Gulf Of America. In mid-2025, Tarantula’s gross processing capacity was expanded to 35,000 barrels of oil equivalent per day to accommodate higher volumes following the success of the Katmai West number two well. Most recently, targeted debottlenecking efforts have boosted throughput to approximately 38,000 barrels of oil equivalent per day. These recent debottlenecking efforts were achieved with minimal capital outlay, reflecting the team’s commitment to grow production and profitability and their ability to unlock value through creativity and ingenuity. Looking ahead, we expect production from the Katmai field to remain essentially flat throughout 2027. The production profile helps underscore our overall base decline rate in the mid to high teens, which is another differentiator for Talos Energy Inc. relative to onshore peers. We are also excited about the Katmai North prospect, which provides potential exploration upside to the field. The team continues to mature this prospect with new seismic data, and the recent blocks we strategically acquired in the lease sale near our Katmai complex further enhanced our prospectivity in the area. Under the third pillar, we continue to build a long-lived scale portfolio that supports long-term sustainable growth. The discovery of the Daenerys exploration prospect marks the potential for a significant addition to our resource base with appraisal activities set to begin in 2026. Additionally, Talos Energy Inc. was pleased to be named the apparent high bidder on 11 new leases, with eight being awarded to date, totaling approximately $15 million in last December’s big beautiful lease sale. These leases surround our Daenerys discovery, and new positions in the Neptune and Katmai areas further leverage our existing infrastructure. We significantly expanded our resource potential, adding eight prospects, some of which span multiple blocks with more than 300 million barrels of gross unrisked resource potential across amplitude-supported Miocene and Wilcox opportunities. This represents approximately two times our current proved reserve base. We increased our working interest in the Beacon-operated Monument project 21% to roughly 30%. Monument is a large Wilcox discovery expected to come online at the end of this year and is expected to provide a durable production profile in 2027 and beyond. Talos Energy Inc. continues to invest in state-of-the-art seismic technology and proprietary reprocessing supported by a broad multi-client seismic footprint across the Gulf Of America. Our modern imaging capabilities and technical expertise help de-risk prospects and improve success rates expected every year, which positions us well ahead of two federal Gulf Of America lease sales over the next decade. Now let me highlight the key projects we have planned for 2026. Talos Energy Inc. successfully drilled the Cardona well in late 2025, delivering the project under budget and ahead of schedule. Production commenced earlier this year with the well flowing to the Talos Energy Inc.-owned Pompano facility. Talos Energy Inc. also recently drilled the CPN well ahead of schedule with first production expected in 2026. The team continues to advance the Talos Energy Inc.-operated Brutus rig reactivation program with the first of four wells scheduled to begin drilling in quarter two and the remaining wells to follow in sequence. We expect that the majority of drilling activities will be completed this year and anticipate bringing three wells online by year end with the fourth well online in early 2027. The Monument Project operated by Beacon Offshore continues to advance towards a March spud, with the rig planned to operate continuously throughout the year. Both wells are expected to be completed in 2026, yielding first oil by year end. Beacon plans to develop it as a subsea tieback to the Shenandoah production facility in Walker Ridge, and the project has firm committed capacity of 20,000 barrels of oil per day. While 2026 is a year marked by investment and development in the project, we expect 2027 to benefit from a full year of production. The Daenerys discovery was a significant highlight in 2025. As we previously stated, the discovery well was temporarily suspended to preserve its future utility pending further appraisal. We plan to spud the appraisal well late in 2026. The appraisal program is designed to test the northern part of the prospect and is strategically planned to penetrate multiple prospective intervals, enabling a thorough assessment of the reservoir. Additionally, the well has been engineered to accommodate multiple future sidetracks, enabling further appraisal and development. We expect results in the 2025 was a great year where we accomplished tremendous results all across the business. In 2026, we will continue to execute safely and will remain guided by the disciplined capital allocation framework that underpins our strategy. We will stay true to our three strategic pillars as we advance the business, create long-term value, and achieve our clear vision for Talos Energy Inc. to become a leading pure-play offshore E&P. Now I would like to turn it over to Zach to cover our fourth quarter and full year financial results along with the 2026 budget and guidance. Thanks, Paul. Zachary Dailey: First, I will recap 2025 through the lens of our strategic framework, then I will discuss some fourth quarter specifics and end with the 2026 outlook before handing it over for Q&A. Underpinning our execution of the three strategic pillars, which Paul discussed, is a disciplined capital allocation framework designed to deliver strong financial outcomes. In 2025, that is exactly what Talos Energy Inc. did. We invested about $500 million of exploration and development capital and produced an average of 95,000 barrels of oil equivalent per day. This generated approximately $1.2 billion in adjusted EBITDA and $418 million of adjusted free cash flow, despite a steady decline in oil prices throughout the year. Our framework calls for returning up to 50% of annual free cash flow to shareholders, and that is what we did. Since announcing our capital allocation framework in Q2 of last year, we have returned approximately 44% of adjusted free cash flow to shareholders through share repurchases. Throughout 2025, we reduced our outstanding share count by about 7%, demonstrating consistent follow-through and clear focus on enhancing per share value. In the fourth quarter, we produced an average of 89 barrels of oil equivalent per day, including 65,000 barrels of oil per day. Fourth quarter volumes were impacted by about 3,000 barrels of oil equivalent per day due to the shut-in of our Genovese well following a failure of its surface-controlled subsurface safety valve. We are working diligently to accelerate the delivery of an insert safety valve, and we expect Genovese to return to production in 2026. Our fourth quarter oil cut was slightly higher than our 2025 average, and we expect that higher oil cut to continue through 2026, which will support our peer-leading margins. Another critical element of our financial framework is maintaining a strong balance sheet. We ended the year with low leverage of 0.7 times and approximately $1 billion in total liquidity, including a year-over-year increase in cash on hand. We have no near-term debt maturities, and recently we extended our credit facility to 2030 while reaffirming our borrowing base at $700 million. We believe this financial strength positions Talos Energy Inc. to navigate commodity cycles and support the strategic growth elements of pillars two and three. For example, last year we increased our working interest in the high-value Monument prospect and also increased our potential inventory with additional leases acquired in the big beautiful lease sale in December, as Paul mentioned. We believe we are well positioned to continue strengthening our portfolio within the Gulf Of America as well as in other conventional basins. Now I want to touch briefly on our year-end reserves. Talos Energy Inc.’s proved reserves were 175 million barrels of oil equivalent, of which approximately 75% is oil. The PV-10 of our proved reserves was approximately $3.2 billion, which is calculated at year-end SEC pricing. We also believe that Talos Energy Inc. has significant value beyond our proved reserves with estimated probable reserves of 103 million barrels, adding an additional PV-10 of $2.3 billion at year-end SEC prices, equating to approximately $5.5 billion in 2P value. Our reserve replacement ratio over a trailing three-year period is approximately 140% of Talos Energy Inc.’s production. During the fourth quarter, we recorded a non-cash impairment of $170 million related to the full cost ceiling test under the SEC guidelines. As a reminder, this test primarily compares the net capitalized cost of our oil and gas properties to the present value of future net cash flows from our proved reserves using trailing twelve-month pricing. Next, let me share a quick overview of our hedge positions. We view hedging as a risk management tool to help stabilize cash flow in a downside scenario while also maintaining attractive exposure to higher oil prices. For the first quarter 2026, we have hedged approximately 29,000 barrels of oil per day with a floor price of approximately $63 per barrel. That represents approximately 47% of our expected first quarter oil production at the midpoint of guidance. And for the year, we have hedged roughly 23,000 barrels of oil per day representing approximately 36% of our expected annual oil production at the midpoint of guidance, with floors above $61 per barrel. Turning to guidance, we expect our 2026 capital expenditures, excluding P&A, to range between $500 million and $550 million. We expect to focus on low-breakeven, high-margin oil projects with a balanced allocation across infrastructure-led development, exploration, and appraisal. Approximately 60% of the total CapEx is allocated towards Talos Energy Inc.-operated projects, while about 40% is allocated to non-operated projects. Our non-op spend is higher year-over-year, driven primarily by increased spending on the Beacon-operated Monument project. As we invest for the future and advance our strategy to build a long-lived scaled portfolio, approximately 10% of our 2026 budget is allocated to exploration, which includes the Daenerys appraisal well. Talos Energy Inc. also plans to allocate $100 to $130 million of capital towards P&A, similar to 2025 levels. We remain committed to meeting our obligations while continuing to pursue opportunities to optimize and more strategically execute these projects. In 2026, we expect production to average between 85,000 to 90,000 barrels of oil equivalent per day and 62,000 to 66,000 barrels of oil per day. As I mentioned, oil as a percentage of total production in 2026 is expected to increase a couple percentage points year-over-year to approximately 73%. Every year, we account for a few items in our production guidance that are unique to offshore operators. Our approach to 2026 guidance is consistent. For example, we have planned maintenance projects throughout the year designed to ensure safe operations, high uptime, and lower unit operating costs for the life of those assets, but these activities reduce our production while they occur. We estimate planned downtime will impact annual production by 6,000 barrels of oil equivalent per day, which includes the annual impact of approximately 2,000 barrels of oil equivalent per day from the Genovese well, which will be shut in for the first half of the year. We also account for weather-related downtime such as hurricanes, in addition to an estimate of unplanned downtime associated with third-party facilities and pipelines. We have included a contingency of an aggregate 4,000 barrels of oil equivalent per day for these unplanned downtime and weather-related factors into our 2026 guidance, consistent with last year’s approach. Two important items to note. First, when normalizing for weather and deferred production at Genovese, our 2026 oil guidance would have been higher year-over-year. Additionally, we expect our year-end 2026 exit rate to be higher than our 2025 year-end exit rate due to the timing of new projects coming online and the return of the Genovese well in the second half of the year. Additional guidance details can be found in our presentation posted on our website. To wrap up, 2025 was a phenomenal operational and financial year for Talos Energy Inc., and we are excited to build upon this success in 2026. We believe our vision, strategy, and strong financial delivery combine for an exciting value proposition to investors. We will now open for questions. Operator: Thank you. Please go ahead. Your first question comes from Greta Drefke from Goldman Sachs. Greta Drefke: Good morning all, and thank you for taking my questions. My first is just on the Monument project this year. Can you speak a little bit more about the key next operational steps for the project and the path to first oil by 2026? You mentioned March spud for the project. Is that spud timing just for the first well or for both of the wells? Paul Goodfellow: Good. Thanks, Greta. We expect Beacon to mobilize the rig, as we said, in March. They will have one rig working on the opportunity, and so they will drill both wells on a back-to-back basis and then complete the wells, which is why we expect both wells to be completed by the end of the year. The plan that we have at the moment is a continuous operation starting in March. Greta Drefke: Great. Thank you. And then just my second question is on the safety valve issues you experienced as part of the fourth quarter. Can you speak a little bit more about the next operational steps of remediation of the valve at Genovese? How long do you expect it will take to receive the equipment you need, and how much time would it take to procure or send a rig over to complete the fix? Paul Goodfellow: Yeah. Thanks, Greta. Let me maybe go back. We operate or have interest in about 120 subsea wells in the Gulf Of America, and so this is a fairly isolated incident. This well has been on production since 2018. It came as part of Fieldwood, and it has produced about 12 million barrels so far. The failure we have identified is a piston failure that meant that the flapper was closing. Importantly, there was no leak or environmental incident as a result of that. The teams have worked incredibly hard to not only identify the leak and the cause, but then to pull a remediation plan together, which, of course, means getting access to a vessel and access to the right type of equipment. What we are choosing to do here is to run an insert safety valve off an intervention vessel versus pulling and replacing the completion with a drill rig. We expect that to take place in the early part of the second half of the year. It is important to understand that whilst we operate the well, we do not operate the facility, and therefore we have to align timing with the operator of the facility. This well is tied back to the Nakika facility, and we are working very cooperatively with the operator of Nakika to line that up. Our plan is to bring an intervention vessel in to run an insert safety valve and to have the well back online in the early part of the second half of the year. It is also important to note that this failure, as disappointing as it was, is very different from the issue we had with a safety valve at Sunspear earlier in 2025. That happened during the completion activities. It was actually due to some proppant during flowback becoming embedded in the flapper, causing that flapper not to seal. In that case, we were on location, we had a rig under contract, and the best path and the only path there was to pull the completion and totally replace it, which is what we did, and we have seen great production and stability from that well ever since it came online. I hope that gives you both the color and the context, Greta. Greta Drefke: Thank you very much. Operator: Your next question comes from Timothy A. Rezvan from KeyBanc Capital Markets. Please go ahead. Timothy A. Rezvan: Good morning, folks. Thank you for taking our questions. As a start, if you can give us a little more detail on next steps at Daenerys. You mentioned late 2026 as the timing of appraisal results. You operated much quicker than expected with your first discovery well, so do not know if you could clarify what late 2026 means. And then if we do get positive appraisal results, I know you have to look at the results to get next steps, but how could things play out if things continue to trend positively there? Thanks. Paul Goodfellow: Yeah. Thanks, Tim. We expect to spud the well late in the second quarter. We have scoped the well, as we mentioned in our comments, in a way to give ourselves the maximum appraisal information in that secondary block, including the ability to have future utility of the well in terms of future sidetracks. We would expect that the well would be drilled and evaluated as we get to the end of the third quarter or start of the fourth quarter, and then it is a matter of exactly, as you said, what is the information and what does that then lead to in terms of a path forward. As we have always said, in a successful case where it looks like Daenerys may be a stand-alone, then we have already started the design basis of what that would look like. It may be less optimistic where it is maybe more of a tieback. We have also started looking at the optionality for that, and so we are working those in parallel. But it is just too early, Tim, to say in terms of exactly what the timeline would be. We will continue to update you throughout the year as we get back onto that well, execute, and get information. I would note, of course, that given we will be executing that well through the summer months, there is the risk of weather impact in terms of a delay, but that is always a risk within the Gulf. Timothy A. Rezvan: Okay. Okay. I appreciate the context. I guess we will stay tuned on that. Then as a second question, Paul, you are almost at your one-year anniversary of joining. I would like to go a little bigger picture here. The share price was about 9. I know it is selling off today on Genovese, but still, it has been pretty strong financial and operational traction overall. You did not take this job, I am assuming, to run a sort of maintenance program. At some point, Talos Energy Inc. needs to be a growth company to get more relevance. Can you just talk about—you hit at 2027 organic growth opportunities—as you think medium term, your inclination or the need to grow the business to get more scale? And where I am going, this organic growth coming, does that preclude you from seeking inorganic growth opportunities? Just kind of curious—I know it is a broad question—on the lay of the land from here after a year in the role. Thanks. Paul Goodfellow: Yeah. Thanks, Tim. I think it is described very well in the strategy that we laid out in June, and our focus has been on rigorous execution of the strategy. Now, clearly, the near-term actions are always more visible, and I am incredibly proud of the work that the teams have done to drive that culture of improvement and improving our business each and every day, as that gives us the ability to think more mid and long term. As we have spoken about in terms of the second and third pillars, we are actively working those. You have seen us be very active in the, let us say, organic space in terms of lease sale activity. We actually started looking at that in the middle of last year with seismic that we, or further seismic that we, acquired and interpreted that informed what we wanted to do in the lease sale. The fact that we brought in roughly 300 million barrels of gross unrisked resource that is operated, I think, is an important point along the journey. Clearly, as we have always said, we will look at continued bolt-on, but also inorganic activity outside the Gulf Of America, which fits into more of that pillar three that we have spoken about. That work continues to be undertaken and executed, but within the very disciplined capital allocation framework that we have laid out. We are not going to look to build the portfolio inorganically just to get bigger. We will look to do it to get better, and therefore any deal that we do will need to absolutely fit within the capital framework that we have. We also set an incredibly high bar in terms of the risk profile of projects, making sure that it ties into the core that we have—subsurface and operational skills—and that it clearly fits strategically where our skill set is. I am very pleased with where we are, as you say, almost a year into my tenure, with a great team here that we have amassed that has phenomenal breadth of industry experience I think is being brought to bear into not just thinking about how we drive culture, but how we drive and shape Talos Energy Inc. of the future. Timothy A. Rezvan: I appreciate the insight. Thank you. Operator: Your next question comes from Paul Diamond from Citi. Please go ahead. Paul Diamond: Thank you. Good morning all. Thanks for taking the call. Just wanted to touch quickly on the Tarantula facility. You talked about flow-through increasing up to 38 with relatively low capital intensity debottlenecking. I guess, question being, how much more meat is on that bone there, kind of extrapolatable? And talk to other assets—like, is that a process transferable to other assets, or is this more just having to do with Tarantula? Paul Goodfellow: Yeah. Thanks, Paul. The first thing to say is when we talk about improving our business each and every day, what Will and John Spath and the team have done at Tarantula embodies that and is a real visible example. As you know, we expanded the nameplate capacity of Tarantula in 2025 to take account of the Katmai West number two well up to 35,000 barrels a day. What the team has then done—as they do on every asset and opportunity—is really look for where the limiting factors are and can we remove those limiting factors to eke a few more barrels of continued consistent throughput through the facility. That is what Will and the team have done at Tarantula where they have taken that from 35,000 barrels a day to roughly 38,000 barrels a day. To use your words, I think that bone is pretty clean, and I do not think you will see any more optimization gains from Tarantula. We now shift our attention to more of the growth side in terms of looking at Katmai North, which is a potential opportunity for us as we come into 2027, and, dependent on the outcome of that and, of course, other strategic leases that we have just taken in the big beautiful lease sale, how we should prosecute those will then determine the next step of expansion potentially at Tarantula that will be more capital intensive and will most likely include the expansion of the pipeline connection that we have from the facility. Now, the second part of your question in terms of how transferable is what the teams are doing at Tarantula, I would say it is absolutely transferable, and in fact you see that working in practice today. The approach of can we get more production and can we get more reliable production is something that has underpinned part of the tremendous results that the team has delivered in terms of improving each and every day. We have seen it, for example, in terms of gas lift optimization studies that we have done across the totality of the portfolio. We have seen it through putting a dedicated flow assurance team together to really make sure that we are optimizing flow assurance. Whilst you may not see a facility expansion where we are limited by facilities relative to wells—which is a specific challenge at Tarantula—the idea of optimizing and increasing throughput is something that the teams are doing on every facility that we operate, Paul. Paul Diamond: Understood. I appreciate that. And just circling back a little bit to the 11 leases you talked about with the big beautiful auction. Can you provide a rough expectation of a timeline on those going forward and where they fit in the larger development program and from a priority perspective? Paul Goodfellow: Yeah. Thanks, Paul. The criteria with which we looked at what leases to go and bid on were very similar to the strategic frame that we have, which is it has to be complementary to the skill set that we have. There are key plays we want to exploit and explore. We wanted to look for prospectivity that raised the overall average size of prospects that we have as well as adding material potential volume to the portfolio, but we wanted to do that in a way that we could take those opportunities through to competing for capital in a fairly short cycle. The timeline that we are generally working on—all the teams are working on—is from lease award, which, of course, once we are named the apparent high bidder, you then have to go through the process of formally awarding those leases. As we mentioned, we have had eight of the 11 formally awarded as of today. From the point of lease award, we are looking at roughly plus or minus a year or so in terms of having an opportunity ready to compete on the drill schedule. I think we would be looking, as we build the 2027 capital plan, to be bringing those opportunities forward to compete for capital. What is also a really important point is, if you take it back a step in terms of from the ideation, getting the seismic, interpreting the seismic, going for the lease—that whole process up until being ready to compete on the drill schedule is probably somewhere less than two years, which I think is a significant achievement and toward the upper end of the norms within the industry. Paul Diamond: Understood. Appreciate the time. I will wait back. Thanks, Paul. Operator: Your next question comes from Michael Stephen Scialla from Stephens. Please go ahead. Michael Stephen Scialla: Hi, good morning. Paul, the Cardona and CPN were both drilled ahead of schedule and under budget. I guess Cardona has been online a little bit now. Can you say anything about the production expectations for those two wells? Maybe how Cardona compares to what you anticipated and what you expect from CPN? Paul Goodfellow: Yeah. I think the easiest comment to say is both of those are in line with the expectations that we had. Again, both were executed very well. The CPN well clearly needs a tie-in, and so the time for that should take place, and that well should come online in the second half of the year into the third quarter. Based on the flowback data we have, we are very pleased with that well and confident that it will be at the upper end of the expectation range that we have. Just to tie back to a point that Zach was making in his comments, one of the reasons that we see oil production rising towards the end of the year, of course, is because of those projects that will be coming on. Both the CPN well, the Brutus rig program, Genovese coming back, and then, of course, Monument, hopefully right at the very end of the year, will give us an oil exit rate that should be in the low double digits higher than where we were at the exit rate of 2025, also with a higher oil cut from a totality of a production point of view. We would expect the average oil cut in 2026 to be close to 73%. Of course, 90% plus of our margin comes from our oil production versus our gas production, and so the pivot that we have had has been very thoughtful, and we would expect to continue down that frame as we go through 2026 to 2027. Michael Stephen Scialla: Wanted to ask about the Katmai North. You said you have got new seismic data there that is maturing. I wanted to see what—I think at one point you had said that Greater Katmai area, the resource there, could be maybe double what the Katmai one and two suggested is right now. So I wanted to see if that is still the case or what the potential resource looks like with the Katmai North and what the timing of testing that prospect looks like. Paul Goodfellow: Yeah, Michael. I think we have said, and there is no real change, that Katmai North—assuming it comes successfully through the seismic interpretation process—will compete for capital in 2027. We are still extremely encouraged by the greater Katmai area, which is why we took more leases in the recent lease sale. We would see at least the resource size that we have mentioned before, but we will update you as we do that work on those opportunities as we go throughout the year. Michael Stephen Scialla: Sounds good. Thank you, Paul. Paul Goodfellow: Thank you, Michael. Operator: Your next question comes from Nathaniel Pendleton from Texas Capital. Please go ahead. Nathaniel Pendleton: Good morning. On Slide 14, you mentioned investing in state-of-the-art seismic and proprietary—can you talk about those investments? And have there been any tangible results from those campaigns yet? Paul Goodfellow: Yes. Thanks, Nate. The first tangible results in terms of first step, of course, is the lease sale success that we have just had. The areas that we were interested in actually went through advanced reprocessing, and we will continue to do that in other areas that we have an interest in. The other thing that is important is our use of OBN seismic, where we actually used that to pick the Katmai two West well, also used that on the current Brutus redevelopment program. We believe that seismic data, advanced interpretation, and grounding our decisions in the fundamentals of reservoir engineering and geology is absolutely critical to the success that we have had and will continue to have here at Talos Energy Inc. Nathaniel Pendleton: Got it. Thank you. As my follow-up, maybe regarding the capital program for next year, is that 10% exploration CapEx target what you see as a good long-term run rate? And how should we think about your preferred long-term allocation of operated versus non-operated activity given the dominance of Monument in the coming year? Paul Goodfellow: That is a short-term view in terms of it just happens to be the big development project that we have at the moment is operated by Beacon, and therefore there will be a higher proportion of non-operated capital in the Gulf Of America. I think our strength actually comes from being an operator. We show that in terms of the leading EBITDA margin results that we have, the operating scale and low cost that we have, and our ability to drill, complete, and tie in a very capital-efficient way. We are very happy to partner with companies like Beacon and others—it is a key part of our portfolio—but we bring a real strength from an operating point of view. We will continue to look for operating opportunities, but we will never turn away a non-operated opportunity where we see value and where we can help the operator improve that value. In terms of do we have a target for exploration spend, the answer is no. Ten percent happens to be where we are this year. I would expect as we get into 2027, given the fact that those lease sale opportunities are maturing through to compete for capital, you could see something slightly higher than that. But we will bring it always back to the capital allocation framework that we have, which talks about investing in high-margin production, making sure that we maintain the strength of the balance sheet, returning cash to shareholders, and then investing in accretive growth. Clearly, organic exploration falls into that fourth bucket. Nathaniel Pendleton: Understood. Thanks for taking my questions. Operator: And our last question comes from Noel Augustus Parks from Tuohy Brothers. Please go ahead. Noel Augustus Parks: Hi. Good morning. I wanted to ask a bit about the service environment. I just wonder if some of the optimism we have been hearing from the offshore drillers around 2027 and maybe even heading into 2028—there is sounding like there is some possibility of maybe producers all crowding through the same door at the same time as far as getting access to rigs. I just wondered how much that might be figuring in your planning these days. Paul Goodfellow: We always look at where we are within the market. Clearly, we plan many years ahead in terms of what slot opportunity sets could be, making sure that we are advancing the procurement strategy that we have along with the technical strategies such that when we are ready to take an investment decision, we have the supply chain lined up, and that is the approach that we will continue to take. Many things, of course, can change the outlook that any company has—certainly commodity price is one of those. As I mentioned before, our focus from a commodity price point of view is to make sure that we build and think about projects that have the lowest breakeven cost possible. That is what we are doing for 2026: driving forward projects that have breakevens in the $30 to $40 range. That gives us the resilience that we need. We clearly see opportunities in terms of capacity in the marketplace as we go into 2026 and through to 2027, but, of course, for us it is important to partner with the right type of providers that share the ethos around safety, environmental stewardship, and ultimately performance. I think you have seen us demonstrate that over the last twelve months or so in the partnership that we have had with the West Vela. Noel Augustus Parks: Great. Thanks. And I was wondering about the company’s historical strategy of favoring assets that feature or include underutilized infrastructure. I am just wondering what you are seeing in the sort of market for legacy infrastructure out there. As there is more capital heading to the deepwater, are other producers like-minded in terms of the strategic value of using current infrastructure as a starting point? Or is that sort of a finer point, say, for new or returning entrants who are looking to get a Gulf program rolling or ramped up? Paul Goodfellow: Thank you. I would offer maybe a couple of thoughts. We clearly see more interest in the deepwater in the Gulf Of America. I think I mentioned this when I first came into the role here in terms of, I believe—and we believe—that the low carbon intensity, high-margin deepwater barrel is vitally important in terms of supplying the energy that the country and the world need, and I think it will be here for many years and decades to come. I do think that the technical barrier to entry is maybe higher than some think. The ability to operate in deep water needs key skills and capabilities, which we have got, and therefore that leads to the ability to actually get access to infrastructure and manage infrastructure. Clearly, the infrastructure element will always be a consideration for ourselves as we think about what opportunities to drive within the deepwater, be it in the Gulf Of America or elsewhere. I cannot really comment on how others think about it, but that is certainly the lens through which we look at it. Noel Augustus Parks: Okay. Great. Thanks a lot. Operator: This is all the time we have for today’s questions. I will now turn the call back over to Paul for closing remarks. Paul Goodfellow: Thank you, Julie, and thank you all for joining today and for your interest in Talos Energy Inc. I would like to close by recognizing again our dedicated team and their commitment to providing safe, reliable, and responsive energy that really is vital to power our everyday lives and the world. We look forward to updating you as we execute the plans we have laid out today throughout the year. Thank you. Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect. Thank you.
Operator: Greetings, and welcome to the Federal Signal Corporation fourth quarter earnings call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce Felix M. Boeschen, Vice President of Corporate Strategy and Investor Relations. Please go ahead. Felix M. Boeschen: Good morning, and welcome to Federal Signal Corporation's fourth quarter 2025 conference call. I am Felix M. Boeschen, the company's Vice President of Corporate Strategy and Investor Relations. Also with me on the call today are Jennifer L. Sherman, our President and Chief Executive Officer, and Ian A. Hudson, our Chief Financial Officer. We will refer to some presentation slides today as well as to the earnings release, which we issued this morning. The slides can be followed online by going to our website, investors.federalsignal.com, clicking on the investor call icon, and signing in to the webcast. We have also posted the slide presentation and the earnings release under the Investor tab on our website. Before I turn the call over to Ian, I would like to remind you some of our comments made today may contain forward-looking statements that are subject to the safe harbor language found in today's news release and in Federal Signal Corporation's filings with the Securities and Exchange Commission. These documents are available on our website. Our presentation also contains some measures that are not in accordance with U.S. generally accepted accounting principles. In our earnings release and filings, we reconcile these non-GAAP measures to GAAP measures. In addition, we will file our Form 10-K later today. Ian will start today with more detail on our fourth quarter and full year financial results. Jennifer will then provide her perspective on our performance, current market conditions, our multiyear growth initiatives, and go over our outlook for 2026 before we open the line for any questions. With that, I would now like to turn the call over to Ian. Ian A. Hudson: Thank you, Felix. Our financial results for the fourth quarter and full year of 2025 are provided in today's earnings report. Before I talk about the fourth quarter, let me highlight some of our full year consolidated results for 2025. Net sales for the year were $2,180,000,000, a record high for the company and an increase of $319,000,000, or 17%, compared to last year. Organic net sales growth for the year was $205,000,000, or 11%. Operating income for the year was $340,900,000, an increase of $59,500,000, or 21%, from last year. Net income for the year was $246,600,000, an increase of $30,300,000, or 14%, from last year. Adjusted EBITDA for the year was $438,900,000, up $88,300,000, or 25%, compared to last year. That translates to a margin of 20.1% this year, up 130 basis points from last year. GAAP diluted EPS for the year equated to $4.10 per share, up $0.51 per share, or 15%, from last year. On an adjusted basis, we reported record full year earnings of $4.23 per share, up $0.89 per share, or 27% from last year. Orders for the year were $2,220,000,000, an increase of $374,000,000, or 20%, from last year. Backlog at the end of the year was $1,040,000,000, an increase of $45,000,000, or 5%, from last year. For the rest of my comments, I will focus mostly on comparisons of 2025 to 2024. Consolidated net sales for the quarter were $597,000,000, an increase of 27% compared to last year. Organic net sales growth for the quarter was $85,000,000, or 18%. Consolidated operating income in Q4 this year was $83,500,000, up $13,400,000, or 19%, compared to last year. Net income for the quarter was $60,800,000, an increase of $10,800,000, or 22%, from last year. Consolidated adjusted EBITDA for the quarter was $119,400,000, up $30,100,000, or 34%, compared to last year. That translates to a margin of 20%, an increase of 110 basis points from last year. GAAP diluted EPS for the quarter was $0.99 per share, up $0.18 per share, or 22%, from last year. On an adjusted basis, EPS for Q4 this year was $1.10 per share, an increase of $0.29 per share, or 36%, compared to last year. Orders for the quarter were $647,000,000, up $201,000,000, or 45%, from last year. Orders in Q4 this year included $132,000,000 of acquired backlog. In terms of our fourth quarter group results, ESG's net sales were $504,000,000, an increase of $108,000,000, or 27%, compared to last year. ESG's adjusted EBITDA for the quarter was $109,000,000, up $26,100,000, or 31%, compared to last year. That translates to an adjusted EBITDA margin of 21.6% in Q4 this year, up 70 basis points from Q4 last year. ESG reported total orders of $566,000,000 in Q4 this year, an increase of $201,000,000, or 55%, from last year. SSG's fourth quarter sales were $93,000,000, up $17,000,000, or 23%, compared to last year. SSG's adjusted EBITDA for the quarter was $23,400,000, up $7,000,000, or 43%, from last year. SSG's adjusted EBITDA margin for the quarter was 25.2%, up 360 basis points from last year. SSG's orders for the quarter were generally in line with last year at approximately $82,000,000. Corporate operating expenses in Q4 this year were $26,500,000, compared to $10,500,000 last year, with the increase primarily due to a $13,000,000 increase in acquisition and integration-related expenses. Turning now to the consolidated statement of operations, the increase in net sales was largely driven by a $36,700,000 improvement in gross profit. Consolidated gross margin for the quarter was 28.4%, up 30 basis points compared to last year. As a percentage of net sales, our selling, engineering, general, and administrative expenses for the quarter were down 110 basis points from Q4 last year. During the fourth quarter of this year, we recognized $13,300,000 of acquisition-related expenses, up from $300,000 in Q4 last year. The increase included an aggregate expense of $6,800,000 to increase the fair value of contingent consideration associated with the acquisitions of Hog and Standard, as well as expenses incurred in connection with the acquisition of New Way. Other items affecting the quarterly results included a $1,300,000 increase in amortization expense, a $1,700,000 increase in interest expense, a $200,000 reduction in other expense, and the nonrecurrence of a $3,800,000 pretax non-cash pension settlement charge recognized in the prior-year quarter. Income tax expense for the quarter was $17,800,000, an increase of $4,900,000 from last year, with the year-over-year change largely due to higher pretax income levels and the recognition of fewer discrete tax benefits in the current-year quarter compared to the prior year. Our GAAP effective tax rate for full year 2025 was 24%, including discrete tax benefits. For 2026, we currently expect a tax rate of approximately 25%, excluding any discrete tax benefits. On an overall GAAP basis, we therefore earned $0.99 per diluted share in Q4 this year, compared with $0.81 per share in Q4 last year. To facilitate comparison of GAAP earnings per share for unusual items recorded in the current or prior periods, in the current-year quarter, we made adjustments to GAAP earnings per share to exclude acquisition and integration-related expenses, debt settlement charges, and purchase accounting expense effects. In the prior-year quarter, we also excluded the pension settlement charge that I just noted. On this basis, our adjusted earnings in Q4 this year were $1.16 per share, compared with $0.87 per share in Q4 last year. Looking now at cash flow, we generated $97,000,000 of cash from operations during the quarter, an increase of $7,000,000, or 7%, from Q4 last year. That brings our full year operating cash generation to $255,000,000, an increase of $23,000,000, or 10%, compared to last year. Early in the fourth quarter, we executed a new five-year credit facility, replacing the $800,000,000 credit facility that was previously in place. During the fourth quarter, we completed the acquisition of New Way for an initial payment of approximately $413,000,000, and in early January, we completed the acquisition of MEGA for an initial payment of approximately $45,000,000. Our current net debt leverage ratio remains at a comfortable level even after factoring in recent acquisitions. We ended the quarter with $501,000,000 of net debt and availability under our credit facility of $925,000,000. With the increased borrowing capacity under our new credit facility and our improved cash generation, we have significant flexibility to invest in organic growth initiatives, pursue additional strategic acquisitions like MEGA, pay down debt, and return cash to stockholders through dividends and opportunistic share repurchases. On that note, we paid dividends of $8,500,000 during the quarter, reflecting a dividend of $0.14 per share. That concludes my comments, and I would now like to turn the call over to Jennifer. Jennifer L. Sherman: Thank you, Ian. We are proud of our record-setting fourth quarter performance, which included new quarterly records across net sales, adjusted EPS, and adjusted EBITDA, thanks to the outstanding results from both of our operating groups. Within our Environmental Solutions Group, we delivered 27% year-over-year net sales growth, a 31% increase in adjusted EBITDA, and a 70 basis point improvement in adjusted EBITDA margin. Contributions from acquisitions, higher production levels, and continued price realization were all meaningful year-over-year contributors. Given continued strong order levels and an extensive pipeline of internal market share expansion initiatives, we remain focused on building more trucks across our family of specialty vehicle businesses and reducing lead times for sewer cleaners and four-wheel sweepers. These efforts to increase throughput across our manufacturing sites contributed to double-digit percent increases in net sales across several ESG product verticals, including sewer cleaners, safe-digging trucks, street sweepers, metal extraction support equipment, and road marking and line removal trucks. From a capacity perspective, the combination of large-scale capacity expansions that we completed between 2019 and 2022, good access to labor, and continued investments in several productivity-enhancing projects position us well to profitably absorb more volume into our existing footprint. As in recent years, we expect approximately half of our annual CapEx expenditures in 2026 focused on various growth initiatives, with the other half focused on maintenance investments. Shifting to aftermarkets, where demand remains strong, aided by contributions from acquisitions. For the quarter, aftermarket revenue increased 20% year over year, primarily driven by higher demand for aftermarket parts, increased service activity, and rental income growth. We are identifying new attractive aftermarket parts growth opportunities across the enterprise and are highly energized by the long-term prospects of our internal build-more-parts initiative, whereby we are vertically integrating certain parts production. Over a multiyear timeline, this initiative will allow our teams to drive increased recurring parts revenue streams while expanding margins. Additionally, our aftermarket teams are working diligently to integrate our most recent acquisitions. Shifting to our Safety and Security Systems Group, the team delivered another excellent quarter with 23% top-line growth, a 43% increase in adjusted EBITDA, and a 360 basis point improvement in adjusted EBITDA margin. This improvement was primarily driven by a combination of volume increases for public safety equipment in the U.S. and in Europe, proactive price-cost management, and realization of certain cost savings. Our SSG teams are laser-focused on new product development initiatives while surgically targeting underserved customer cohorts and regions, a strategy that is yielding share gains. Additionally, we expect the recent addition of a fourth printed circuit board manufacturing line at our University Park facility to drive additional efficiency improvements in 2026. Lastly, we had another strong year of cash, with $255,000,000 of cash generated from operations. For the full year, our cash conversion was 103%, slightly ahead of our annual target of 100%. Before I shift to current market conditions, I would like to spend a moment to update you on our refuse truck distribution strategy in Canada now that we have completed the acquisition of New Way. As many of you know, we have extensive internal experience in the refuse market, as we have been distributing third-party refuse trucks through our Joe Johnson Equipment sales channel for more than 20 years, primarily in Canada. This existing internal refuse service infrastructure and sales expertise was an important synergy consideration as part of the New Way transaction. Prior to the acquisition, New Way had not penetrated the Canadian market at scale, creating unique market share growth opportunities for us starting in 2026. As such, beginning in 2025, we stopped taking orders for third-party refuse trucks and instead began selling New Way through our Joe Johnson Equipment network in Canada. Given these dynamics, we have provided additional disclosures in this morning's earnings presentation outlining our historical third-party refuse orders and sales levels to facilitate more appropriate comparisons. We will continue to provide this reconciliation as we move through 2026. From a financial perspective, we expect to deliver the remaining $80,000,000 of third-party refuse backlog over the next four quarters and eventually wind that backlog down to zero. As we wind down the sale of these lower-margin third-party refuse trucks and increase New Way sales in Canada, we expect to realize margin tailwinds in 2027 and 2028. Shifting to current market conditions, on an underlying basis, excluding the impact of acquired backlog and third-party refuse orders, Q4 orders increased $64,000,000, or 14%, year over year, with improved demand across both our publicly funded and industrial product lines. Within product lines, we experienced particular strength in sewer cleaners, safe-digging, and vacuum trucks, fueled by continued demand for infrastructure and water projects in North America and rising safe-digging adoption within the U.S. Similarly, we are seeing especially constructive demand environments for our metal extraction support equipment and road marking and line removal products. Lastly, I wanted to provide some context around our backlog, which stood at $1,040,000,000 at the end of the fourth quarter, up approximately 5% year over year. When I first became CEO, I put in place a multiyear growth strategy aimed at building a best-in-class specialty vehicle and industrial equipment growth company while decreasing the cyclicality of our earnings stream. As we have executed this strategy both organically and through M&A, the composition of our product portfolio has changed over time. Consequently, our business has become less backlog-intensive compared to historical periods. In fact, many of our least cyclical and fastest-growing product lines, such as aftermarket parts, are not really backlog-relevant at all. To illustrate this impact, in 2025, net sales of our backlog-intensive products—which include vacuum trucks, street sweepers, metal extraction support equipment, refuse trucks, and road marking and line removal trucks—comprised approximately 45% of our sales compared to more than 50% in 2015. While we internally continue to view backlog as an important metric and our current backlog provides excellent visibility for certain product lines throughout the next six to twelve months, the overall importance of backlog relative to enterprise-wide forward sales has decreased over time as we have decreased the cyclicality of the business. As a reminder, consistent with our long-term growth strategy, through cycles, we target annual low double-digit top-line growth split roughly evenly between inorganic and organic growth. Looking ahead to 2026, we are laser-focused on driving three critical multiyear growth initiatives forward that will benefit the company for years to come: first, the successful integration of our recently acquired businesses; second, new product development; and third, continuing to strengthen the power of our platform. Let me share a couple of highlights. First, our teams are moving full steam ahead with the integration of New Way. As a reminder, we remain committed to achieving our targeted $15,000,000 to $20,000,000 in annual synergies by 2028, with approximately half of those synergies tied to cost savings and the other half tied to various sales synergies, including the increased penetration of the Canadian market, dealer development, aftermarket parts optimization, sales channel alignment, and new product development. Consistent with the outlook we provided in our September acquisition announcement call, we are expecting the acquisition of New Way to be approximately adjusted EPS neutral in 2026, inclusive of a preliminary estimate of intangible asset amortization expense. Second, we were pleased to close the acquisition of MEGA Equipment last month. MEGA is a manufacturer of parts and equipment for the metal extraction support equipment sector. We have been following them for a number of years, having identified the company as a highly complementary asset to our Ground Force and TowHaul businesses. We believe MEGA can accelerate several of our strategic growth initiatives within this space. As an example, MEGA will substantially increase our reach into certain underpenetrated geographic regions such as South America. As we optimize our combined sales channel between Ground Force, TowHaul, and MEGA, we see important cross-selling opportunities, similar to the playbook we have been deploying since 2022. We also see incremental opportunities to accelerate MEGA's aftermarket parts business, which has historically represented about 25% of MEGA's net sales, and we have identified several operational benefits, including production savings and freight cost opportunities. From a financial perspective, MEGA generated approximately $40,000,000 in net sales over the last twelve months, and we expect the acquisition to be modestly accretive to cash flow and EPS in 2026. Third, we continue to invest in our internal centers of excellence to widen our competitive advantage within the niche markets that we operate. In 2026, we see specific opportunities to drive several sales, new product development, and dealer optimization initiatives forward across our vacuum trucks, street sweepers, multipurpose maintenance vehicle, refuse collection, road marking, and safety and security systems verticals. As part of this strategy, we acquired certain assets and territory rights in Texas in the fourth quarter, which we think will allow us to increase market share for several key product lines. Turning now to our outlook. With the ongoing execution against our strategic initiatives and the current demand backdrop, we are confident that we will have another record year in 2026. For the full year, we are anticipating net sales of between $2,550,000,000 and $2,650,000,000 and adjusted EPS between $4.50 and $4.80 per share, notwithstanding an aggregate $0.16 per share headwind from higher acquisition-related intangible asset amortization expense and the normalization of our tax rate. At the midpoint, this outlook would represent another year of double-digit growth and the highest adjusted EPS level in the company's history. In line with our typical seasonal patterns, we expect Q1 net sales and earnings to be lower than subsequent quarters due to less aftermarket revenue capture. Lastly, we expect CapEx to be between $45,000,000 and $55,000,000 for the year, which includes productivity-enhancing projects. In closing, I want to express my profound thanks to all of our employees, suppliers, dealer partners, customers, and stakeholders for a tremendous 2025. With that, we are ready to open the lines for questions. Operator? Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question is from Timothy W. Thein with Raymond James. Timothy W. Thein: Hi, good morning. Can you hear me okay? Jennifer L. Sherman: Yes. Good morning, Tim. Timothy W. Thein: First question, just on the call at the midpoint of $2.6 billion in revenues. Apologize if I missed this. Is there a way to parse out—I am not sure if you updated what you are expecting in terms of New Way and MEGA and other acquisition impacts. Just trying to parse out organic versus relative to that $2.6 billion number? Ian A. Hudson: Yes, sure, Tim. I will take this. So, if you think of the guide—the revenue guide—obviously, in the aggregate, 17% to 22% year-over-year growth, that is about 5% to 9% as organic, and the rest would be contributions from New Way and MEGA. So that is how it breaks down. And then the midpoint—that is squarely in line with what we have delivered really since 2015. Our organic growth has been a CAGR of about 7%, so that is squarely in line with the guide. Timothy W. Thein: Yep. Okay. Excellent. And then just on the order trends—and I am sure you have far from perfect visibility as to every order placed and what the motivation is behind it—but I am just curious, maybe what feedback, if any, you hear from dealers in terms of or maybe how you are seeing that order board fill out, meaning are there any signs of maybe customers wanting to get ahead of a prebuy, meaning more of those orders may be coming later in the year, or just curious as to what, if any, impact you think that is having in terms of order activity. Thank you. Jennifer L. Sherman: Yes, I will start with the prebuy discussion. There has been a lot of discussion around this. We have not baked any meaningful prebuy into our guidance. We are going to continue to monitor it, and we will be prepared to respond to it. The other thing I would add there is publicly funded customers do not materially engage in prebuying, so with respect to that part of the business, we do not think it would be a significant driver. Where we would see traction would be on those non-publicly funded customers. Timothy W. Thein: Understood. Thank you. Operator: Our next question is from Steve Barger with KeyBanc Capital Markets. Steve Barger: Hey, good morning. Thanks. Jennifer L. Sherman: Morning, Steve. Steve Barger: For the 5% to 9% organic for the consolidated guide, is that similar—got it. And thanks for the reminder on how the mix of backlog-dependent business is changing. So maybe a two-parter. First, is it safe to say that you expect book-to-bill above one for the business units that still depend on backlog for forward visibility? Ian A. Hudson: So, a couple of comments there. As we previously talked about, our lead times are still extended for sewer cleaners and four-wheel street sweepers. So we have been focused on build more trucks. I am pleased to report that we made some really good progress during Q4. If you look at unit production combined at both Elgin and Vactor, it was up versus 2024, and up 13% for the full year. So we were pleased with that progress. For those particular businesses, we are very focused on getting those lead times in that six- to eight-month range. We provided some additional information in the slides today regarding the impact of the $80,000,000 third-party refuse trucks. We will not be taking orders for third-party refuse trucks in 2026, and we will be delivering those throughout the year. So we tried to separate that out for everybody so they understand the impact that will have. We will be taking orders for New Way, but it will take us some time to build up to those particular rates over a multiyear period. So, outside of those particular things, we would expect over a twelve-month period that book-to-bill would be around 1.0, a little bit better. But we wanted to call out those two particular issues as we move forward. Steve Barger: Yes, that is great detail. Thank you. And then the second part, just a clarification. Do you book-and-ship orders within any given quarter—does book-and-ship business, I should say, in a given quarter get reported in orders? And how do we think about rental and used equipment, and how that flows through, just for clarification? Ian A. Hudson: Yes, the short answer, Steve, is yes. They do get reported in both orders and sales within the quarter. And we typically do not have much backlog for rentals, if any, because typically you will receive the request to rent and fulfill it quickly, so that is probably an in-and-out within the quarter. So not a whole lot of backlog in the rental business. Steve Barger: Yes, but rental would still show in orders, or is that just kind of a— Ian A. Hudson: Correct. Steve Barger: Okay. Got it. Yes. Thank you. Operator: Our next question is from Ross Sparenblek with William Blair. Jennifer L. Sherman: Good morning, Ross. Ross Sparenblek: Nice quarter here. Maybe just starting with a housekeeping item. Can you help parse out the $132,000,000 inorganic contribution to orders in the quarter? I understand some is backlog; some is going to be incremental orders that were secured once you owned the asset. Ian A. Hudson: Yes, Ross. That is just the backlog that we acquired on the date of the acquisition. Ross Sparenblek: Okay. Can you give us a sense of what the inorganic order flow looked like to try to parse out the organic orders for the year? Ian A. Hudson: Yes. I mean, the difference was not really material from what we have reported. If you strip out the acquired backlog, that delta was not material. Ross Sparenblek: Okay. I mean, how should I think about that, though, since you guys did start stocking inventory in Canada for New Way, and presumably the rest of the United States? Ian A. Hudson: We did not do anything meaningful in the one month that we owned them. Ross Sparenblek: Okay. Well, just based on early discussions, do you get the sense that you are going to have a strong adoption rate with existing dealers that might be selling other third-party refuse trucks? Ian A. Hudson: You know, right now, New Way has a number of strong dealers, and we are working with them. And the JJE sales arm—we have hired a number of people. We are leveraging the existing infrastructure that is in place. We are training them on the New Way equipment. So they are still in early stages. We are excited about some of the opportunities that are out there. And then in certain areas, we plan on strengthening that dealer network through either the JJE team or other additions to the network. Ross Sparenblek: Okay. So, I mean, probably first quarter, though? Like, timeline on when we should start seeing a more meaningful contribution? It just seems a little odd that you would let the LaBrie phase out. I guess you do have a backlog there. We should not expect until the end of the year for the overlap of replacing LaBrie with New Way inventory. Correct? Ian A. Hudson: Yes, we are taking orders since closing, and New Way has a number of strong dealers in place. There are a number of opportunities, and we are continuing to take orders. And our view on New Way's contribution to the 2026 earnings has not changed. Including the amortization, we expect it to be neutral. Ross Sparenblek: Okay. Alright. Well, thanks again, guys. I will hop back in queue. Ian A. Hudson: Thank you. Operator: Our next question is from Walter Scott Liptak with Seaport. Walter Scott Liptak: Hi. Thanks. Good morning. So I want to ask—I did not catch it—Jennifer, in your remarks. You talked about the first quarter. I wonder if you could talk a little bit about what you are expecting seasonally and from production schedules so we can get our modeling right? Ian A. Hudson: Sure. We expect, in terms of earnings, the cadence to be similar to the past in terms of 19% to 20%. With respect to orders, there could be—this year, obviously, New Way in part of first quarter, Hog, and MEGA will be new—so there could be some change to the seasonality of orders. But in general, what I said in my prepared remarks is we would expect the cadence of earnings to be similar to the past. Walter Scott Liptak: Okay. Great. And I wanted to ask you about New Way and just the cost synergies now that you have had a chance to do a full financial review and look at the operations. Are you going to be able to do more with the cost synergies? And I wonder about 80/20—if that is something that you give them time to integrate first and then start 80/20, or do you start doing that right away with the New Way business strategies? Ian A. Hudson: Yes. So, we identified the $15,000,000 to $20,000,000 by 2028. That is about half cost and half revenue synergies. We have various teams that have been in place since we announced the acquisition in September that are working on those cost synergies and revenue synergies. 80/20 and operational optimization is absolutely a critical synergy. We have transferred one of our best 80/20 people. Our facility—the general manager of that facility—is now working directly with the New Way team on 80/20 opportunities. Walter Scott Liptak: Okay. Great. Thanks for that. And just the last one for me, I was curious about the University Park—the fourth PCB line that went in. You guys have been really successful with vertically integrating, and I wonder if this one is for demand that you already have, or is this room to grow? Why did you have to add a fourth PCB line? Ian A. Hudson: There are a couple drivers. First of all, the team did a super job, and we installed that line—we are actually a little bit ahead of schedule—in Q4. We look at it as driving a couple things: continued growth, it really accelerates new product development, and it allows us to attract customer needs, particularly within both our police and our signaling businesses. So, the short answer is accelerating new product development—the team is a star in that particular area—and, number two, it facilitates additional growth opportunities. Walter Scott Liptak: Okay. Great. Okay. Thank you. Ian A. Hudson: Thank you. Operator: Our next question is from Michael Shlisky with D.A. Davidson. Jennifer L. Sherman: Good morning, Mike. Michael Shlisky: Good morning. Thanks for taking my questions. Wanted to start off asking about MEGA and about New Way. Can you share first how 2025 fared within their own four walls as far as organic growth in those businesses? Were those both growth businesses in 2025? And do you expect them, organically, to be for themselves growth businesses in 2026? Ian A. Hudson: Yes. I think with respect to MEGA, we are obviously very excited about the combination of MEGA with the Ground Force and TowHaul businesses. In Jennifer's remarks, she commented on how MEGA brings some things to the table that we did not necessarily have before in terms of geographic expansion. So MEGA has had some nice organic growth in 2025. We are expecting that to continue as we go into 2026. They had revenues of about $40,000,000 in 2025, and as we go into 2026, we are expecting that to grow a little bit. As it relates to New Way, they were in the middle of a sale process during 2025, so we did not necessarily have audited financials, but the last audited financials that we had, they did $36,000,000 of EBITDA and about $250,000,000 of sales in 2024. As we talked about in September, we are expecting them to be slightly lower in 2026 just because there is some normalization of trends within that industry. So that is what we have implied in our guide for 2026. Michael Shlisky: Got it. Thank you so much. And then your comment earlier about expanding a little bit into South America was also very interesting. Was that just a comment about Ground Force and TowHaul, or are there other lines of business that you think could actually work as well in South America? Just any comments on local sourcing, whether you have to have engine changeover to make that happen. Because there are often some rules around locally sourced content when you try to get into South America. Ian A. Hudson: Yes. So my comments were focused on MEGA and TowHaul/Ground Force. We have partners that we work with in South America. MEGA has a very strong brand, and they manufacture tanks and water trucks on locally sourced chassis where needed. With respect to the chassis for TowHaul, we export, and for other Ground Force and TowHaul products, given the strong brand recognition of MEGA, the teams are excited about the synergies for both those other products. Michael Shlisky: Great. Just one last one for me. You had a busy 2025 for M&A. Just a sense as to the pipeline you think for 2026 and what areas you are looking to grow through inorganic means ahead here? Ian A. Hudson: Yes. Our pipeline continues to be full. We are very focused on identifying companies, purchasing, integrating, delevering, and then repeating. With that being said, different teams work on different opportunities. We have mentioned previously that our SSG team is looking at a number of opportunities right now. We would expect that to continue. There are some other opportunities we are looking at with respect to specialty vehicles that involve different teams than the refuse team or the mineral extraction team. M&A over the long run will continue to play a critical part in our growth, but we will meter according to bandwidth. Michael Shlisky: Okay. Outstanding. I will pass it along. Thank you. Operator: Our next question is from Christopher Paul Moore with CJS. Christopher Paul Moore: Good morning. Great quarter as always. You guys were obviously ahead of the curve early in COVID, expanding capacity, and certainly it depends on mix. But just trying to get a sense of roughly how much annual revenue Federal Signal Corporation can currently handle with the existing infrastructure. Ian A. Hudson: Yes. So we are currently running at about 70%. I would highlight that we added some additional capacity with New Way and MEGA, particularly New Way. We are excited about that capacity with some organic growth initiatives that we are incubating right now that we expect will have multiyear benefits into 2027 and 2028. I will say what I say all the time: we are continuously tweaking our capacity at various facilities, where we might do something that is less than $5,000,000 type expansion. The teams have done a super job in terms of 80/20, which—one of the many benefits of 80/20—is freeing up additional capacity. We have been able to add some additional capacity. We are leveraging some of the opportunities in New Way. I can give a great example in our dump truck body business. We had excess capacity in Pennsylvania. We are now producing dump trucks in a particular facility there. I think we are in pretty good shape right now as we sit here to support our growth initiatives going forward. Christopher Paul Moore: Got it. Helpful. Maybe just one on New Way. So you have talked about the New Way acquisition being neutral to EPS in 2026, potentially adding, I do not know, $0.40 to $0.45 EPS in 2028. I am assuming, based on prior conversations and prior comments, that that would be pretty back-end loaded for 2028. Is that the way we should be looking at that and also the margin progression from EBITDA margins from 14% to 15% to the 20% range? Ian A. Hudson: Yes. I think we talked about the $15,000,000 to $20,000,000 of synergies by 2028, kind of evenly split between cost and revenue synergies. We would expect those cost synergies to be more evenly split as we move through the three-year period, with the revenue synergies to be more back-end loaded. They take some time. If you think about that particular team, a good example is we are very focused on new product development. We have a number of products in the works, and it will take some time to get traction, for example, on those particular initiatives. Christopher Paul Moore: Got it. That makes sense. And just any thoughts on the current tariff discussions? Ian A. Hudson: Yes. I think that we are fortunate because, as we talked about last year, we are in country for country, so they had a nominal impact. USMCA is important to us, particularly given the importance of our Canadian businesses. But we are not baking any meaningful impact into the guidance that we provided earlier today. Christopher Paul Moore: Fair enough. I will leave it there. Thanks, guys. Jennifer L. Sherman: Thank you, Chris. Operator: Our next question is from Gregory John Burns with Sidoti & Company. Jennifer L. Sherman: Good morning, Greg. Gregory John Burns: Good morning. The adjusted pro forma order number of $64,000,000—how much of that is organic, and what is the contribution from acquisitions in that adjusted number? Ian A. Hudson: Yes. I mean, I think what we have done, Greg, is we have stripped out the acquired backlog at the time of the acquisition. So that is the 14% year-over-year growth from Q4. The vast majority of that is organic. Gregory John Burns: Okay. Perfect. And then in your municipal, publicly funded markets, I know there was a lot of federal money coming post-pandemic into that market. I assume a lot of that has been allocated and spent. So is there any concern that we might see a slowdown in those end markets? Ian A. Hudson: Yes. I will start with—as we have talked about before—we did not see any meaningful contributions in 2024 or in 2025 from those pandemic programs. Infrastructure projects are still ongoing. We expect those to be ongoing for several years. Again, within that publicly funded revenue bucket, water taxes are an important part of that. That is our largest single product line, which supports purchases of sewer cleaners and other types of municipal vacuum trucks. We find that to be a growing revenue stream. Our general municipal exposure would really be around street sweepers, some of our multipurpose tractors, a small portion of our public safety systems, and then a portion of refuse. As we talked about in the prepared remarks, we saw strong orders in Q4 for sewer cleaners and street sweepers. Again, we feel we have baked this into our outlook, and it is really, frankly, the diversification within that publicly funded revenue stream that is important to look at with respect to the order trends. Gregory John Burns: Okay. Thank you. Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to Jennifer L. Sherman for any closing remarks. Jennifer L. Sherman: Thank you. Again, we would like to express our thanks to our shareholders, customers, employees, distributors, and dealers for their continued support. Thank you for joining us today, and we will talk to you next quarter. Operator: This concludes today's conference. We thank you for your participation. You may disconnect your lines.
Operator: Good day, and welcome to the International General Insurance Holdings Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Robin Sidders, Head of Corporate Relations. Please go ahead. Robin Sidders: Thank you, Danielle, and good morning. Welcome to today's conference call. Today, we'll be discussing the financial results for the fourth quarter and full year 2025. We issued a press release after the close yesterday, and you can find that on our website in the Investor Relations section at iginsure.com. We've also posted a supplementary investor presentation, which can be found on our website as well on the Presentations page in the Investors section. On today's call are Executive Chairman of IGI, Wasef Jabsheh; President and CEO, Waleed Jabsheh; and Chief Financial Officer, Pervez Rizvi. As always, Wasef will begin the call with some high-level comments before handing over to Waleed to talk through the key drivers of our results for the fourth quarter and full year 2025 and finish up with our views on market conditions and our outlook for the remainder of 2026, and then we'll open the call up for Q&A. I'll begin with the customary safe harbor language. Our speakers' remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words. We caution you that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will, in fact, be achieved. Forward-looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward-looking statements due to a variety of factors, including the risk factors set forth in the company's annual report on Form 20-F for the year ended December 31, 2024, the company's reports on Form 6-K and other filings with the SEC as well as our press release issued last evening. We undertake no obligation to update or revise publicly any forward-looking statements which speak only as of the date they are made. During this call, we will use certain non-GAAP financial measures. For a reconciliation of non-GAAP measures to the nearest GAAP measure, please see our earnings release, which has been filed with the SEC and is available on our website, as I said. With that, I'll turn the call over to Executive Chairman, Wasef Jabsheh. Wasef Jabsheh: Thank you, Robin, and good day, everyone. Thank you for joining us on today's call. I'm very pleased with the outstanding results we achieved in 2025. Next year will be IGI's 25th anniversary year, which is quite a milestone for us. We have built a successful track record of consistently strong performance, generating significant value for our shareholders over this time. I'm delighted that in addition to our solid financial results, highlighted by roughly 14% growth in book value, plus the return of more than $108 million to shareholders through our capital management actions that we announced a special dividend of $1.15 per share this morning. This is the third consecutive year that we have taken decision to pay a special dividend in addition to our regular quarterly dividend. Our ability to do this really shows how our confidence in the strength of our balance sheet and our capital position is. And it rewards our shareholders for their trust and support of IGI over the years. I want to congratulate all of our people whose focus, dedication and loyalty not only produced these results, but who have helped to build our track record for over more than 2 decades. I'm very proud of the people we have at IGI. It is their passion for our business and their belief in what we have built and continue to build at IGI that continues to drive our success. With this excellent foundation, I'm confident that we will continue to serve as a stable market for our customers and generate strong value for our shareholders in '26 and beyond. I will now hand over to Waleed to discuss the numbers in more detail and talk about market conditions and our outlook, and I'll remain on the call for any questions at the end. Go ahead, Waleed. Waleed Jabsheh: Thank you, Wasef. Good morning, everyone, and thanks for joining us on the call today. As Wasef said, we had an excellent fourth quarter, capping off what was another exceptional year for IGI. Strong underwriting execution, strong investment performance, all of which leading to a very solid bottom line result. This adds a further set of data points to what is a very strong and consistent track record that we've built now over the past 24 years. To begin with, I'm just going to run through the key highlights of our performance for 2025 before delving into detail into the results. In the last 12 months, we delivered more than $161 million in underwriting income, leading to a combined ratio of just under 86% for the year. That's well below our 10-year average. Delivered a return on average equity of 18.6%, also well below our -- well above our 10-year average. Book value per share growth of almost 14% to $16.91. And finally, capital return to shareholders of more than $108 million in dividends and share repurchases. And as Wasef mentioned, we announced our ordinary common share dividend in our press release last night and declared another extraordinary special cash dividend this morning, this time, $1.15 per common share, marking the third consecutive year now that we've paid a special cash dividend. This level of performance is the result of a very well laid out, well-understood strategy that's executed at a very high level consistently year after year. And our history has shown that this strategy is what works for us and drives sustainable value to our business partners, shareholders and our employees. We have what we believe are strategic advantages and attributes that are unique to IGI and that underpin the results we are able to achieve. One, we have a high-performance profitability-driven culture underpinned by strict discipline in underwriting. Two, we've got deep specialist and technical expertise driven by years of experience and an on-the-ground presence in our core regions, allowing us to do business in a manner that is culturally compatible with our markets. Three, we're value-driven, we're long-term focused. And finally, four, our significant insider ownership and founder manager mindset aligns directly with shareholder interest. Our view of success, as we've said time and time again is not over a 1- or 2-year period, but a much longer-term period encompassing ever-changing conditions, dynamics in our market and more broadly, global social and economic environments that are constantly shifting. Now I'll move on to the results for the fourth quarter and full year of 2025. I'm going to do this just a little bit differently and really focus on the key points for the quarter and the year and what the drivers are behind the numbers. And then I'm happy to answer any questions any of you may have at the end. Starting with the top line, and as we said would be the case on prior calls, gross premiums written in the fourth quarter were down $33.4 million or just over 19%. Similarly, gross premiums for the full year were down by the same dollar amount, $33.4 million, and that's equivalent to about 4.8 percentage points. This predominantly relates to the nonrenewal of a large professional indemnity binder in our long-tail portfolio that we disclosed to you on our Q2 call last year. At that time, we said the impact would flow through 4 consecutive quarters starting with Q3 and that the largest portion, which is about half of the total, would be reflected in Q4. So that's what you're predominantly seeing in the top line movements for the quarter. Net premiums earned were $111.4 million for Q4 '25 versus $120.6 million for the same period in the year before. For the full year, net premiums earned were $453.8 million versus $483.1 million. For the full year, also net premiums earned included the impact of reinstatement premiums on loss-affected business amounting to $10.2 million. We've mentioned this on previous calls. And as I've said before, our reinsurance buying approach is very strategic, aiming really to help mitigate volatility in the high severity lines of business that we write. It's important to note that our reinsurance purchasing patterns vary depending on where we are in the market cycle. For example, we tend to buy more facultative coverage during periods of softer market conditions, and we retain more risk in harder market conditions. Now this is all part of our cycle management strategy, but it can definitely sometimes result in some distortion in the component parts of our combined ratio, and I'll talk more about that in a moment. Now the combined ratio for Q4 of '25 was 82%, and that included 18.1 points of accident year cat losses and 5.2 points of favorable reserve development. This compares to 77.8% for Q4 of '24, which included 6 points of accident year cat losses and 2.3 points of favorable reserve development. The Q4 2024 combined ratio also benefited from the impact of about 18.3 points of foreign currency revaluation. The full year ' 25 combined ratio was just under 86% and included 14.5 points of accident year cat losses and just under 8 points of favorable reserve development. The full year combined ratio was also negatively impacted by about 6 points of negative currency revaluation movement. Now this compares to a full year 2024 combined ratio of 79.9%, which included 9 points of accident year cat losses, 7.7 points of favorable reserve development and just under 2 points of positive currency revaluation. So if you're looking at it on an FX-neutral basis, we're comparing 79.9% combined ratio for the full year 2025 to 81.8% for 2024. Now during the fourth quarter of 2025, currency revaluation movements played very tiny miniscule part on our results. But for the full year, in line with the first 3 quarters' results and the commentary there, the volatility of the U.S. dollar during that -- those 3 quarters against our major transactional currencies impacted a number of line items in the results. Now just a few comments on the G&A expense ratio. For the fourth quarter and full year of '25 versus the same period in '24, we saw increases of 5.9 points or $4.8 million and 2.7 points or $6.6 billion, respectively. Now this is largely the result of new hires, systems costs and a number of other items, which are all part of the investments we've made in the build-out of our business and in our visibility in the market. So you're seeing a higher dollar expense load in the fourth quarter versus Q4 in 2024. The higher fourth quarter '25 expense ratio is then compounded by the lower level of period-over-period net premiums earned. I would also say that the fourth quarter 2024 G&A ratio -- expense ratio benefited from a reclassification of expenses from the G&A line to the acquisition cost line. So the Q4 year-over-year comparison isn't really on an apples-to-apples basis. For the full year, you're also seeing the effect of the strengthening of the pound versus our dollar reporting currency during '25. And this directly reflects and impacts the level of G&A expenses that are transacted in pounds, which for our business is fairly chunky. Generally speaking, the total expense ratio provides a true reflection of overall expenses as a component part. And I'm talking here about G&A combined with acquisition costs. And that would -- but that will move around a bit at this stage of the cycle depending upon the cycle management actions that we take. All in, we delivered net income of $32.3 million or $0.76 per share for Q4 of '25 versus $30 million or $0.65 per share for the same quarter in 2024. For the full year, in 2025, we generated net income of $127.2 million or $2.89 per share versus $135 million or $2.98 per share in 2024. Moving on to our segment results. In the Short-tail segment, conditions are somewhat mixed, but rates remain broadly adequate. Underwriting income in this segment improved by over 14% for the fourth quarter and declined a little over 7% for the full year, and that's largely due to a lower level of net premiums earned as well as a higher level of ceded premiums. As I mentioned a moment ago, part and parcel of our cycle management is taking advantage of reduced reinsurance pricing with the aim always to protect and mitigate the volatility in our portfolio. And this definitely becomes more pronounced as the cycle softens. In the Reinsurance segment, conditions generally remain strong and pricing more than adequate in the business that we write. Underwriting income was down about 4.5% in Q4, predominantly due to a lower level of net earned premiums. But for the full year, underwriting was up almost 30%, and this is a better measure of the true performance of this segment in 2025 and also reflects a shift in focus we made in late 2022 to the higher-margin reinsurance business as part of our cycle management actions, which we've spoken about previously. Now the Long-tail segment continued -- well, Long-tail segment has continued to be the area of our portfolio that has definitely been the most challenging for several years now. But it's also where we're hopeful for some improvement in 2026 or at least a bottoming out in pricing and conditions. This is the area where we also took action in the second quarter of the year when we've nonrenewed the large account, the PI binder that I mentioned -- we mentioned before, and that's what impacted the top line, both in Q4 and full year for this segment. Underwriting income for both the fourth quarter and full year of '25 was impacted by lower net earned premiums and more pronounced here is also by the currency valuation movements since this portfolio is primarily transacted in British pounds. Underwriting income of $10 million for Q4 '25. That compares to $14.3 million in Q4 '24. For the full year, we recorded underwriting income of $10.9 million versus $39.5 million for the full year in 2024. Now again, going back to the foreign exchange on an FX-neutral basis, that would have been $29.2 million for '25 versus $34.3 million for '24. If we turn to the balance sheet, total assets were $2.1 billion. Total investments, cash were $1.32 billion. The allocation to fixed income securities makes up a little over 80% of our investments and cash portfolio. That generated $14.2 million in investment income in Q4 and just under $55 million for the full year. That's a yield of about 4.2%. And we held the duration fairly steady at about 3.6 years. During the fourth quarter, we repurchased just under 344,000 common shares, average price per share $23.51. At the end of the year, we had about 4.65 million common shares remaining under the new $5 million common share repurchase authorization that we announced before last quarter's call. For us, share repurchases are a strong value generation lever for us, and we view them as highly accretive and excellent value for our shareholders. At the end of the year, total equity was $710 million, and that includes the share repurchases and common share dividends, including the special dividend of $0.85 that we distributed back in April. This compares to total equity of about $655 million at the end of 2024. Ultimately, we recorded a return on average shareholders' equity of 18.5% for Q4 and 18.6% for the full year. From a total return perspective, we grew book value per share by almost 14% in 2025, and we returned a total of about $62 million to shareholders in share repurchases and just over $46 million in common share dividends. So all in, an excellent quarter and full year for IGI. Now if I turn to our view on the market briefly, I mean, there isn't a whole lot more that is new or groundbreaking that you haven't really heard -- already heard from others. We've heard various iterations from across the market that things are getting more competitive, and that's entirely accurate. There's very clearly an elevated level of competitive pressure across much of the market, but it continues to be fairly disciplined, but I'll admit, a little less disciplined than anticipated at 1/1. Most important right now is context and the reality is that while rates are under pressure, they do remain adequate in many of the lines of business that we write. And just as an indication, we saw declines averaging around 10% at 1/1. Looking at specific segments of our portfolio, I'll start with the Reinsurance lines and segments. I mean, margins here are still very healthy. And because of this, this is also the area where we're seeing the greatest push for market share, particularly from the larger carriers. And -- but for us, this is where our S&P upgrade has definitely helped us raise our profile. And as a result, we're seeing more business that we may not have seen otherwise. Short-tail portfolio remains mixed. Our energy book and certain areas of our property book, which, as you're aware, are 2 of our largest lines, those continue to be tougher than a year ago, and I would say is the areas where we're seeing the most significant pressure. Having said that, I mean, we're continuing to see relatively healthy conditions in the more specialist lines such as construction and engineering. I mean, in that line, there's a strong pipeline of opportunities out there, particularly with the increase in infrastructure projects and also the number of data centers being built in various geographies around the world. Similarly, in the marine lines that we write, such as cargo and liability, in these areas, terms and conditions are still holding up reasonably well, and they continue to present new opportunities for us. As I've mentioned before as well, contingency is also still very much a bright spot for us. In our Long-tail segment, we're cautiously optimistic in our outlook as we're seeing some leveling off in the professional financial lines after several sequential quarters of pricing deterioration. Obviously, this is a little different to what you may be hearing from some U.S. carriers. But remember, we don't write any long-tail U.S. business. Now in our PI, Professional Indemnity portfolio, which is predominantly U.K.-based, the pace of decline appears to be leveling off. Our relationships across this business are providing us with some new opportunities and a good and healthy deal flow, especially in the more niche segments of the [ market ]. Similarly, in both FI, Financial Institutions, and D&O, we're still seeing some reductions, but the magnitude of decline is definitely narrowing and the pace is slowing. In our geographic markets, similar -- very similar commentary to what we said before, continued focus on the U.S. and specialty treaty and short-tail portfolios, and we're continuing to build up our profile and presence across various geographies, including Europe, MENA region and Asia-Pac. Now for IGI specifically, context is really critical here. Now for a company of our size, our global strategy and footprint are quite unique. Over the past several years, as is natural to do when market conditions are in your favor and conducive, we've invested heavily in growing our top line, and we've taken actions to strengthen and fortify our business in preparation for when conditions change and become less favorable. One of our most important achievements coming out of this has been our recent financial strength rating upgrade by S&P, which not only underscores the quality of our results and the strength of our balance sheet, but the confidence that S&P have in our ability to continue doing this consistently into the future. Our level of diversification and our strategy of having local talent with high levels of local knowledge positioned in our core regions means we've got much better chance of success in competing for business that isn't necessarily coming to London. I said on prior calls that domestic markets across the globe are becoming stronger, making our local operations even more important. Our people on the ground in these markets have specialist technical and marketing expertise. They've got strong network of relationships. And they've got the ability to interact face-to-face and understand the dynamics of how business is transacted in these local markets. For us, that is a clear benefit that provides a lot of leverage. In the context of our size, footprint and our financial strength, it's a little easier for us relative to our larger competitors to move the dial. That means -- what I mean by that is that we can still find profitable opportunities to write new business across many lines and many geographies within our portfolio whilst maintaining healthy margins. Now while it's perhaps a little harder in today's environment, we have given ourselves a lot more levers to work with in mitigating and managing these conditions better than even 18 months ago. Especially important is that all of our actions are aimed at protecting the book we've built while continuing to generate healthy margins and add to our value proposition. And that is, in essence, all part of the dynamic cycle management which we're constantly banging the drums of and is the nature of our business and something we have successfully navigated numerous times in our almost now 25-year history. Having said all that and given where we are in the cycle, it wouldn't be unreasonable to assume that we're likely to see some contraction in top line in certain areas of the portfolio where we decide to walk away from business that, as we've said before, simply doesn't meet our embedded profitability or coverage targets. We've seen this in our general aviation book, which over the last couple of years, we've virtually halved in size due to the tough market conditions. And we're seeing it today in some other lines. But it's this strict discipline that we always talk about that drives us to take these sorts of actions and puts us in a position of optimal strength to make the most of opportunities when they come without being encumbered by short-term thinking decisions of the past. Looking at 2026, the key focus remains the same: focus, consistency, discipline. This is exactly what underpins successful cycle management and leads to consistent high-quality results and value creation that is sustainable through all stages of the cycle. Just in closing, I mean, we have outstanding teams at IGI and our track record over almost now 25 years clearly demonstrates not only that we're not just a fair-weather company, but that we won't compromise our principles or values under pressure. We have the experience and we've built a level of resilience in IGI that has put us in a much stronger position than we were going into the last soft cycle, and that is what will continue to drive our success forward for the benefit of all stakeholders. So I'm going to pause there, and we'll turn it over for questions. Operator, we're ready to take the first question, please. Operator: [Operator Instructions] The first question comes from Michael Phillips from Oppenheimer. The next question comes from Rowland Mayor from RBC Capital Markets. Rowland Mayor: Could you maybe walk through the state of competition? And I heard all your comments on it, but I just wanted to understand, do you think the durability of maybe the pricing competition, particularly in property, are we reaching a sort of bottom here? Or do you expect to continue throughout 2026? Waleed Jabsheh: Rowland, thanks for the question. I mean, the competition is in line with what we've been really seeing now for many -- quite a few quarters. I mentioned earlier that energy and property lines seem to be the most pressured. I guess, at some point, I don't anticipate that pressure easing off, although there has been talk in the market about the refining aspect of the downstream book and how poorly the results were in 2025 in that area. The hunger seems to still be out there. That being said, I think there's a lot of hunger on the reinsurance side. And in part of the cycle management, it's not just a discipline on the inwards business, but trading in this environment and taking advantage of the opportunities that a soft market provides and leveraging those opportunities against that inwards business, making it attractive and adequate to get involved with. So do I see any sort of short-term let down in the competition? In all honesty, I don't. But we can deal with that. We can manage it. We've managed it on the long-tail lines now for quite a few years. And as I mentioned, on the aviation side as well. But yes, the competition is expected to remain at least in the near term. Rowland Mayor: Yes, that makes sense. And I'm wondering just on the type of insurers you're running into. Is it traditional capital that has always been in the market? Or is it new capital coming in with maybe alternative backing that is creating all the competition right now? Waleed Jabsheh: No, no, no. It's pretty much all traditional. And a lot of it is coming from the larger carriers, both within the short-tail lines, the property and energy lines that we were just talking about as well as the reinsurance lines. I think the market is in a state where it has performed well now for several years in a row, by and large. And the market is sitting on a lot of excess capital that they're potentially pressuring themselves to feed. We don't put ourselves in a position like that. As you know, we've got the buyback program, and we're returning capital via special dividends as well. It's just -- it's all about that discipline and writing the business that makes sense and not putting yourself under pressure to go -- to move with the herd. Rowland Mayor: That's super helpful. And then I did want to talk about the capital. So in the past few years, you've done some M&A to reach into new markets. Is there any opportunity to do that here or multiples just not making sense? Waleed Jabsheh: At this point in time, I would say there's nothing really strong on our radar for any of that. I think you've got to be mindful at the same time of the market that we are in and what that means from a capital management and M&A perspective. We're just focused on our business. We're focused on -- as you know, I mean, if you look at our history, we're pretty much almost entirely a story of organic growth. And that is honestly how we prefer to do it. We're always on the lookout for new opportunities, and I think there are growth opportunities for a company like IGI, both this year and in the years ahead despite the market being tougher. And we're out there fighting hard to find and capitalize on those opportunities. I'm confident we will. But the short answer to your question on the M&A side is nothing solid at the present time. Rowland Mayor: And then I did want to just try to squeeze one more in on the special dividend announcement this morning. Can you just walk through how you decide the size of the dividend versus buyback and your approach to capital management here? Waleed Jabsheh: I mean, by and large, the buyback is something that we're doing throughout the year, right? And a lot of it depends on what ability we have and how much of that we are able to buy. I mean in terms of the special dividend, I mean, when we announced our sort of new at the time capital strategy a few years ago, we said it was basically a focus on the business, underwriting first. Capital position was a lot weaker than what it is, of course, today. But we saw the opportunities at the time in the market. And we said that when we don't see those same opportunities and we don't feel we can feed that capital or need that capital, then we would return it to shareholders. And you started seeing that a couple of years ago from a dividend perspective. Essentially, we want to make sure we are in a comfortable place from a capital adequacy perspective. Obviously, we've got the upgrade from S&P. That's a huge asset for us that needs protection. We always will. But we've had another fantastic year, generating just under $130 million of profit, growing book value. And the business from a top line perspective has not grown. And as a result, the required amount of capital where we stand hasn't increased, yet you've managed to grow the balance sheet in that regard. So we tend to wait until the end of the year, see what the results are like, see what our capital position is like and then assess whether we are in a position to give back to shareholders. And if we are, then the amount that we are able to give back to ensure that our capital position remains strong, protecting all our interests, internal and external. Rowland Mayor: Best of luck in your 25th year. Operator: The next question comes from Michael Phillips from Oppenheimer. Michael Phillips: I apologize if any repeats, I was dropped for about 10 minutes here. So hopefully, no repeats. Congrats on the quarter. I guess, Waleed, I wanted to start with maybe just to what extent on the long-tail line business in the fourth quarter did you feel you had to walk away from business that didn't meet your hurdles more so than maybe you did earlier parts of the year? Waleed Jabsheh: To be totally honest... Michael Phillips: And by the way, let me say this, I apologize. I'm asking not so much on the margins because you -- I think there's lots of confidence in your ability to maintain margins as the soft market maybe continues. But just maybe more so if you consciously walk away, what impact that might have on top line. So if you've already done that, should that continue? Waleed Jabsheh: I mean if there's -- thanks, Mike, for the question. The long-tail business has now been in a downward trajectory for a good 3 years plus now. So a lot of that sort of walking away from business. I mentioned on the call that we're seeing a leveling off in a sense or indications of a leveling off in the softening or in the rate reductions. And hopefully, what we'll see in 2026 is a bottoming out of that. Most of that walking away, we're pretty much done. Now obviously, there's always going to be business here and there that you're going to walk away from. There's going to be new business that comes in. The impact that, that will have on the overall size of the portfolio, I don't think will be material in any shape or form, at least not negatively, once we're done with the PI portfolio that we walked away from. So you're going to continue to see in Q1 and Q2 of this year, the impact of the reduced premiums from the runoff of that portfolio. But we are replacing that with new business. As I said on the call, we've got a good deal flow with good partners, and we're working hard to make those or to get those materialized. So I think once we're done with the runoff of that PI portfolio and the lost income you'll see in Q1 and Q2 of this year, then you'll see a much more stable and potentially positive trajectory for the long-tail portfolio. Michael Phillips: Okay. And then -- I appreciate your comments on the G&A and your opening comments. I guess, some of the pressure on the quarter, obviously, was from the hires that you mentioned and the system build-out. Is that stuff done going forward? Are there any more additional pressure on the dollar amount in the next couple of quarters? Waleed Jabsheh: I would say that there will be, I think, more -- definitely more stability. Now this is a big chunk of our expenses are incurred in pounds, right? So if the pound does strengthen, there's nothing we can do about what that means and not a lot we can do about what that means and translates into dollars. So there are certain things that we've got to keep in mind. Now I think if there's going to be growth from an HR perspective in terms of teams, et cetera, it's going to be more on the underwriting side. If we find new opportunities, bring in new teams to develop new portfolios, build out -- bring in new business, then we will not hesitate to spend the money on that. I mean that being said, on the -- and I tried to address it and explain it in my own way on the call in my commentary. But I know I understand how, obviously, the combined ratio components of the G&A ratio, the acquisition cost ratio and then obviously, the loss ratio all come together, and we look at them individually, and we do very much so ourselves, 100%. The one thing I would say, though, is that as you -- depending on where you are in the market cycle, your strategy of underwriting, both underwriting the inwards business and then buying the reinsurance that you feel provides you with the optimum protection, right, is going to have an impact and distort some of these ratios depending on which stage you are in the cycle. So if you notice, we're -- as I mentioned earlier, for example, now, we're buying a lot more facultative reinsurance, offloading elements of risk and exposure that we're happy to offload. And ultimately, what that does is it impacts your net earned premium numbers. But we're doing that very much knowing that, okay, maybe that may result in a higher expense ratio, right? But if it keeps that loss ratio, most importantly, under wrap or under control and helps to reduce and control that loss ratio, then overall, your combined ratio is still going to be healthy and still going to be good. So it's pulling the different -- taking different actions at different times, pulling the different levers when you see you need to pull them that may distort a couple of numbers. But then overall, when it all comes together, which is the most important thing, when it all comes together, it still looks great. Michael Phillips: No, that's perfect. Last one for me. You mentioned the construction business and infrastructure and data centers around the world. One of the things that I think we're seeing here in the U.S. is some of that stuff has been delayed and impacting some insurance companies' top line business. And I wonder if you've seen that in any parts of your construction business at all? Any concerns there? Waleed Jabsheh: Do you mean delay in starting the projects or delays in completion of the projects? Michael Phillips: Well, both, probably more so on starting, but kind of both. Waleed Jabsheh: Yes. I think -- I mean, a lot of these projects, Mike, are quite chunky. The smallest projects in this area meaningfully is in the low single-digit billion sort of contract values. And we've seen projects upwards of $20 billion, depending on which part of the world we're talking about. And these types of projects always tend to take -- they'll come to the market and they take time to be finalized and completed. And you've got all stakeholders, bankers, financing sign off, and that does take time. We haven't -- I mean -- and so that's natural in our -- in the construction portfolio. What we haven't seen is projects being pulled, which -- so that's the positive sign. So it might take time for them to actually get finalized. But all in all, I mean, this is a big, big -- and you hear everybody talking about. I mean you've seen other carriers go in quite heavily in facilities being set up, et cetera, et cetera, because it's no doubt a big area for everybody going forward. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks. Waleed Jabsheh: Just want to say thank you to everyone for joining us today, and thanks for your continued support of IGI. As always, any additional questions, please contact Robin. She'll be happy to assist. I wish you all a great day, and we look forward to speaking with you on next quarter's call. Thank you, everybody. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and welcome to the Par Pacific Holdings, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity for questions. Please note this event is being recorded. I would now like to turn the conference over to Ashimi Patel, Vice President of Investor Relations. Please go ahead. Thank you, Drew. Welcome to Par Pacific Holdings, Inc.'s fourth quarter earnings conference call. Ashimi Patel: Joining me today are Will Monteleone, President and Chief Executive Officer; Richard Creamer, EVP of Refining and Logistics; and Shawn Flores, SVP and Chief Financial Officer. Before we begin, note that our comments today may include forward-looking statements. Any forward-looking statements are subject to change and are not guarantees of future performance or events. They are subject to risks and uncertainties, and actual results may differ materially from these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements, and we disclaim any obligation to update or revise them. I refer you to our investor presentation on our website and our filings with the SEC for non-GAAP reconciliations and additional information. I will now turn the call over to our President and Chief Executive Officer, Will Monteleone. Will Monteleone: Thank you, Ashimi Patel, and good morning, everyone. 2025 was a year of meaningful progress. We navigated challenges, advanced key strategic initiatives, and generated substantial profits along the way. Full-year adjusted EBITDA was $634,000,000 and adjusted net income was $7.56 per share. 2025 represents an excellent year for the enterprise and further validates the structural improvements we have made to the business. At the beginning of 2025, we laid out clear priorities for the year: one, execute major turnaround activity safely and on schedule; two, minimize the impact from the Wyoming crude heater event; three, advance and start up our Hawaii renewables unit; and four, deliver on our cost reduction commitments. Despite a volatile refining backdrop, we have largely achieved those objectives. We executed the Montana turnaround work safely and effectively, restored Wyoming to reliable operations, advanced the Hawaii renewables project into commissioning while forming a joint venture with world-class partners at an attractive valuation, and strengthened our cost structure. While no year is without challenges, the consistency of our execution reinforces our organization's commitment to excellence. In our business, financial success starts with operational reliability, and overall, we made strong progress during the year, achieving record annual refining throughput. However, the Wyoming event was a reminder to the organization that we are never finished when it comes to safely and reliably operating our facilities. One notable operational success was the sustained improvement in Hawaii throughput rates following several years of focused effort by the team. Hawaii throughput averaged 84,000 barrels per day, approximately 4% above the prior three-year average, reflecting sustained operational improvement by the team. The logistics organization progressed key initiatives throughout the year and generated record segment profits, and Retail once again delivered growing results, setting new financial records in 2025. Full-year adjusted EBITDA increased approximately 13% versus 2024. 2025 same-store fuel and in-store sales grew approximately 1.6% and 1.5%, respectively, reflecting continued traction in merchandising initiatives and food programs. In Hawaii, the renewable fuels project has progressed into commissioning and early startup phases during the fourth quarter. We prioritized the readiness of the pretreatment unit and have successfully achieved on-specification feedstock with a range of inputs. We are in the final phases of operational readiness and expect to introduce post-treated feedstocks into the renewables unit in the next few weeks. While timing has extended modestly beyond original expectations, there have been no material operational issues. Our focus remains on safe startup, operational stability, and optimization towards steady-state performance. We are constructive on the medium-term economic outlook as the policy backdrop continues to improve. A significant highlight for the year was the strengthening of our balance sheet. During the fourth quarter, we received proceeds from the Hawaii Renewables joint venture and began monetizing excess RIN inventory. Combined with solid underlying cash generation, these actions materially improved liquidity. We ended the year with approximately $915,000,000 in liquidity and 49.7 million shares outstanding, improving liquidity by 49% and reducing our share count by 10%, while completing key growth and reliability projects. A stronger balance sheet provides flexibility to invest through cycles, execute high-return internal projects, and opportunistically repurchase shares when appropriate. We entered 2026 positioned to continue expanding the earnings power of the business and driving long-term shareholder value. Refining markets are cyclical; our strategy is not to predict short-term movements but to structurally improve our position within the cycle: increasing distillate yield, enhancing logistics integration, improving capture rates, and lowering our cost structure. Over time, these efforts expand our mid-cycle earnings profile and strengthen durability. Our priorities for the year are clear and consistent with our long-term strategy: one, improve the mid-cycle earnings contribution of our Rocky Mountain assets through targeted high-return projects that enhance flexibility and capture; two, execute the Hawaii turnaround safely and on schedule; three, successfully start up and optimize the renewable fuels unit; and four, maintain disciplined and opportunistic capital allocation. I will now turn the call over to Richard to discuss Refining and Logistics operations. Richard Creamer: Thank you, Will. 2025 reflected significant operational progress and improvement across the refining and logistics business. Reliability is a cornerstone to success and last year's performance is representative of that. We were challenged early in the year by the heater outage in Wyoming, and the team there delivered an exceptional recovery. Throughout the year, we executed disciplined operating and capital spending across the system. The refining and logistics team delivered another record throughput year of 188,000 barrels per day, led by Hawaii's increased production rates. I want to commend the Montana team for the execution of their largest-ever turnaround. Following this event, we reported record quarterly throughput of 58,000 barrels per day, demonstrating the site's potential. We continue to see the benefits of our reliability investments, and the team has made great strides in improving OpEx per barrel. I would like to recognize the Wyoming team for safely restoring operations after the Q1 crude heater incident more than one month ahead of schedule. Shifting to quarterly results, fourth quarter combined throughput was 191,000 barrels per day. In Hawaii, throughput was strong at 87,000 barrels per day. This represents Hawaii's efforts to deliver at maximum capacity through the team's focus on high-reliability operations. Production costs were $4.15 per barrel. Washington throughput was 37,000 barrels per day, reflecting reduced rates ahead of the first quarter planned downtime, and production costs were $4.57 per barrel. Maintenance activities are now complete and the plant restart is underway. Shifting to Wyoming, throughput was 14,000 barrels per day and production costs were elevated at $13.27 per barrel due to a third-party power outage in Northern Wyoming and lower seasonal throughput. Finally, in Montana, fourth quarter throughput was 52,000 barrels per day and production costs were $11.74 per barrel, elevated by approximately $1.50 per barrel due to coker maintenance. Looking ahead to the first quarter, we expect Hawaii throughput between 85,000 and 89,000 barrels per day and Washington between 24,000 and 28,000 barrels per day reflecting the Q1 planned outage. Wyoming is expected to operate between 13,000 and 16,000 barrels per day, with Montana between 52,000 and 56,000 barrels per day, both reflective of Q1 seasonality. This results in a system-wide anticipated midpoint throughput of 182,000 barrels per day. I will now turn the call over to Shawn to cover our financial results. Thank you, Richard. Fourth quarter adjusted EBITDA was $113,000,000 and adjusted net income was $60,000,000, or $1.17 per share. For the full year, adjusted EBITDA was $634,000,000 and adjusted net income was $390,000,000, or $7.56 per share. Shawn Flores: The Refining segment generated $88,000,000 of adjusted EBITDA in the fourth quarter, compared to $135,000,000 in the third quarter, excluding the SRE impact. Our combined refining index averaged $13.13 per barrel in the fourth quarter, down approximately $1.60 from the prior quarter, reflecting seasonal conditions in the Rockies and the Pacific Northwest. System-wide refining capture was 93% for the quarter and 94% for the full year. In Hawaii, the Singapore 3-1-2 averaged $21.43 per barrel during the fourth quarter, and our landed crude differential was $6.50, resulting in a Hawaii index of $15.38 per barrel. Hawaii capture was 104%, including a net $7,000,000 loss from product crack hedging and price lag. Excluding these items, Hawaii capture was 110%. In Montana, the fourth quarter index averaged $11.14 per barrel, with margin capture of 72%. Capture was impacted by elevated asphalt sales and a lighter, higher-gravity crude slate due to coker downtime, reducing margins by approximately $10,000,000. Montana production costs include approximately $7,000,000 related to coker maintenance. In Wyoming, the fourth quarter index averaged $18.31 per barrel; normalized capture was approximately 70% excluding a $3,000,000 FIFO impact from declining crude prices. As Richard mentioned, a regional power outage and subsequent maintenance activities reduced throughput and impacted both margins and production costs during the quarter. Lower diesel sales during the downtime impacted margins by approximately $4,000,000, while maintenance-related activity increased operating costs by $3,000,000. In Washington, our index averaged $8.60 per barrel. Margin capture was 97%, reflecting a normalization of jet-to-diesel spreads and favorable sales mix during the Olympic Pipeline outage in November. Looking to the first quarter, our combined refining index has averaged approximately $6.70 per barrel quarter-to-date, with February month-to-date improving by $2 per barrel versus January. In both the Rockies and the Pacific Northwest, prompt distillate margins have strengthened by roughly $15 per barrel compared to January averages. On the West Coast, tighter jet balances have driven jet fuel to trade at a premium to diesel, supporting margin capture in Washington. In Hawaii, Singapore distillate cracks remain firm, and we expect our first quarter crude differential to be in the range of $4.75 to $5.25 per barrel, reflecting easing backwardation and favorable access to waterborne crude supply. Moving to the Logistics segment, adjusted EBITDA was $30,000,000 in the fourth quarter, compared to $37,000,000 in the third quarter. Full-year Logistics adjusted EBITDA reached a record $126,000,000, reflecting strong system utilization and a $6,000,000 reduction in annual costs. Retail delivered $22,000,000 of adjusted EBITDA in the quarter, in line with the third quarter. For the full year, Retail achieved a record $86,000,000 in adjusted EBITDA, up from $76,000,000 in 2024, driven by favorable fuel and inside-store margins and a $4,000,000 reduction in operating costs. Turning to cash flow, full-year cash from operations was $568,000,000, excluding working capital outflows of $21,000,000 and deferred turnaround costs of $101,000,000. Cash from operations in the fourth quarter was $134,000,000, excluding working capital outflows of $40,000,000 and deferred turnaround costs of $1,000,000. Q4 working capital outflows were primarily related to prepaid annual insurance premiums and trade credit timing in Hawaii, partially offset by RIN proceeds. At year-end, we had monetized less than half of the SRE-related excess RIN inventory, providing favorable working capital visibility into 2026. Full-year accrued CapEx, including deferred turnaround costs, totaled approximately $246,000,000, or $6,000,000 above our prior guidance. Cash used in financing activities totaled $64,000,000, driven by an ABL paydown of $163,000,000 and share repurchases of $28,000,000, partially offset by $100,000,000 in proceeds from the Hawaii Renewables joint venture. For the full year, we repurchased 6.5 million shares, reducing shares outstanding by 10% while lowering gross debt by $310,000,000. Total liquidity was a record $915,000,000 at year-end. Gross term debt was approximately $640,000,000, positioning us at the low end of our leverage targets. During the quarter, we repriced our existing term loan, reducing the spread by 50 basis points and lowering our annual cash interest by over $3,000,000. With improving market conditions and reduced capital requirements, we are entering 2026 from a position of financial strength with the flexibility to invest in growth, maintain a strong balance sheet, and opportunistically repurchase shares. This concludes our prepared remarks. Operator, we will turn it back to you for Q&A. Operator: We will now open for questions. 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 you would like to withdraw your question, please press star then 2. The first question comes from Alexa Petrick with Goldman Sachs. Please go ahead. Alexa Petrick: Hey, good morning team, and thanks for taking our question. I wanted to start on capital allocation. You talked about starting to monetize the excess RIN bank. How should we expect that cash to be used? And then, how are you thinking about share repurchases, particularly with the stock at these levels? Will Monteleone: Good morning, Alexa. Yes, I think our capital allocation framework remains consistent with how we have approached it in the past. I think we are looking at a mix of both the opportunity to repurchase our shares, as well as internal growth opportunities, and even potentially external opportunities. So I think if you look at our past, you will see that we have used really all of the above when appropriate to try and generate shareholder returns, and I think we will continue to deploy a dynamic approach to that given our strong excess capital position. We have a lot of flexibility. Alexa Petrick: Okay. That is helpful. And then maybe just a follow-up. Can you talk a little about Q4 on captures? I think Rockies was a little softer than maybe what we think about cycle captures. Can you kind of walk us through some of the moving pieces there? And then how 1Q is shaping up so far? Shawn Flores: Hey, Alexa, it is Shawn. Yes, I think in my prepared remarks, I touched on the softness that we saw in the Rockies. In Montana, we had 72% capture relative to our sort of annual guidance of 90% to 100%, and I think it is really driven by the coker downtime. We lightened up our crude slate while the coker was offline, and it also results in incremental asphalt sales, and we estimate about a $10,000,000 margin impact. That translates to about 19% capture. So I think when you normalize for that, you are back within sort of that 90% to 100% range. And then I think a similar story in Wyoming. As Richard referenced, we had the regional power outage that impacted most of the state for a few days and led to a multiple-week downtime, and ultimately, I think it impacted diesel sales, which was about $4,000,000. And I think adjusting for that margin loss, Wyoming capture would have been in the high 80s. I think the story is as simple as that. Alexa Petrick: Thank you, guys. That is helpful. I will turn it back. Operator: The next question comes from Matthew Blair with Tudor, Pickering, Holt. Please go ahead. Matthew Blair: Great. Thank you, and good morning, everyone. Will, maybe to just follow up on your comment there about looking at external growth opportunities, could you talk a little bit more about what opportunities that might be? Would that include retail integration, additional retail integration, or are you also open to refinery acquisitions or even corporate acquisitions? Will Monteleone: Yes, Matthew. Happy to talk a little bit more about it. I think the best way to think about our framework is probably to look at our track record and to think about how we have operated in the past is a pretty good indicator of how we will approach the future. And so I think from our perspective, we are focused on growing the scale of the business when it is accretive. And, again, I think we are trying to find opportunities that are synergistic with our existing portfolio, where we can really generate an edge. And so that is our focus. And I think we hold two things to be true at the same time. I mean, you look at our history, we have grown this business through M&A. But I think we also fully understand that if you pursue growth at any price, you can destroy shareholder value very quickly. So being disciplined is important. And I think what we have found on the retail side is, generally, we can be competitive in small acquisitions, one- to five-store, and then we can be competitive on new builds and generate real returns in that area. Given the current market, larger-scale M&A in retail is less likely and more challenging given our competitors' cost of capital versus our own. Matthew Blair: Sounds good. And then, Will, you also mentioned the cash coming in from the RIN sales. Have any update on potentially monetizing the Hawaii land, the excess land out there, or potentially monetizing the Laramie E&P investment? Thank you. Will Monteleone: Sure. So on the land position in Hawaii, we are continuing to progress the redevelopment of that, and again, I think we are nearing completing getting the equipment to grade and are, again, working through the process to rehabilitate that and get it back into, I will say, in the commerce. And so I would not plan on that being an immediate benefit. I think this is a long-term project for us that is going to take us several years. But I do think it is an attractive asset. With respect to Laramie, I think the business there has continued to do well and has generated cash with its existing production, improved its balance sheet, and has continued to improve. I would say, like I have mentioned in the past, we own 46% of Laramie, so we have influence, but we do not have control. And our view is that the best way to generate max for our stake is to align with the other shareholders who have different time horizons than we do and ensure that we maximize the value of the business when they are ready to monetize. And so, again, I think the gas business is noncore to us. At the end of the day, though, we need to ensure that we are aligned with our partners to maximize the value and are not selling a minority non-controlling position. Matthew Blair: Got it. Thank you. Operator: The next question comes from Manav Gupta with UBS. Please go ahead. Manav Gupta: Good morning. I had a very quick clarification. Can you remind us of your sensitivity to the WCS differential? I think it was about $14,000,000 per $1 of widening. But if you could reflect on that and then your view on the WCS differential itself with more Venezuelan crude coming into the United States. Will Monteleone: Sure, Manav. So I think kind of at mid-cycle we are roughly running between 40,000 and 50,000 barrels a day of WCS, and so it is basically every dollar is worth around $15,000,000 to $16,000,000 a year. So that is, I think, the best way to think about our sensitivity on that. And I think at the end of the day, we are an indirect beneficiary of incremental Venezuelan barrels on the Gulf Coast, really as it cascades and pushes Canadian barrels back up into the Mid-Continent. And so we are seeing less volume flowing out of Vancouver and Westridge to the Far East, more barrels in Canada, and increasing apportionment on the lines, which is all favorable for crude differentials moving back out towards our mid-cycle range of, let us call it, $15 to $16 under WTI. Manav Gupta: Thank you so much. I will turn it over. Operator: This concludes our question and answer session. I would like to turn the conference back over to Will Monteleone for any closing remarks. Will Monteleone: Thank you, Drew. 2025 was a year of meaningful progress. We set clear objectives, and we largely achieved them. We strengthened the balance sheet, we expanded the structural earnings power of the portfolio, and we continued to build a more diversified and durable business. Our objective remains constant: to increase the mid-cycle earnings power and grow the free cash flow per share over time through disciplined execution. I want to thank all of our employees across the organization for their continued focus on safe and reliable execution. Thank you all, and have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: And welcome to the Euroseas Ltd. Conference Call on the Fourth Quarter 2025 Financial Results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer, and Mr. Anastasios Aslidis, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. Please press star one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. Please be reminded that the company announced their results with a press release that has been publicly distributed. Before passing the floor over to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, Euroseas Ltd. will be making forward-looking statements. These statements are within the meaning of the federal securities laws. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties and may result in such expectations not being realized. I kindly draw your attention to Slide number two of the webcast presentation, which has the full forward-looking statement, and the same statement was included in the press release. Please take a moment to go through the whole statement and read it. And now I would like to pass the floor over to Mr. Pittas. Please go ahead, sir. Aristides Pittas: Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Anastasios Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the three- and twelve-month periods ended 12/31/2025. Please turn to Slide three of the presentation for our core financial highlights. For 2025, we reported total net revenues of $57,400,000 and a net income of $40,500,000, or $5.79 per diluted share. Adjusted net income for the quarter was $1,300,000, or $4.48 per diluted share. Adjusted EBITDA for the period was $40,700,000. Please refer to the press release for the reconciliation of our net income and adjusted EBITDA. Anastasios Aslidis will go over our financial highlights in more detail later on in the presentation. As part of the company's common stock dividend plan, we are pleased to announce that the Board of Directors increased the quarterly dividend by 7% to $0.75 per share for 2025. This represents an annualized dividend per share of $3.00, resulting in an annualized dividend yield of about 5% based on our current share price. Additionally, since the launch of our 20,000,000 share repurchase program in May 2022, we have repurchased 480,000 shares of common stock in the open market, representing about 6.8% of our outstanding shares, for an aggregate price of approximately $11,400,000. Following two one-year extensions, the program was renewed for the first time in May 2025. We intend to continue executing our repurchase program in a disciplined manner, deploying capital when appropriate to support and enhance long-term shareholder value. Please turn to Slide four for an overview of our recent developments where we highlight key progress across vessel sales and business partnering activity and operational performance. As previously announced, we successfully completed the sale and delivery of motor vessel Marcus V to her new unaffiliated owners. This transaction generated a gain on sale of $9,200,000. On the chartering front, we secured multiyear employment for several vessels, further strengthening our revenue stability. Motor vessel Gragos, Terrapate, and Lawniverse were all fixed for about three years at an attractive daily rate of $30,000 per day. In addition, motor vessel Lean Expenses were fixed for a minimum of 22 months and a maximum of 24 months at a daily rate of $21,500 per day. We had no idle or commercial off-hire days for the period. Now please turn to Slide five. Our owned fleet currently consists of 21 vessels with a total carrying capacity of 1,000 TEUs and an average age of 13.1 years. This includes six intermediate vessels with a combined carrying capacity of 25,500 TEUs and an average age of 18.2 years, and 15 feeder vessels with a combined carrying capacity of about 45,000 TEUs and an average age of 9.4 years. In addition, we have four intermediate vessels under construction, each with a capacity of 4,484 TEUs. Two of these are expected to be delivered in 2027 and the remaining two in 2028, adding a further 18,000 TEUs of capacity to our fleet. On a fully delivered basis, our fleet will grow to 25 vessels with a carrying capacity of approximately 80,000 TEUs. Operator: Ladies and gentlemen, please stand by. Your conference will resume. You are now connected. You are now connected. Aristides Pittas: Sorry for the interruption. We had the line break down. I hope you can hear me. I will continue. I just described the 4,484 TEU vessels that we expect to take delivery in 2027 and 2028. So now please turn to Slide six for a further update on our fleet employment. We continue to benefit from a high level of forward coverage. Looking ahead, we have secured a high degree of revenue visibility in the several years. For 2026, 87% of our available voyage days have been fixed at an average daily rate of approximately $30,700 per day. In 2027, our coverage stands at about 71% with an average rate of around $31,900 per day, whilst for 2028, we already have 41% of our days secured at an average rate of around $32,400 per day. This forward coverage, achieved through our disciplined chartering strategy, allows us to balance market exposure with earnings stability across different phases of the cycle. It provides meaningful cash flow visibility and positions us to sustain profitability over the next several years, even in the event of a sudden market correction. Moving on to Slide eight, let's review the key market developments during 2025. One-year time charter rates remain firm at historically elevated levels, supported in the near term by a substantial portion of the fleet being fixed forward. This forward coverage has helped sustain charter rate resilience even though the freight market softened amid increased vessel supply and seasonally weaker demand. The Shanghai Containerized Freight Index recovered by approximately 13% from near two-year lows recorded in late September. On a quarter-on-quarter basis, average rates across the major container segments were largely unchanged and continue to hover around similar high levels. Secondhand asset prices remained stable in 2025 compared to the previous quarter. This resilience was supported by limited vessel availability and continued competition among buyers seeking to expand their fleets amid ongoing trade disruptions. Meanwhile, the newbuilding price index declined modestly, easing by 1.5% quarter over quarter. After an extended period of strong growth, container newbuilding prices softened in the fourth quarter compared to the third. As yards are mostly full till 2028 and consequently, ordering activity has slowed. However, prices remain high by historical standards. Idle fleet capacity has trended steadily downward and is now approaching negligible levels. Recycling activity remained muted in 2025, with just 11 vessels being scrapped during the year. Scrap prices have recently softened to around $435 per lightweight ton in Bangladesh. Overall, the global fleet expanded by approximately 7% in 2025. Please turn to Slide nine for our broader market overview focusing on the development of six- to twelve-month time charter rates over the past ten years. As illustrated on the slide, charter rates across all major container segments remain meaningfully above the respective ten-year historical averages and median levels. While rates have moderated from the extraordinary peaks of 2021 and 2022, they continue to reflect a structurally stronger earnings environment than the long-term norm. This is particularly evident in the feeder and intermediate segments where demand remained solid. These vessel classes continue to play a critical role in maintaining network flexibility and supporting regional and intra-regional trade flows, especially amid ongoing geopolitical uncertainties and supply chain realignments. Moreover, limited vessel availability at the moment combined with sustained demand continue to support the elevated time charter rates. Please turn to Slide 10. According to the IMF 2026 World Economic Outlook Update, the global economy is projected to maintain a resilient expansion, with GDP growth now forecast at 3.3% in 2026 and 3.2% in 2027, reflecting a slight upward revision to the outlook relative to last October's projections. Inflation pressures are expected to ease further with headline inflation declining from an estimated 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027, supporting a gradual return to target price stability. Despite a relatively stable medium-term outlook, there are still meaningful downside risks, though. These include the possibility that expectations around technology-driven growth prove too optimistic as well, of course, as the risk of escalating geopolitical tensions. Ongoing trade frictions and broader geopolitical fragmentation continue to create uncertainty for the global economy. The recent events in Venezuela, Greenland, and the Middle East are a reminder that external risks remain always present. That said, some trade pressures could possibly ease in 2026, which could help reduce the drag from the tariffs on overall growth. In the United States, growth is projected to remain broadly steady with GDP growth expanding by about 2.4% in 2026 and 2% in 2027, although business and consumer sentiment appears subdued and inflation is expected to ease towards target only gradually. Among emerging markets and developing economies, India is forecast to remain one of the fastest-growing major economies, with GDP growth projected at about 6.4% for both 2026 and 2027, which is underpinned by robust domestic demand and investment momentum. The E7 M5 region is projected to also maintain solid growth with expansion of 4.2% in 2026 and 4.4% in 2027, supported by strong domestic investment and technology exports even amid global trade uncertainties and tariff pressures. Finally, China's growth trajectory is expected to moderate more, with GDP forecast at 4.5% in 2026, down from 5% in 2025 and easing further to 4% in 2027. The slowdown reflects pressure from weaker external demand, subdued manufacturing investment, and ongoing challenges in the property sector. While segments of the economy, particularly exports and AI-related investment, continue to grow at a healthy pace, broader domestic demand remains soft, pointing to an increasingly K-shaped recovery. On the containerized trade, according to Clarksons’ latest estimates, containership trade growth is projected to soften, with TEU-mile demand expected to decline by approximately 1% in 2026 and 5.5% in 2027. This decline is solely due to the expectation that trading through the Suez will normalize during these two years. Some of this artificial uplift in TEU-mile demand is expected to unwind beginning in 2026, with a more pronounced impact anticipated in 2027. At the same time, the substantial newbuilding ordered during the pandemic period is scheduled for delivery over the coming years. This influx of tonnage is likely to outpace underlying demand growth at certain points in the cycle, particularly if geopolitical disruptions ease more rapidly than expected and vessels are able to return to more efficient routes. Turning on to Slide 11, you can see the total fleet age profile and containership outlook. The top left chart shows that the total containership fleet remains relatively young, with the majority of vessels under 15 years of age and only about 13% of the fleet over 20 years old. This, however, changes drastically if you look in the feeder and intermediate segments in isolation, which we will go over in the next few slides. Staying on this slide for a moment, the top right chart illustrates scheduled new deliveries as a percentage of the existing fleet at approximately 5% for 2026, 8.5% for 2027, and 17.6% for 2028 onwards. Although actual fleet growth is expected to be somewhat lower due to slippage and future demolition activity. The bottom chart shows that the order book has increased to close to 35% of the fleet as of February 2026. Let's turn to Slide 12 where we highlight the fleet age profile and order book specifically in the 1,000 to 3,000 TEU range, which represents our feeder fleet. As of February 2026, the orderbook for vessels below 3,000 TEU stands at a relatively modest 10% of the fleet. At the same time, roughly 28% of the fleet is over 20 years old. This dynamic points to a clear imbalance between limited newbuilding activity on one side and an aging fleet on the other. As environmental regulations tighten and compliance costs increase, a meaningful portion of these older vessels are likely to be scrapped. According to Clarksons, deliveries in this size range remain limited, with newbuilding additions projected at only 2.4% of the fleet in 2026, followed by 3.9% in 2027, and 3.8% in 2028 and beyond. Let's move to Slide 14 now to see the supply outlook for the 3,000 to 8,000 TEU segment representing the intermediate containership segment. As of February 2026, the orderbook here stands at 17% of the fleet, a modest level compared to the largest main classes. Meanwhile, the age profile of this segment is also notably advanced, with almost 29% of vessels being over 20 years old, and another 37% between 15 and 19 years. With a limited newbuilding pipeline, net fleet growth in this segment is expected to remain contained over the next few years. Moving on to Slide 14. This chart places those dynamics in a broader context across the entire containership sector. What becomes very clear is how sharply the orderbook is concentrated in the larger vessel classes. Neo-Panamax and post-Panamax units show orderbooks of 40% to nearly 80% of the existing fleets, in line with the significant capacity being added to the mainlane trades. By contrast, the feeder and intermediate segments show significantly smaller orderbooks ranging from just 4% to 18% depending on size, despite a meaningful share of these fleets—between 20% and almost 40%—already being more than 20 years old. This widening gap between newbuilding activity in the large vessel segments and the more limited replacement in smaller sizes highlights why our core segments remain structurally well-positioned with minimal risks of oversupply. Now please turn to Slide 15 for a synopsis of our outlook on the container sector. Trends remain multifaceted. While time charter rates remain strong, weaker freight rates, firm fleet growth, macroeconomic uncertainty, and the possibility of vessels being rerouted again via the Red Sea point to the potential for a softer market environment ahead. Overall, time charter rates remain at historic highs. Looking into 2026, the container sector is expected to deliver one of the lowest orderbooks in recent years, with only 5% expected to be delivered versus 8.5% expected to be delivered in 2027 and over 17% in 2028 and beyond. However, any return to normality in routes could release effective capacity back into the market, potentially putting pressure on rates and prompting further network adjustments. Looking further ahead to 2027, when containership deliveries are set to accelerate, we could experience additional softening in container shipping markets. While capacity management and higher demolition activity may help mitigate part of this pressure, the sector still faces the potential for a more challenging supply-demand balance. The energy transition continues to pick up speed in the container subsector. Alternative fuels are clearly on the horizon, but the shift is not happening overnight. Technical challenges, economic hurdles, and delays in finalizing the IMO net-zero framework mean the journey to zero emissions will be gradual. Still, the momentum is undeniable, and the industry is steadily charting a course towards an even cleaner future. Let's turn to Slide 16. The left-hand graph shows the cycle of the one-year time charter rate for 5,000 TEU containerships over the past ten years. As of 02/20/2026, the one-year time charter rate stands at $36,000 per day, well above both the ten-year historical average and median levels. This firm rate environment is mirrored in asset values as well. Newbuilding vessels are now valued at approximately $43,000,000 compared to a ten-year median of $35,000,000 and an average of roughly $36,000,000. Likewise, ten-year-old secondhand vessels are currently valued at $37,500,000, significantly higher than the ten-year historical median of $15,000,000 and historical average of about $21,000,000. The continued firmness in charter rates and asset values highlights the underlying resilience of the containership market and reflects the robust long-term fundamentals that continue to underpin demand for these vessels. Our financial strength allows us to act strategically as attractive investments emerge in both the secondhand and newbuilding segments. Supported by our strong liquidity profile and revenue visibility, we believe we are well positioned to further enhance shareholder returns. Our investors can rely on us continuing to offer a meaningful dividend, as our recent 7% increase demonstrates, whilst retaining excess earnings for further optimized growth. And with that, I will pass the floor to our CFO, Anastasios Aslidis, to go over our financial highlights in more detail. Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. Anastasios Aslidis: Over the next few slides, I will give you the usual overview of our financial highlights for the fourth quarter and full year of 2025, and compare them to the same periods of the year before, 2024. For that, let's turn to Slide 18. For 2025, the company reported total net revenues of $57,400,000, representing a 7.7% increase over total net revenues of $53,300,000 during 2024. The increase is mainly due to the result of the higher charter rates earned in 2025 compared to the corresponding period the previous year, partly offset by the decreased average number of vessels that we operated in 2025. Consequently, including the $9,200,000 gain on the sale of our vessel MV Marcos V during the fourth quarter, we reported a net income for the period of BRL 40.5 million as compared to a net income of $24,400,000 for 2024. Total interest and other financing costs for 2025 amounted to $3,400,000 compared to $4,100,000 for the fourth quarter of the previous year, before accounting for €600,000 of imputed interest income related to the self-financing of the pre-delivery payments for one of our newbuildings at the time, which was capitalized. This decrease is mainly due to the decreased benchmark interest rates of our bank loans in the current period, 2025, partly offset by the slightly higher amount of debt we carried. During both periods, we reported interest income of about $800,000. Adjusted EBITDA for 2025 increased to $40,700,000 compared to $32,800,000 for the corresponding period of 2024, a 24% increase primarily due to the higher revenues we collected. Basic and diluted earnings per share for 2025 were $5.92 and $5.79 respectively, calculated approximately on about 7,000,000 basic and diluted weighted average number of shares outstanding compared to basic and diluted earnings per share of $3.51 and $3.49 respectively for 2024. Excluding the gain on the sale of vessel and the unrealized income or loss on derivatives, the adjusted earnings per share for 2025 would have been $4.50 basic and $4.48 diluted—one of our highest quarters—compared to adjusted earnings per share of $3.35 basic and $2.33 diluted for the same period of 2024, during which we also had to adjust our results for the contribution of the fair value of below-market charter rate contracts and the related depreciation. Let's now look at the numbers for the full year 2025 and compare them to the full year of 2024. For the full year of 2025, the company reported total net revenues of $227,900,000, representing a 7% increase over total net revenues of $212,900,000 during the full year of 2024, and that is again mainly the result of the higher number of vessels we owned and operated and the higher average time charter equivalent rates we earned during 2025. We reported a net income for the year of 2025 of BRL 137,000,000 compared to a net income of $112,800,000 during 2024. Total interest and other finance costs for the twelve months of 2025 amounted to $15,100,000, again not including $100,000 of imputed interest income, compared to interest and other financing costs of $13,800,000 during 2024, not including, again, $4,200,000 of credit interest income in relation to our newbuilding program. This increase is mainly due to the increased amount of debt in the current period compared to the same period of 2024. Adjusted EBITDA for the twelve months of 2025 increased to $155,900,000 compared to $135,800,000 during 2024, a 15% increase again, primarily the result of the higher revenues we collected. For the full year of 2025, we recorded a $19,400,000 gain on sale of vessels: a $10,000,000 gain on the sale of motor vessel Diamandis earlier in the year, and a $9,200,000 gain on the sale of motor vessel Marcus V, compared to a $5,700,000 gain on the sale of motor vessel Lia Mastoria we recorded during 2024. Basic and diluted earnings per share for 2025 were $19.73 and $19.72 respectively, calculated on about 6,900,000 basic and diluted weighted average number of shares outstanding compared to basic and diluted earnings per share of $16.25 and $16.20 during 2024. Again, excluding the gain on sale of vessels, the unrealized income or loss on derivatives, the contribution of the fair value of below-market time charter contracts and related depreciation for the relevant periods, the adjusted earnings per share for the twelve months ended 12/31/2025 would have been $16.75 basic and $16.74 diluted compared to $14.92 basic and $14.97 diluted for 2024. Now, let's turn to Slide 19 which highlights our fleet performance. As usual, we report our utilization rate there, and our utilization figures are near 100% across all periods, so I will not get into describing in detail the individual utilization rates. On average, 21.22 vessels were owned and operated during 2025, earning another time charter equivalent rate of $30,268 per day compared to 23 vessels during 2024 earning on average $26,479 per day. Our total daily operating expenses, including management fees and G&A expenses but excluding drydocking costs, were $8,284 per day during 2025, compared to $7,728 per vessel per day for the same period in 2024. If we move further down in this table, we can see the cash flow breakeven levels, which take into account the above expenses and, in addition, interest and debt burden expenses and loan repayments without accounting for balloon payments. For 2025, our daily cash flow breakeven level on that basis was $13,009 per vessel per day compared to $13,936 per vessel per day for 2024. Finally, below the breakeven line, you can see the dividend we distributed expressed in dollars per vessel per day, and that amounts to a little more than $2,000—$2,509—for 2025, where the debt was increased, and $2,035 for 2024. Let me quickly review the annual figures on the right part of this slide. Again, for the full year of 2025 and 2024, the utilization rates were near 100%. So let me jump and say that on average, 22.2 vessels were owned and operated during 2025, earning on average $29,107 per day compared to 21.7 vessels in 2024 earning on average $28,054 per day. Total operating expenses for the full year, including management fees and G&A expenses but again without drydocking costs, were $7,600 in 2025 compared to $7,526 in 2024. The gross margin breakeven level for the full year ended up being $13,100 in 2025 compared to $14,794 for 2024, and again, in the last line, we can see the dividend we paid expressed in dollars per vessel per day, and that amounted to $2,335 in 2025 versus $2,131 in 2024. Let's now turn to Slide 20. And in this slide, we want to provide a better perspective of the depth of our contract coverage, especially in light of the recent charters that we concluded and I think are mentioned earlier in the presentation. The table shown presents the development of our fleet ownership days over the period of the next three years and an estimated breakdown of how many days are available for hire and how many days are already contracted. It incorporates assumptions about delivering days for the vessels under construction, scrapping days for older ships, technical drydocking and timing, timing and duration, utilization assumption going forward, and estimates for contracted days and average contracted rate. Please note that the data presented in this table represents our internal estimates provided for indicative purposes and used for modeling future time charter equivalent revenues, and actual results may differ. Nevertheless, we believe this provides useful visibility into our forward revenue and earnings profile. Our contract coverage currently stands at approximately 87% for 2026, 71% for 2027, and about 41% for 2028, as Aristides mentioned earlier. Average contracted rates are approximately $30,700, $31,890, and $32,400 per day for the respective years. We hope this framework will assist investors and analysts in evaluating earnings potential forward by making their own assumptions for the uncontracted days of the fleet and coming to an estimate of our revenues and future profitability. Let's now turn to Slide 21 to review our debt profile. As of 12/31/2025, our total outstanding bank debt stood at about $218,400,000 at an average interest rate margin of about 2%. We assume a three-year SOFR rate of 3.7%, the total cost of our debt stands at about 5.7%, which is well within the prevailing rates for our segment and peers. Turning to our debt amortization profile, in 2026, scheduled repayments amount to approximately $19,500,000. In 2027, our total debt service—debt repayments—increases to about $36,800,000, consisting of $16,800,000 of regular repayments and a €20,000,000 balloon payment. Repayments moderate to approximately $12,000,000 in 2028 with no balloon maturities during that year. Looking further ahead, 2029–2030 includes total repayments of $33,800,000, again comprising $7,400,000 of scheduled repayments and a $26,400,000 balloon repayment. In the past, we were able to refinance balloon repayments routinely if we chose to do so; this remains our expectation for the upcoming balloon payments over the next five years shown in this chart. If we choose to refinance them, we expect to be able to do so relatively straightforwardly. Please also note that this table shown here does not include debt that we expect to draw to finance the construction of our four newbuildings, which we estimate to be in the range of $140,000,000 to $150,000,000 for the four vessels. Overall, our debt maturity profile remains well staggered with no significant near-term refinancing pressure. At the bottom of this slide, we show our customer breakeven estimate for the next twelve months broken down by its key components. On this basis, our total cash flow breakeven level for the next twelve months stands at approximately $12,200 per vessel per day, a level well below the contracted and prevailing earnings of our fleet. Given the average earnings of our fleet for 2026 stand above $30,000 per vessel per day, one can appreciate the cash flow generation that our vessels provide. To sum up my remarks, let's move to Slide 22 to review some highlights from our balance sheet. As of the end of last year, cash and other current assets totaled €188,700,000. We have already made about $35,900,000 advances for our newbuilding vessels. The book value of our fleet stood at $465,000,000, bringing the total book value for our assets to about $700,000,000. On the liability side, as I mentioned in the previous slide, we had debt amounting to $218,600,000 and other liabilities amounting to about $18,200,000, resulting in shareholders' book equity of roughly $463,000,000. However, the market value of our fleet is significantly higher than the respective book value. According to our last estimates, our fleet is valued at approximately $664,000,000, which translates into a net value for our company of about $660,000,000 or around $93.70 per share. With our last closing price in the recent trading range of $62.40 per share, our stock trades at almost a 33% discount to its charter-adjusted net asset value. That highlights the appreciation potential that our stock has given the discount and the depth of our contracted revenues. And with that, let me pass the floor back to Aristides to continue the call. Aristides Pittas: Thank you, Anastasios. Let me now open up the floor for any questions you may have. Thank you. Operator: We will now be conducting a question-and-answer session. Our first question comes from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question. Mark Reichman: Thank you. Well, I know you have got some of those balloon payments coming up, but I was just wondering, given your strong liquidity and contract backlog, how are you prioritizing between the dividends, share repurchases, secondhand acquisitions, and potential newbuild orders? Basically your capital allocation priorities. Aristides Pittas: We will continue giving a strong dividend to our shareholders. We will continue looking at opportunities to grow the company accretively. We do not see such opportunities in the secondhand market, so we are more focused on the newbuilding market. We will keep very moderate leverage, and we will capitalize whenever there is an investment opportunity to do. I think that is the strategy in one minute. Mark Reichman: On the last call, you had mentioned that containership orders had accelerated as charters had committed to take new ships on charter for longer periods even with deliveries well into the future. And I think you had mentioned that with that new supply, you thought the rates for older vessels could experience pressure beyond 2026 unless demand accelerates. So it just seems like the containership market is kind of transitioning towards those newer vessels. But it sounds like you kind of expect scrapping to accelerate meaningfully over the next two to three years. And to what extent do you think that could offset the new deliveries? Aristides Pittas: Scrapping will not happen unless we see charter rates falling, right? Because now even very old vessels continue to get employment at very decent rates. So, as soon as the market drops though, I would expect a significant increase in the number of ships that go to the scrapyard. Because indeed the average age of the fleet has grown dramatically. So, first step that will happen is the market will drop at some point, perhaps because the world finds some equilibrium and we start trading through the Suez and do not have such disruptions. That will mean there will be too many ships around, that will mean the market will fall. Charter rates will drop. Vessels will be scrapped, older vessels will be scrapped. And then we will be buying more secondhand vessels at significantly lower prices. The newbuilding market has grown sufficiently, as we discussed, but now one can expect to take a newbuilding delivery in 2029 onwards. So this makes quite a lot of people reluctant to place orders when they are going to receive the vessels three, four years down the line. Mark Reichman: And then just—I ask this question generally every conference call—could you just provide some visibility on the off-hire or drydocking days in 2026? Maybe even 2027. Anastasios Aslidis: I will be happy to provide that. I mean, as I said on top of my—the drydocking strategy for the next—it is very, very limited. It is very, very limited for this year. So we have gone through most of the, as Aristides said, imminent drydockings. Aristides Pittas: We have two, I think, this year. Anastasios Aslidis: Yes. And whatever the expenses are pretty minimal for the next twelve months. So you can tell from the chart on Slide 21 that the actual component is very small per day, so that is reflective, I guess, for the— Mark Reichman: Okay. Well, thank you very much. I really appreciate it. It is very helpful. Aristides Pittas: Thank you, Mark. Thank you. Operator: Our next question comes from the line of Tate Sullivan with Maxim. Please proceed with your question. Tate Sullivan: Thank you. I mean, arguably, I think asset values and the long-term contracted value for the sector has gone up, and M&A probably lifting higher. But separately, on the other side, I see operating expenses per day of $7,000 roughly in the fourth quarter, up about 5% year over year. Based on your exposure in the sector, can you talk—as the market is pricing higher for crew costs, supplies—what do you see across your business? Anastasios Aslidis: A big part of those, Tate, is the dollar-euro exchange rate that was the most opposite for us during the fourth quarter, during the latter part of 2025. A portion of our operating expenses are in euros—the management fee and some other expenses. So that is part of it. Tate Sullivan: Are you seeing any higher salary costs, salaries—yes, crew salaries—and probably not to that 5% increase amount. Or is that not— Anastasios Aslidis: No. Increases are below 5%, both on crew costs and G&A. It is the euro-dollar thing that has increased a little bit spare parts, management fee costs, things like that affected by the euro-dollar. Also, please note that on the quarter, at least, where we operated two vessels less in the fourth quarter of this year, the G&A component is divided by a smaller number of ships, and so that is why you see probably a little bit bigger jump on a per-day basis on a per-vessel basis. Tate Sullivan: Okay. And while I have you two, I mean, dividend policy—impressive streak of dividend increases. How do you and your Board evaluate the dividend? I mean, how do you compare what you see from other containership companies? Are you looking at 20%, 30% payout ratio or depending on the year, please? Aristides Pittas: We do not have a steady payout ratio that some other companies have. But we do have a strategy of providing a very decent dividend to our shareholders. I think our current dividend yield of around 5% is about the lowest level we will have it at. So, if need, we might pay out more out of our—we pay out of our earnings in dividends so that we continue to pay a very decent dividend. Tate Sullivan: Thank you. Aristides Pittas: You are welcome, Tate. Thanks. Operator: Our next question comes from the line of Poe Fratt with Alliance Global Partners. Please proceed with your question. Poe Fratt: Yes. Hello. You have covered a lot of ground, and you always do a comprehensive overview of the industry. Aristides, if you could just highlight what the near-term prospects are for some of your upcoming open days. Specifically, looking at the older assets, the Corfu, the—I never can pronounce this correctly, but the—can you please name of my godmother. I know, and I always apologize for pronouncing her name incorrectly. I just cannot get it. But if you could just talk about the prospects there and then at what point do you consider scrapping those older assets— Aristides Pittas: I can tell you, Poe, that on all our modeling, we had been assuming up to very recently that the vessels will be scrapped. But the market has proven too strong for this to happen. So, we will pass the special surveys and charter them out for minimum one, hopefully two years. We are discussing with potential charterers, but I cannot make any further comment at this point. Poe Fratt: Okay. The implication is that rates are high enough to keep those in the fleet active until maybe the 2027 timeframe, maybe 2028. Aristides Pittas: So yes, I would say, Poe, that, you know, they are going to pass this special survey now. So they will potentially have another three years of life if they pass the special survey. We will be able to trade them for another three years before we need another extensive survey. And that is probably the time that they will be scrapped. Poe Fratt: Okay. And with extensive forward cover, as Anastasios says, it makes it simpler for us to model out the cash flows and how your financial position is going to look. And even with newbuild costs of $140,000,000 to $150,000,000, I think over the next two years, I have you in a net cash position assuming that you do not need to finance those newbuild payments. You have bought stock back fairly—not as sizable as maybe you would have hoped just given the potential volume constraints. You have increased the dividend. Even with a higher dividend, you are still in net cash position. At what point—and you are talking about newbuilds potentially, but newbuilds would be 2029, 2030 delivery at this point in time. So are you thinking at all about a special dividend to distribute some of the cash to shareholders? I mean, at least in my model, you are overcapitalized when I look out into 2027 and even 2028. Is a special dividend something you might consider— Aristides Pittas: You are correct, I think, in your calculations. We are not really considering a special dividend at this stage. So probably, we are hopeful that we will be able to find use for the extra capital that we currently have—better use than returning it to shareholders. But we will continue providing a very decent dividend to our shareholders. Poe Fratt: Yes. And implied in that, Aristides, I had you increase the dividend at the middle of the year, not at the beginning of the year. Is the potential cadence of dividend increases going to be a little quicker because of how much cash you have on the balance sheet and how much cash you could— Aristides Pittas: That is very probable, but I really cannot comment on how we will decide. But the dividend will be—addition. Hopefully, our share price will appreciate, and then we will feel that we need to always have a minimum dividend and therefore increase the dividend as well. Operator: Okay, great. Thank you. Anastasios Aslidis: Thanks. Operator: Our next question comes from the line of Climent Molins with Value Investor's Edge. Please proceed with your question. Climent Molins: Hi, good afternoon. Thank you for taking my questions. Most has already been covered, but I wanted to follow up on Tate’s question on the cost side. Is your OpEx guidance for 2026 based on the current euro and USD rate? Anastasios Aslidis: What is the guidance for—what is, what we assume for the dollar-euro exchange rate? Climent Molins: Exactly. Because your guidance aims lower than Q4 OpEx, and it was—what were the key drivers behind that? Anastasios Aslidis: I think there is—basically, every year, we are making a budget for expected OpEx for the following year, which reflects potentially expenses required for certain ships during the period, and an assumption for the dollar-euro exchange rate. So I think we expect the dollar-euro exchange rates to remain in the high teens, 1.15 to 1.20 range. And typically, we budget—we are finalizing the budgets for this year now, but we, as a base, we assume a 3% overall increase for our OpEx expenses. I do not know whether that is exactly what you asked— Climent Molins: Yes. I was asking your assumption on the euro-USD exchange rate because you mentioned that as the driver behind the cost increase? Anastasios Aslidis: Yes. I mean, it is in the high teens, 1.15 to 1.20. Aristides Pittas: If you—but for 2025, we started off with 1.05. We ended at 1.18. So that was—and our costs are maybe, I would say, about 25% overall euro-related. Climent Molins: That is helpful. Aristides Pittas: That is— Anastasios Aslidis: Okay. Operator: Our next question is a follow-up question from Mark Reichman with Noble Capital Markets. Please proceed with your question. Mark Reichman: I just wanted to follow up on Poe’s question. You have got the four intermediate vessels to be delivered in 2027 and 2028. But when you look at your feeder vessels, I mean, you have got a few that are aging. So is now the time to start ordering some feeder vessels? I mean, there is the lead time, if you are telling us that Everdiqui and Corfu probably have about three years left? Aristides Pittas: Of course, but we are looking into that possibility. Nothing to report yet. Thank you, guys. Operator: We have reached the end of the question-and-answer session. Mr. Pittas, I would like to turn the floor back to you for closing comments. Aristides Pittas: Thank you all for attending our conference call today, and we will be back in three months, starting with similar kind of results. Thank you. Thanks, everybody. Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Operator: Good morning. Thank you for attending today's Haleon's Fiscal Year 2025 Results question-and-answer. My name is Sarah, and I'll be your moderator today. [Operator Instructions] I would like to pass the conference over to our host, Jo Russell. Please go ahead. Joanne Russell: Good morning, everyone, and welcome to Haleon's Full Year 2025 Results Q&A Conference Call. I'm Jo Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer. Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed or implied by such forward-looking statements. We have posted today's presentation on the website this morning, along with a video running through the results in detail. So hopefully, you've all had a chance to see that ahead of this call. And with that, let's open the call for Q&A, and I'll hand back to the operator. Operator: [Operator Instructions] Our first question is from Guillaume Delmas with UBS. Guillaume Gerard Delmas: So one question. So my one question is on your organic sales growth guidance of 3% to 5% for 2026. I mean it does seem to signal some sequential acceleration relative to the 3% you posted last year. So wondering what will be the main drivers behind this sequential improvement? I mean, is it predicated on category growth accelerating and/or your level of outperformance gaining further momentum? And then related to this, Brian, you reiterated your medium-term ambition of 4% to 6%. I guess what underpins your confidence in the 4% to 6% when you may be delivering an organic sales growth below the bottom end of that range for now 2 consecutive years? Brian McNamara: Thanks, Guillaume. I appreciate the question. So maybe let me take the 3% to 5% guidance, and I'll go to medium-term view. So if you take a step back and let's look at 2025, we grew 3%. That clearly was below what we were expecting when we were at Q3 based on the cold and flu season. But the U.S. was down about 0.5%. APAC and EMEA, LatAm grew mid-single digits. Now we did experience a market slowdown. A vast majority of that was obviously what we've talked about in the U.S. market and then the cold and flu category, which I mentioned. Now remember, 70% of our cold and flu business is also outside the U.S. So in that context, we did deliver competitive performance. We outgrew the market overall and 60% of the business gained and maintained share. Looking at 2026, we're not planning on material improvement in the market. Consumers are likely to stay cautious. We're absolutely focused on driving category growth. I'm confident we will continue and improve on our competitiveness. And that's through investment in A&P, strong innovation plan, sharper commercial execution behind our new operating model. And listen, the U.S. will return to growth in 2026. And that's based on the progress we've had to date. We ended the year where we expected to with inventories at the right place. And that's -- part of that is we did have softer cold and flu, but we had stronger Oral Health business, which helped offset that. And we also have plans in place that we know is going to help us improve through the year. So for instance, in Q2, we have a lot of key customers doing shelving resets. We're gaining distribution. We're gaining shelf placement. On the profit side, the productivity program continues to deliver. You saw the 220 basis points of gross margin improvement. We feel great about that. That, combined with the efficiencies coming from the operating model, will allow us to deliver high single-digit operating growth at constant currency and still invest in growth, still invest in A&P, R&D and some key capabilities that we're continuing to build on. So now if we step back and think the medium-term guidance. I mean you said it, the guidance doesn't necessarily mean we're going to be outside the range. But obviously, part of the guidance is outside our medium-term range. I think it's an acknowledgment of the uncertain market we're dealing with. Based on what we know today, we'd expect to be in the middle of that range, based on what we know today. You also asked about the phasing. What we do know today is that Q1 cold and flu season is going to be below a year ago. We're now almost 2 months into the quarter. And the results, we saw a spike towards the end of the year, and then we saw it come down after that. So we're going to be below a year ago, and that's not only in the U.S., it's outside the U.S. My confidence, listen, these are still attractive categories. I still believe there's huge potential. Everything we've talked about in the past, closing the instant treatment gap, success of our premiumization continuing, the low-income consumer opportunity, which we're still only at the beginning at. And as we progress through 2026, I expect to see stronger performance in North America, as I said and continued strength in emerging markets. We feel good about China, and I expect an acceleration in India. Actually, India for us is performing extremely well. And then as we continue to drive that productivity agenda, again, we will be able to continue to invest in the business, which again underpins my confidence in getting back to that 4% to 6% growth. Operator: Our next question is from Warren Ackerman from Barclays. Warren Ackerman: It's Warren Ackerman here at Barclays. Outside of the numbers, Brian, could you talk about the new reorganization? You've got a new Chief Growth Officer, Chief Transformation Officer, new reporting structure, new hires in the U.S. other than Natalie I've seen. Can you maybe sort of walk us through how that's going to be a growth unlock and how you'll drive more volume growth in the U.S., more innovation? Anything you can say on sort of shelf resets and how the things are shaping up in the U.S. in what is clearly a tougher operating environment? Brian McNamara: Thanks, Warren. And I think you captured it. This is first and foremost about unlocking growth and agility. And I think about the journey we've been on as a company, we're now 3.5 years in as a company. The strategy we laid out is very clear. And there was still an opportunity for us to streamline and simplify the way we work and drive strategy to execution. So as you said, we created this Chief Growth Officer role that combines our category structure, our marketing effectiveness and capabilities, our business insights and analytics strategy and a new commercial excellence function. And then 6 operating units replacing our 3 regions. As you're aware, Latin America, India and Middle East, Africa will now have a seat around the leadership team table. So I think a couple of things. It's one on the commercial execution function that we've created. Centrally, we're driving AI-driven tools behind net revenue management, next best action. We're going to be able to drive this quicker and faster through the organization. This structure of CGO, the 6 operating units, is going to allow us to really, really much quicker drive our category strategies through to execution, better leverage scale, better be able to move resources around, react to, what I would say, as you said, a very uncertain environment. And then as a result of it, we're taking a layer out of the organization. So we're talking about a flatter, leaner organization, and that leads to the $175 million to $200 million in gross savings we talked about, which gives us incredible flexibility, frankly, to invest in those growth opportunities and to invest in innovation and drive the capabilities. Now your question on the U.S. -- specifically on the U.S., yes, well, first of all, overall in the team, we did, as part of those changes, bring new members of the team. We got a fantastic leader in India, a fantastic leader in Latin America that came from outside the company who know these markets extremely well. Our Middle East, Africa leader is now sitting on the leadership team, and she's an incredible talent. In the U.S., as part of all this, Natalie made a number of changes in our category heads or category general managers. So we have one of our top talents now on the OTC business. We brought external talent in Oral Health and in the Wellness category, which is a combination of VMS and Digestive Health. I mentioned it a bit earlier, Warren, but we know that in Q2, we will see across a number of key customers, some wins on distribution and shelving across Oral Health, VMS and Pain Relief, and that's locked. That's going to happen in Q2, and we feel good about that commercial execution. We also feel good about the innovation. The one thing I will say, it's broadly across the business, specifically in the U.S., Oral Health is doing incredibly well. And it really did better in Q4 than we expected, which again helped us offset, land the U.S. where we wanted to despite the tough cold and flu season. Operator: Our next question is from David Hayes with Jefferies. David Hayes: So just on emerging markets, there was a sequential slowdown in the fourth quarter. So just trying to dig a little bit deeper into whether the emerging is performing as you would expect it to be, like it to be at the moment. And then which areas specifically maybe are not doing as well? And I guess in that context, Oral Care continues to be amazing and impressive, obviously, still in this difficult consumer environment. So is there something different about Oral Care and the dynamics there versus some of the other categories ex Respiratory because of the cold and flu? But it feels like Oral Care could ride the consumer dynamic whereas the other brands can't. Is there something you point to that says that this is what's going to change as the consumer maybe picks up in the other areas? Brian McNamara: Yes. Thanks, David. So listen, I will take the Oral Care question linking to other categories, and I'll pass it to Dawn to talk about what we're seeing more broadly in emerging markets. So first of all, we do feel really good, as you pointed about around Oral Care. And as we've been talking about now for a while, the clinical range in Sensodyne has really resonated well with consumers. And it's beyond clinical white, it's clinical repair, it's clinical enamel strength. Beyond that, we're seeing great progress in places like India with low-income consumer on Oral Health. And Parodontax is an amazing brand in gum health. We don't talk about it as much as Sensodyne. It's obviously not as big, but it's growing in the strong double digit in the mid-teens. We launched in China this past year. It's still quite early in our ramp-up for distribution, but we couldn't be happier with the progress that we're seeing there. So we feel great about Oral Health. And the Oral Health model is very, very clear. It's linked to the dental recommendation. It's linked to the innovation. And obviously, we compete on the therapeutic side of the business. Listen, in the other categories, quite -- listen, when we talk about the impact of cold and flu, to be clear, we talk about our cold and flu portfolio specifically, which are brands like Theraflu and Robitussin and Otrivin, which sit in that category. There is also impacts across other areas like Pain Relief and some VMS and things like that tend not to be as much but there does tend to be a little bit of that impact that happens, too. Fundamentally, I believe these are real strong categories that as we move forward, we can move ahead. I think we're just radically differentiated versus the competition in Oral Health in a way that's very, very unique. We're talking about now over 10 years of kind of high single-digit to double-digit growth in Sensodyne, and we continue to see that continuing to hum. And we're seeing good competitiveness in the other categories, but we're continuing to focus on innovation, things like our 12-hour patch launch on Voltaren in a number of European countries. Otrivin Nasal Mist continues to do well. We're growing aggressive share there. Our OptiSorb technology on Panadol, we're rolling out to another [indiscernible] market. So we feel like we have a good innovation plan that should underpin our -- certainly our medium-term guidance. Dawn? Dawn Allen: Yes. Good morning, David. Hi, everyone. So let me talk a bit about emerging markets because we feel really excited about our emerging markets business. If I look at Asia Pac, first of all, I mean, we continue to deliver strong performance in Asia Pac. We expected an acceleration in half 2 versus half 1, and that has come through. And when I look at the growth drivers in Asia Pac, 80% of our growth is coming from volume mix. And that is a factor of us driving penetration and expanding reach across lower-income consumer groups. If I look within Asia Pac, let me talk about India. I mean, an incredible performance in India, double-digit growth in the year, an acceleration in quarter 4 on the back of the macro changes around GST, but also on the fact of our activations. If I look at our INR 20 pack and Sensodyne is performing incredibly well. We continue to expand our reach across rural areas, across villages based on our investment in terms of bringing our sales force in-house. And actually, I was out in India the first week of this year, and it was great to be on the ground with the team, visiting stores and really seeing our brands come to life. So that was India. If I look at China, we're also really excited about China, mid-single-digit growth in the year. And just some pockets to talk about. If I look at our e-com business, it's around 40% of our business in China. And Douyin, we're growing more than 100%. And our online to offline business is also growing double digits. So actually, we feel really good about China. If I move on then to EMEA, LatAm. EMEA, LatAm, actually, we've seen a good performance, particularly across LatAm and EMEA, Middle East and Africa as well as Central Europe. But it is fair to say that whilst we've seen a good performance, particularly in LatAm and specifically Brazil, we are seeing a much more challenging macro backdrop, both in terms of the consumer behavior, but also in terms of retailer behavior as well. So we did see a slowdown in LatAm, particularly in quarter 4. And if I talk about kind of Middle East, Africa continues to perform well. Central Europe also has seen a good performance. But again, based on the soft cough, cold and flu season in quarter 4, we saw a slowdown in Central Europe because of that. But overall, as I said, we're really excited about emerging markets. It's a huge growth opportunity for us. When I look at our A&P investment, half of our increase in A&P investment in the year actually went to emerging markets, and you can see that coming through in the performance. Operator: Our next question is from Celine Pannuti with JPMorgan. Celine Pannuti: My question comes back on the overall guidance and how you manage top line performance versus margin improvement. Clearly, strong delivery in margin and your cost savings initiative augurs well for the years to come. At the same time, your top line has disappointed. And if I look at the past 3 years, volume has been 1%, which is quite low compared to the overall European staples, best-in-class are trying to achieve at least 2% and above. So in order to grow 4% to 6%, what kind of volume level do you think you need to have? And how do you -- like the discrepancy between margin progression and volume performance, does it mean that you may need to reinvest more or maybe look at your price positioning in order to grow volume faster? Brian McNamara: No, thanks for the question, Celine. So let me kick that off, and then I'll pass it to Dawn to give a bit more perspective. I think if you take a step back, I do think we're investing in the right places on the business. If you look at our A&P investment in the last year, we were over 7% ahead of a year ago, and R&D was over 7% ahead of a year ago. That is the absolute benefit of the gross margin improvement and the improvements we've seen in our supply chain and structure, giving us 220 basis points of operating -- of gross margin improvement, which is allowing us to invest in the business. We continue to focus on where is the best of that investment. By the way, a lot of that incremental investment this year went against Oral Health, and you see the results that have come out. And we understand that in a lower cold and flu season, also while we can gain share, we're going to have a very difficult time driving volume overall. But maybe, Dawn, you can talk a little bit about how we see the algorithm going forward and where we see the role of volume growth, which we're very focused on volume growth. So Dawn? Dawn Allen: Yes. Thanks for the question, Celine. And you're right, and Brian mentioned it, we are very focused on driving volume growth in 2026 and moving forward. We've always said that the right price volume mix split for this business is around 60-40, 40-60. I already talked about Asia Pac in terms of 80% of that growth is coming from volume on Asia Pac, and we feel really good about that. When I look at EMEA, LatAm, if I take out the two shoulders of the year, so if I take out Q1 and Q4 for 2025, where we had a soft cough, cold and flu season, actually, in Q2 and Q3, we did see a more balanced price volume mix profile. And that obviously should give us confidence moving forward that we can deliver that. And then if I look at North America, look, it's been a really challenging market in North America in 2025. But as Brian has talked about, we have put in place the key actions to drive volume growth in 2026, whether it's about us no longer doing destocking, whether it's about reducing the drag from smokers health, the distribution builds that we expect to get from shelf resets as well as the strong activations. These are all important drivers in terms of driving the volume growth. So whilst for '26, I'm not going to guide to specific volumes, I would expect us to be improving the split of price volume mix in '26. Operator: Our next question is from Olivier Nicolai with Goldman Sachs. Olivier Nicolai: I got one question first. Could you go back to the change you have implemented in the U.S. over the last 12 months and specifically also the incentive structure you put in place for the new management there? And just following up on the press release on Page 5 regarding the overall equipment effectiveness. It has improved by 7 points in 2025. It's a bit lower than what you expected at H1. Should we assume a stronger improvement in '26 compared to '25 on these metrics? Brian McNamara: Yes. So thanks for the question. Let me talk a bit about the U.S. As you know, we announced a new leader in the U.S. in May. As we looked at our operating model structure broadly, we worked very closely as an executive team to define that. I talked a little bit earlier when Warren asked the question about that and we worked that very closely with the U.S. So one of the things we've done is we've created [indiscernible] category General Manager role, which obviously report directly up to our President of the U.S. and also are connected to our global category heads, which is going to help us really drive kind of this strategy to execution even faster. We're making a number of changes around net revenue management and the tools that we're providing. We've made a number of changes in our sales force and our sales leadership and structure. And all of that was really pretty much done on January 8 when we announced the broader stuff in the U.S., you obviously move much faster on those kind of changes. So I feel really good about those changes and how they're going to drive growth. And as I said, we've seen progress to date. There's no question about it. We ended up again where we expected to. Inventories are kind of where we expected to. Oral Health has been extremely strong. Advil grew share in Q4. So that was a really important element. We're seeing -- we see these opportunities on the distribution and stuff that I talked about in Q2. So I feel like we're in a very good place to really drive those changes in the U.S. Dawn Allen: Yes. And I think, look, in terms of the productivity program, Brian talked about it, we're really pleased with our supply chain productivity program. It was even better than we expected. I mean, 220 basis points improvement in gross margin is incredible in the year, and it is a collective effort across the whole organization. And that's important because it helps to drive flexibility and agility in the P&L to be able to invest for growth. And if you remember, we talked about 3 drivers of how are we going to deliver that gross margin improvement and productivity benefit. The first one we talked about was immediate accelerators. So this was reducing complexity in our supply chain, whether it's around number of languages on pack, harmonizing packaging, formulations. And let me give you an example. So in Europe, in 2025, on our Aquafresh brand, we had 44 single language packs. And we've now reduced to 18 multi-language packs in the year. And that is a huge optimization piece in terms of supply chain. The second area that you referenced in your question was around operational efficiency. And this is all about debottlenecking upfront, process improvements, equipment optimization. And let me give you an example of that. In our Levice factory in Europe, we reduced formulations by 30%. So if you think about the impact of that, that reduces change over time, but it also increases the capacity, the available capacity on that line, which is really important. So I think, as I said, it's an incredible effort that is helping us to continue to invest in the business to drive growth. Moving forward, I wouldn't expect to see, it would be great if we had that level of improvement each year. But moving forward, 50 to 80 basis points is what we've built into our guidance. That will be a strong performance on supply chain productivity. Operator: Our next question is from Jeremy Fialko with HSBC. Jeremy Fialko: So the one for me is more on the U.S. market more generally. So the first element is just the pharma channel within the U.S. Do you see that continuing to be under pressure in 2026? Or do you think with some of the ownership changes there, there's the possibility that the channel could become a little bit better in some of the broader drops there, which have, I guess, led to pressure on inventories and overall sell-through could abate? And then maybe if you look at the U.S. more broadly, is it just a case of waiting for the consumer to get a bit better before the market growth can improve? Or are there some other elements that you think are kind of specific to the market getting a bit better, let's say, putting aside any cold and flu impacts? Brian McNamara: Thanks, Jeremy. Thanks for the question. Let me take that. I think as you talk pharmacy channel, really, what we've talked about is the 2 big retailers in the U.S., which is Walgreens and CVS. What I can say is we see the channel shift that we've seen for many years, which is drug channel and obviously, e-com. E-com growing quite aggressively and that's walmart.com or that's amazon.com, that will continue. The dynamic we saw in 2025 was lower inventory levels in those retailers as they were dealing with their own challenges. We believe we're where we need to be, and now we're just managing normal channel shift as we can. And by the way, that channel shift is not a bad thing for us. If we look at our Amazon shares, 18 brands on Amazon account for 90% of our business on Amazon and 16 of those 18 brands have higher share online than offline. So as that channel shift moves, it's something we can take advantage of. We have good capabilities there. So we feel good about that channel shift. Yet to be seen what happens under new ownership at Walgreens, if that's a positive or not a positive. But again, I don't feel like this is a situation that if gets worse, we baked it in. We proactively managed our inventory levels to try to be at a place where we felt good about so we can stop talking about it as we move forward. In the overall market, you said ex seasonality, so I will take that out because there's certainly a seasonality impact that we're kind of seeing. Listen, what we see in the dynamic is we see club channel doing a bit better, dollar channel doing a bit better as consumers are looking for more value. Some consumers looking for lower price points, some consumers looking for -- different consumer want value, higher price point, lower price per use. We're very focused on those 2 channels and increasing our offering to make sure that we're meeting the affordability issues of consumers in the U.S. And we believe we can also play a role, and we do play a role certainly in Oral Health in driving that category growth. So we're not sitting back and waiting for the categories to change. We're just acknowledging that we -- there are some things we can't control. We're focused on competitiveness, growing market share. We feel confident in that, and we're focused on driving that category growth where we can. Operator: Our next question is coming from Sarah Simon with Morgan Stanley. Sarah Simon: Just one question from me. How important is it in terms of securing shelf space and sort of with your retailer negotiations to have that cold and flu business? Because I think in your bit to become a sort of steady compounder with predictable top line, this is obviously the kind of bit that's causing the biggest issue. So I'm just wondering how much do you need to own that business? Brian McNamara: Okay. Sarah, thanks for the question. Let me take that. Listen, I think cold and flu plays an incredibly enormous role in consumer health and for consumers. And if you look over the history, I've been involved in the -- in consumer health now for over 20 years. So I've seen quite a few cold and flu seasons. This year, we're seeing kind of two seasons in a row that are down because if you remember last year, we were down. We know that Q1 is also going to be down. It doesn't happen that often, but it has happened in the past. We've experienced that in the past. I believe if you look over time, you're going to see growth in this category going forward. It's a bit exasperated this year because we are dealing with multiple headwinds in the U.S. environment, which this has compounded on. But I think it's a very important category. We feel good about our positions in the category and our portfolio. I think it's going to -- it plays a very important role for our customers, too, as you were saying, this is category management around pain and cold and flu. And frankly, cold and flu and pain have some common brands, Panadol Cold and Flu, Advil Cold and Flu. So we think it's an important part of the portfolio as we move forward. Operator: Our next question is come from Karel Zoete with Kepler. Karel Zoete: I'd like to go a bit deeper into 2 categories. The first one is the Digestive Health business. Historically, a good business for you, not so seasonal, but we've seen a slowdown in '25. What should we anticipate for '26? Why should things get better? And then coming back to pain, I know there's a bit of cold and flu impact in there. But if you zoom out, 2024, '25 have not been great years for pain despite of some of your strongest franchises such as Panadol in Asia are there. So what is needed for the pain franchise to start performing more in line with the anticipated growth rates? Brian McNamara: Okay. Thanks very much, Karel. I appreciate the questions. So let me start with Digestive Health. If you think about our Digestive Health business, just to get us grounded, it is -- over 80% of that business is focused in 3 countries: U.S., India and Brazil. In India and Brazil, it's ENO, which is a fantastic brand and does very well in both cases and is part of our strategy and our growth strategy, certainly in both those countries and certainly in India. So now you get to the U.S. where we have Tums, we have Nexium, brands like Gasx and XLax, Benefiber, which is a fantastic brand. We have seen a drag on Nexium in the U.S. There's no question that is one brand in one category, and we're not alone in this that has been impacted by private label. If I zoom out and look at the U.S. overall, we've gained share versus private label. But Nexium has been a bit of a challenge there. One of the opportunities we see in Digestive Health, and we feel really good about and we're now working is supporting consumers on GLP-1s because there's multiple side effects on GLP-1s that brands like Tums and brands like Benefiber address. There's also side effects like dry mouth, which we have a mouthwash brand. We don't talk about much in the U.S., Biotene, which is actually quite effective in dry mouth. And there's nutritional supplementation, and we've actually created the Centrum variant that's specifically focused to GLP-1 consumers. So we see an opportunity across our categories to drive that. Tums is a tremendously performing brand and so is Benefiber. We have dealt with a little bit of a drag from the Nexium side of the business. Listen, on Pain Relief, it's a great portfolio. I mean, Voltaren is #1 topical analgesic in the world. By the way, we talk about -- a lot about the topical. We also have a very strong patch business. I mentioned earlier, we're launching 24-hour patch in a number of markets around the world, and we're seeing quite a successful pickup of that. Panadol has done quite well in Asia. We don't have quite the same strength of a systemic pain relief business through Europe, and we're addressing that. We're launching there. And the big thing is on Advil. Like I said, we're growing Advil share in Q4. We're really confident that now with the new structure, with the new focus, our ability to invest and everything else that will get Advil back to a more consistent performer. That's going to be important for us. So that's one of the things we need to make sure that we drive and deliver on the business. But overall, listen, we've always said the OTC categories in general would be 2% to 3% growth categories, and we could outgrow that. They've seen a little bit of headwinds here and in the U.S. as all categories have been a bit muted, again, not super declines, but a bit muted. So we're addressing that, but we feel very good about that franchise and the global nature of that franchise. Operator: Our next question is from Edward Lewis with Rothschild & Co Redburn. Edward Lewis: Brian, just returning to the medium-term guidance. Should we think that getting back to that range is all about the U.S.? Or do you think you can deliver against that with a structurally slower U.S. market but greater contribution from the rest of the world, given the confidence you're obviously expressing about India and China? Brian McNamara: Yes. So listen, as I think about the medium-term guidance, I do expect that the U.S. will perform better. There's two things. We've outperformed the market, to be clear, in 2025. But do I feel like the performance is -- we're hitting it on all cylinders? We have not. We can do better. Just outperforming the market isn't enough, and I am confident we can do better. So we do expect an improvement in that U.S. environment. And I believe over the next couple of years, we'll get that U.S. environment, if not too close to the bottom end of our algorithm growth. Outside of that, we also expect that, again, over time, emerging markets will continue to be a strong contributor and the low-income consumer strategy we have, which is taking hold in certain places, and we're learning a lot, to be very clear. And that takes a bit of time to kind of build up to be significant, and we see those opportunities. So overall, I do feel the medium term of 4% to 6% that nothing has fundamentally changed versus what we have said and what we've said in the past about our strategy and our opportunities. What you're hearing from us this year is 3% to 5% because the market is still quite uncertain, and we want to make sure we're providing the proper context for everyone on where we see things are at. And again, where we sit now, knowing Q1 is going to be softer due to cold and flu, middle of the range is kind of where we're at on that, and we'll update as the year goes on. Operator: Our next question is from Tom Sykes with Deutsche Bank. Tom Sykes: One quick follow-up and one on A&P, please. Are you able to quantify the shelf space stocking benefit that you'll get in either Q1 or Q2 in North America, please? And then just on the A&P spend, I mean, there can't be many consumer companies that have increased A&P by almost 8% to 20% of sales and still running at negative volumes. So where is the A&P ineffective? And where is it effective? And does it make much of a difference in your non-oral care businesses at the moment? And can you talk about whether you're allocating more of that A&P increase to oral care or to non-oral care, please? Brian McNamara: Thanks, Tom. Thanks for the question. Let me take the U.S. stocking, and I'll pass it to Dawn on the A&P question. Listen, we're not going to guide to specific improvements on the shelving increases. But let's just say it's part of the thing that gives us the confidence as we progress through the year that we'll see stronger results because it's real. Consumers will see more of our brands. We will have a bigger shelf space and in a number of cases, we'll be at a better visibility point in some key resellers. Dawn, do you want to talk about A&P? Dawn Allen: Yes. Look, thanks for the question. And I think it also builds on one of the comments that Celine talked about in terms of the margin profile as well. So let me say a few words about that. I think, look, it's often easy for companies to cut A&P when the market is more challenging. We have not done that, and we haven't done that because we're really focused on ensuring the long-term sustainable growth for this business. So we -- you're right, we've increased A&P 7.5%. We've increased R&D 7.7% in the year. And we invest in our brands at a healthy and the right level to drive that sustainable growth. So if I kind of give a bit more color behind that. So what -- where has that increase in A&P, where has it gone? We've already talked about it. Half of that increase went to Oral Health. You've seen the growth momentum on that this year in terms of high single digit and acceleration in Q4 and the ROI on that Oral Health is incredibly strong. The other half, I referenced it earlier, went to emerging markets. So India, D-com in China, and that's really important. And the third area actually is around experts. So expert is a critical part of our business model in terms of the work that we're doing around the Haleon Health portal, where registrations have increased 27% in the year and on our field force engagement, which has also increased 16% in the year. So that's where the spend has gone. The other thing that we are particularly focused on as well as ensuring it's the right level is also around the return, the efficiency and the effectiveness. So in the year, we've improved our working, nonworking split, so 12% growth in working media. We've also increased our overall ROI mid-single digit, and we've increased the coverage, the global coverage to around 3/4 of our business. The other thing that we're focused on is also the mix. So 60% of our working media is allocated to digital. And that's an important balance for us as we think about the shift in the broader economy. So I would say, overall, look, it's an important focus area for us. We invest at a healthy level, 20.5%. I feel really good about that. And we also continue to focus on improving the efficiency and effectiveness of our spend as well as ensuring that we are shifting and having the right mix around digital versus legacy. Brian McNamara: Okay. Super. Thanks, Dawn. Listen, I think we are going to close the call now. So thanks, everyone. I appreciate you joining us today. Look forward to catching up with all of you in upcoming meetings and roadshows. And please feel free to reach out to the IR team if you have any further questions. Really appreciate your continued interest and support in Haleon. Thanks, everybody. Operator: Thank you. That concludes Haleon Fiscal Year 2025 Results Q&A. Thank you for your participation. You may now disconnect your lines.