AI Investor Insight

EDNMY 2025 Q4 财报电话会议

Bertrand Dumazy: Good morning, everybody. Thanks for being with Virginie, the Edenred CFO and myself for the Edenred 2025 results. We are together for the next 90 minutes. So first part is the presentation of our results. The second part, we will be pleased to answer any questions you may have. In the executive summary, there are 5 message I want to share with you. First of all, yes, 2025 was a year of strong commercial and operating performance. Second message, we exceeded the guidance 2025 in terms of like-for-like EBITDA growth and free cash flow generation and free cash flow conversion. Third, yes, thanks to those results, we are able to post some strong shareholders' return. My fourth message is you know the Edenred growth equation. It's a very simple equation. We are looking for more users and more value per user. Finally, 2026 will be a rebasing year before renewed sustainable and profitable growth in 2027 and 2028 with a growth of between 8% and 12% of our EBITDA like-for-like for 2027 and 2028. With those 4 messages, now let's go into the details, and I propose that we move directly to Slide 6. Edenred delivered a strong operating and financial performance in 2025. Our operating revenue has been growing at 6.2% like-for-like versus 2024. Our EBITDA has been growing at 11.2% like-for-like versus 2024, which is above our guidance set at more than 10% growth like-for-like. Our EBITDA to free cash flow conversion has reached 82%, which is an increase of 12 points as compared to 2024 and which is vastly above our guidance of more than 70%. Finally, our adjusted EPS is reaching EUR 2.59, and it means an increase of 10% versus 2024. So now let's look at the breakdown of this growth in terms of operating revenue. As you see on the left part of the chart, we have been growing at 6.2% like-for-like. And in fact, if you exclude the impact of the Italian regulation, the 6.2% would have been 9.1%. Where does the growth come from? First of all, in Mobility, representing about 26% of our operating revenue, we have been growing at double digit, 11.7%. In Benefits & Engagement, which represents 64% of our operating revenue, we have been growing at 5.9%. And finally, in Complementary Solutions, with all the work we have been doing on the portfolio, we have a negative growth of 4.6% in 2025 versus 2024. Now if we look at the breakdown of the operating revenue per geography, Europe representing 60% of our operating revenue has been growing at 1%. In fact, if you exclude the Italian regulation impact, the growth would have been 4.5%. Mobility -- sorry, Lat Am has been growing double digit at 13.2%. And finally, the Rest of the World has been also growing at double digit at 16.8%, the Rest of the World representing about 30% of our operating revenue. In fact, this strong commercial performance is translating into solid revenue and EBITDA growth. So the total revenue has been growing at 5.7% because of the Other revenue that has been growing at 1%. And finally, in terms of EBITDA, the growth of EBITDA in 2025 is 11.2% like-for-like without the impact of the Italian regulation, this growth would have been around 16%. So what does it mean in terms of profitability? What you see on the 2 charts on the left, first of all, we have been increasing our operating EBITDA margin significantly by 280 basis points, moving from 39.1% to 41.4%. And as to the EBITDA margin, once again, the same story, i.e., a strong increase of our EBITDA margin by 230 basis points, reaching 45.9% in 2025. Another point to notice, we have an acceleration of our intrinsic operating revenue growth in H2. When you look at the graph in red, what you see is the first half of the year, a growth of 7.1%. The second part of the year, acceleration in Q3 at 8.2%. And then due to the Italian regulation, a growth at 2.7%, leading to a full year at 6.2%. There is another way to read it to understand the intrinsic growth of Edenred. Without the Italian regulation, the growth in Q3 would have been 9% and the growth in Q4 would have been 9.7%. That's why we are saying that we see an acceleration of the intrinsic revenue growth of Edenred, which is, in fact, a very good sign for 2026, but also for the years after. Then if we move to the EBITDA growth, you see also an intrinsic acceleration of the EBITDA growth. So when you read it, 14.4% in H1, 8.3% in H2, leading to 11.2% for the full year. If you exclude, in fact, the Italian regulation, the growth would have been 16.5%, so for the entire year, 15.6%. So now let's move to how did we reach this level of EBITDA and this level of EBITDA margin. In fact, part of the answer is into our Fit for Growth program. You remember, we shared that with you. It's a program that is in 2 phases. The Phase 1 was between the end of 2024 and 2025. In fact, we launched and we set up the Fit for Growth program, and we got some quick wins in 2025. So we have more workforce efficiency. We have been renegotiating the suppliers and distributors contract, and we did some IT internalization, which creates, in fact, more efficiencies. That's why you see our level of OpEx like-for-like growth at plus 1.3% in 2025. Then the question is what does it mean for 2026 and beyond. In fact, based on the acceleration of our growth, we are totally convinced that Edenred is set for the future. That's why we will accelerate our strategic investments, especially in sales and marketing and data and AI because AI for Edenred is a plus and only a plus. That's why we want to accelerate our investments. And the second thing is to generate some efficiencies in 2027 and 2028, we will accelerate our platform convergence that is going to give us scale, but also best-in-class customer journeys. The second thing we will do in 2026 is the standardization and the streamlining of our support function. So after a growth of 1.3% in terms of OpEx like-for-like, we're going to accelerate our OpEx level in 2026 to prepare for the next 3 years in terms of EBITDA generation. The other thing we shared with you as to what we will -- what we wanted to put in place in 2025 is, in fact, what we call a performance and product improvement plan. This plan is made of 6 key actions: 4 to improve the top line growth; and 2, which are about the portfolio review. If I start by the first 4 to improve the top line growth, first of all, we said we want to revamp our offer in terms of gifting, especially with the Edenred Plus new platform. And in fact, we did it and it works because when we look at the results of the European gift business volume, we have a growth of circa 10% in Q4 2025 versus Q4 2024. Why Q4? Because it's the peak season of the gifting for Edenred. The second thing we shared with you is Edenred Finance. You remember that we lost a big client in Romania, but we have a unique position. So we revamped our offer. We accelerated our investment from a sales and marketing point of view, and it works because, first of all, we are very pleased to share with you again the signature of our partnership with Shell in Q3 2025. And when you look at the growth in Q4, the growth has been more than 20%. The third action in terms of improving the top line is to work on CSI. CSI, which is our corporate payment solutions in the U.S. We decided to refocus on key verticals and business excellence, and we start seeing the benefits of these focuses in the last month of December with a growth that was between 5% and 10%. Finally, in terms of incentive, it was time for us to revamp our digital offer. We did it. And in fact, in Europe, we see a growth now on this product line of more than 10%. The second part of the plan is our portfolio review. 2025 was a unique occasion to question ourselves on where do we want to accelerate and where do we want to, in fact, to stop or work differently. As to the PSP, so the public social program, we review our entire European portfolio. It's completed, and we are now focused on the most profitable programs. As to the BaaS B2C, BaaS, meaning Banking as a Service, we decided to leave that segment, the B2C one to be focused on the B2B one. And for us, it's a derisking through this progressive exit, and it's done. We are on target. We still have a few things to do for the first half of 2026. But we can consider that the effort is behind us, and it's going to have a positive impact on the profitability and the derisking profile of the group. So based on all those elements, a solid growth on the top, a very good control of our OpEx. We -- and so a good generation of EBITDA. The impact on the free cash flow is an increase of 34% in 2025. So it's based on the record FFO generation, funds from operation. So it comes directly from the EBITDA, but also our activity in benefits is working well. So we have a float increase. And thanks to Virginie and her team, we increased our discipline in cash collection. That's why you see the EBITDA to free cash flow conversion rate moving from 70% to 82%. Based on this strong generation of free cash flow plus a strong return to shareholders through dividends and share buyback for a total in 2025 of EUR 463 million, we are able, in fact, to decrease significantly our net debt. The net debt has decreased by 31%. That's why our leverage ratio has moved from 1.4x to 0.9x. At Edenred, not only we are working on the economic performance, but also the extra economic performance, and we are very pleased to post excellent results on that on our 3 pillars: People, planet and progress. Just to take one of them, our greenhouse gas emission reduction on Scope 1 and 2 versus the point of departure 2019 has been now reduced by 31%. And in fact, all those efforts have been recognized by leading ESG ratings. To name a few, we received the gold medal for the first time with a 5-point increase by EcoVadis. Or if you think about the S&P Global, we increased our score by 6 points, and we are now a member of the Sustainability Yearbook. When I say now, in fact, for the fifth year in a row. So after having gone through the results of 2025, economic and extra economic. I propose that I share with you a quick update on our new strategic plan called Amplify, Where do we stand on that? You remember, Edenred has a strong and unique value proposition. We are serving 1 million corporate companies. We have 60 million users, and we are driving business traffic for merchants via 2 million merchants. What does it mean? 1 million companies. It means that on Benefits & Engagement, we propose solution for HR directors to answer the equation, attract, engage and retain, but also solutions for fleet manager to manage their fleet and optimize their TCO, but also to organize the transition to electrical vehicles and reduce the CO2 emissions. As to the 60 million users, we propose mobile-first solutions for those users to increase their purchasing power and to have in mobility hassle-free drive. As to the merchant, 2 million of them, we increased traffic and loyalty, and we propose to them a very efficient cost of client acquisition. So that's our strong and unique value proposition. And to be able to do that and to amplify that, we have, in fact, a very unique and unrivaled asset to pursue the growth. First of all, remember that we are the leaders of our industry and our relative market share is very high. Second thing, we have the deeper portfolio on earth as to benefits and engagement, but also mobility. Third, we are the only player who is able to process internally the business volume with more than 90%. So this mission-critical infrastructure is very distinctive versus the competition. We are the best orchestrator you can find on our EBITDA growth. And we are also the biggest player as the leader. So our investment capacity are very strong. In tech, OpEx and CapEx, we're able to invest more than EUR 500 million per year to prepare and to amplify the growth. We are very efficient in terms of go-to-market. And also, we have a very resilient and recurring revenue model. Only one number, our net retention rate in Benefits and Engagement in 2025 is at 104%. So with those assets, we also have a very diversified portfolio of solution. As you can see, Benefits & Engagement, 64%; Mobility, 26%; Complementary Solution, 10% of our total operating revenue. In this diversified portfolio of solution, as you can see, what is, in fact, beyond the core, which is the core fuel and the core meal and food, it represents now 42% of our total revenue, i.e., the diversification of Edenred is well in place and is amplifying. Then if we go even deeper, you realize that the largest client we have represent less than 1% of our business volume. The largest merchant represent less than 2% of the redemption volume and the largest program we have, i.e., a country and a solution. So the combination of both represents about 10% of our operating revenue. So it's a super diversified portfolio of solution. If we focus once again on meal and food, as you can see, Brazil, Italy and France represent 27% of the total group operating revenue and the rest of the meal and food represent, in fact, 15% of our total revenue, but spread out of 24 countries. As I said, the diversification of Edenred is amplifying. Another way to look at it is beyond the core meal and food and the core fuel, what is the percentage of the total operating revenue it represents. In fact, Beyond Food has moved to 34%, increasing by 1 point and Beyond Fuel has increased by 2 points, moving from 31% to 33%. Now if I take, in fact, one second on the situation in Brazil as to the presidential decree. Here, you have a chart explaining, in fact, the legal track to help you reading this chart and to make it very clear. First of all, a presidential decree was, in fact, signed on the 11th of November. As we said, Edenred went for a legal action and Edenred won the first legal action. And so the presidential decree is suspended. As expected, the government went for an appeal in front of the Federal Tribunal, and we are waiting for the answer of the Federal Tribunal. Here, there are 2 options. If Edenred wins, the government has many opportunities to go for an appeal, an appeal that could be suspensive or not of the presidential decree. But if Edenred is losing in front of the federal tribunal, then the appeals of Edenred will not be suspensive, and we will wait for the second legal track, which is the judgment on the merits and the judgment on the merits will not happen before the end of 2026. What does it mean? It means that, in fact, we will know better by the end of the year at best. And in between, many things can happen in terms of implementation or not of the presidential decree. That's why our guidance 2026 is based on a worst-case legal scenario. Another way to say it, the minus 8% to minus 12% for 2026 is based on the fact that the President of the Federal Tribunal is asking for the implementation of the presidential decree. And to stop the implementation, we will know it only by the end of the year. So as I said, many things can happen. Today, the decree is suspended. It could be reinitiated or not. And whatever they or not, the final decision will be by the end of 2026 at best. So let's go back to our growth equation. Our growth equation is very simple, more users and more value per user. More user, it means attract more clients and users on the Edenred platform, 50% to 60% of our growth for the coming years. More value per user, 2 levers, enrich and activate, enrich between 30% and 40%. Behind enrich, 2 levers, upselling and cross-selling. As to activate, that will represent between 10% and 20% of Edenred growth, activation is really the monetization of our very qualified user base, but also new services for the merchants. That's the very simple and magic growth equation for Edenred. So now if we go into the details of those 3 levers, and we start with attract, which is about 50% of the future growth of Edenred. Yes, we have been able to accelerate our client acquisition in 2025. How did we do it? First of all, we reinforced our digital acquisition. So we have more and more digital lead generation and AI automation for sales processes. What does it mean? Our level of SME users in 2025 has increased by more than 700,000. So the engine is in place and the engine is amplifying week after week. The second example I would like to share with you is the ability to extend our customer reach. What does it mean? Edenred is selling directly its solution via the very unique platform, but is also now using more and more distribution partner. So I take the example in mobility. Now our solutions are distributed by Daimler, by Man, by Shell for the financial services or by Arval, a leasing company for the maintenance services. What is true in mobility is also true, in fact, in benefits. Here, we take the example of Brazil, where our solutions for toll payment, in fact, are now, in fact, distributed by Nubank, the first e-bank in the world, but also some other banks, in fact, in Brazil, like Ater, CCredit or CCOB. To make a long story short, our network of indirect distribution partners has increased by 30 in 2025 versus 2024. So we amplify our extension of the customer reach, and there will be more to come in the next years. The second lever of Amplify is enrich, enrich with 2 levers. The first one is cross-selling. The second one is upselling. Here, you have the example of what we did in Brazil. You remember, we made the acquisition of RB. RB is a ticket transport provider. The offer of RB is now integrated on the Edenred platform, and this integration has allowed for more cross-selling on our customer base. And so the RB total revenue growth in 2025 has been circa 60%. It's an example of what we can do in cross-selling. The other lever we have is upselling. Upselling, what does it mean? It's to translate the maximum legal face value increase into users' benefits. What has happened in 2025, if we look at portfolio of ticket restaurants around the world, we had more than 40% of the business volume that has been positively concerned by a face value increase. And in fact, this momentum is going to accelerate in 2026 because as of today, the ratio is not more than 40%, but the ratio is more than 50%. And to give a few examples, in Italy, the Italian government decided to increase the face value by 25%. It has not happened for the last 6 years. In Belgium, the government has decided to increase the legal face value by 25%. Nothing has happened on the legal face value in Belgium for the last 10 years. And in Romania, the government decided to increase the legal face value by 12.5%. So as you can see, the upselling engine of Edenred based on face value increase, notably is going to work well for the years to come because it takes about 2 years to benefit from 85% of the legal face value increase. So we know that this growth engine will amplify in the coming years. Finally, the last lever is activate. So the idea is provide more services to our merchants and better monetization of our very qualified user base. You have an example of a retail media campaign that has been done by Reward Gateway, the engagement solution of Edenred. And we see the first very encouraging results. Our retail media revenue has been growing by more than 30% in 2025. So to conclude, we can count on an enrich revenue model because, in fact, our model is based on solution-based fees, but also nontransactional fees and some new revenue streams that are coming from our platform for our user activation and our merchant services. The combination of this enrich revenue model with, in fact, the 3 levers I shared with you before, is putting Edenred on its way to increase the average revenue per user, which is at EUR 45 in 2025, up to EUR 70 in 2030. And as a reminder, what are the growth drivers of this average revenue per user. It's going to be upsell, it's going to be cross-sell. It's going to be our mix of solution, our portfolio diversification, but also some M&A that we can do. A good example was the RB acquisition in ticket transport, another benefit for the Brazilian worker. Finally, a quick point on data and AI. Data and AI is only a plus for Edenred. And because it's only a plus for Edenred, we're going to increase our investment in data and AI by multiplying by 6 our annual data and AI investments during the course of the Amplify plan. Here, you have 2 examples of a concrete application of the AI at Edenred, concrete application within the services we propose to our clients and our users. On the left part, now we are able to propose an AI augmented customer journey. It's called EdenHelp. It's powered by, in fact, the leaders of AI in the world like Agentforce and Zion. And it allows us and the user to benefit from hyper personalization and an unrivaled customer service. And by the way, we won, in fact, an award on self-care and chatbot services in 2025. Another example is our engagement solution in Latin America in 5 countries. It's called GOintegro. Now if you are a user of GOintegro, you will not be alone. You will have your everyday companion. It's a virtual HR agent, but you will also have an AI agent to help you in the content moderation. So the AI revolution is on its way at Edenred. And as I said, it's only a plus for our clients and users. That's why we increased our level of investments. Thank you for your attention. It's now time to go into the detail of our 2025 financial performance under the leadership of Virginie. Virginie J. Duperat-Vergne: Thank you so much, Bertrand, and good morning, everyone. Let's dive into our Edenred '25 detailed financial performance. So first, starting here, you can see that we delivered EUR 2.961 billion of total revenue in '25, growing 7.6% like-for-like if we exclude Italian change of regulation impact. All in all, with a negative foreign exchange impact of minus 4.6% weighing on our total revenue growth, reported growth is at plus 3.7%. Operating revenue amounted to EUR 2.7 billion and reflects 8% like-for-like growth when we exclude the Italian new regulation. Foreign exchange impact on our 2025 operating revenue was a negative minus 4.3% offsetting a positive scope effect of plus 2.9%, which reflects the contributions of the recently acquired activities, mainly Transport voucher in Brazil, the IP Fuelcard energy activity in Italy. And all in all, this resulted in an as published growth of plus 4.7% for the year '25. Now regarding other revenue, we recorded EUR 229 million in '25, showing a minus 7.1% in reported figures, but this is a 1% growth in like-for-like. Foreign exchange effect was a negative minus 8.1%, and it reflects mainly the evolution of Latin American currencies on our other revenue. Now in Europe, overall, on this page, you can see that operating revenue in Europe amounts at EUR 1.6 billion, and it represents 60% of the group operating revenue. In '25, operating revenue in Europe grew 3.4% as reported and 1% like-for-like, benefiting from a positive scope effect due to the contribution of the acquired IP Energy Cards business in Italy. Zooming on Q4, Europe operating revenue was at EUR 433 million and decreased minus 3.4% on a like-for-like basis. that reflects mainly the impact of the Italian meal voucher regulatory changes. Excluding this impact, European performance would have been an 8% like-for-like growth, confirming the improvement observed since the second quarter of '25. Zooming in France, we delivered EUR 363 million of operating revenue in '25, up 0.5% like-for-like on a full year basis. In the fourth quarter, operating revenue was stable, down minus 0.2% like-for-like. Mobility confirmed its strong sales momentum with double-digit growth over the quarter, led by rising demand for electric vehicle charging solutions. Meal & Food delivered steady growth with good commercial development in challenging macroeconomic conditions and the year-end gift campaign was boosted by the new digital offering. Meanwhile, this performance was offset by the tail end of the cyclical downturns in software solutions. In rest of Europe, Edenred delivered 8% growth in 4Q '25, excluding the new regulation in Italy on the back of a good performance in Southern countries and in Germany with the Ticket City solution. Mobility also benefited from a good commercial traction in Italy with IP and with Beyond Food solutions with Edenred Finance, for example. Our recent partnership between Spirii and Daimler on electric vehicle demonstrates the relevance of our solutions. Then finally, as regards to complementary solutions, we had lower revenues on Romanian public social programs and the ongoing exit of Banking-as-a-Service B2C activity that Bertrand mentioned earlier is still in our like-for-like computations and continue to weigh negatively on the growth. In Latin America now, if we dig into our performance, we see operating revenue up to EUR 826 million in '25, representing 30% of the group operating revenue. This Edenred region has been robust and resilient all year long, delivering double-digit growth both in 4Q and in full year. Brazil delivered good level of growth in meal and food, but it's worth to mention that our Beyond Food activities also propelled this good performance with our employee ticket transport solutions, for instance, RB, that delivered 60% total revenue growth in 2025. On Mobility, both Fuel and Beyond Fuel solutions delivered solid level of growth in Brazil and emphasize the relevance of Edenred diversification in the country. Hispanic Latin America delivered a lower growth with 2.3% like-for-like in Q4 on the back of a high comparison basis in Benefits and Engagement due to strong Mexican performance last year. In the regions, the performance remained strong, supported by favorable dynamics in mobility, growing double digit as demand remains robust for Beyond Fuel solutions, notably in Argentina and in Mexico. Other revenue. Now other revenue was better than anticipated. We can see that we started the quarter with a boosted higher volume in float, interest rates remaining higher for longer, and we faced a less detrimental effect of currency translation. And overall, we delivered EUR 229 million of other revenue, which is slightly above our latest expectation of around EUR 220 million. Indeed, with higher business volume in Latin America and interest rates, notably in Brazil, all this led to a 7.2% like-for-like growth in 4Q versus last year. Overall, despite a less favorable interest rate environment, especially in Europe, where most of the float is located, other revenue are up 1% like-for-like. This performance reflects the group float increase generated by higher issue volume. What does it mean for '26? For '26, we expect other revenue to have lower dynamic because of interest rate decrease and just notably in Europe. We remain though confident with the EUR 210 million floor that we gave you at the Capital Market Day, knowing that the Brazilian decree needs to be taken into account as an additional computation to that number. Now a little bit of view on our P&L. That illustrates the increase in profitability that Edenred achieved in '25. Operating expenses growth remained really contained at 1.3%. Indeed, scale effect of our per platform and the first milestones of our Fit for Growth program that Bertrand talked about previously, have been instrumental to enhance the group profitability. The group delivered an operating EBITDA of EUR 1.131 billion, corresponding to an operating EBITDA margin of 41.4%, increasing 2.8 points like-for-like in '25. EBITDA was EUR 1.360 billion, and EBITDA margin was at 45.9%, increases by 2.3 points versus last year. Now on this page, you have a detailed view of our P&L that led us to the solid increase of the adjusted EPS by 10% in '25. And if I comment quickly on each line to give you a little bit more color. First, on D&A, you can see an increase, which is in line with our CapEx regular increase. And moving forward, you'll see D&A continue to increase in line with CapEx growth. PPA-related D&A increased in '25 due to the finalization of the purchase price allocation exercises relating to Spirii, RB and IP acquisitions that we acquired in '24. As the group has not made any additional big acquisition in '25, this amount should remain relatively stable year-on-year. In terms of other income and expenses, we were at EUR 46 million this year, and that merely reflects the restructuring cost that we incurred, notably on the back of our portfolio optimization actions. On the tax rate, tax rate was up in '25 as our normative tax rate reflects our geographic mix with a higher share of Brazil, offsetting a lower Italian contribution. We do not expect Brazilian contribution to significantly lower next year as a lower contribution will be partly offset by the expected tax rate increase in that country. Number of shares continue to decrease in line with the execution of our share buyback, and we bought back EUR 125 million over the year. Minorities interest are growing in line with the increase of profitability of the group, and our EPS is EUR 2.18 for '25, growing 5.7%, while our adjusted EPS stands at EUR 2.59, growing 10% year-on-year. Record cash flow generation. Our cash flow was EUR 1.111 billion, up 34% versus last year. And if we look to how our cash flow is built, you'll observe once again that the EBITDA to free funds from operation conversion rates remains the main and constant constituent to the free cash flow generation of Edenred. Looking to balance sheet movements. The material improvement on working capital variation is coming from the increase in float, reflecting higher business volume in Q4, especially in Latin America. Our other working capital benefited from cash collection discipline in mobility, a good momentum in VAT reimbursements coming from the European tax administrations as well as the positive effects coming from the portfolio optimization actions we undertook last year and notably some public social programs not weighing anymore on our balance sheet. CapEx are at EUR 198 million for the year '25, down EUR 20 million year-on-year, thanks to our technology cost renegotiation efforts. And overall, CapEx represented 6.7% of our total revenue, well within our 6% to 8% range. As a result, free cash flow to EBITDA conversion rate was a strong 82% for '25, up 12 points versus last year. Let's have a look now on our net debt position. We started '25 with EUR 1.8 billion net debt and the leverage ratio, which has been now lowered from 1.4x end of '24 to 0.9x end of '25. This leverage improvement results from the strong cash generation, slightly offset by the shareholders' return, which amounts to EUR 463 million in '25. We then closed the year with a net debt position of EUR 1.2 billion. This gives us full flexibility on our capital allocation and illustrates our fast deleveraging profile. Now moving to our robust financial position. We do have a strong liquidity position with EUR 5.2 billion as current financial assets, a debt well spread over the years and the access to an undrawn credit facility of EUR 750 million. Moreover, our A- rating with stable outlook has been confirmed by S&P at the end of November '25 again. As you may have seen, we successfully issued a EUR 500 million bond earlier this year with a 7-year maturity, a coupon of 3.75% and an order book more than 3x subscribed, showing the confidence of bond investors into Edenred's credit quality. This refinancing increases our average bond maturity to 4.1 years. Overall, we decreased the cost of debt down to 3.3%. If we move now to capital allocation, which is focused on both growth and shareholder returns. First, growth remains our top priority. We plan to invest and pursue organic growth initiatives to deliver the Amplify plan with annual CapEx between 6% to 8% of our total revenue. Second, we want to take advantage of our solid balance sheet to seize value-accretive M&A deals and be opportunistic while maintaining strong focus on strategic and financial discipline. We focus on key deal considerations such as further consolidation, opportunities to accelerate our Beyond strategy and further diversify, strong potential for revenue synergies as well as sustainable business models. Now in terms of shareholders' return, we will propose to the shareholders a dividend on EUR 1.33 per share for 2025, which is a 10% increase compared to '24. This material increase is in line with our progressive dividend policy and reflects Edenred's confidence to continue to deliver sustainable and profitable growth in the long run. We continue to execute our current share buyback extension program of EUR 300 million, out of which EUR 125 million have been already executed during the year '25. And finally, we remain committed to maintain a strong investment-grade rating with our A- S&P rating reaffirmed in April and November last year. Last page for me, I want to show you the Edenred 2025 performance presented under the new reporting structure by business line that we announced during our Capital Market Day and which we will fully use starting 1Q '26. This enhanced reporting structure will provide operating revenue, operating EBITDA margins for each business line. And as a consequence, business lines become our prime segment reporting geographies moving to the secondary dimension. This change also includes limited scope adjustments between business lines that you can track in the appendix of the presentation. As shown on the page, Benefits and Engagement and Mobility have similar operating EBITDA margin at 43% and 40%, respectively. And these are both in progression compared to 2024. As for Payment Solutions and New Markets, operating EBITDA margin is at 29%, up 9 points versus last year on the back of all management actions that have been undertaken in '25. I'd like to thank you for your attention, and I now hand you back to Bertrand for the '26 outlook. Bertrand Dumazy: Thank you, Virginie. So a few words of conclusion as to the outlook for 2026 and beyond. So first of all, yes, 2026 is a rebasing year for Edenred. Intrinsically, the EBITDA growth will be between 8% and 12% like-for-like, and it's going to be powered by 2 engines. The first one is the total revenue growth, but also the structural operating leverage we are able to generate, thanks to the platform. However, in 2026, we have to rebase based on one thing, which is the impact of the regulation change in Italy and Brazil. It's going to impact negatively in 2026, our EBITDA growth. Then we are going to accelerate our investments to achieve, in fact, the management actions and the portfolio optimization we talked about. And finally, as explained by Virginie, our overall revenue will decrease slightly outside the regulatory change in Brazil, and it's going to be probably the last year because our float is increasing, and we are moving towards a stabilization of the interest rates. The combination of all those elements, an interesting growth of 8% to 12% plus the regulatory change will lead to a guidance for 2026 between minus 8% and minus 12% like-for-like. Once again, as to the Brazilian impact, we took the worst legal case, i.e., an implementation of the presidential decree. Then based on that, what does it mean for beyond, i.e., 2027 and 2028, back to the growth of Edenred between 8% and 12% starting in 2027 for the EBITDA like-for-like growth and the free cash flow to EBITDA conversion rate after the regulation impact in 2026, we are back to the 65% and more in 2027. To make a long story short, what are the key takeaways of the 2025 results, our Amplify plan, 4 messages. First of all, 2025 was a year where we are able to post a new set of record results from the top line to the EPS. Yes, we are able to generate sustained revenue growth with an acceleration in the second part of the year, which is a very good sign for 2026, but we are also benefiting from our structural operating leverage. We are a platform business. It's the scale business. The more we grow, the more we are able to generate increased margin. The second thing is, yes, we see in 2025, the first effects of our performance and product improvement plan and all the efficiency measures we took, the constraints creates the talent. Finally, we are a highly cash-generative business, and that's why we have been able to post strong cash generation in 2025. What does it mean? It means that based on all those elements, 2026 is a rebasing year before we resume sustainable and profitable growth trajectory starting in 2027. We will mitigate the impact of the regulatory step back, thanks to our very diversified portfolio. We will continue and amplify our management actions to deliver further efficiencies. And finally, we know that we can count on our product and tech leadership in large to continue to grow on vastly underpenetrated markets. Based on our results in 2025, we have been able to reinforce our fast deleveraging profile. And so we have a very strong balance sheet that leaves Edenred ample room for organic growth investments, especially in data and AI, but not only, also focused M&A opportunities while continuing our high level of shareholder returns in terms of dividends, but also share buyback. Based on that, we also have a long-term vision. This long-term vision is called Amplify with a magic growth equation that is simple, i.e., to increase the number of users and to increase the average revenue per user. And all those elements allow us to reiterate our ambition to reach EUR 5 billion of total revenue in 2030. Thanks a lot for having listened to us. And Virginie and myself, we are all yours to answer any questions you may have. Operator: [Operator Instructions] The next question comes from Estelle Weingrod from JPMorgan. Estelle Weingrod: To start with, can I just ask on Brazil. So thanks for the slide regarding the legal process ongoing. I just wanted to clarify a couple of things. So do we know how long it will take to hear back from the government's appeal? And in the meantime, the decree is suspended, so you are not implementing the decree, which should on paper start now. Is that correct? So that's the first question. And the second question -- sorry, there's 2 in 1, but then the second question, on CSI, you mentioned a good growth of 5% to 10% in December. What are you expecting in '26? And should we expect Complementary Solutions to remain in positive growth territory? Or we would still see some impacts from the actions you took last year? Bertrand Dumazy: Okay. Estelle, thank you for your questions. I will take all of them. So first of all, the decision or, let's say, the decision of the federal body or legal body can happen any time now. So it can be tomorrow, it can be in a few weeks. So we are waiting the answer and the answer can be as early as tomorrow. In between, there is a suspension of the decree for Edenred and I think for 9 other issuers in Brazil. So we did not implement the decree. We are ready to implement it if the decision of the federal jury goes against the suspension. Your second question is as to CSI, yes, we start seeing a good dynamic, and we start seeing it as well for all the complementary solutions because 2025 was also a year of, let's say, cleaning our portfolio, especially in the BaaS B2C to derisk from this activity. So you can expect complementary solution to grow, in fact, in 2026. So I remind that in 2025, we are at minus 4.6% in terms of operating revenue. You will see some good growth in complementary solution in 2026. Operator: The next question comes from Sabrina Blanc from Bernstein. Sabrina Blanc: Yes. I have 2 questions for my part. The first one is regarding the cost efficiency. Can you provide more details about the 200-something improvement, if we could have more color by segment or by areas. And the second question is regarding the environment in France. We see that the growth was almost stable in Q4. But in the same time, you have mentioned that the gift campaign was very good in Europe. So just to understand what's happened in France and notably in terms of economic environment. Bertrand Dumazy: Sabrina, thank you for your 2 questions. First of all, as to the cost efficiency, so OpEx growth of 1.3% in 2025, where does it come from? If you look at the, let's say, the OpEx structure of Edenred, 50% of our OpEx are payroll. And in fact, the payroll is the combination of the total number of people and the average increase. In fact, in 2025, we employed less people at Edenred than in 2024. And we worked on, let's say, salary moderation in 2025. But in fact, behind that, when we say we employ less people, in fact, around 30% to 40% of less people is coming from the synergies coming from the acquisition. So we talked, for example, about RB, Ticket Transporte in Brazil. We have a platform. They have a platform in Ticket Transporte. Obviously, there is cost synergies, and we implemented those cost synergies. And unfortunately, people that you employ are part of those synergies. So in fact, you have between 30% and 40% that are coming from the synergies. Then you have what we call portfolio rationalization. So for example, when you progressively exit from BaaS B2C. In fact, at the end of the day, in this division, you employ less people because we are exiting this activity. So let's say, between 15% and 20% of, in fact, those payroll stabilization is coming from what we call the portfolio rationalization. And then the entire Edenreders, so the employees of Edenred, we all made some efficiencies for everybody everywhere. It has been well balanced. And as I said, the constraint creates the talent. So 50% was, in fact, a work on our payroll coming mainly from the total number of people with the #1 driver, which is synergies coming from the acquisition and efficiencies and portfolio rationalization. Then you have, in fact, what we call the cost of sales. And in fact, cost of sales is about 15% of our OpEx. And basically, we renegotiated with some of our distributors new formula, but we also sold less hardware at Spirii that are, let's say, impacting in terms of cost of sales. So that's the reason why the cost of sales in percentage of our operating revenue has slightly decreased. And then you have the other charges. And here, the other charges are representing 35% of the total. The other charges in percentage versus the operating revenue went down. Why? Because we sat down with all our suppliers and we renegotiated with them or we readjusted our needs. When you think about our tech investments, we are buying a lot of tech from everybody around the world. And sometimes we have not been efficient enough in the past in terms of what do we need exactly, how do we use it? So we sat down, we reviewed the way we were working, and we have been able to renegotiate. So to make a long story short, 2025 was a very good year to work on our efficiency, whether on the payroll, the cost of sales, but also the other charges. Then you had the second question as to the environment in France. In fact, in France, everything goes well at the exception, as we said, of the software sales for the workers' council. So the ticket restaurant in France is doing well. The gift is doing well. The only blow we have in 2025, and we explained that in the past is we have a negative growth in software sales. And in fact, why? Because now you have a new, let's say, elective process in France, it's every 4 years. And it means that the year before the election, you will see, in fact, a huge increase of our software sales. And in between, it's more slow. So we expect the activity to rebound sharply in 2026 and even sharply in 2027. So for France, everything goes well, Ticket Restaurant, gifting, to name a few, but a big blow on software sales, but we will back on track. We will be back on track very soon and the rebound will start in 2026. Operator: The next question comes from Hannes Leitner from Jefferies. Hannes Leitner: Yes. I got 2 questions. So you called out that business volume exposure, meal and food are over 50% experiencing a face value increase led by Italy, Belgium and Romania. Can you maybe square that why shouldn't that give more confidence in '27, '28 targets given that those face value increases were only pending at the CMD. And then the second question is, if we calculate the Italian headwinds, they come up to EUR 10 million in Q3 and EUR 44 million in Q4. So slightly below your EUR 60 million indications. Should we expect that the balance now to the EUR 120 million is coming in 2026? Or should we just think that the same thing will be replicated? Bertrand Dumazy: Hannes, thank you for your 2 questions. So first of all, as to the face value increase, yes, it gives us a lot of confidence in terms of upselling. And that's why there is a bracket between 8 and 12, the bracket was the same at the Capital Market Day. Then it depends on where we are going to be on the bracket. But it's true that, thanks to, in fact, those very good news in terms of upselling, it will have a positive impact on our guidance, but let's do 1 year after another. As to Italy, yes, we confirm that the total impact for the Italian regulation is EUR 120 million. And what I can confirm as well is as soon as it is swallowed, you will see double-digit growth in Italy in 2027 and in 2028. Operator: The next question comes from Julien Richer from Kepler. Julien Richer: Two ones for me, please. The first one on Reward Gateway. Could you please give us some details on its deployment and the impact of that deployment on the number of solutions per head and ARPU. And the second one on your dividend policy. If you look to 2026, let's assume a worst-case scenario where your reported earnings will be down, let's say, 10%. Do you still expect your dividend to grow in absolute terms in '26? Bertrand Dumazy: Julien, thank you for your 2 questions. So I start with the dividend. We commit -- we have been committing for the -- for many years into progressive dividend policy. So you will see the dividend growing, in, in fact, 2026 paid in 2027. Now the question is the intensity of the growth, and it's a debate that we are going to have with the board and the proposal to the shareholders. But we are committed to a progressive dividend policy. So by definition, in absolute value, the dividend is going to progress in 2026. By the way, can we do it? Yes, we are a cash-generative company. We are fully deleveraged with a ratio of 0.9, and we are strongly confident in our ability to generate between 8% and 12% EBITDA growth like-for-like starting 2027. So that's why I'm able to answer like that. Then Reward Gateway, the deployment. The deployment is going to accelerate in France, Italy and we said France, Italy and Belgium. As I said, in 2025, we had very good successes in Belgium. In Italy, 2025 was a pause because we had to renegotiate 14,000 contracts in a few months. So when you do that, and I'm a great believer in the focus, when you do that, you have to make some choices. So 2026 is going to be the year of the extension of our engagement solutions in Italy. And in fact, in France, we have been pleased by the signature in the second part of the world of a few, let's say, large contracts with very well-known French companies. So we will see an amplification in 2026 on those 3 countries. What is the impact on ARPU? The impact, in fact, is going to be positive and also in terms of number of users because it's another point of entry to have access to Edenred solution. It goes one way and the other. You are currently an Edenred user and client and in fact, engagement is going to increase the cross-selling. So that's one way. Or the other way is you are not a user of Edenred solution and you enter into the Edenred world via the engagement solutions. And our goal is to satisfy you so much that, in fact, you will beg for the other solutions of Edenred on your digital application. So Reward Gateway, amplification of the deployment in France, Italy, Belgium with a specific focus on Italy and France because Belgium is well launched. And probably, we're going to also accelerate the deployment in Spain and in India in 2026. Operator: The next question comes from Justin Forsythe from UBS. Justin Forsythe: A few questions from me here. So thank you for the detail on Brazil. That was super helpful. Just wondering, is there a potential third avenue, which might be you settling out of court with the government. Are there any terms that you might find attractive, whether that's like a phased interchange cap, maybe not a day 1 move to this 3.6% or the 2% or anything else that would be attractive to you. It may be a delay in the 15-day settlement requirement or something of that nature that you might be interested in. Virginie, I wanted to ask a little bit about the free cash flow guidance. The 35% conversion. I think that at least by my math, implies over 60% decline compared to where you reported in '25. Now I understand that's inclusive of the Brazil regulation. So maybe that has something to do with your expectations around float in concert with the overall drop in EBITDA. But maybe you could dig into that a little bit. And just wanted to give you guys credit because RB seems like it's doing really, really well in Brazil. Maybe you could talk a little bit about how you expect penetration of that solution to go. Are you expecting higher attach rates with your corporate customers? Could you get to maybe close to 100% of those that are using a voucher solution in Brazil? Bertrand Dumazy: Sorry, Justin, your last question was about what? Virginie J. Duperat-Vergne: RB. Bertrand Dumazy: About RB. Okay. Justin Forsythe: RB. Yes. Bertrand Dumazy: So I propose that I take the #1 and #3 and then Virginie, the #2 as to the free cash flow. First of all, is there a third avenue? Yes, there is a third avenue. That's why we were pushed to go for legal action, but the industry is willing to discuss with the Ministry of Labor, the Ministry of Economy with open arms to try to find a solution because at the end of the day, what is good for the workers is good for the industry. And what is good for the workers is 2 things. First of all, you have 20 million users of the PAT, so in Brazil. And in fact, when you look at the full potential, the full potential should be 40 million users. So what can we do together hand-in-hand with the government to accelerate the development of those solutions in Brazil. By the way, the main target is probably the SMEs. And when you look at our growth in Brazil in 2025, we have been growing at almost 15%, in fact, in benefits in Brazil. It is, in fact, the proof in the pudding that there's still a long way to go in terms of penetration, especially for the SME users in Brazil. Once again, we consider that full potential, there should be 20 million more. So based on this potential, yes, there is a third avenue to discuss because we want more users of the PAT in Brazil and the government has exactly the same, let's say, willingness. And the second thing is for the program to be sustainable, it has to be well filtered. And so well filtered, it's not possible at all with an open-loop solution. And it's complex. It takes time to explain. We need to reinforce our explanation, and it's part of the third avenue. So you are right, Justin. On one side, there is legal action. And on the other side, as usual, with Edenred, open arms to sit down and to say, okay, what is best for the workers, what is best for the program and how can we find a compromise. Your second question was about RB. Yes, Ticket Transporte is doing well and the level of cross-selling is still, in fact, below, let's say, 40%. So there's still a long way to go, knowing that Ticket Transporte is a mandatory benefit, in fact, in Brazil. So it has to be given by the employer. And we still have many employers who are giving this benefit, but not using yet the Edenred platform. That's why all our commercial efforts in terms of cross-selling will amplify because the potential is there. As to the free cash flow guidance, Virginie? Virginie J. Duperat-Vergne: Thank you, Bertrand. So thank you, Justin, for the question. So sorry to do a little bit of mathematics guys, but maybe that helps. It's a ratio. So we have to look to both parts, the numerator and the denominator. And number one, you have one element which is touching numerator and the denominator at the same time, which is that next year, we will be impacted by some lack of revenue and then EBITDA, obviously, in -- coming from Brazil and from Italy. But in addition to that, and that's not helping the ratio, definitely, our numerator is even more hit than the denominator is because of the elements coming from working capital variations and the lack of float effectively, as you noticed, Justin, that will be hitting us. And that has an impact quite sensitive on the calculation of the ratio. So to help you a little bit on that, as we said, we are moving from a guidance to 2% to 4% before the announcement of our new decree in Brazil down to minus 8%, minus 12%. That gives you an idea of the magnitude of the impact on the Brazilian regulation on our EBITDA. Bertrand stated it again based on the worst legal case scenario, that's the one that we reinstate for '26. And then that's the way we compute what will happen to our free cash flow. So on that part, we said it in November. We estimate that more or less 85% is operating revenue and the rest is coming from the other revenue. So then if I compute the float, which is touched the other way around, knowing that our interest rates are around 12%, a little bit more in Brazil, you'll be able to go to quite a sensitive amount in terms of missing float that we will lose from Brazil. Another way to look at it is to start from the volume of float that we have in Brazil. In Brazil, remember, that 20% is coming from Latin America of our float and Brazil is 3/4 of that. And then we have a bit of a big part of it, which is on the merchant side because Brazilian people used to consume their vouchers a bit faster than it is happening in Europe. And then the vast majority of our float is based on the merchant delay. So then you cut that by half of it and you'll compute almost the same figure, which is going really to hit us. So that has an impact. And obviously, as we said, on free cash flow, you will lose both the EBITDA part and that float part. And remember also that what we stated to Capital Market Day is that mobility growing and mobility having a very slightly negative working cap position. Then on average, we expect it to go to 65%, meaning that the starting point that we expect to see also for next year is also touched by that. That being reinforced by a mix where you have less benefits and engagement and more mobility, mobility has no impact of Brazilian and Italy regulation. So that's what it did. Just maybe to help everyone call on that, it's a 1-year effect. You will have to suffer into brackets the working capital variance once. And after that, we'll go back to a usual cash generation ratio. And that's what we reinstate with our guidance, what we see for '27 and '28, assuming '26 is taking the impact is that we go back to the 65% cash generation ratio because we won't have to absorb twice working cap variance. Operator: The next question comes from Kate Xiao from Bank of America. Kate Xiao: My first question is still Brazil. I guess if my understanding is correct, if there's going to be an unfavorable ruling at the end of the day, that decision is only going to come towards end of 2026. Then why are you still holding your 2026 guide of the full impact? Is it because if there is a more negative decision, it could be applied retrospectively to the full year of 2026? And my second question is, I noticed you used to disclose the benefits and engagement section take-up rate. It was 5.6% in 2024. Just wondering what the latest rate is for 2025. And obviously, let's say, in 2026, there's still going to be some impact from the full impact of Italy and Brazil. If we assume both markets, it's fully -- the impact fully happens and it's fully derisked, what would that take-up rate look like in that normalized environment? Bertrand Dumazy: Okay. So let me take those 2 questions. Yes, your understanding is not correct. So let me repeat it. Today, the presidential decree is not applied, and it was supposed to be applied starting February 11. It's not applied as of today. Why? Because we won the first part of the legal battle, and we are not the only one because out of 12 issuers that went into court, 9 of them won and the other ones are waiting for their appeal. So it is not applied. The government has made an appeal with a federal judge. The answer of the federal judge can come as soon as today or tomorrow or even 1 month. So waiting for the answer of the judge, the decree is not applied. But if the judge is giving reason to the State, then we will have to implement the decree. But if the judge doesn't give right to the State, the State has multiple ways to go for an appeal and the appeal could be suspensive, i.e., the implementation -- the decree would have to be implemented. So to make a long story short, as long as we don't have the answer of the federal judge, the decree is suspended. As soon as the decree might not be suspended, then the next step for us is an answer on the merits of the decree, and it's going to happen by the end of 2026. That's why we don't know. And because we don't know, every day that goes without the implementation of the decree is a good news. So you will see us probably if it takes longer, you will see us more on the top of the bracket than on the bottom. So that's how it works. And I hope my clarification is helping you. Your second question is as to, in fact, the take-up rate. In fact, the take-up rate is a notion that makes less and less sense for Edenred as we explained during the Capital Market Day. Why? Because the take-up rate is a percentage on the transaction. And as you can see, we are providing more and more services that do not have anything to do with the amount of the transaction. So if you think about engagement, it has nothing to do with the amount of transaction. If you think, in fact, in terms of maintenance services in mobility or telematics, it doesn't have anything to do. So when you look at the Beyond part, which represents more than 40% of our total revenue today, the vast majority of Beyond is decorrelated from, in fact, the value of the transaction. That's why we are moving to measurement that are much more the average revenue per user and the number of users. Having said that, to make the link between the old Edenred and the new Edenred without the impact of Italy, the take-up rate would have increased in 2025 at Edenred. Operator: The next question comes from Pravin Gondhale from Barclays. Pravin Gondhale: My first question is on free cash flow. The 2025 free cash flow conversion was very strong, and you sort of flagged that you benefited from the stronger float position at the year-end. Do you expect a part of that to reverse in 2026 and hence, the guidance of greater than 65% FCF conversion, excluding Brazil regulations is kept unchanged? What are the dynamics here? And then secondly, on the operating EBITDA margins, they were quite strong in 2025. Can you help us understand the moving parts of that margin progression between what's recurring and you expect that to happen in 2026? And what is -- what was -- what were sort of the one-off majors in 2025? Bertrand Dumazy: Pravin, thank you for your question. I start with the margin, and I'll let you work on the free cash flow, unless you want to do the margin, Virginie. Okay. So I go for the margin. So first of all, in 2026, our operating EBITDA margin and so our EBITDA margin will go down. Why? Because we have to swallow the EUR 60 million, the remaining part of Italy, plus for now, the worst-case legal scenario in Brazil. So our EBITDA and operating EBITDA margin will go down in 2026. After that, you will see both margins going up. Why? First of all, this business is a scale business, i.e., the more you grow, the more you are able to dilute your fixed costs on the revenue that you generate. So you will see the margins going up based on the current plan we have in 2027 and after. So that's how I see the evolution of the EBITDA margin and the operating EBITDA margin. The scale effect is a powerful engine for us to increase our margin. The second thing you will see as a powerful engine is the efficiency program that we put in place. As I said, it's called Fit for Growth. We are now in the Phase 2 of Fit for Growth. And so we have a plan. We have a plan in terms of efficiencies. We have a plan in terms of streamlining certain functions. We have a plan in terms of convergence of platform. I give you one very simple example. By the end of 2026, 100% of our users will be upgraded to our new platform in France. It's a very good news. First of all, from a cost point of view, we will stop the historical platform. So we're going to run with one platform. And if the law is voted in France, there will be no more paper. So today, I'm running with 3 different systems, the paper system, the Edenred platform and the Edenred Plus, the new platform. By the end of 2026, there will be most probably only one platform. So not only it's good for our cost base in France, but it's also excellent in terms of user satisfaction because if you go on the web and you look at the ratings we have on this new platform, you will see that they are absolutely outstanding. So it's a very good thing for, in fact, the churn and a very good thing for the profitability of the business. So based on the scale effect that are natural in our business, plus all the product and performance improvement plan part 2 of Edenred, you will see the EBITDA margin going up after a drop in 2026. Virginie J. Duperat-Vergne: Maybe I jump on free cash flow. On free cash flow '25, you're right, Pravin, was strong because you have a big movement on working capital element. If you look to free funds from operation, the conversion is very much in line with what we have every year and which is fully in line with our anticipation of a cash conversion rate of 70%. Why do we do not only 70%, but 82% this year in addition to the good EBITDA performance and obviously, a big numerator and denominator at the same time is nurturing your free cash flow is that we have this movement on working cap element, which is an increase in float. So an average increase on volume in float just because we had bigger business volume to start with during the year. In addition, some other elements and especially in Latin America with additional volumes of orders by the end of the year, which pushed the cash up. And also, as I said, some elements around the rest of the portfolio, which is namely the -- what we call other working capital variance and refers to the rest of our business, mobility, for example, or also the headquarter and so on. Bertrand just referred to all our efforts also in terms of negotiation on suppliers and so on. So that has a direct impact on the supplier debt that you have on the face of the balance sheet. But we also have very good cash collections on the side on mobility. Remember, we talked about some missing elements when we disclosed the H1 free cash flow and some cash collection that needed to be back in, and that has been done since then, obviously. So that's definitely helping. And then we have a lot of receivables in various countries in terms of VAT credits to be reimbursed. Here also, you can see that the tax administration in each and every country are progressively digitalizing themselves. And then they become more efficient and then we get reimbursement a bit more in advance. I cannot predict or anticipate whether it will be exactly the same next year in that respect. But part of the positive, depending the way you take the photography at year-end can move one way or the other, and then you might have a slightly better or a slightly lower variance in working cap next year to take into account in the computation of the free cash flow. But really, the guidance on '26 is the elements I described earlier to Justin and the fact that we'll be missing quite a significant volume of float and this volume of float missing will create a decrease -- a strong decrease and movement in our working cap variance that will negatively impact the absolute value of the free cash flow. Bertrand Dumazy: The cash flow management is well under control at Edenred. Operator: The next question comes from Andre Juillard from Deutsche Bank. Andre Juillard: Two follow-up questions, if I may. First one about Mexico. You didn't talk about this market. And could you give us some more color about the trend? And do you have any fears with the actual events? Second question about the leverage. Your leverage is quite low at the moment, 0.9x net debt on EBITDA. Do you have a target in mind just to help us to manage the anticipation that we could have in terms of reinvestment return to shareholders and so on? Bertrand Dumazy: Andre, thank you for your question. First of all, as to what's going on right now in Mexico, no, we don't have fears. That's part of life. We are in 44 countries. The trends in Mexico are good for Edenred. So in mobility, we have a sustained growth in 2025 and very good prospect, in fact, in 2026. And I'm very pleased by the performance of the new CEO of Edenred Mexico in Mobility. As to benefits, we also have very good perspective with the success of the deployment of Edenred Plus in France. In fact, we started a few weeks ago the deployment of Edenred Plus in Mexico. And so we'll come with a new offer, totally renewed, revamped. And based on the good results we have in France, we are very positive for what it's going to mean for Mexico in the coming years. As to the leverage, so yes, we are at 0.9. Do we have a target? No, we don't have a target. We know the maximum. We want to stay strong investment grade. So we know that to stay strong investment grade, you need to be in a normative band that is no more than 2, 2.5. Then you have a period of grace depending on the acquisitions of 18 months. So more or less, we are well, let's say, capped on the maximum. As to -- in between, in fact, it's a very good news for Edenred to be at 0.9 because it gives us all the flexibility to accelerate our investment for the future growth of Edenred. It gives us a lot of flexibility to continue acquiring some companies in buildup or bolt-on with the same financial discipline in terms of strategy, but also in terms of return on investment. It gives us flexibility, for example, in EV, it's a growing trend in Europe. We have some successes. We started with the acquisition of Spirii. The market is moving fast. We are seeing opportunities every day. So maybe that's another thing where we could continue to invest. So we love the idea that we are very well deleveraged because we can fuel the organic growth, but also the very targeted growth in M&A to enrich our offer and consolidate our leadership position. Finally, we want to continue to have the progressive dividend policy and share buyback. So with the balance sheet we have, Edenred is well in order to accelerate the growth to go over the year 2026 for 2027 and 2028. Andre Juillard: Just maybe one follow-up on France. Bertrand Dumazy: It's really the last one, Andre because... Andre Juillard: Did you have recent discussion with the government about regulation in France or nothing. Bertrand Dumazy: Okay. Very quickly, the association of the issuers obviously met the ministers in charge. Their willingness is to push for a law voted in 2026. They have a preference for the first half of the year, but it's going to depend on the calendar. So to make a long story short, the current government is exactly on the same page as the previous ones. They want the reform to be voted because we think it's a good thing for all the workers in France to have, first of all, the end of paper and second thing to have a clarification on the usage. So we have today ministers who want more Ticket Restaurant in France. Once again, the penetration in France is only 28%. So as compared to many other countries, the penetration is not that high in France. So they all want more Ticket Restaurant solutions in France, and they want the law to be voted along the lines I just shared with you. Thank you, Andre. Thanks a lot for all your questions, and I wish you a very good day.

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NEC.AX 2026 Q2 财报电话会议

Mathew Stanton: Good morning, everyone, and thank you for joining us for our H1 FY '26 Results Briefing. I'm Matt Stanton, CEO of Nine Entertainment. Joining me here today is our CFO, Martyn Roberts. And we are coming to you from our studio in North Sydney, which was upgraded in preparation for the Winter Olympics. The studio has been integral to the coverage of all the action from Milano Cortina that has enthralled Australian audiences on Nine, 9Now and Stan over recent weeks. I'd like to start off by acknowledging the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past, present and emerging and extend that respect to all First Nations' people today. For myself, I am on the land of the Cammeraygal people of the Eora Nation. For the 6 months to December, Nine has reported group EBITDA, including Radio and NBN and Darwin of $201 million, up 6% on PCP on revenue of $1.1 billion. On a continuing business basis, this equated to EBITDA of $192 million, also up 6% and net profit after tax of $95 million, up 30% on PCP. EPS of $0.06 per share was also up 30%, and enabled the declaration of a $0.045 interim dividend. We were very pleased to report another half of EBITDA growth for the 6 months to December 2025, consistent with our guidance from August last year. Nine's diversity of revenue and strong cost performance helped to counter the weak advertising market with growth from Stan, the mastheads and robust result from Total Television. Overall, Nine's group EBITDA margin increased by nearly 2 percentage points to 18.2%. Subscription revenues grew by 13% across the half, underpinned by double-digit growth at Stan and in digital subscription revenues at publishing. across the half, we continue to see digital revenue at our mastheads growing faster than the rate of decline in print revenue. We removed a further $43 million of costs from the business across the half, $32 million on an ongoing basis. This was a result of our focused program of improving efficiencies in parts of our business whilst continuing to invest in the areas of growth. We continue to expect delivery of at least $160 million across FY '25, '26 and '27, with $92 million delivered to date. Since our last result, we have also made significant progress in our strategic initiatives. To this end, the announcement in late January of the acquisition of QMS, sale of Nine Radio and restructuring of NBN and today's announcement on Nine Darwin are key to accelerating Nine's strategic transformation by increasing our exposure to growth assets. The outdoor assets enhance our scale and reach, and are resilient to the power of the global platforms. As a result, we have streamlined Nine's business around our focus on premium content, digital growth, as well as subscription and licensing assets. We believe this portfolio offers the greatest opportunities for optimizing the combined value of our assets, underpinning longer-term growth opportunities and value to the shareholders. While these big moves may have grabbed the headlines, we have also been working behind the scenes, improving the operating effectiveness of our existing businesses. During the half, Nine's strategic transformation program, Nine 2028, enabled the delivery of a number of cost and growth initiatives, helping to offset the challenges of external advertising market while capitalizing also on growth opportunities. We have made significant progress with our AI initiatives, focusing on both improving the operating efficiency of our business and also the further commercialization of Nine's pool of proprietary content. Our own use of AI continues to gather momentum. We are through the establishment phase, democratizing the usage of AI across the company, with Gemini platform rolled out and being utilized daily by an increasing number of our employees. We are now focused on accelerating the redesign phase, driving efficiencies as well as driving growth in new product and new revenue streams. We are pleased with the progress we are making across customer support, sales, finance automation, consumer engagement, content creation and engineering. One clear example of reimagining the use of Nine's content is evidenced as corporates look to fuel their own in-house LLMs with quality, reliable content in volume. On this point, we have already signed 2 Australian corporates as licensors of Nine's content into their own proprietary AI ecosystems, with a lot more opportunities to come. These strategic moves have resulted in a step change in the balance of our business. In the latest result, we estimate that around 51% of our revenue and 49% of our EBITDA was sourced from growth assets; Stan, 9Now and Digital Publishing. Looking forward to FY '27, we estimate that on a pro forma basis, around 60% of our revenue and almost 70% of our EBITDA will be sourced from growth assets, adding in the higher-margin outdoor business and reducing our reliance on broadcast. Whilst we are not motivated by scale alone, it is also an important outcome, enabling us to maximize the impacts of our content and remain relevant in a fragmenting media market. Moreover, as our business becomes more digital, we expand our ability to build and exploit the opportunities of our integrated consumer platform. At this point, I'd like to ask Martyn Roberts, our Chief Financial Officer, to talk through the group financials. Martyn Roberts: Thanks, Matt, and good morning, everyone. As Matt summarized earlier, for the 6 months to December, inclusive of the results of Radio, NBN and Darwin, the reported EBITDA of $201 million equated to growth of 6%. On a continuing business basis, Nine reported group revenue of $1.1 billion and group EBITDA of $192 million, which was also up 6% on half 1 FY '25. Group net profit after tax and before specific items was $95 million, up 30% on the previous corresponding period on a continuing business basis. Inclusive of a specific item cost of $14 million, the net profit for the half was $81 million. Slide 9 details the composition of specific items, which totaled a pre-tax cost of $18 million for the half. A bit over half of this related to restructuring costs, primarily redundancies. We incurred almost $5 million of costs relating to the development of our in-house total trading platform and HRIS projects. There was also around $3 million of pre-transaction costs relating to sales of Nine Radio, NBN and Darwin and the acquisition of QMS. The waterfall chart on Page 10 illustrates our continuing work on costs. Reported costs on a continuing business basis were $59 million lower. Pre the impact of the Paris Games, costs were up $36 million or 4%. Within this, Nine offset the impacts of returning costs, inflation relating to employee salaries, investment whilst continuing to invest in growth businesses, Stan and Drive. This resulted in a total cost saving of more than $43 million, including $32 million of ongoing costs. We expect to take a further $70 million of underlying costs out across half 2 FY '26 and into FY '27, consistent with a 3-year total of around $160 million. Page 11 shows the transition of Nine's net debt from the starting position at the 1st of July 2025 of $450 million to the $158 million in cash we have reported for the 31st of December 2025. This includes the $720 million proceeds from Domain, net of the dividend paid and tax, of course. Within this, we paid a special dividend of $777 million, fully franked to our shareholders. We continue to expect leverage to peak at around 1.8x by June 2026 post completion of our M&A transactions. The enhanced EBITDA of the combined entity and the benefit of the tax losses, which are expected to be realized around January 2027, are projected to reduce leverage to within Nine's targeted range of 1 to 1.5x by the end of FY '27. For the 6 months to 31st of December, cash flow from operating activities was $96 million, with the breakdown of this shown in detail in Appendix 3 of the presentation pack. Mathew Stanton: Turning now to our divisional results. Together, our streaming and broadcasting businesses recorded growth in the first half, with a record result at Stan and a pleasingly robust result for Total Television. We continue to focus on broadening our advertising offering in the digital video market, with the introduction of ads on Stan Sport, coupled with our sales agreement for HBO Max. The logic behind bringing these 2 businesses together and the appointment of Amanda Laing is playing out, with both revenue and cost initiatives across the half. So in particular, we have accelerated the restructuring of streaming and broadcast under the Nine2028 program. Specifically, we consolidated the creative and promos teams, resulting in both cost efficiencies and engagement opportunities. We've also stepped up our cross-promotion and collaboration, clearly evidenced during the Winter Olympics. In particular, I'd like to mention the MAFS spin-off After The Dinner Party, which launched last week as Stan's highest ever single episode subscription driver in a 24-hour period, beating global phenomenon, Yellowstone. And with a massive 15% of the total user base watching the first episode over the first 4 days, again, highlighting the benefits of our cross-platform offering. We've also introduced a Pathways to Stan initiative, which uses Nine's digital assets and associated Nine user ID to direct subscribers and non-subscribers to Stan content. Also, earlier this year, we announced plans to consolidate NBN and Nine Darwin within our regional affiliate, WIN Network, enabling both businesses to focus on their strengths. And in mid-2025, we rolled our advertising into Stan Sport, which together with 9Now and our agency agreement with HBO, further increases our offering in the digital video market. Nine's advertisers are now able to reach audiences across live, broadcast, live streaming and on-demand platforms, creating the most powerful video platform in Australia. And finally, we progressed the future news transformation project, with rollout beginning in Sydney and go-live dates starting mid-2026. So it's been a time of transformation for streaming and broadcast as we position ourselves for the future and enable these latest results with strong growth at Stan and a resilient result for Total TV in a very difficult ad market. Martyn Roberts: Looking first at the results for Total TV on Page 14. Nine recorded audience growth, excluding the Olympic Weeks for Total TV in both total people and 25 to 54-year-olds for calendar year '25 and also the 6 months to December. Our content performance continues to strengthen with shows like The Block, up 12% across the season on a Total TV basis and Love Island, up a massive 43%. For the December half, Nine's comparables for revenue and costs were significantly impacted by the prior year Olympic period. As a result, Nine recorded a Total TV revenue decline on a continuing business basis of 14% in a market that was down by around 10%. Total television costs declined by $85 million in the half, the key driver being the $76 million net reduction in sports costs, primarily the Paris Olympics and Paralympics. On an underlying basis, savings of an estimated $25 million more than offset inflation and strategic investments in premium content and technology. The net outcome, therefore, was a broadly steady total TV EBITDA of $99 million, which is a pleasing result in a tough advertising market. At Stan, revenue growth of 15% was underpinned by sport, with the Premier League outweighing the absence of the Olympics, resulting in 40% growth in average sports subscribers on a higher ARPU across the half. The current subscriber number of around 2.4 million reflects a more competitive market for entertainment content and the conclusion of Yellowstone in the comparative period. Stan Sport has been a key driver of Stan this half, with the new Premier League contract boosting subscriber numbers and enabling a price increase in July last year. As a result, ARPU across the half increased by 6%. The Winter Olympics has also been the primary driver of a recent boost in sports subscribers, resulting in more than 200 million minutes viewed and an all-time record for Stan Sport weekly users, once again highlighting to Nine the merits of cross-platform sports rights. Stan's margins expanded further across the year. Entertainment costs were down year-on-year, showing ongoing cost discipline across the entertainment portfolio as well as early benefits from the streaming and broadcast restructure. Stan reported a record half 1 EBITDA result of $37 million, up 24%. We also introduced advertising to Stan Sport at the beginning of FY '26, delivering single-digit millions of dollars of advertising revenue in the half despite a short lead time before the start of the Premier League season. Coupled with the new agency revenue from HBO, Nine's ability to generate incremental revenue in the digital video market is continuing to build. Mathew Stanton: Okay. So, turning now to Page 16. We continue to be pleased with the performance of our publishing business. These results can only be achieved with commitment to journalism, to our people and to delivering our content in as many ways across as many platforms as we can. To this end, over the past 6 months, we have continued to focus on investing in our high-quality journalism, which, of course, sits at the core of the business. We have cycled through price rises across the SMH, Age and AFR, and we are constantly developing and evolving the product experience for our subscribers and readers. In particular, this latest half, we have launched personalized notifications and AI-powered in-app audio as additional features for high-ARPU packages. We have also continued to deliver profitable industry events and expanded our campus access, building direct relationships with thousands of potential new subscribers. We're also pleased with the performance of Drive. The focus towards lead generation revenues is paying off, with 120% growth in Marketplaces' revenue across the half. As I mentioned earlier, Nine Publishing has also completed a small number of AI deals with major corporates who are licensing Nine's premium content for use in their in-house LLMs. Martyn Roberts: In terms of results, Publishing reported revenue of $262 million and a combined EBITDA of $74 million, which was flat on the first half of FY '25. The result included an $8 million reduction in defamation provisions, primarily a result of the completion of the Ben Roberts-Smith case. It also included a mid-single-digit millions of dollars investment in Drive, the early results of which are reflected in Drive's revenue growth. You will see from this table that we reported strong growth in digital revenues, 9% of the Metro mastheads and AFR and 32% at Drive. This growth at Drive was underpinned by 120% year-on-year growth from the Marketplace business, supported by a 108% increase in dealer car listings, which together more than offset a 5% decline in advertising. Profitability at nine.com.au declined by around $4 million. We are currently undergoing a complete refocus of the product and audience proposition for the business, with significant website enhancements during this half and with our new Executive Editor starting just last week. The revamped nine.com.au strategy is aimed at maximizing results for our commercial partners and providing the best news, sport, lifestyle, entertainment and shopping experience for the nearly 10 million Australians that visit every month. On Page 18, we take a closer look at our masthead business, which reported EBITDA growth of $5 million to $78 million. These results further highlight the key inflection point Matt spoke to earlier, with the growth in digital revenues more than offsetting the decline in print. Once again, we were pleased with our digital subscriber performance, both in terms of subscriber numbers and ARPU, resulting in digital subscription revenue growth of around 17%. Nine's metro mastheads were, however, impacted by the softness in the broader advertising market as well as prior year Olympics revenue and some large client campaign and spend movements out of the first half from both print and digital. Print advertising declined by 11% and digital advertising declined by 14%, reflecting softness in government, business and travel. Cost of the mastheads declined by $2 million, with savings from defamation and printing, partially offset by cost increases from salaries and increased subscriber marketing. The mastheads are also continuing their targeted investment in their key growth areas, with a focus on ensuring recent audience and subscription strength is maintained. Mathew Stanton: I'd also like to say a few words about the current regulatory environment. Australia faces some significant challenges from the increasing influence of global tech giants and the rapid evolution of artificial intelligence. These developments are having significant impacts on local media companies. That is why the media sector eagerly awaits the government's intent following the industry feedback to the discussion paper on proposed reforms to the News Media Bargaining Code. The Prime Minister has assured the sector he remains committed to the reform. This policy is not just of great importance to Nine and the journalism we so heavily invest in. It will have long-lasting impacts on the health of our democratic nation, the voices of its communities and the broader economy. We encourage the Prime Minister to give the News Media Bargaining Code a higher priority status on the policy agenda than at present to ensure implementation doesn't slip into late 2026. On the commercial broadcasting tax, Nine continues to advocate strongly for the abolition or further suspension of the tax as economic headwinds and the challenges faced by the broadcasters has not fundamentally changed since it was first suspended. The rushed implementation of local content investment obligation for subscription streamers has been a concerning example of the unintended consequences of pursuing policy aimed at global streamers without properly understanding the impact this has on the content landscape for local media broadcasters and Nine's SVOD platform stand, the only Australian-owned service of its kind. We will be monitoring the impacts of this new regulation on content cost inflation, competition and access to quality Australian content for Nine, other Australian services, both free and subscription and audiences. So turning back to these results. Our ASX release this morning includes the updated view of current trading, which I refer you to. Overall, the new year has started on a more positive note operationally, underpinned by Nine's exceptionally strong content, which has been reflected in Q3 advertising share. We're also buoyed by the strategic changes we announced a couple of weeks back. Our goal is clear: to be Australia's leading digital-first connected media business. We are confident the changes we have made and continue to make both to our portfolio and operating structure will accelerate Nine's transition to a digitally focused, structurally growing media company in a way, which demonstrates our commitment to enhancing shareholder value. We are moving from a traditional media-based business to a data-driven integrated digital media powerhouse. So now, Martyn and I will take your questions. Operator, if you could pass us through to our first question? Operator: [Operator Instructions] Your first question comes from Eric Choi at Barrenjoey. Eric Choi: I had a few. I'll just go one by one and just tell me to bugger off when you think there's too many. But first one, just on a boring one on NPAT. On the outdoor call before, I think I incorrectly back sold about $140 million of FY '26 NPAT just using your accretion comments. Just with your -- the new information you've given us today on interest D&A, I just want to confirm that's looking more like a $140 million to $150 million NPAT range. And I just don't want to short change you because if we're calculating EPS accretion for the outdoor deal, I just want to make sure we're using the right EPS base. Mathew Stanton: Yes. Thanks, Eric, and thanks for such a technical question to start us off. So, I might refer to Martyn. I don't know if you can help us on that one. Martyn Roberts: Yes. So, I think as we said on the call in January, with QMS, we're looking at $105 million of EBITDA in calendar year '26. And I think I also indicated that D&A would be about $50 million. Clearly, for the EPS accretion to be the low single digits that we called out pre-synergies, you've got to get over the after-tax interest costs of roughly $35 million a year if you take the $850 million acquisition price. And so that's how you get to that small accretion. And then the synergies of $20 million after-tax of $14 million. And then that adds together with the low single digit to get to double digit. Clearly, it depends on what your EBITDA forecast is to get to whatever you want to focus on NPAT, but hopefully, that helps you work it out yourself. Eric Choi: That's good, Martyn. And sorry, Matt, let me bring it back to the operations. Just on the fourth quarter outlook and if we look at what Southern Cross has said today, they're implicitly guiding to probably like $130 million of EBITDA in the TV business, which would be probably below what consensus was expecting for SWM before. And if you look at the 4Q comments, they're definitely not expecting an improvement in the TV market versus 3Q. I'm just wondering if you think that's conservative because if you look at SMA, like May and June look like easier comps. So just from a market perspective, I'd be interested in your views. And I realize your share is going to be lower in 4Q versus 3Q, but just interested in the market outlook. Mathew Stanton: Yes, Eric. So, I think we've guided the fact is it's a bit too early to say what quarter 4. We talked about quarter 3 being better than quarter 2. We had a very strong content slate in quarter 3. No doubt about that. Don't forget last year, you had the election in April, which does buoy up and then May, June softened down. So it does depend a little bit on the share. And also, don't forget, for us, the business in quarter 4 will be the advertising part and the broadcast bit, if you like, is under 30% of the business at that point in time. So I don't -- it's very difficult to say how material that will be to our numbers in quarter 4. But it is -- I'd say the market feels better in quarter 3 than it was quarter 2. It was choppy through quarter 4 last year, and it's a bit early for us to say. Eric Choi: I'm sorry, Matt. Do you mind if I ask you one more? Martyn Roberts: Yes. Go for it. Eric Choi: Perfect. Probably the most important question at the moment, which is, do you think you guys are an AI winner or loser? Obviously, you're doing enterprise deals. Just wondering the potential for bigger LLM deals and then does all of that sort of potential licensing revenue, you guys monetizing the Bard and all of your data, et cetera, et cetera, does that more than offset any kind of potential disruption vectors to ad markets or content aggregation? Mathew Stanton: Yes. Great question. I mean, where we sit with this is that we think we're net positive on the impact for us. I think we are very much -- our strategy is around premium content. And I think when you've got premium content and the quality of the content we've got is very strong that we're in good shape, and there will obviously be some efficiencies coming through, but a bit of disruption as well. So, we've done a couple of LLM deals that we announced today, and there's a good pipeline of other opportunities, both locally and we'll see globally over time. But we're net positive on where AI will land us. Operator: Your next question comes from Entcho Raykovski at E&P. Entcho Raykovski: I might start with a question on Total TV as well. And just looking at that 3Q trajectory, I mean, it looks reasonably strong given the PCP. I know you had a really strong Q3 last year. So, my question is how much of that strength can you attribute to the Olympics? And how much can you attribute to the fact that the Australian open effectively had close to an extra week of content, which looks to have been pretty well marketed and sort of other factors? I guess I'm just trying to isolate what's one-off within that number as opposed to recurring. Mathew Stanton: Yes, no, you're right, Entcho. You're right to say that we had a very strong period last quarter. So this time last year, we were up, I think, 7% or 8% year-on-year for the quarter and then to come up again. But don't forget, we do -- this quarter, we had AO, which was very strong from an audience point of view and good commercially. You go into the Olympics, which is very strong. You got MAFS, which is very strong, and then we get into the NRL. So, we've got 4 huge content pillars through the first quarter. So, we will over-index on share. There's no doubt about it in quarter 3 through it. So as I said, like quarter 2, as a whole market is better, but it's -- quarter 3 was pretty soft as a market. And I think we were lower share in quarter 2 because of the content slate we had. Quarter 3 is definitely driven by the content slate we've got. The market does feel better, but it's still soft and a bit short. Entcho Raykovski: Okay. It sounds like it's mostly -- I mean, sort of the 3 out of the 4 factors are basically recurring, so it doesn't feel like it's a one-off sort of Olympics or anything like that. Mathew Stanton: Yes. Look, I think where we've sort of realized, the Olympics, actually, the audience was better than we thought it was going to be because you're doing the -- we're putting the Olympics on at the same time as MAFS was on, on a different channel, obviously on Gem. And then when MAFS finished, we saw a surge back into the Olympics. And so the numbers were very strong on the Olympics, which is great. I think in the longer term, next time around with the Olympics, we'll probably push MAFS out of thought because you can't move the AO, you can't really move the Olympics as much as we'd like to tell them what to do. I don't think we move those 2. So, we'll probably shift it out because it's a lot to do in one quarter. Entcho Raykovski: Yes. Got it. And then the Stan paying subs that have reduced slightly since the last result. I guess, can you talk about what the dynamic is, which is driving this? You mentioned in your prepared remarks a competitive market. And just for the avoidance of doubt, is it just reduced entertainment subs and how sports subs trended? I'm sure you're not going to give us specific numbers, but just the broader trend would be useful. And have you seen any benefit from the Winter Olympics to those sports subs? I'm sorry, there's a lot in there. Mathew Stanton: No, that's okay. Entcho Raykovski: But that $2.4 million, I assume that includes any benefit from the Winter Olympics as well, given you said that as of February. Mathew Stanton: Yes. Yes, there is some benefit there in that $2.4 million. So in effect, sport has been very strong, driven really by the Premier League coming into it. We had a lot of conversions from entertainment into sports. So if you think about the sports -- sorry, the entertainment tier and then you can -- you purchase the sport on top of that. So, ARPU growth has been very strong because of that. So, that's what's happened there when the biggest driver of the revenue growth has been the ARPU coming through from people coming through. So the sport has been very strong. Entertainment has been stable, but not as strong as the sport growth. Entcho Raykovski: Okay. And just a very final one. The publishing deals with corporates to power their LLMs, I mean, quite an interesting announcement. I suppose you're restricted to some extent in what you can say. But can you talk about the structure of these contracts and the revenue you can generate from a single contract? And if you can't talk about specifics, I suppose where do you think you can get to over time in terms of revenue from this channel if there are big addressable opportunity you can attack? Mathew Stanton: Yes. Thanks. You're right. I can't talk about the specifics on this. But we've done a couple of deals, and they will depend on the size of organization and the size of the deal we do. So, they will change a little bit depending what sector you're in and category as well, whether you are in tourism or banking or mining, et cetera, through that. So it's a license deal basically for our content to sit to train their own models, to help them train to be a stronger model for them in their market and what they're doing. So it's obviously got The AFR, The Smh, The Age type contract, but it's mainly AFR in there. And it's -- we've done 2. We have a pipeline of other opportunities, and we see it as a good revenue stream in the future. I don't really want to get into material how much at this point in time until we get through a few more. Operator: Your next question comes from Fraser McLeish at MST Marquee. Fraser Mcleish: A couple for me. Just firstly, on QMS. Just if you can say anything about the sort of trading you've seen in, I guess, another month from when you announced the transaction. And just how much visibility do you have over that sort of 25% revenue growth you've outlined for QMS this year? If you can give us some kind of indication of how much is coming from new contracts or new inventory that you've put in rather than any assumption of underlying growth, that would be helpful. And my other one was just if you could run through some of the moving parts on 9Now. That revenue is obviously down pretty substantially. Some of that assumes the Olympics, but what's happening there underlying? I mean, you've had great audience growth there, but still doesn't seem to be translating into revenue growth. Mathew Stanton: Yes. Thanks, Fraser. Sort of 3 questions there. On QMS, we obviously haven't completed yet the deal on QMS yet. So, I can't really sort of talk about trading from that side. What I would say is we've had very good strong conversations with advertisers and agencies around the acquisition and feel pretty good about that from the ability for us to bring the QMS business into the Nine business. So, we're very pleased about that. But I can't really talk about trading. We don't actually own, technically, the business at this point. If we talk about the 25%, I'll talk rough, rough numbers around that. So about 10%, I think -- about 10% is from growth from the business. So whether it be from more inventory going through those assets and price and so forth. So about 10%, I suppose, organic, if you like, and about 5% for new assets coming on board in Australia, so about 5%. And then about another 10% coming actually from the Auckland contract. That's a new contract in New Zealand that they've got, and that gives some growth through there as well. So, that's about how sort of roughly to think about that 25% through there. Yes, you're absolutely right on the 9Now performance. The Olympics was the biggest driver of the difference. We had a huge Olympics this time last year in that 6-month period from there. And then one of the other things is we're thinking more and more about this digital video market, extending outside of the BVOD market is one thing into digital. So, we launched Stan Ads. It was one thing and also did the HBO Max [ Red ] deal through that period as well. So from a digital video, that sort of comes a bit more into it. through there as well. But we are very pleased with the performance as we go through into Q3 and so forth with the BVOD side of it. And possibly, could we have done better in quarter 2? Yes, we probably could have done. Fraser Mcleish: Great. And I'll just take the opportunity to say well done again on the Domain transaction. That's obviously looking a better deal by the day when you look at share prices across the sector. Mathew Stanton: Thank you. Yes, no, we're not pleased about that, but we're pleased about the transaction we did, yes. Any more questions? Operator: Yes. We do have a question from Ailsa Lei at UBS. Ailsa Lei: I've got 2 questions. Firstly, on Stan, I believe there's a cohort of Optus subs who received a Stan Entertainment tester at a discounted price for circa about 6 months. I'm just wondering what's been the churn like for these subs post discount plan that you guys have seen? Mathew Stanton: Yes. So, I think, on the Stan, so we had that deal in place where we continue to give content through for those subs that comes in. We've had -- I mean, basically, where we're seeing at the moment is it's relatively stable, but we're getting more people go into the main package, i.e., entertainment into sport, which has helped us drive our ARPU growth. So, we're seeing good traction on the ARPU versus the volume a little bit as well. So, more people are sort of just coming out of those deals and coming just direct to us. Ailsa Lei: Understood. And then secondly, maybe just adding on from Eric and Entcho's LLM questions. Interested as to what your current proportion of traffic is from LLMs, if you have visibility? And what's been the trend in that as well? Mathew Stanton: Sorry, I'm a little bit confused by the question. So, I think -- so you're saying on the LLMs, what's our traffic from the LLM? Ailsa Lei: Yes. Straight from -- yes, traffic straight from -- audience traffic straight from LLMs onto the Nine platforms. Mathew Stanton: Yes. Okay. I'd have to take -- I'd have to come back to you on that, to be fair. I don't think I've got an answer. We'd have to come back to you, apologies. I haven't got that at hand. Operator: The next question comes from Roger Samuel at Jefferies. Roger Samuel: I've got 2 questions as well. First one, just going back on the outlook for Total TV for Q4, which is, as I mentioned, there's still a lot of uncertainty. So, what do you need to see to get more confidence in your outlook for Q4? And do you think that the most recent rate hike and potentially more to come has introduced more uncertainty in terms of the outlook for the ad market? Mathew Stanton: Sorry, that last bit, Roger, what was that, more uncertainty from what? Roger Samuel: More uncertainty on the ad market, yes. Mathew Stanton: Okay. Just on -- look, I think -- I mean, as we go into every quarter, well, we're still not in that quarter, obviously. But before the quarter, we opened our books up. And then when we get more trading coming through our books, we get a better visibility of what it is. I think, quarter 4 was very choppy last year. So it's quite difficult to say because there was a lot of election money went into April, but then May and June came off a lot. So it's a bit of a difficult quarter to say. And we haven't -- I mean, we've got obviously strong NRL through that. We haven't got any big -- we've got some big shows, but not to the level of MAFS or Block, for example, coming through. So it's just a bit short for us to say at the moment. And if you're on 9Now, the programmatic will come through a bit later. So it's difficult for us to give exact numbers at this point. Roger Samuel: Got it. And yes, just in terms of your guidance for CapEx, it looks like it has been reduced by about $5 million for FY '26. What's driving that? Is it because of the divestment of the radio assets? Or is it some ongoing cost efficiency? Mathew Stanton: Yes. Maybe I'll just hand over to Martyn on that one. Martyn Roberts: All those forecasts in the appendix are on a kind of like-for-like basis just to help you going through that. So it's not to do with radio. It's just a normal seasonal process of people not quite spending what they anticipate spending. A lot of the CapEx in the first half, as you'd appreciate, is all digital. So, we're putting together the 9Now Stan platforms. We've got some investments in publishing and obviously, investments Matt's talked about in AI and data and they continue through into the second half. But it's just really just updating from the run rate that we've got. Nothing specific. Operator: Your next question comes from Lachlan Elliott at Macquarie. Lachlan Elliott: Just a couple of questions from me. First of all, how should we be thinking about the underlying cost base across the whole group? You called out a few one-offs like Winter Olympics and Ben Roberts-Smith, but just trying to get a guidance on how we should think about the second half of [ London ] and how those costs -- the net benefits from those cost initiatives fit into that. Mathew Stanton: Lachlan, thank you. The underlying cost base, we've got a program in place that we talked about Nine2028, which we'll continue with that. We've talked about costs coming out of the business. The way we think about the cost base is not so much individual platforms. We do think across the business, how do we work the platforms work better together. So especially across the streaming and broadcast side of the business, we're very much around how do we do content that can go across both Nine, 9Now and Stan, the MAFS After Party being a good example of that where we've had cost base across Nine that goes into there. The Winter Olympics, we have a cost base that goes across broadcast, streaming, 9Now and Stan. So, we do think of it as how do we just basically get efficiencies across the business? And we've got a program there to drive through, which we're very confident of hitting as we go forward. And the other -- probably the other point is around just the affiliation deals we've just done with WIN, with NBN and Darwin we announced this morning, that allows really a capital-light model in those markets. So for us, it's a continuous way for us to push our content across the whole of Australia, but in a more capital-light way with something like WIN, who's one of our -- he is our partner. He is very good at regional broadcasting and the management of those assets. Lachlan Elliott: Great. That makes sense. And then maybe shifting gears a little bit, but focusing on content. Are there any other kind of content deals or contracts that you think would be a good fit for the business in general, whether it be new content or expanding current rights into digital? I know F1 was mentioned middle of last year. I'm not sure if there's any other contracts you want to comment on that would be appealing. Mathew Stanton: Yes. Sure. I mean, it's a bit commercially sensitive to say individual contracts. But I'd say Formula 1, we had a good crack at, but didn't quite get there. So, there are some -- both on the sport and entertainment side of the business, there's some contracts that we're working on at this point in time, so some sport contracts. And if you think about entertainment with the big global production houses, there's continuous conversations and deals to be had around output deals from the big players as well as any sports deals. So, we're very active in that space, as you can imagine. And when we look at them, we look at them to try and work out how do we both best commercialize those across all of our assets, including publishing as we go. Operator: Your next question comes from Tom Beadle at Jarden. Thomas Beadle: I've just got a couple of questions around publishing. I mean, firstly, obviously, that subscription revenue growth was really strong, but total revenue probably came in a bit below expectations. So, I was just wondering if you could just unpack the drivers of revenue growth or reduction just outside of subscriptions and in particular, just interested to understand ad revenue trends. Mathew Stanton: Yes. Sure. So as you said, we're very pleased with the publishing revenue growth and the digital subscription revenue growth was very strong. So, that was very good and it offset the print decline. So, I'd say you got your print subscriptions and circulation that goes through the retail has come down. And that continues to be a trend where we are seeing that the digital subscription offsets the print. And so we're through the inflection point on that. That's probably the biggest bit. On the advertising side, you'd say that the advertising has been pretty robust actually in the print area, where we've got some work to do is actually on the digital display advertising. It has not been probably where we wanted it to be. So, there's some work to be done around improving that digital ad display revenue, whether it be short-form video or whether it be just display ads. So that's the offset, if you like. So, both print and some of the advertising on the digital side, on digital display, which is something we're working on. Thomas Beadle: Great. And I guess just a second question around just total subscriber numbers in publishing. I mean, if I look at that, it's a bit apples and oranges, but that ARPU -- subscriber ARPU was up 14%. If I look at that digital subscriber and print revenue, that was up 12%. That possibly suggests that subs were fairly flat. Is that a fair comment? Mathew Stanton: Yes. I think the majority of the growth came through ARPU, definitely. So, I think you'd say it's relatively flat. We constantly look at the elasticity of the mastheads and AFR around what's the pricing, what's the volume. And you have to look at that elasticity, and it depends on the AFR versus the mastheads to some extent. It also depends on whether you look at the corporate subscription versus the B2C subscription. So, we do go through a bit of a process through that. And we also think about the paywall, how much do we open the paywall and close the paywall. So as an example, when we went through Bondi, for example, we opened up the paywall completely to give full access to everybody to the content because it was one of those national moments that we feel an obligation that we should do that, doing the right thing. And so that will impact the stuff as well. So, we'll look at a combination of price elasticity across the different verticals and also the paywall, how much do we leave behind the -- how much do we close the paywall and how much do we open it up. So it's quite a considered pricing volume approach that we work through. Operator: That does conclude our investor conference call for today. Thank you for participating. Media wishing to ask questions should remain on the line. Mathew Stanton: Thank you. So, that's a bit of a wrap-up of the results briefing. So if you're still on the line, thank you very much. I do see -- I wonder where I think we might be going to media now. Is that right? So, we're carrying on. Martyn Roberts: In a couple of minutes. Mathew Stanton: Okay. In a couple of minutes, we'll go to media. Okay. Thank you for your attendance, and we will see you again at our full-year results briefing in August. Thank you.

82天前Insight Analytics约5分钟阅读

WIE.VI 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, welcome to today's conference call of Wienerberger's Full Year 2025 Results. I am Judith, your operator for today. [Operator Instructions]. The conference is being recorded. [Operator Instructions]. We are looking forward to the presentation. And with this, I hand over to Therese Jander. Therese Jander: Good morning, everyone, and a warm welcome to the Wienerberger Full Year 2025 Results Presentation. My name is Therese Jander, and I'm pleased to host this call today from London. And I'm joined by our CEO, Heimo Scheuch; and our CFO, Dagmar Steinert. We will begin with the presentation of our key developments of 2025 and the financials of the year and an update of today's news as well and an outlook for 2026. And afterwards, we will open up for your questions. So with that, I hand over to Mr. Heimo Scheuch. Heimo Scheuch: Thank you very much, and lovely good morning from our side from Wienerberger's team. I'm glad to have you on the call. Let's walk quickly through the results of 2025, here. You have received them actually a week ago, so I just focus on the most essential points. If we look at '25, I think it was again a year that has to be characterized by a lot of volatility, politically speaking, financially speaking and also business-wise. The guidance that we actually delivered to you midyear with the EBITDA number has been fully reached. We have -- considering the circumstances that we operate in, I think, shown a high degree of profitability with an EBITDA margin, which is more or less flat compared to last year, 16.5%. Keep in mind that all of this comes at the market level when we talk a combined market level new build, new residential housing, infrastructure and renovation that even dropped compared to the year before. So we had a drop in the relevant markets from about 70%. You remember that we give indication that '21 is our reference here was 100%, so we dropped to 70% in '24 and to 65% in -- when we talk about '25. And again, here, Wienerberger has shown basically through the very strong cost discipline and the efficiency improvement, this strong margin in the year 2005 (sic) [ 2025 ]. Keep also in mind, and Dagmar will elaborate on that a little bit more, that we had quite a substantial cost inflation also last year, which we could counter with these measures, in order to keep the level of profitability. Profit after tax, very good and strong performance. We more or less doubled it to EUR 168 million. And the free cash flow, this is, I think, a very important step forward to reach nearly EUR 500 million last year, so again, we showed here the discipline in managing cash, managing the capital allocation throughout the business, especially and therefore, being able also to reduce debt further. So let's move on a little bit when we look at the debt structure as such. We came in at net debt level about EUR 1.6 billion. So that's 2.2x, considering what we have achieved with the acquisition of Terreal a year before and digesting it, it shows actually, again, the strength of Wienerberger to self-finance such transactions, to digest them, to integrate them and especially also financially also to be able to handle those. Again, one of the important step next to the cost discipline, next to the efficiency improvements throughout the business, which contributed largely to these strong numbers was the reduction of working capital to 20%. Also, again, a very important step in this volatile time to focus clearly on working capital. So this -- all of this, I consider that has been a very strong approach, very firm approach of Wienerberger on the discipline side when it comes to the financials. I already explained a little bit the market decline. And here, we have obviously the market decline when we talk about new residential housing. Here, again, you see that we have seen further declines in 2005 (sic) [ 2025 ] that have occurred, especially in the second half of the year. And we come obviously already when we look at the current status, with a lower level into '26 compared to the year before, '24 to '25. And again, at this stage, I just want to draw your attention because probably we are the first ones in the sector, but I don't shy away to make frank comments because it's no use to sort of wait and see. We had very harsh winter this year. It's an extremely strong winter, not only in North America, but also all around Europe with not only cold weather, freezing, snow, ice, but also flooding. So all of this has to be digested in the first quarter and will certainly have its effect in the second quarter as well. So all in all, I think when we talk then a little later during the call about the outlook, which is, again, a strong outlook that Wienerberger will provide, but it comes in at the basis of, I call it, a weaker start in the year due to the weather conditions, the harsh one that we have to face this year. Let's move on then a little bit to the different regions where we have seen in West, I think, I call it a stabilization throughout the different businesses. And you see also that, again, Wienerberger from a housing perspective and the new build segment outperformed the market with 2% volume increase. So very disciplined approach on renovation and new build when it comes to this part of the ceramic business, and also the pricing was very much in line with our expectations. Again, also on the piping front, we were able to improve our performance, grabbing some market shares left and right. But again, you see here that the Western Europe has performed considering the market as such, very well. And you see also the share of the business, which is, I think, very important to show that Wienerberger has emerged as a player, not only new resi, but also one in a stronger and even increasing share in infrastructure and in renovation. If we move now a little bit to the East, a little different picture. Obviously, depressed markets when we come to the new resi markets, with about 2% down. But again, here, we have sort of increased our activity and being a little bit more active in the market when it comes to volumes, so a plus 1% here and also from a pricing an okay situation throughout the year '25. I would say on the piping front, the minus 3% in volume effects, yes, that's due to some of the projects get delayed when the European funds don't finance in certain countries where there's political turmoil. So these projects, the bigger ones tend to get delayed. So this has an impact on the volume. And therefore, the minus 3% when it comes to the volume in piping. And here, you see also that we have already from a revenue split, improved our revenues in renovation and infrastructure, but not to the extent that we've done it in other areas. So this is some work in progress, I would say, as far as the share of different activities is concerned in Eastern Europe. Now let's move across the Atlantic to North America. I would say a very -- from our perspective, was a very tough environment that we faced throughout the year, '25, in North America, both in the U.S. and especially in Canada. And in Canada, we had a drop of new resi of more than 30% to digest in the market. So that was rather dramatic, I would say; and also in the U.S., around 9%, 10%, depending on the states that we operated in. So this affected obviously our new residential housing business essentially facing bricks. And you see it also on the revenue split that we are very much exposed to this sector yet or still in North America. The piping operations are doing well. We consider in this context that we only have one pipe factory in North America, but performing very well on the volume side. We extended our presence there due to investments in the production. So we grabbed a little bit of market share again in the Piping segment. And above all, I think we performed even in this market where the margins are coming down from this very high level during the last couple -- 2 years now to a normal one and a very satisfactory trend still in the piping business in North America. So all in all, I think driven by weak markets, North America suffered the most in our portfolio, and this is obviously then to be seen also in the profitability. But still, they have done a good job North American management in managing efficiencies and cost structure. I think when you look to summarize the introduction, before I hand over to Dagmar, you see the strong development, how we have improved, again, our share in the different segments and Wienerberger is now emerging as a strong player when it comes to the piping business in infrastructure, especially in the water management and energy management and in the renovation due to our strong growth in the roofing business. So this is, I think, from my side, this introduction, and I hand over to you, Dagmar. Dagmar Steinert: Thank you, Heimo. Yes, a warm welcome from my side as well, and I will give you a deeper insight into our financials. It's now 12 months I'm with the company, and it's my first conference call for a full year, and I've seen how resilient and strong our business model is, and we delivered a solid set of results and that even in this really tough market. So having a look at our revenues and operating EBITDA, we are delivering. We are delivering our guidance. We've seen a stable profitability with still a remarkable margin of 16.5%, despite quite a high cost inflation. On the revenue side, Heimo already elaborated a bit about the market situation, about the volume overall for the whole group. On average, volumes are flat; as well as prices. But of course, we managed to again increase our revenues with innovative products, which are now standing at 34%. And that, of course, is as well paying in for our profitability. If we now go on further to the bridges, revenue bridge and operating EBITDA bridge. That well, is dominated in 2025 by our growing exposure to our roofing business, especially in Western Europe, which pays into our strategy and shows that we are growing in renovation. On the revenue side, yes, it's a flat development with overall plus 1% and a negative organic growth. So we already explained the volume softness in different markets, especially in North America. We've had some modest headwind from the currency side and the scope, the EUR 120 million scope that reflect our increasing exposure in roofing. On the operating EBITDA, we delivered. We delivered despite these rough markets and again, markets coming down, remarkable earnings, and we managed to absorb the overall cost inflation we faced, and that is a very strong result. So how did we do that? Of course, overall cost inflation was plus 4% in the year 2025, and that accounts for more than EUR 100 million. And that's quite a big chunk we should -- we had to manage. This cost inflation was mainly driven by higher labor and energy costs, as we elaborated during all our conference calls already. We managed to have EUR 30 million overhead savings from ongoing strict cost discipline. That is something which we are doing since years, focusing on a strict cost discipline. And if you have a look at the markets, which are softening year-by-year, it's quite a challenge to really deliver out of that some gains. What did we do? We delivered from structural simplifications, and we had a high focus on tighter spendings. And with that, as already said, we managed somehow to deliver EUR 30 million savings. Additionally, we are focusing on operational excellence. What does that mean? We have a look at production measures and capacity optimization, especially in the ceramic business in Europe. We improved our operational performance through improved shift patterns, improved throughput and of course, one or the other energy savings. That helped quite a lot. And on the other hand, we started our program Fit for Growth in the third quarter 2025. Fit for Growth is about streamlining processes from holding to operations so that we are improving our culture, how we work together, that we become much more agile, that we are faster and that everything is towards the customer in a better optimized structure and way. With that, of course, we will have -- we will see annual savings in the range of EUR 15 million to EUR 20 million once it is in a full swing. We haven't seen EUR 15 million to EUR 20 million in 2025. It was a bit less, but overall, that is sustainable and it will continue. Coming now to our operating segments, starting with Western Europe. Western Europe had a really good performance in 2025 due to roofing and the renovation portion of that business. Renovation accounts for nearly 50% of the business in Western Europe, and it's dominated by our roofing business. On the operating EBITDA on the profitability, of course, we had beside our strict cost control, we took capacity out, and we managed to have a higher utilization. We showed a strong operational excellence and with our well-balanced portfolio in Western Europe, as already mentioned, the roofing business is the main contributor. In Eastern Europe, the picture is a little bit different. Markets are dominated by our new build business, our wall business, and that's a difference compared with Western Europe. Our exposure towards renovation and infrastructure is less. But anyhow, we managed to keep our revenues on previous year's level. And regarding the profitability, we had quite to digest a big jump from inflation, but we managed to have a recent operating EBITDA margin was 18.1%. We focused a lot on cost efficiency and on capacity reductions, where we had one or the other winter still stand as well. Coming now to North America, that is our segment where we have the highest exposure towards new build and Heimo already mentioned that the market is in 2025 in North America and Canada, especially -- well, a disaster. So markets have been down significantly. And on the piping business, which accounts for roughly 20% of our business, we've seen volume increases. But on the pricing side, we faced due to deflation in raw materials, price decreases; therefore, our revenues are significantly down by 12%. Of course, that has a high impact on operating EBITDA, on the profitability, and we came in with EUR 132 million operating EBITDA and a remarkable strong margin of 19.0%. And with that, I would like to go further to our free cash flow. Our free cash flow is the second highest free cash flow in the company history, and it's the second year in a row with a remarkable free cash flow. And I would like to put your attention on the change in working capital. We managed again to have a significant cash inflow from the reduction of our working capital. And that, of course, a high free cash flow is the basis to reduce net debt and to be ready for further growth. With that, I would like to elaborate a little bit about our net debt development. We managed to reduce our net debt by roughly EUR 120 million, and therefore, our leverage by the year-end is 2.2. Beside our really good free cash flow, we had a strong focus on growth CapEx because we focused on high return projects, and that underpins again our future growth, which will be self-funded. We've seen some smaller bolt-on acquisitions where we paid in total EUR 24 million in 2025. And of course, we, as always, have a significant amount, which we pay on dividends and share buybacks to our shareholders. And with all of that, I must say, we have a disciplined CapEx and cash management, and that is ongoing. If we have a look at our balance sheet, don't look at all these numbers. It's just to give you an impression that we have -- that our fundamentals are in a really good shape. We have a robust balance sheet, a solid balance sheet, and we even managed to improve our equity ratio by 1% from 45% to 46%, despite different headwinds we faced. One headwind, of course, the really weak market and the other headwind regarding our equity ratio, the swing in negative currency impact. On the other hand, positive, we reduced our gross debt by 10%. We reduced our net debt by 7%. And that, of course, goes hand-in-hand with the reduction of working capital where we improved the ratio towards revenues to 20%, coming from 24%. So as you can see, our fundamentals are in a really good shape. We have an attractive shareholder return, paying dividends, which are solid, steady and reliable. Our dividend proposal for the year 2025 is EUR 0.95 per share, as we had in the last year. As you can see, if you look at the development of our dividend payout and share buyback, our dividend is stable and is stable or is even growing and never comes down. Our payout ratio is 28% of the free cash flow, and that is in line with our 20% to 40% range. Now I would like to come to our outlook. What are the key assumptions? If we have the macroeconomic view, we expect, again, flat residential markets, no structural recovery. We see flat infrastructure and renovation markets, so there will be no real movement. And as well, we don't see any decline in long-term interest rates. Markets stay difficult, volatile and are not growing. Inflation is expected to be around 2.5%, and we will cover that by price increases up to 2%. What are we doing to manage all these key assumptions? We focus again on optimization and efficiency measures. First, I would like to mention our Fit for Growth program. That is a cultural transformation. Our people are empowered to take on more responsibility and accountability to be more responsive and agile with a view to delivering future growth and profitability. We will see further consolidation of our plant network, and of course, we will see a payback of expanding our industrial footprint with new products. Just to remind you, we are growing year-by-year our share of revenues from our innovative products. But we will have some special topics in 2026. And one I would really like to point out, put your focus on, is our energy inflation because that energy inflation is Wienerberger specific. It will be a burden of EUR 30 million in 2026. We faced highest energy costs of the past 10 years, and we will be not able to compensate these higher energy costs through price increases. It's not homemade, it's externally driven, and I will explain on the next chart why. Here, you can see the development of the market price. Natural gas, which is a most important energy we use and the price we pay in our portfolio. As you can see, the market price came down from 2025 from EUR 37 in '26 to EUR 33 on an average. What we pay or paid for our portfolio in 2025 was an average price of EUR 24, and that goes up to EUR 32, maybe EUR 33, so it goes up to the market price. And out of that, we face this EUR 30 million extra one-off energy inflation, which we are not able to compensate. If you look at the capital expenditure, we expect overall EUR 280 million, EUR 100 million will be growth CapEx for high profitable projects. On the other hand, we will spend roughly EUR 180 million, which is with EUR 160 million maintenance CapEx and additionally EUR 20 million for improving our Secure Zone Action Plan, which is to support the safety of all our plant workers. A little view again on the market. Our assumptions are: we don't see a recovery of the market. 2026 will be flat, not only in new build as well, but as well in renovation and infrastructure. I would like to draw your attention on the development during the year 2026. We start at a very low level in the first quarter and the first quarter due to these really bad weather conditions will be a quite weak quarter. And therefore, we expect the first half 2026 to be below the second half 2026. And of course, the first half 2026 will be below the first half of the previous year. But that's all in line with the development of a flat market. So coming now to the numbers of our outlook for the ongoing business. You can see here a bridge starting at our delivered guidance 2025, the EUR 754 million operating EBITDA. You will see out of organization and profitability measures, EUR 36 million, that includes everything, like our Fit for Growth, our operational excellence, what we do regarding operations, where we are improving our profitability in our processes towards better shifts, better mix and better utilization. Then we would have an operating EBITDA of EUR 790 million. But unfortunately, we have this one-off in 2026 regarding our own energy inflation. And therefore, our guidance for our ongoing business for the year 2026 is with the assumption of flat markets, EUR 760 million operating EBITDA. But of course, that's not all because the future is going on, and we have our next chapter, and that's a growth chapter. And with that, I would like to hand over again to Heimo. Heimo Scheuch: Thank you, Dagmar. And ladies and gentlemen, I think what you have seen in the presentation of Dagmar is very clear. We have performed very well in the light of declining markets, in the light of sluggish, I call it, recession development over the last couple of years. Wienerberger has been very good. And on a personal note, with sadness, I sit here in this call because I remember 4 years ago, this dreadful invasion of the Ukraine by the Russians. And a lot of things have changed in business, not only energy costs, and not only the way how we do business, but we had to adjust in a lot of aspects of the business, and we adjusted very well as Wienerberger. If you look at the performance of North America that Dagmar has shown in detail, I mean, when I compare the housing starts that we had last year in Canada and the U.S. and the performance of EBITDA wise to the ones that we have 5, 6 years ago, how strong we have been able to improve our EBITDA performance, our margins in North America, it's impressive. Impressive how we work on this every day, and our people put a lot of effort in making our business even more performant in the future. Secondly, and that's also, I think, something to really -- before we go into the new chapter to stress is the innovation rate. It's a very strong rate above 30%, actually around 34% that we have in the group. We push through our systems more successfully. Otherwise, actually, if you sell only bricks, pipes, roof tiles, we wouldn't be able to make these margins in such depressed markets. So that's the system approach that helps us to increase margins, and we continuously do so. Thirdly, and most importantly, you see also the strict discipline when we come to M&A. We have delivered over the last 10 years, a lot of deals coming in, very disciplined when it comes to the pricing of the deals and also the payback. And every cent has been paid back, and that's why we have to strong performance. If we look now at the new growth chapter that comes our way, we have the ideal fit for our business to grow and to improve when we talk about the Italcer acquisition. Why? And let me just summarize this in a nutshell. This is -- Italcer is the leading business when it comes to high-end solutions for tiles, for floors, for walls, for facades, for the inside, for the outside and especially in the Renovation segment, which is very highly performing, modern production hubs in Italy and Spain. They are growing, not only in the local market, but especially with respect to exports. It's not a new business for Wienerberger. I call it an adjacent business. Why? Because actually, we use the same raw material. It's clay. We have more or less the same technology. Obviously, these colleagues in the wall and floor tile industry are more specific, highly technology when it comes to the surface treatments, the colors, the structures. So this is a great addition to our facing business that is obviously very strong in North America, Western Europe and also increasingly strong in the renovation. Here, we have an ideal sort of growth space for the future in order to improve our footprint there. Clients are more or less the same in a lot of countries. So we can sort of improve our footprint in the Southern European Hemisphere and also in the Western Hemisphere. And obviously, Italcer is a leading company when it comes to technology, as I said before, in manufacturing; also in capturing CO2 and improving the footprint there. They have the first kiln when it comes to electrified kilns in Spain, high performance. And again, you see it's an ideal fit for Wienerberger on the growth path in the future and gives us a more and even stronger performance and a footprint in the renovation part of the business. So as I said, these are the reasons from our perspective to enter Italcer. We have here the leading company, solid growth, outperforming the markets over the last couple of years, very strong and committed management team that will stay in place and fits culturally and also from a performance very well with ours, so it's an easy integration, if I may say. So we will put the guys also on our platforms and integrate them as we did in the past with others on our back offices and business support centers and then therefore, ensure obviously, the growth in the future. When we look further to this business, the transaction structure that we have put here and Dagmar has stressed this item very carefully and duly when we talk about financing. Again, we focus here on self-financing and support. So this is, again, an acquisition that we realized in this way in order to ensure this financing, buying 50% plus 1 share now. And then we will have the necessary approvals that are for such transactions. They are not the EU application as it's only in Germany and Austria and in other countries. So this will run through rather smoothly. We all expect that and then start the consolidation from Q2 onwards. So again, it's a fully cash transaction funded from our existing liquidity. We have all the facilities in place in order to finance this transaction. When we look at the -- from our perspective, the integration as such, as I said, it's going to be a rather quick one on the back office side, on the front office side because in these markets, Italcer is very strong. We can obviously help them in order to improve the business throughout Europe and also in North America, where they have a strong business also exporting to the U.S. and our strong footprint with our outlets and sales offices throughout the country will help us to improve the performance. On the financial front here, we see about EUR 10 million of synergies rather quickly to be grabbed here on the commercial side and a little bit on the cost side. But more will come in the future, but this is, I think, a good starting point. When we summarize, again, in a nutshell, it's an ideal sort of addition to our portfolio. It's easy to manage, easy to integrate. We understand the business. We can handle it in our product assortment, can use it to improve our footprint in the facade business throughout the world, actually. It will strengthen our footprint also in the renovation segment, which is very strong. It helps us with architects, with planners, with designers in order to have here even a better footprint for Wienerberger when it comes to new build, but especially renovation. We will get quite a substantial amount of synergies in, as I said, very quickly. It's a highly attractive financial profile because from a perspective of EBITDA about multiples, we have here about EUR 82 million EBITDA that Italcer will provide us full year in 2026. We will come to this in a minute, but a strong sort of performance here, which gives us a multiple a little higher than 6, but nothing sort of that we look at comparable transaction in the past. So very attractive for us. We'll bring it down when we look at the EUR 100 million that we think we were able to achieve rather quickly to a multiple in the 5-ish for such an acquisition, I think, a very strong track record, again. So let's move on to the next slide. And here, you see from what has been presented by Dagmar on the outlook of the ongoing Wienerberger business, now the integration of Italcer. Obviously, when you look at the outstanding performance in 2025, all these measures that Dagmar has explained will make us performing in this scenario rather well. Let me say one thing on this. Dagmar and myself used the word flattish, stable markets. Yes, that's an assumption. If the markets gets better and if something happens this year, we are ready. Don't worry about that. We have capacity in place, we have structure in place to satisfy. Only if you see all this volatility, and I think it's wise at this stage of the year to say clearly, let's see what comes our way, but we, as Wienerberger, we don't wait for the cycle. We create our own growth by doing the right things and improving our portfolio, focusing on the cost side, focusing on the organic growth side and therefore, reaching then the EUR 790 million when you talk about performance. The EUR 30 million of one-off effects on the energy front, I think you have understood that. It's a result of our buying-forward strategy. Basically, it helps us in a long time, and then it comes a little bit against us, but I think it's a one-off, we digest it. So the EUR 760 million is a strong guidance for this year operating wise, and we will add the EUR 50 million coming from Italcer on top. That's, as I said earlier, provided that we get the necessary approvals in Q2, and then we will consolidate the EUR 550 million from this date onwards and then at the operating EBITDA guidance of EUR 810 million for the whole year of 2026. If we look at a very important point because some of you will obviously ask these questions anyway. On the financing, Dagmar has clearly explained how we have brought down our debt in '25 to 2.2. The Italcer acquisition will bring in additional debt of about EUR 400 million. So we'll end up a little bit above EUR 2 billion of debt, it's about 2.5. If I then calculate the EUR 810 million as a reference already, and then we bring it down as to -- with very specific measures, as you have seen in '25. We have now already in place, our reduction in working capital. We have also the CapEx adjustments that we will bring in and some real estate transactions where we have nonoperating real estate that we will sell off. All of this brings in about EUR 220 million. So we will reduce towards the year-end 2026, again, our debt level to about EUR 1.8 billion. You see a very disciplined approach and how we can finance such a transaction and expansion of our portfolio rather quickly, fast and very efficiently throughout this year. Again, when we look at the EUR 810 million outlook, it's in the light of persist geopolitical and macroeconomical uncertainty that we face. Guys, all of you that are listening in every day, there are other news on tariffs, on other things. We need to live with this. And this is something I think we have learned to do so, and therefore, we remain very optimistic, very positive and just do our work well and cut costs where we can, focus on margins. And as I said, we assume right now that there's no real big recovery in the new residential housing market. There's somehow flattish infrastructure and renovation market. It might be better than towards the mid of the year. We will see. But as I said, we are prepared. We have a lot of attention to grow fast and react very quickly. But at this moment, the financing environment, the banking, how they react with real estate, I think, remains very restrictive. So there's not the green light that I see here or the tailwind that some of you talk about that is here in the market in order to boost the business. Again, we will outperform, by this guidance, our markets. We'll focus on the debt reduction that we told you. Strong cash generation, obviously, goes by itself and integration of Italcer and therefore, expanding our earnings base. So a strong focus on the business again this year. I think from my side, this is -- summarizes the year 2026. We will obviously have our Capital Markets Day a little later this morning, where we'll elaborate about the strategy in much more detail in the future. But this is, I think, from a perspective of year '25-'26 what we had to tell you today. So I hand over to all of you for further questions. Operator: [Operator Instructions]. The first question comes from the line of Cedar Ekblom from Morgan Stanley. Cedar Ekblom: Can you hear me now? Heimo Scheuch: Yes, we can. Cedar Ekblom: Perfect. That took a while on my side. So I've got a couple of questions, please. Can we just go back to Italcer? I'd like to get some final details around the purchase consideration on a 100% basis and the implied multiples pre and post synergy. I appreciate in the slides, you've got the cash impact of EUR 400 million in 2026. But my understanding is that is only for the initial 50% plus 1 share. And so it would be helpful to get a sort of a fully acquired impact to the gearing and the multiple and the cash impact. Do we multiply EUR 400 million by 2 to get to the sort of 100% EV implications for the business? So that's question one. Question two, also around Italcer. To be honest, I'm not 100% sure on the sort of channel overlap here on the products. Maybe you can talk a little bit more about it. My understanding is that Italcer's products are sort of luxury high-end ceramic products for internal sort of design applications, fancy bathrooms, fancy tiles, et cetera. I don't get that how that overlaps with your external brick roofing product categories. I get that there's a regional overlap, but I don't see the end market overlap there. So a bit more color around how you see the fit would be helpful. So those are the 2 questions on Italcer. And then there's 2 questions just on sort of the outlook or financials. Can you confirm if you had any benefits from carbon credit sales in the 2025 results, any positive impact there? And then just on the energy side of things, you have guided to this EUR 30 million impact, which I understand is around the way you purchase energy. Is there any way that you could soften that impact by doing some contracts, some hedging, et cetera, that you wouldn't normally do in order to try and soften some of that headwind? So quite a lot to unpack there. Those are my 4 questions. Heimo Scheuch: Thank you, Cedar, for the questions. I will hand over and then come in if it's needed on the Italcer financials because Dagmar will take over right now, and then I will answer the rest. Dagmar Steinert: Yes. Well, regarding on the Italcer financials and the additional EUR 400 million debt we will put on our balance sheet. Of course, we buy 50% plus 1 share. And with that, we are going to fully consolidate the whole group. And with that, we are taking debt over. Therefore, in 2027, when we make the second step to acquire the minorities, it will be far, far less than EUR 400 million. We see overall equity value of EUR 560 million. And with that, I'm very confident that we will not only manage to bring our leverage by the year-end '26, again, down to 2.2, but we will see further improvement in the years to come, 2027 and ongoing. Cedar Ekblom: Sorry, Dagmar, just before you go on, apologies. So I just want to be 100% clear here. You're saying EUR 560 million equity value? Heimo Scheuch: No. Enterprise value. Dagmar Steinert: Enterprise value. No, enterprise value. Cedar Ekblom: Enterprise value. Okay. So EUR 560 million. That's helpful. Apologies, carry on. Heimo Scheuch: And as I said, Cedar, it's EUR 82 million full year EBITDA contribution from Italcer in '26, yes? And we will only consolidate EUR 50 million because we have the processes to go through on the approval side from antitrust authorities in Germany and Austria. Understood? Cedar Ekblom: Understood. Heimo Scheuch: Thank you. And let's now go into the 1 -- you had 2 questions, actually. The one was the channel question, distribution; and the other one was obviously the positioning of Italcer. First of all, let me start with the positioning. Yes, they started with the sort of -- I wouldn't call it only luxury but high-end sort of applications, tiles for floors, for walls and in the inside and renovation. Yes, you are right. This is a business which is strong in renovation. There are some special dealers around Europe that sell those products, but they are also big distributors. I will refer to, for example, to a French one that is very well known to you. It's POINT.P, the Saint-Gobain distribution structure in France that sells all of their products. So here, Wienerberger products and Italcer products goes through the same channels. Also in Italy, for example, we have the same. Also in the U.S. So there's a lot of common when we talk about distribution as such. Obviously, we will have a specific sales force as we have for facing bricks or for clay blocks or for also the roof tiles. So we will have the special and continue to have the special sales force for the tiles in Italcer. On top of it, and this is, I think, a very important aspect, I said that strategically, you will see emerging very strongly in the next couple of years. This company is leading when it comes to treatments of services, digital printing, colors, et cetera. So where do we need it? We see that the facing brick business moves towards a thinner product business. That means the bricks get thinner and thinner. We call them thin bricks or slips or whatever throughout the different markets. So here, we have a very ideal addition to our business where we can produce these products and replicate old bricks very easily through the Italcer channel. So there's a lot of manufacturing synergies there and where we can improve the business because there's a lot of renovation work going to be on the outside in Europe of the old housing stock. So replicate those bricks we do today burn in our kilns traditionally, cut them, have some waste and then put it into the market. We can produce it much quicker, much faster through the manufacturing base of Italcer. So this is something -- a growing business already for them. So they have here a business, a good business already, and due to the addition to ours, in Western Europe, especially and, above all, also in North America, this will play out as a very strong growing business for Wienerberger in the future. So I hope I have addressed this part of Italcer for you strategically. Dagmar Steinert: You had some questions about our energy pricing and ask if you are able to fix energy at lower prices with like future contracts. Of course, we do that. We did that in the past, but always like ongoing for the next years to come. And in the face of decreasing energy prices, of course, our level, what we fix is below what we did in the past. And we feel quite comfortable how we manage our risks and what actions we are taking. But 2026 will stay as it is. We will pay energy prices on market level. And the years to come, of course, it highly depends how our energy prices are developing, what is going on with the war and so on. So that's a volatile environment. Heimo Scheuch: But to add something what -- Dagmar, what Cedar has asked, there is no softening possibility of this EUR 30 million. Dagmar Steinert: No. No, that's not. Heimo Scheuch: This is, I think, what she wanted to understand. And here, we have done the utmost in order to bring it down to EUR 30 million. Yes? Dagmar Steinert: Yes. Cedar Ekblom: And could we get some color just on the carbon credit sales? I'm not sure if you disclose these numbers, but it would be helpful to know if you have been selling excess credits in the market in the last couple of years and put some numbers around what those benefits might have been? Dagmar Steinert: Well, we are always selling some carbon credits, which we don't need for our ongoing business. And we have some gains out of that, but that's normal business, nothing unusual. Cedar Ekblom: And what is the quantum there? Are we talking EUR 50 million or... Heimo Scheuch: No, no, no. By no means, such high numbers. No. It's -- as Dagmar said, it's a normal sort of ongoing business thing. So it's not a few million euros. It's a double-digit amount, if I may say so, but nothing in the range of what you were referring to. Operator: We now have a question from the line of Markus Remis from ODDO BHF Securities. Markus Remis: Can you hear me now? Heimo Scheuch: Yes. Markus Remis: Okay. Excellent. I'd also like to start with a question on the '25 financial statement. And I'm trying to better understand the cash conversions because when I look at the receivables, the ratio compared to sales was the lowest since 2010. So can you maybe disclose the level of factoring by year-end to get an understanding to which extent this was operationally driven or how much financial engineering stands behind the receivables reduction? Dagmar Steinert: Well, we have 2 effects on our receivables. First of all, regarding our working capital management, we focused on our trade payables and receivables, and we faced lower -- much lower sales volumes in the months November and December. That, of course, was one aspect of a reduction of receivables. On the other hand, we increased our factoring by roughly EUR 30 million towards year-end, but that's normal operating business as we had our Terreal acquisition integrated in our group and therefore, a bigger portion of that refers to the integration of Terreal into our factoring business. And the focus -- just to add, the focus for the year 2026 for the reduction of working capital is strongly on inventories. Markus Remis: Okay. And so factoring at year-end '25 was then close to EUR 200 million? Dagmar Steinert: Yes. Markus Remis: Okay. That's very helpful. And then if I may follow up on the cost inflation part, you've flagged 2.5% of cost inflation, excluding this energy burden, this EUR 30 million. Can you shed some light on the remaining drivers? How that 2.5% is composed? Some indications here would be helpful. And then on the other hand of the price cost equation, for which parts of the business are you most upbeat to raise prices to get to this 2% on the group level? Heimo Scheuch: Well, I can answer that. For example, we are certainly on the roofing segment, which is a stronger segment in resident than the new residential housing right now. So there, obviously, I think, we will have no problems bringing up the prices. Dagmar Steinert: The 2.5% on an average inflation, it's just a normal inflation you face more or less in every country. In some, it's below. In some, it's even higher. And therefore, it's an average number, 2.5%. You see it on personnel expenses. You see it on -- yes, on everything more or less. So nothing specific, nothing... Heimo Scheuch: Labor is the most important one. Dagmar Steinert: Yes. Markus Remis: All right. And then the last question, again, to get it straight on Italcer. The EBITDA multiple that you mentioned. So it's like just over 6x. I think that was just mentioned, how is that derived? Because if I take the equity value and then assume something like... Dagmar Steinert: Enterprise value. Heimo Scheuch: Enterprise value. Markus Remis: Sorry, enterprise value. The EUR 70 million of current EBITDA, I get to quite a different... Heimo Scheuch: No, no, you take EUR 82 million EBITDA, EUR 82 million. Markus Remis: Okay. So that's the kind of annualized contribution in the current year. Heimo Scheuch: Correct. Correct. Operator: And next in the line is Isaac Ocio from On Field Research. Isaac Ocio: Can you hear me? Heimo Scheuch: Perfectly well. Isaac Ocio: So 2 questions regarding maybe '26 and 2030. So the first one would be, so is the current inability to pass on cost inflation behind us after the EUR 30 million hit in '26? And maybe my second question would be what is the pace of recovery in European residential construction you're expecting since we're seeing kind of some green shoots in Germany and France and maybe give a bit more color regarding that. Heimo Scheuch: Thank you for the 2 questions. Yes, I agree with you that this one-off, as Dagmar has explained it, the EUR 30 million energy is then this one-off that we have to deal with this year. The rest is then a more, call it, stable development when it comes to inflation that we can digest with price increases on a yearly basis, in the years to come. Now from the future and if I may, we will do it, and I will speak about this in the Capital Markets Day presentation in more detail. But I've given you a base case that you will see in the presentation, where basically I say, it's a stable case in the future, where we, Wienerberger, can generate growth and don't wait for green shoes, as you have explained or you have referred to in France and Germany, et cetera. So we say Wienerberger has the capacity to digest and to grow very quickly when it comes to better markets or stronger markets in new residential infrastructure and renovation because we have the capacity there. We have also, if the Ukraine war ends and there's more demand, also the possibility to substantially grow our business quickly, and that will have a huge financial impact. But at this very moment, obviously, these are things that might occur. We don't know when and how and there's a lot of volatility. So we don't want to put our business model only on this. But as I tried to explain on our own strengths and what we can influence and drive, therefore, the growth independently for this. And you will see the numbers that I'll present to you in a minute. Operator: And I am moving on to Julian Radlinger from UBS Limited. Julian Radlinger: So a couple for me. First of all, could you help us with some of the moving parts in the 2026 guidance, please? What should we assume for D&A and net interest costs? I'd love to better understand the implied EPS guidance, either excluding Italcer or preferably including it? And then secondly, so you're alluding to H1 '26 being particularly tough for a lot of reasons that makes sense. Could you elaborate on that a little bit, please? So historically, your adjusted EBITDA seasonality H1 versus H2, something like 48%, 52% of full year EBITDA. Are we thinking something like 45%, 46%? Is that the right kind of ballpark or should we think about it differently? Dagmar Steinert: Well, first of all, I would like to start with our interest costs. Our interest costs in the year 2025 amount to EUR 100 million, and we usually build up during the year working capital. Therefore, we take more debt during the year on our balance sheet to bring it down by the year-end. And so the EUR 100 million, of course, are, first of all, like the basis. And then we will see additional EUR 400 million in the second quarter. And our interest costs on average are between like 3.5% and 4%. So the impact will be digestible. But of course, you have to refinance the net debt of Italcer. Italcer pays a much higher interest rate. Therefore, we will see overall for 2026, of course, higher interest rate. Julian Radlinger: Okay. That's helpful. And the D&A? Dagmar Steinert: The D&A, of course, is increasing as well. But if we look at the P&L of Italcer and the strong margin they are delivering that will be less -- yes, I would say, a little bit less impact than we have on average in our business. Julian Radlinger: So that you're saying they have lower D&A as a percentage of sales than you do? Dagmar Steinert: Slightly. But of course, we have to see regarding the purchase price allocation, what we identify in assets which we have to amortize. So what is like the split between goodwill and like customer lists and know-how and so on. And that work isn't done so far. So therefore, it's still a little bit, of course, of a slightly black box for us. Julian Radlinger: Understood. And then regarding the H1 '26, please? Dagmar Steinert: H1 '26, yes. Heimo Scheuch: Yes, you mean your EBITDA split. I think historically, you're right, you can deduct this from all the information that you have available. But I wouldn't sort of count on this for this year. It's a very different year. We have never seen such a winter for the last 20 years or so. So I think we'll have to cope with it in the sense of how the business will start in March, when it starts, how quickly it takes off and how it develops, we will see. I think I don't want to make too many predictions. As we said, we give you a clear guidance for the year, which is already, I think, a very strong message from ourselves in this volatile market. Operator: Thank you very much. There are no more questions at this time. I would now like to turn the conference back over to Therese Jander for any closing remarks. Therese Jander: Thank you very much, and thank you for joining and your interest in Wienerberger. And we hope you -- we welcome you back again in the first quarter call in May 13. And I hope you will also find a lot of usual information around our Capital Markets Day that you will now receive on our website. So thank you, everyone, and goodbye. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.

82天前Insight Analytics约5分钟阅读

STAN.L 2025 Q4 财报电话会议

William Winters: Good morning and good afternoon, everyone, and welcome to our full year 2025 results call. I'm joined here in London by Pete Burrill, our Interim Group CFO; and Manus Costello, our Global Head of Investor Relations. We'll take you through our results and outlook before opening up for questions. Now 2025 was an extraordinary year by any measure. It tested the resilience of the global system and the relevance of institutions operating within it. It was a year shaped by heightened geopolitical tension, tariff announcements and periods of significant financial market volatility across multiple asset classes. But it was also a year that demonstrated something fundamental, that global trade, capital flows and economic connectivity endure and even thrive and that institutions built to support them responsibly and at scale matter more than ever. Now when I spoke to you at our first quarter results in the immediate aftermath of the tariff announcements, I said that we were entering that period of global volatility from a position of strength. Our results for 2025 demonstrate exactly what that strength looks like in practice. Our underlying return on tangible equity for the year was 14.7%. This is not just a financial outcome. It's evidence of a strategy that's working and a franchise that's delivering with consistency. We delivered record annual income of $20.9 billion, up 8% year-on-year. That growth was very broad-based. Global Markets and Global Banking both achieved double-digit growth for the year. Our Wealth business grew by 24%, supported by record net new money of $52 billion. Importantly, this growth was delivered despite interest rate headwinds and a softer fourth quarter for episodic income in markets. It speaks to the depth of our client relationships, the relevance of our capabilities and our ability to deploy them precisely where our clients need us most. And whilst it's early days, we're encouraged by the start of 2026 across the engines of non-NII growth, even against what was the strong first quarter last year. Our strong capital position allows us to grow while continuing to deliver attractive returns to shareholders. Today, we're announcing a further share buyback of $1.5 billion, which will start imminently. We're also proposing a full year dividend per share up 65% year-on-year. And as you'd expect, we're stepping up our shareholder distributions while maintaining a full investment program intended to build on the strong momentum in our business. The outcomes we delivered in 2025 mean that across income growth, return on tangible equity and shareholder distributions, we've achieved the objectives of our 3-year plan, and we've done so a year earlier than initially guided. Our 2025 underlying return on tangible equity was well above the target we set ourselves for 2026 and income met our 2026 guidance a year early. And we did this while achieving strong underlying positive income to cost jaws in both 2024 and 2025. We've returned significant value to our shareholders by announcing distributions exceeding the $8 billion target since February 2024. These results highlight our strong financial performance and the success of our strategy. As we have exceeded our 2024 to 2026 group targets already, we're introducing new guidance for 2026, which we'll set out later. Additionally, going forward, we'll be presenting our results on a reported basis, shifting away from underlying financials. This move has been in the pipeline for some time. We intend for this to provide ever more focus on a single set of financial outcomes. We believe it will provide a clearer and more consistent framework for both our financial disclosures and future guidance. Our performance is the result of sustained execution over a long period of time. It reflects long-term strategic choices, disciplined focus and an increasingly high performance culture that prioritizes collaboration and delivery across markets, products and sectors. But this plan was only ever a milestone for us. Reaching it sooner is significant because it encourages us to pursue our ambitions with even greater determination. I want to thank our clients for the trust they place in us. I want to thank our partners for working with us in increasingly integrated ways. And I want to thank our colleagues across the group for their professionalism, resilience and commitment. These results are a direct reflection of their efforts. 2025 marks our fifth consecutive year of improvement in both underlying and statutory return on tangible equity. We've taken advantage of a generally supported business environment with shifts in trade and investment flows working in our favor and growth remaining strong in most of our key markets. But we've amplified these long-term trends by growing our franchise in a focused, disciplined and responsible way, by managing costs and capital rigorously and by communicating clearly and transparently with all of our stakeholders. I am committed to maintaining that focus so that we continue to deliver sustainably higher shareholder value over the long term. At our event in May, I and our team will set out our strategy and associated medium-term targets in more detail. We'll explain how we see the evolution of the global economy and trading systems, as I set out in the annual report. We'll discuss how these themes affect us and how we intend to build on the momentum that we have created, how Standard Chartered is playing an increasingly distinctive and valuable role in the global financial system, and we are doing so profitably. We'll discuss how our footprint and connectivity, our expertise and our differentiated capabilities position us well, not just to perform, but to lead in the environment ahead. Pete will now take you through the 2025 performance in more detail and the outlook for 2026. I'll then return to discuss how we continue to support our clients across our business segments, after which, Pete, Manus and I will be happy to take your questions. Pete, over to you. Peter Burrill: Thanks, Bill. Good morning and good afternoon, everyone. I will now take you through our 2025 4th quarter and full year results. In my remarks, I will be comparing underlying performance year-on-year at constant currency, unless otherwise stated. Our full year 2025 income was $20.9 billion, up 6% or 8% excluding notable items. The performance was primarily attributable to our growth drivers of Wealth Solutions, Global Markets and Global Banking. These areas delivered strong results, underlying our ability to capture opportunities in our targeted business segments. Q4 income was broadly flat due to weaker Global Markets, which I will talk about in more detail on the CIB slide. On a full year basis, costs were up 4%, and we delivered 4% positive income-to-cost jaws. Profit before tax for the year was up 18% to $7.9 billion, and our underlying return on tangible equity was 14.7%, including around 70 basis points of FVOCI gains from Ventures. Our reported profit before tax was up 18% to $7 billion in 2025 with a statutory return on tangible equity of 11.9%. Our earnings per share increase of 37% reflects the strong underlying performance and ongoing reduction in share count. Now let's look at the performance components in detail. Fourth quarter NII came in slightly higher than expected and was up around $200 million quarter-on-quarter. This is primarily due to the movement in HIBOR during the quarter, where we benefited from both improved CASA pass-through rates and treasury-related timing differences. As a result, our full year NII was $11.2 billion, up 1% with a negative impact from rates and WRB portfolio actions, offset by volume growth and mix improvement. In 2026, we expect NII to be broadly flat year-on-year based on several factors. First, as mentioned, NII in Q4 was higher than anticipated due to HIBOR increases. This has already reversed in Q1. Second, we outperformed on pass-through rates during 2025, but we expect these to normalize over time. Third, our currency weighted average rate outlook indicates a 44 basis point reduction in 2026 and, consequently, we anticipate a continued headwind due to movements in interest rates throughout the year. Lastly, the impact from WRB portfolio actions is expected to be around a 2% headwind to NII this year. These impacts will be mitigated by volume growth, but the pace and extent of volume growth remains uncertain. Moving on to non-NII. In 2025, our non-NII increased 13% year-on-year or 17% excluding notable items. This robust growth was primarily driven by the strong performance in Wealth Solutions, Global Markets and Global Banking. In addition, the year's performance benefited from gains realized on the SOLV transaction. I'll talk to the products performance in more detail when I come to the business segments. Now turning to expenses. Q4 operating expenses were higher quarter-on-quarter, driven by a number of factors. First, we continue to invest in our people and businesses. Second, we took some regulatory charges related to a pension code change in India and a PRA rule allowing accelerated vesting of shares. Lastly, during the quarter, we had an increase due to the rise in our share price and the associated impact on deferred compensation costs. In some of our markets, regulatory restrictions such as exchange controls prevent us from settling deferred compensation in the form of shares. In such instances, we settle those awards in cash, and therefore, the material increase in the share price witnessed in 2025 and especially in the last 2 months of the year impacted deferred compensation costs. As a result, full year 2025 operating expenses were up 4% with the increase from business growth and inflation partly offset by Fit for Growth savings. We delivered 4% positive income-to-cost jaws excluding notable items, and our underlying cost/income ratio improved 80 basis points to 59%. Our Fit for Growth program continued to progress with over 300 initiatives driving simplification, standardization and digitization. We have spent close to $700 million in cost to achieve, or CTA, since its inception and have achieved over $700 million in run rate savings. As we have been explicit in the past, we have remained disciplined on how we spend the CTA, ensuring that we deliver one-for-one return on investment in FFG and finish the program in 2026. As we enter the final year of the FFG program and we reflect on the broader investment opportunities across our business, some of which were not visible at the outset of the program, we have revised our estimates of both CTA and savings from FFG. We now expect FFG savings and total CTA to be around $1.3 billion rather than our initial expectation of $1.5 billion. As a reminder, from 2026, all financial results and guidance will be based on reported figures. However, to clarify how our costs will evolve this year, we have shown on this page that our 2026 underlying costs would have been $12.6 billion at constant currency compared to the $12.3 billion in the previous plan. Two things drive the increase. Our business has demonstrated strong performance, consistently exceeding our established targets, including significantly positive income-to-cost jaws. That gives us confidence to invest into initiatives which will deliver both productivity and growth benefits in the years ahead, such as data infrastructure and AI enablement. This represents the majority of the difference. The remainder is due to higher performance rated costs, for example, the need to pay our relationship managers for exceptional performance in affluent. As we move toward a reported basis this year, we are now targeting costs to be broadly flat in 2026 at constant currency, which would mean around $13.3 billion. Credit impairment for 2025 was $676 million, up around $100 million as 2024 included significant net recoveries in CIB. The level of impairment in WRB improved year-on-year, reflecting the impact of portfolio optimization actions, while CIB impairment remained benign at $4 million. Our overall loan loss rate of 19 basis points was broadly flat year-on-year. We expect this to normalize towards the historical through-the-cycle 30 to 35 basis points over time. Asset quality remains resilient in the face of a volatile environment and our high-risk assets were down $1 billion quarter-on-quarter. The $1.5 billion reduction in early alerts was due to a combination of client upgrades, repayments and a sovereign downgrade from early alerts into stage 3. We continue to monitor our credit portfolio closely, and we are not seeing any significant signs of new stress emerging across the group. Moving on to the balance sheet. Underlying customer deposits were up 12% in the year with growth in CASA and term deposits across WRB and CIB. Turning now to capital. Risk-weighted assets were $258 billion, up 4% in 2025. As previously guided, we took the annual increase in operational risk RWA in the fourth quarter, which we would usually have taken in the first quarter of the following year. This has resulted in 2 increases in operational risk RWA in 2025. Going forward, this will be taken every fourth quarter. We closed the year with a CET1 ratio of 14.1%. And as Bill mentioned, we are announcing a new $1.5 billion share buyback, which will take our pro forma CET1 ratio to 13.5%. Since the beginning of 2024, we have announced $9.1 billion of shareholder distributions, including the buyback and dividends announced today. This exceeds our 3-year target of at least $8 billion ahead of schedule. On a per share basis, we have increased our full year dividend and tangible book value by 65% and 12%, respectively. Now let's take a look at our business segments. CIB income for the year was $12.4 billion, up 4%. Global Banking was up 15% driven by strong growth in both origination and distribution. The 7% decline in Transaction Services was a result of lower rates. Global Markets was up 12% as we delivered consistent growth in flow income above our long-term trajectory. Episodic income was a small negative in Q4 and down significantly from last year. This was due to the timing of large client deals and broad-based market movements across a range of asset classes, which impacted inventory held for client activity towards the end of the year. As we've noted in the past, episodic income is less predictable and can be volatile from quarter-to-quarter. But on a 12-month rolling basis, it continues to be within its historical range and remains a meaningful contributor to our Global Markets income. Moving to WRB. 2025 income of $8.5 billion was up 6% driven by consistent strong growth in Wealth Solutions, up 24%. During Q4, we generated $10 billion in affluent net new money. This contributed to a cumulative total of $52 billion net new money for 2025, equivalent to 14% growth in affluent AUM, reflecting excellent momentum in the affluent segment. We onboarded 275,000 new-to-bank affluent clients in the year and up-tiered over 300,000 individual clients across the continuum. As I mentioned earlier, we will be making some changes to our financial disclosures effective from the first quarter of 2026. We will be moving away from presenting our financials on an underlying basis by allocating restructuring and other items from below the line to above the line. We are also going to report our Digital Banks within WRB and SC Ventures will be reported within the Central & other segment. We will publish a data pack showing the representation of financial data on this basis prior to our Q1 results. So to conclude, we expect 2026 year-on-year income growth to be around bottom end of our historical 5% to 7% range at constant currency with adjusted NII expected to be broadly flat. Our reported costs for 2026 are expected to be broadly flat at constant currency. We will no longer provide underlying cost disclosures. And we are now targeting a statutory return on tangible equity of greater than 12% in 2026. Our medium-term financial framework will be provided at our investor event in May. With that, I will hand back to Bill to give you an update on our strategic progress. Over to you, Bill. William Winters: Thank you, Pete. First, let me talk about CIB. At Q1, we told you that our network business, which represents around 60% of our CIB income, is highly diversified, resilient and agile. And that has continued to be the case. Our strength in providing network services in and around China, payments, FX, financing, et cetera, has been a key part of our outperformance as Chinese and international corporates diversify manufacturing and ship their supply chains. We often play a central role in those shifts as demonstrated in our China corridors to markets across Asia and South Asia, the Middle East and Africa. Trade and investment flows are also picking up pace as regions seek elements of self-sufficiency, in search for more resilient middle power status. Regional and bilateral trade pacts in South Asia, the Middle East, Africa, and ASEAN will support growth in trade and investments across our footprint markets, playing to our core cross-border strengths. Now as you can see, our network income remains diversified by product. It's not just trade. And despite interest rate headwinds in Transaction Banking, our network business has continued to grow. We also have continued to see growth in income from financial institution clients, and we've made further progress towards our 60% medium-term target. The financial institutions client segment, which generally delivers a higher return on risk-weighted assets, remains an attractive area for Standard Chartered. We stand out in serving financial institution clients due to our differentiated products, extensive local market and global networks and specialized capabilities in areas like security services, financial markets and financing. These trends enable us to meet the diverse needs of a wide range of clients, including banks and broker-dealers, investors, sponsors, insurers and sovereign wealth funds. Meanwhile, we've remained disciplined in managing resources within CIB to make sure that we were focusing on serving our top tier clients and doing so more effectively. These are the ones where we can provide more value. In 2024, we spoke about how we were planning to exit around 3,000 clients by the end of 2025, and I can confirm that we have hit this target with minimal loss to income. Our focus on optimization does not end here, and we continue to manage our RWAs in order to maximize the returns for shareholders and invest to serve our client needs. Now if I can shift to our wealth and retail business. We announced just over a year ago that we were targeting $200 billion of net new money over 5 years. In the first year, we've been ahead of that pace, delivering $52 billion, which is equivalent to 14% growth of AUM and makes us the fastest-growing wealth manager in Asia. We also now rank as the #3 wealth manager overall across Asia with affluent AUM of $447 billion. Our Wealth Solutions income continues to grow strongly across asset classes. Our product innovation and advisory capabilities, including initiatives in AI, put us in a great position to capture market opportunities and cater to changing client preferences. The growth in Wealth Solutions, combined with the decisions we made to exit single product relationships and the entirety of our retail operations in certain markets, have helped us drive affluent to 70% of WRB income. This is great progress towards our 75% medium-term target. Turning to Ventures. We have made strong progress across the digital banks. In 2025, Mox continued its strong growth trajectory, achieving a 15% year-on-year increase in customer base and reaching around 750,000 customers. Trust Bank also continued its momentum with customer numbers up 15% year-on-year, reaching over 1 million customers and taking its share of the adult population of Singapore beyond 20%. Within our SC Ventures portfolio, we're building ecosystems in areas of the future of finance, including digital assets, tokenization and blockchain settlements as well as data and technology capabilities that will serve our bank and our clients well in future years. We actively manage the portfolio, building ongoing momentum across a number of fronts. You'll recall that we had a successful merger of SOLV India into Jumbotail in the first half of 2025. We've also seen unrealized gains, particularly from our stakes in Ripple and Toss, which have contributed around 70 basis points to our underlying RoTE in 2025. Now as Pete mentioned earlier, this is the final quarter that we're reporting the Ventures segment separately. We'll be reporting Digital Banks as a product within WRB, reflecting how they're managed within the group and the increasing synergy we see between the Digital Banks and the rest of our WRB business. Given the maturity of the portfolio of investments, SC Ventures will be reported as part of Central & other going forward, but we'll continue to call out key investments, gains and disposals as and when they occur. Now if you only listen to the noise in the markets, you might think that sustainable and transition finance was going the way of the dodo. This could not be further from the truth. Our clients are sticking with their commitments and our capabilities continue to improve. We've exceeded our income target of at least $1 billion in 2025 and see further growth from here. With $157 billion mobilized in sustainable finance since the beginning of 2021, we're over halfway towards our commitment to mobilize $300 billion by 2030. Highlights in the year include our EUR 1 billion inaugural green senior bond, and we're proud to be ranked first in the Global Bank Climate Adaptation Assessment 2025, ranking the world's 50 largest commercial banks on their adaptation maturity. Bottom line, we're committed to our sustainable finance agenda, seeking to do the right thing and earn good returns doing that. So to conclude, 2025 including Q4 was very strong for us, and we're delighted with the outcome even with some noise in the fourth quarter. We completed our 3-year plan in just 2 years, which speaks to our disciplined execution and momentum. We started the first quarter of 2026 strongly, particularly across our growth engines in CIB and WRB, where we see continued client activity and opportunity. We're announcing a new $1.5 billion share buyback and a 65% increase in full year dividend per share. This is a clear signal of confidence in our performance today and in the strength of our outlook. We're targeting a statutory RoTE of over 12% in 2026. Before we move to questions, I want to lift the lens and look ahead a bit. As mentioned earlier and in the annual report, we see a number of major structural trends, long-term shifts that are reshaping global trade, capital flows and growth. These are not short cycle opportunities. They're powerful forces that will play out over many years and will play directly to our strengths. We've already positioned against those trends. And importantly, we continue to invest in and sharpen our focus on our critical and relevant competitive advantages. Our ambition is clear: to create an ever more distinctive, exciting and high-performing Standard Chartered, one that delivers growth across every dimension that matters for our clients, for our communities, for our top line, our bottom line and, of course, for our shareholders. We'll go into this in much greater detail in May. But the direction of travel is clear. The momentum is real, and we're building a business that is set up for sustained high-quality growth. And with that, I'm going to hand you over to the operator, and Pete, Manus and I can take your questions. Operator: [Operator Instructions] And we're going to take the first question on audio line. And it comes to line of Joseph Dickerson from Jefferies. Joseph Dickerson: Two questions, if I may. The first, on the investments that you're making in the business, I guess, is the 60,000 per quarter of accounts that you opened in Wealth, is that capacity constrained? And if so, are some of the investments that you intend to make or are making designed to remove processing constraints and effectively increase account opening capacity on the Wealth side? And then secondly, if I can invite you to comment further on the start to the year on Wealth. Is this coming from the deposit side of the equation? Or the investment side of the equation or both? And I guess do you have an outlook for this year on the deposit side given there's a fair amount of maturities on the Mainland that will be happening this year that could send further flow your direction in Hong Kong? William Winters: Great. Thanks for the question, Joe. I'm going to start it off, I'm going to pass to Manus for some color. And first of all, it's a pleasure for me to be sitting here with Manus and Pete, just to call that out, because it's not the same as last time. So first on the investment in the business. So of course, we're delivering the 60,000 of clients with the current capacity. So it's not something that we're experiencing any particular constraints. We're significantly adding both tech and RMs. That's the $1.5 billion program that we announced last year that we're well on the way to deploying, and I think we will continue to make those investments, which should not so much increased capacity, it will, of course, but remove bottlenecks along the way. We still have a largely RM-driven business model, and we're increasingly supporting those RMs with technologies and AI and otherwise, which is going really well for us. But we see the RMs as a critical part of the future and as they are an essential part of the present. And any capacity constraints that we've got our bottlenecks, we are going to remove. Anyway, it's not a constraint today. The start of the year in Wealth has been broad-based as we've seen a reasonably predictable now migration from deposit products into wealth products. And we're seeing that continue into the first part of this year. I won't get too much more detail because, obviously, we're just 7 weeks in or something like that. But the start of the year is both substantial in quantity but also quality. Manus? Manus James Costello: Thanks, Bill, and thanks, Joe, for the question. I'll note that in the fourth quarter, we actually delivered 72,000 new clients into WRB, into the affluent segment. So it was actually a very good end of the year. And that momentum has continued into Q1, as Bill said. I think if we look forward, you'll see that in the fourth quarter, we actually delivered a slightly higher mix of wealth versus deposits than we did in the fourth quarter of last year. And we have said that, over time, we do think that we will continue to grow that Wealth business as quickly as possible and likely ahead of the deposit piece. So we're continuing that momentum. It will change quarter-by-quarter, obviously, but we're confident in how we ended last year and how we started this year. Operator: The question comes from the line of Jason Napier from UBS. Jason Napier: Bill, Pete and Manus, the first one, just on episodic income. Quite clearly, I think the fourth quarter print, disappointing relative to the bank's expectations sort of as shared earlier in the fourth quarter. I wonder whether you can just provide additional color on what happened there and whether it actually means anything for the business model or for the approach going forward, what it says about the business as it's being conducted? And then secondly, somewhat inevitably, and I'm sorry, it's regretful, but the move to stated costs in '26 has prompted some questions from investors as to whether this gives you room to spend more in '27, if you, in consensus, have restructuring expenses going from $800 million to $200 million in '27 whether you are actually going to deliver an absolute decline in costs in '27. So without putting too fine a point on it, I wonder whether you could just talk about without Fit for Growth continuing, whether it would be our expectation, the cost could be flat or perhaps slightly down in '27 in line with existing consensus? William Winters: Great. Thanks very much, Jason. I'll take the FM question and move to Pete for the cost question. So as we said a few times as we set up here, we do break out our income between episodic and flow. The flow, it tends to be transactions that are ordinary course coming from our clients, frequently but not exclusively, coming from our transaction banking franchise broadly. But they tend to be operating flows. That flow income has been growing at a pretty steady 10%, plus or minus just a little bit, as was the case in the fourth quarter as well and as we are starting off well in Q1 of 2026. The episodic is really comprised of two things. First is large customer transactions, so the kind of things that we called out are deal contingent forwards, where there's a possibility for higher profitability, higher returns. There's also the possibility that you can lose money in some cases. The fourth quarter for us in client, these large client transactions was weak. The first 3 quarters of the year were strong. The first half in particular was very strong. So overall, the episodic income for the year is good. The second component, though, of episodic is gain or losses on risk position. So we play a very important role in the markets in which we operate, in particular in the emerging markets with less developed underlying currency and hedging instruments. And when we get delivered customer transactions, we warehouse that risk until we can work it out over a period of time. And while we had no large losses in Q4, we had no gains either. And small losses, some small gains, it netted out to approximately 0. So you had minus $16 million. Change in business model? Absolutely not. I mean, we're super happy with the growth of our FM business. Good strong growth year-on-year. Yes, fourth quarter was weak. But this is not a quarter-to-quarter business. We've been building a franchise for the very long term. We have delivered that substantial increase both in profitability levels, both income and bottom line returns. And it comes from being able to warehouse risk in these markets on behalf of our clients. That's what we're doing. We do it well. 2025 was a good year. 2026 is starting off very well both in flow income and episodic. Absolutely no discomfort with the business model. I can tell you, we have an A team. The financial markets team that we are running today is as good as any I've seen, and I've been doing this stuff one way or another for 3 decades. It is an excellent, excellent team, very differentiated positions in our market. It doesn't mean to get it right on every trade in every market. But overall, we're super happy with '25. Pete, do you want to take the cost question? Peter Burrill: Thanks, Bill. Thanks, Jason, for the question. Thinking about costs, maybe a couple of thoughts here. First, zooming back on the change from underlying to reported. And I know in the way you phrased your question, you're asking if it gives us more room. We're doing this because this is what shareholders have been asking for. We think it's a positive. The benefit of being able to focus on one set of numbers both internally and externally, we think, is a big benefit. What we tried to do is, on Slide 11, give you the component parts, as you've pointed out, on how to think about costs. So we provide kind of a onetime bridge on an old underlying basis. And you can see the moving pieces that we've got there. To your point, in '27, while I'm not going to comment on specific direction of travel, you should think that, yes, we will continue to invest in business growth as we see the opportunities in front of us that Bill's already spoken about. The FFG CTA will go away. There's usually some level of other restructuring, which, obviously, we'll only call out if and when it's material. But I do want to leave two thoughts. We maintain focus on positive jaws, we maintain focus on improving our cost-to-income ratio, and we maintain focus on productivity. So don't read too much into the move to statutory. We think it's just an overall benefit and something our investors have been asking for. And we've tried to give you as much transparency as we can about how we think about costs. But any guidance beyond 2026, you're going to have to wait for our discussions in May. William Winters: I just want to give a little color on the accounting change, the presentation change. We're going to find it really useful to have a single set of numbers that our team focuses on. And the idea that there was the above the line, below the line, the suggestion which was never the where we operated, but nevertheless you wonder, is somebody thinking that below the line doesn't count or I get a freebie or it's not going to affect my bonus pool. It wasn't in my LTIP. So in theory, I was incentivized to jam stuff below the line as was the previous CFO. The new CFO will not be incentivized that way because we've just got a single measure. It is above the line. Everything is above the line. I just think we're going to get focused. And of course, that's what you, shareholders and analysts, have been encouraging us to do as well. So I'm glad that we got there. And on Fit for Growth as well, I want to say, that program was a success. I mean, we've deployed $1.3 billion of capital in an accelerated way. Extremely rigorous at the outset in terms of defining the benefit cases and extremely rigorous in terms of tracking whether those benefits are coming through. Two years into the program, I think we all looked at that and said, yes, first of all, we constrained ourselves in terms of the productivity investments that we're making around a particular set of program guidelines. We don't need to have those guardrails in place anymore. We do need to internalize completely that discipline in terms of the way that we both measure and then track our investments. And I think that we can safely say that, that is now BAU for us. So as Pete said, the productivity gains that we've generated through the Fit for Growth program, we would expect to generate in an accelerating way with future investments into our business. With that, we will go back to the operator for the next question. Operator: We're going to take our next question, and it comes from the line Andrew Coombs from Citi. Andrew Coombs: If I just start with net interest income. You talked about timing benefit in Treasury income and how also the move in HIBOR temporarily improved your pass-through metrics. Perhaps you can just elaborate there on the magnitude of the temporary benefit across those factors. And linked to that, are you kind of alluding to the fact that Q4 is not an appropriate jumping off point from which we should extrapolate? We should be more thinking Q3 rather than Q4? And then the second question is a more specific one. I was slightly surprised that you called out Ripple and Toss as being a 70 basis point benefit. I think previously, you talked about $72 million unrealized gain on that in the first half. So can you just help us how you get to the 70 basis points? William Winters: Great, Andy, I'm going to turn to Manus for both of those. Just a couple of headline comments for me. First is we're really quite happy. The combination of a sort of pass-through rate management and volume growth has allowed us to keep our NII in the zone of flats, including '26 guidance despite some obvious headwinds. We consider that to be a good outcome. And second, of course, the 70 basis point RoTE benefit of Ripple and Toss is part of the 14.7% RoTE outturn, which is a really good number as far as we're concerned. But yes, I mean, we want to call out anything that's specific. And as we get into -- I know this wasn't your question, but as we get into the separation of the Ventures segment into WRB for the Digital Banks, Mox and Trust, and the Central & other for the rest of SC Ventures, we will continue to call out these kinds of things so that you get the same color that you're getting now while it's separately reported. But Manus, please. Manus James Costello: Thanks, Bill. Yes, on the NII move and the impact of HIBOR, you should have seen that the majority of the increase quarter-on-quarter was the result of that HIBOR move. It was split between treasury, as you point out, where there were some timing differences between repricing of liabilities and assets. And some of it came through in retail within our deposit and mortgages line as we delivered strong PTRs in that quarter. As you think about where we go to '26, we're using 2025 as a full year as the base because there were a number of different moves in HIBOR during the course of 2025 in different directions. So taking any given quarter as a jump-off point, certainly the fourth quarter, would not be the right approach, which is why when you think about how to roll forward NII using our guidance that we provided for you, you should really take the full year '25 and then apply the different metrics that we've given you there. So hopefully, that gives you a bit more color, Andy. William Winters: Do you want to comment on the 70 basis points from Ripple and Toss? Manus James Costello: It's included within the way that we report the underlying RoTE, as we've stated before in the past. It's not included in the statutory RoTE in the way that we talk about it. And clearly, we will continue to call out any gains that we have in the future, but it's not included in the measure of statutory RoTE that we put in for '25 or that we're guiding to in '26. William Winters: Maybe it's worth noting that while Ripple has observable market prices, we're not fully marched to the last transaction. We form a judgment based on a combination of broker quotes, actual traded volumes in that company, and we have positioned historically conservatively against whatever the last price is. Obviously, cryptocurrencies and XRP in particular, have dropped quite a bit since the last valuation. We still think we're appropriately valued at this point. Toss is a private company, Toss Bank, in which we helped create that bank in Korea. It's an outstanding bank. It does have a peer that's public, just Kakao Bank. And Toss Bank is performing extremely well. And again, very little observable volume in terms of share transactions. So these are both judgment calls. I think you've come to understand that we're quite conservative in terms of the way that we assess these things where there's judgement required. Operator: And the question comes line of Perlie Mong from Bank of America. . Pui Mong: I'm just trying to understand the guidance a little bit better. So the income guidance is bottom end of the 5% to 7% range. I suppose, firstly, what will make it higher versus lower. And then within that, because NII is relatively flat in the year '26. And that would imply that noninterest income, it's probably double digit and obviously with the SOLV India in '25. So if you strip that out, it's probably going closer to 14%, 15%. And I would just love to hear about how you're thinking about the different business lines. So episodic, a bit weaker in Q4, but flow income is up 15%. So would you expect something similar? Is it 15% across the majority of the main business lines? Or are you expecting something closer to, say, 20% for Wealth, given your comments on how strong the front-end flows are and maybe a little bit more conservative on banking and markets just because of the natural volatility in those lines. So that's number one. And then number two, just quickly on distribution. Dividend is one of big [indiscernible] of today and it's now looking at about 30% payout ratio to reported EPS. Is that roughly right? So would you expect that to be something that you would continue doing and do more dividends versus buyback? William Winters: Great. Perlie, thanks for the question. For some reason, your audio quality was quite poor. So I'm not sure we got everything correct that. I'll try to repeat some of the questions because I'm not sure that others on the line could hear either. I think your first question was on guidance. I'm going to turn it to Manus in a moment. We're at the lower end of the 5% to 7% range. You note with NII roughly flat, that must mean double-digit growth in the non-NII. That is mathematically correct. And of course, that's what we've been doing for some time, is really strong double-digit growth in non-NII. And maybe to one of your subsequent questions, yes, the early part of the year also supports -- the early part of 2026 supports that trend, and we're extremely happy with that progress. I'll go to Manus, just quickly running through the questions, your second was around episodic, which was weaker in Q4. For sure. I commented on that earlier. I'm not sure I mentioned I've repeated what we said in the past, which is that the episodic will tend to vary between 0% of income, where we came out in Q4, and 50%, was up by $16 million at the bottom end, it was 0 because we obviously lost a little bit of money. Maybe we'll be off up by $16 million in some future quarter, I don't know, at the top end. But it is volatile. But it's a decreasing percentage of our overall FM income. And you can see from Page 29 in the deck, the steady progression, this sort of 10% compound rate in flow income, not quite a straight line, but pretty close, with the episodic on a rolling 12-month basis being more volatile, a shrinking percentage, but still a meaningful contributor to our business and extremely important for facilitating customer flows. So we're very happy with the overall mix. And then... Pui Mong: I'm sorry about that. Can you hear me better now? I don't know what happened with my headset. William Winters: We can hear you better now. Pui Mong: No, I was just going to say, with implied noninterest income looking to be up maybe 15% if you exclude SOLV India, where is that going to come from? Is it more wealth versus more markets and banking? Episodic was a bit weaker, but obviously flows are very strong, still about plus 15% year-on-year. So are we thinking about maybe 15% across markets as well as wealth? Or are we going to see a bit more from wealth, maybe closer to 20% and maybe a little bit less on markets given the natural volatility in that business? William Winters: Well, I'm going to let Manus take the details of the question. I think you're right in terms of the sources of growth. I mean, the good news is in 2025, wealth banking, financial markets and key elements of transaction banking, especially when you strip out the interest rate impact, we're all firing. And in fact, our bank is firing on all strategic cylinders. And while we had a weak fourth quarter in episodic income, flow is firing across the board and financial markets year-on-year for the full year is very strong. And that has continued into '26. Manus, fill in the gaps? Manus James Costello: Yes. To carry on from where you left off, Bill, I mean, we had a very strong year in 2025. Wealth was up 24%. Markets was up 12%. Banking was up 15%. As you know, the majority of those businesses is noninterest income, and we're saying that we started the year well. What we're really trying to say is across all of those 3 engines, as Bill said, they're all firing. They're all doing well, and we're comfortable with broad-based growth across all of them. What you should not take away is that there's anything hidden or any kind of individual element which is driving that guidance to 2026. It just speaks really to our confidence in how we ended last year and how we're coming into this year and how we're set up for the business going forward. Pui Mong: Understood. And my second question was just on distribution because dividend was a lot higher than expected. It will be about 30% payout ratio. Is that something that you would expect to continue? And given the share price has done very well in the last 12, 18 months, would you expect to do more dividends versus buyback? Or how are you thinking about distribution? William Winters: Thanks again for that. I'll start on this and let Manus finish up. Obviously, we've got quite a healthy buyback as well. $1.5 billion, I think it's a little bit higher than what the market was probably expecting with a substantial increase in the dividend. And we think we're getting to something like a 30% payout ratio in this environment makes sense. And we have every intention of continuing to grow our earnings and continuing to grow our dividend. We'll give a little bit more color on the way we're thinking about capital allocation in the capital markets event in May. But clearly, we've had a substantial increase in dividends, which I think positions us well in a number of regards, together with a big potential share buyback after completing a very robust aggregate investment program in our business. So the organic investments have been at record levels for our banks. So we're really not scrimping on anything at the moment. But Manus, anything to add? Manus James Costello: Just as you say, we'll talk about it in more detail in May, obviously, about our capital allocation priority, Perlie. I think you should just see the increase that we have delivered so far in total distributions, both dividends and buybacks, as evidence of our confidence in our ability to generate capital and as evidence of our discipline in distributing that capital when we're not using it. We're a business that can deliver strong top line growth and distribute plenty of capital at the same time, and we'll update you more on that in May. Operator: Now we're going to take our next question, and the question comes from the line of Aman Rakkar from Barclays. Aman Rakkar: Hopefully, you can hear me fine. I had 2.5 questions, I'm going to try. On net interest income, could you just help us with -- you've referenced this deposit be to catch-up or kind of normalization of pass-through rates for a number of quarters now, primarily on the CIB, but now presumably in the retail business as well. Could you help us kind of put numbers on this? I know you've given us sensitivities before about 1% shifted pass-through assuming 100 bp cut. Can you just kind of quantify the range of potential outcomes here on this deposit beta catch up, please? Because it just feels like a big source of uncertainty that's very hard to quantify. The related question on the interest income, the deposit growth, 12% deposit growth, we actually completely glossed over it in the presentation. It's a standout number. And I'm struggling to work out what to do with this data point because it doesn't really seem to be informing any confidence around the NII outlook. And I'm not really sure why. I mean, it's presumably because you're investing in markets and some of it's going to go into wealth. But can you help us kind of think about quantifying the forward look on this deposit base? How sustainable is that as a growth rate going forward? And what's the benefit to your P&L from deposits. It is major driver of net interest income, and I'm struggling to work out what to do with that. There was a question on costs around Fit for Growth. I was just kind of reviewing the 2023 full year results update when Diego kind of announced the Fit for Growth plan. And there's a lot of talk around needing to address the inherent complexity and inefficiency in the business. So it is kind of curious that there was an investment envelope that we're not actually putting fully to work. And just taking a step back from the numbers, I'm just kind of I'm interested in your take around what is it you're telling us about how efficient Standard Chartered is from here that actually we tried to spend this money, but we can't because we're actually -- we're very efficient or whatever? It'd be good to kind of hear about the kind of approach and philosophy to the kind of the operational makeup of the business. And my half question was just on Ventures, the $200 million of cumulative losses. I think you've basically done something like $170 million to date. So does that mean there's not much coming from here on in? Or it's going to be very hard for us to kind of assess that going forward? So if you could just kind of update us on that would be great. William Winters: Super. I'll just give a couple of editorial comments upfront. I may come back with some color at the end. I think your 2.5 questions was actually 3.5, but that's okay. And you use terms like feeling uncertain, lacking confidence. I'm going to say, what feels uncertain to you just feels good to us. And the lacking confidence, we hope, is a track record that can be evidenced through time so that you can feel very confident about the quality of the business that we're generating, in particular on the deposit side. But I'm going to turn to Manus on the NII, Pete on the cost, and then maybe I'll add some color on the NII, and I can comment on Fit for Growth as well if they don't cover it. Manus? Manus James Costello: Thanks. So on the NII on the PTRs, the deposit beta as you call it Aman, first of all, it's primarily in the CIB segment that we're talking about this. And you're right that we've said that we are above the ranges that we've guided to in the past for CIB of 60% to 75%, and we expect that to normalize again through 2026. The truth is market is quite conducive. It's been conducive for a while for us to maintain those PTRs at very disciplined levels. We obviously hope that could continue, but we think it's conservative and prudent for us to assume that we come back within the longer-term ranges that we've seen in the past. I'm not going to quantify it exactly. If you go through the maths of the guidance we've given, you can kind of work out where you think the gap will be that PTRs would fill. But of course, there's give and take about different parts of that guidance. And what I would say on that as well, over time, longer term, and this links to your second question actually, is that we continue to improve the quality of our liabilities, both in CIB, where we're focusing on operating accounts, and across the bank as a whole, where our deposit growth, to segue into that, as you pointed out, was 12% for the year. And the majority of that or a lot of that was driven actually in the WRB business. I don't think that, that necessarily speaks to directly a correlation with NII into the course of 2026. A lot of that deposit growth in wealth is obviously driven as future wealth flows. A lot of money comes into the bank through deposits, which is then converted into wealth. But I do think it speaks about the improving liability mix of the bank overall that we're continuing to attract these deposits, and there could be benefits from a mix perspective going forward. But all of these, you have to place against the backdrop, of course, of the fact that we do have headwinds within NII from the rate environment, as we've called out, that 44 basis points. And we do also have a couple of percentage points of headwind from the actions we're taking in WRB. So it all goes into the mix but with an underlying story of a longer-term improvement in liability, Aman. Peter Burrill: And to pick up on your questions on FFG in costs, I guess, a few things. FFG was always intended to simplify, standardize and digitize the bank. And we're really happy with the progress that we've made to date. You can see we've got over 300 initiatives in flight, delivering a broad range of benefits. And that's really been the focus that we've had. When it comes to the spending, we wanted to ensure that we kept to a kind of -- we were focused on productive spending and that we could keep the 1:1 ratio spend to save. And we also didn't want it to be an everlasting program. So it was important to us that FFG as a program and as a series of programs comes to a conclusion in 2026. We will continue to invest in productivity initiatives to simplify the bank from an ongoing basis. And again, made some really good progress. We've got some of our mortgage platforms. The turnaround times have gone from 14 days to 5 days in some of our largest markets. We've significantly reduced the number of applications that we have within the bank. We've taken third-party risk systems from 10 systems to 1 system. So a lot of really productive investments. We're happy with where it is. I wouldn't take it that we couldn't spend it. I think it was just about discipline and looking beyond 2026 as far as future opportunities. William Winters: Yes. We're very happy with Fit for Growth, the progress that we've made. And while that program is going to stop at $1.3 billion, and we have some big execution still to do in 2026, we've got plenty of other programs for creating productivity in the bank, including things that are much longer term in duration, so outside of the scope of Fit for Growth. We also, since the time that we announced this program or started conceiving it 2.5 years ago or so, we have had plenty of new information about the things that we should be deploying our shareholder dollars into. And whether that's into some other longer-term productivity opportunities, whether it's related to AI or other things, where we've got some super interesting and exciting projects underway that will produce productivity type returns that match anything that we could be doing otherwise within a more constrained, heavily guardrailed Fit for Growth project. We just said this is the right time to complete the first phase of this productivity agenda, bringing all of that into our business as usual for continuous improvement and then obviously shift some of our resources on the margin to these other longer-term or other projects that will make us much more productive through time. So no big story here. But I think you would expect us to reflect and adjust our business approach as circumstances change. This one is a success. And we're on to the next one. The last question you asked, the last half question was on SC Ventures, the $200 million of losses. Obviously, the bulk of the Venture segment has been the Digital Banks. That's been the biggest single component. And those have always been managed by the WRB management chain, so up into Judy Hsu. We're increasingly looking at and acting on the opportunities between the Digital Banks and the main bank. So the distinction became a little bit more artificial than has been the case. And those banks are mature. They're doing very well, and we will continue to evolve those. And you'll see them in terms of the breakout within the WRB presentations. The rest of SC Ventures is a collection of things, including stakes and, as we mentioned earlier, companies like Toss and Ripple, including ventures that we built, like SOLV, which we've merged in Jumbotail but continue to have a stake in the resulting company. And our digital assets businesses, Zodia Markets, Zodia Custody, Libeara, et cetera. And as we reposition that into Central & other, of course, we'll continue to call out anything that's of any note. But you would want us and expect us to invest in things that are leveraging the key strengths that we've got. And you would want us and you would expect us to manage that portfolio actively. So cutting out either things that aren't working out, which we do regularly. I mean, we've had thousands of ideas that have been killed at different points of gestation, hundreds that we put more than $20,000 into that we've killed and, of course, the ones that have succeeded we've run with. So the constraints -- I mean the $200 million is fine. We'll be within that level by almost any measure. But the value of calling that out as a specific metric is just not so relevant anymore. Operator: [Operator Instructions] And now we're going to take our next question on the audio line. And it comes from the line of Ed Firth from KBW. Edward Hugo Firth: I have two questions on costs actually. I mean the first one was in Q4. I just wondered what the costs were related to episodic income because you pulled that out on the revenue line, but it doesn't seem to be any mention in the cost line. I would have thought it would have a highly variable cost base related to that. So I just wondered why that's not the case? Or could you give us some quantum of the sort of costs that go with that revenue and whether or not it is variable? That would be my first question. And then the second question is back to Jason's question at the beginning. If I look at Slide 10 and looking at your Fit for Growth, it looks to me -- I know you're going to want to talk about this more in May, but I guess we have to fill in numbers before then. You've broadly got about $600 million of CTA cost dropping away and about $300 million of savings next year. So am I right that when I look at my '27 cost base to start with, the sort of lumpiness should take just short of $1 billion out of the cost base. And that other than that, it should just be there's no other lumpiness that we should know about or think about when we look at '27 costs and beyond? But that is the sort of right base level, somewhere around $1 billion below the $13.3 billion, I think you said for this year. William Winters: Well, again, I'll make a couple of comments upfront and hand to Pete for both questions. On the cost associated with episodic, it's not really the way we run the business. I think what you might have in mind is that traders get paid bonuses that are a function of results. And if they don't make money in trading, their bonuses will go down. That's true. That is a truism, in fact. But cost base -- the cost -- the resources supporting the episodic income are the cost of the financial markets. So we don't allocate the cost between what's flow and what's episodic in any macro way. Pete, you can offer some more color on that if you have it. And then on the Fit for Growth, I mean, we're running a business here. And while the productivity investments and then associated savings coming in current in the later periods are material associated with Fit for Growth, we will continue to be investing in productivity-related initiatives, which will continue to produce savings and expense and also produce income in terms of revenue. So I'm definitely not guiding to $1 billion out of the cost base. But Pete? Peter Burrill: Thanks, Bill. Bill covered most of this when it comes to any cost related to episodic. And when we do look at markets, we look at it on a whole year basis rather than a particular quarter-on-quarter, and markets had a very strong year in 2025. So I wouldn't read anything into quarterly volatility in that number and no direct read across to the cost base. When it comes to your question on how to think about 2027 costs, you noted all the downs, and I noticed you kind of somewhat skipped the ups on Slide 11. So there's two areas to think about, right, which is we've called out -- you called out the FFG CTA going away and the ongoing savings. We will invest and continue to invest in business growth. We see great opportunities and we're going to make sure that we invest into those and lean into those, not least of which in our affluent and wealth space. And secondly, what we've termed other restructuring in there is kind of our historical run rate of other stuff we don't have below the line anymore. So that will be above the line. But I just want to make sure you're thinking about all the various components rather than just the FFG-specific CTA and savings in 2027. So I hope that helps. William Winters: Unless anybody think -- I was just going to say unless anybody think otherwise, we're still very focused on generating positive jaws. Operator: Now we're going to take our next question, and the question comes from line of Alastair Warr from Autonomous Research. Alastair Warr: Just a couple of detailed questions really. Could you just say, sticking with this cost point, was there anything you actually pulled the plug on in the Fit for Growth program, programs you've been working on, lots of granular stuff you flagged before in the last year or 2. Is there anything that dropped off the list? And then just a couple of things on asset quality. Could you add any color or anything on the outlook in relation to that sovereign downgrade, anything we should be extrapolating or be concerned about or just one lump? And finally, a couple of your peers in Singapore, Bank of East Asia saw some movement on Hong Kong property, something you have called out a little bit before but not at this time. Is that just nothing to report here as a topic? William Winters: That's great. Thanks, Al. I'm going to turn to Pete for all of those. Certainly, the headline on the second set of questions, there's nothing to call out. We're just in good shape all around. The sovereign downgrade is what it is. It's a sovereign downgrade you've seen not associated with any material ECL that you can fill in the blanks there. Pete? Peter Burrill: Thanks. So focusing on the first one on FFG, yes, of course. I mean, it was a dynamic portfolio. I think important, if you look at the types of areas that we've laid out on Slide 10, those are broadly the similar proportion as what we laid out originally that we thought we had a hypothesis. But of course, you test and learn and you try some. They don't work out and you stop them. So yes, it was a very dynamic portfolio. 343 initiatives currently in the pipeline that we're focused on executing in 2026. But yes, there were some that came in and out of that portfolio over time. On asset quality, I mean, Bill gave the headlines. We've provided a bit more detail in some of our slides with regards to Hong Kong and China CRE, where the overall view is things have gotten slightly better. It's not a major issue. We've still got overlays. So we feel quite comfortable with that. When it comes to the sovereign downgrade, as Bill mentioned, no significant ECL in Q4 as a result of that downgrade. So it moves the numbers as far as the what we call high-risk accounts. But we feel quite comfortable and confident and no significant areas to point out that we're concerned about heading into 2026. Thanks for the question. Operator: And the next question comes from the line of Amit Goel from Mediobanca. Amit Goel: So 2 kind of follow-ups from me. But firstly, just on the income guidance for '26 to be around the bottom end of the kind of 5% to 7% growth range. Just want to double check, is 5% kind of like the floor? So you would expect to be 5% or better? Or are you thinking that the income depending on obviously external variables, it could actually be a touch below the 5% as well as being potentially above the 5%? And then secondly, again, just following up on the costs. So obviously, a large part of the delta was the investment into initiatives in terms of cost of '26 underlying. Would you mind just giving me a little bit more color in terms of what those investments initiatives were and how that will help productivity and growth in the future? So what's the kind of payoff or what exactly have you invested in there? William Winters: Great. I'll turn to Manus on the guidance question and Pete on cost. But let me say, I'm pretty sure that our bankers, RMs, traders don't pay a lot of attention to the guidance that we're discussing on this call. They don't shoot for 5.0% and then take the rest of the day off. These guys are, all of them, ladies and gentlemen, are very focused on generating growth. Super excited about the growth that we've generated so far, which has been well ahead of the guidance that we set out. And I can tell you, every undertaking will be to continue to do the same. Then we get into levels of precision that are probably not so meaningful given what's going on in the rest of the world. Manus? Manus James Costello: Yes. No, I'm not going to add those levels of precision either. I would just say the guidance is around 5%. It's neither a floor nor a ceiling. It's how we see things at the moment. We'll obviously update you during the course of the year on how that progresses. But that you shouldn't take it as either a floor or a ceiling specifically, Amit. William Winters: And Pete, do you want to talk about the change in investments? Peter Burrill: Yes. Thanks for the question. When looking at '26 and the business investments, it's a variety of things, as you pointed out, both productivity and growth oriented. So on the growth side, we've been talking about our investments into wealth management and affluent. And those, we want to continue. And so those are a key component of that. On the productivity and growth side, you've got enabling technologies as well as data infrastructure and AI initiatives to really take advantage both to grow as well as to become more efficient. So that's a few types of examples of the things that we're leaning into in 2026 with the confidence that we've got in the business momentum. Operator: And now we're going to take our final question for today, and it comes the line of Chen Li from China Securities. Unknown Analyst: This is Chen Li from China Securities. The first question about the credit cost. Although through the cycle, credit costs are 30 to 35 bps, but it has remained at around 20 bps in the past few years. So what is your outlook for the credit cost trend in 2026? And the second question is about Global Markets. Since Global Markets revenue tends to fluctuate significantly with market conditions, so what about the trend of the net interest comp about the Global Markets in 2026? William Winters: Great. Thanks for the question, Chen Li. I'm going to turn to Pete on the credit question, but I'll just again give a little bit of a high level first pass. The 30 to 35 basis points is what we estimate are through the cycle credit cost to be. Of course, we've not been operating at that level for some time. And we see nothing in the portfolio today that gives us any particular cause for concern. We've also substantially improved the credit quality of the portfolio over the past, call it, 10 years, but I think continuing over the past, call it, the post-COVID environment, with over 70% of our portfolio being investment grade, et cetera, with much lower concentrations than we've had at times in the past. So none of this is to say that our guidance of 30 to 35 basis points is inaccurate. It's just we haven't been tested in a down credit cycle with our current portfolio. I guess kind of it's a truism. But I will say that I think we've managed our capital allocation quite carefully. So I would hope that we can demonstrate an outperformance relative to the guidance that we've given. But we can't prudently suggest anything other than what our data analysis would suggest we should be prudently guiding towards. And I think we covered it before on the financial markets. The flow income is not that volatile. It's actually quite steady. It's been growing 10% year after year after year after year after year, including 2025 and into the start of 2026. That's 70% pushing to 75% or, possibly over some period of time, 80% of financial markets income. The remainder is volatile. But it's tended to be volatile above 0. And you can give us a big old knock for being $16 million negative in the fourth quarter of 2025, still a good overall episodic year for the full year 2025. Volatile but positive and with the underlying core of the business being very stable and growing quite nicely. Pete, do you want to add anything on either of those? Peter Burrill: I think you covered the Global Markets. On the credit cost, just a couple of data points. If you look at our CIB portfolio, we actually had only $4 million of credit cost this year and a net recovery last year. We don't see anything concerning on the radar screen. But we're just cautious that expecting net recoveries or virtually 0, we want to be aware that situations can change. But read into that along through the cycle rather than anything specific looking at 2026. So feel comfortable with where we are there. William Winters: Good. Well, I think we've exhausted the questions for this morning. And thank you enormously for the time that you spent with us. I know it's been a long earnings season, and no doubt, you've got a lot to do for the rest of the week. But I really appreciate the focus and attention. Just a couple of parting thoughts for me just in case you didn't pick it up from our earlier answer or the presentation. We feel super good about the franchise right now. It is firing on all cylinders. Really anything that matters strategically, we're doing well. We're investing in the things that are producing those kinds of results. We have an excellent team, of course, starting with the gentlemen on either side of me. But the rest of the management team, as I've said, is as good as any -- I'll say better, than any team I've ever worked with. And that's the team that's generated these results. So we are full speed ahead. I personally am full speed ahead. I may not look like it, but I definitely am. And I look forward to future outings where we can continue to talk about the great progress that we're making on our cross-border and affluent strategy. Thanks.

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G2M.ST 2025 Q4 财报电话会议

Jonas Warrer: Hi, welcome to Gentoo Media's quarterly presentation for Q4 2025. My name is Jonas Warrer. I'm the CEO of Gentoo Media, and I've been looking forward to present our business and our business results to you today. Gentoo Media is a leading affiliate in the iGaming industry. We help online Sportsbooks and casinos acquire higher-value players, acting as the bridge between players and operators. Affiliates are a vital part of the iGaming ecosystem. For many operators, affiliates are the main driver for player intake. You can say that we have the online stores that players visit before they decide where to place a bet or open an account. Getting to the Q4 2025 executive summary. Strongest quarter of 2025 for revenue, profitability and cash flow generation. Margin expansion driven by a structurally stronger cost base and disciplined execution. Q4 delivered record end user deposits. We also strengthened visibility across search, emerging AI-powered platforms and paid campaigns, supported by product enhancements and a positive December Google Core update. We see strong EBITDA to operating cash flow conversion, delivering full year operating cash flow of EUR 33 million. Q4 demonstrated operational resilience in a year impacted by Brazil regulation and market volatility. Revenue generation in 2025 is not where we wanted to be, and it has disappointed us. However, with the actions taken during the year, we enter 2026 with a structurally stronger business, with clear growth opportunities across core markets and continued focus on cash generation. It has been a rough year, but it has also been a year that has made us stronger. Going to the financial highlights of the quarter. Q4 delivered the strongest revenue and EBITDA performance of the year. Revenue ended at EUR 25.6 million, down 16% year-on-year, but up 13% quarter-over-quarter. The shortfall versus expectations was driven by softer December sports margins, while the year-over-year decline also reflects the sunset of low-margin activities in Q4 2024. Personnel and other OpEx ended down 33% year-over-year, reflecting the benefits of earlier cost rightsizing activities that were executed during the year. Year-end adjustments increased other OpEx by EUR 0.9 million in the quarter. Marketing spend was EUR 5.7 million, down 38% year-over-year, with the marketing ratio improving to 22%. EBITDA before special items reached EUR 14.9 million versus EUR 10.1 million in Q4 last year and up 16% -- 60% quarter-over-quarter. Special items totaled EUR 1.6 million. Cash flow from operations was EUR 11.4 million versus EUR 7.3 million in Q4 last year. If we look at Q4 this year and compare to Q4 last year, we can see that we have seen a decline in revenue, but we have also seen an increase in EBITDA. Going into revenue and a bit into the revenue details, 59% of revenue come from recurring revenue share agreements. Revenue in Europe decreased by 20% compared to Q4 2024, although revenue generated by the Nordic market remained stable. Revenue in the Americas declined by 11% year-over-year, with North America revenue growing over 40% year-over-year and reaching record levels. If we look at Q4 and compare to the previous quarter, all notable regions grew quarter-over-quarter with North America leading at 62% quarterly growth. Europe and the Americas contributed respectively, 56% and 22% of quarterly revenue, remaining core focus regions for the business, in line with previous quarters. Looking into player intake and value of deposits. Player intake reached 102,900 FTDs in Q4 2025. North America player intake more than doubled year-over-year and now accounts for nearly 20% of Q4 intake. Player intake from Europe declined year-on-year with the Nordics remaining broadly stable. The development reflects continued focus on higher-value markets and a more consolidated website portfolio following the strategic realignment that was executed earlier in the year. When we look at value of deposits, Q4 deposit values reached an all-time high of EUR 202 million. Full year deposit value reached EUR 774 million, slightly above 2024 numbers despite this being a year with Brazil regulation and the absence of major summer sports events. Going to the operational highlights. If we look into Publishing business, revenue grew 8% quarter-over-quarter with notably fixed fees improving. Publishing revenue experienced a softer-than-expected seasonal uplift in December, impacted by lower sports margins. The December Google Core update had a net positive impact. Flagship brands, including AskGamblers, saw traffic recovery following targeted SEO and content optimizations. We also piloted our next-generation WordPress platform, improving page speed and technical performance. The wider portfolio will benefit throughout 2026 as the platform is rolled out. CRO and product capabilities expanded alongside continued focus on omnichannel visibility across both search as well as emerging AI-driven platforms. Publishing enters 2026 with improved visibility, a stronger technical foundation and a more scalable platform. Moving to Paid and Paid highlights. Quarterly revenue increased 36%, driven by U.S. market expansion and broad channel improvements. Year-over-year, revenue declined 22%, reflecting the sunset of lower-margin Q4 2024 activities and the effects of the Brazil regulation. Following a strong October and November performance, December revenue was softer than expected due to lower sports margins. A larger share of marketing spend was allocated to the U.S. in the quarter, focusing on opportunities within Prediction Markets and DFS. Paid and Publishing strengthened cross-functional collaboration with the aim to improve and grow our CRM channel in Paid. Paid moved from reset to rebuild during 2025, improving unit economics and entering 2026 in a stronger position. Looking at events post quarter, in late January, Gentoo Media initiated a refinancing process of its existing bond. The net proceeds are expected to repay the current Bond and RCF facility. Management is currently evaluating whether the potential new bond terms are attractive for Gentoo Media and for its shareholders, comparing with alternative financing options. We will inform the market as soon as a decision is made. Summing up on the quarter, strongest quarter of 2025 for revenue, profitability and cash generation, demonstrating a structurally improved operating model and a structurally stronger business. A stronger cost base, drove margin expansion and improved cash conversion. Record end-user deposits and healthy underlying activity confirms continued strength in traffic quality and continued strength in our commercial engine. Visibility across key brands improved across search, paid channels and emerging AI-driven platforms, supported by product enhancements and a positive December Google Core update. Paid and Publishing exited 2025 with stronger unit economics, with closer commercial alignment and a more scalable operating platform. As said in the beginning, revenue generation for 2025 is not where we want it to be. However, with the actions taken during the year, Gentoo Media enters 2026 structurally stronger with improved visibility, a stronger underlying business and a scalable platform to drive sustainable cash-generative growth going forward. Thank you for listening in. This concludes our quarterly presentation. I would like to take this opportunity to thank our employees for their hard work and dedication in a demanding year. Next, I would also like to thank our shareholders for their trust and support throughout the year. We have an exciting year ahead of us. Gentoo Media enters 2026 as a stronger business. Our publishing portfolio demonstrates higher quality and our paid division now operates with higher efficiency. This year will also bring the largest sports event in human history with the World Cup this summer as a key growth driver for 2026. Lastly, I would like to thank you, the listener, for taking your time to hear this presentation. Thank you, and see you next quarter. Hjalmar Ahlberg: Okay. And now we move over to Q&A. So welcome, Jonas and Mads. Maybe starting a few questions on the headline numbers. Maybe Q4 for top line, you mentioned sports win margin. I mean that varies from time to time. But would you say that December was kind of an exceptional impact, if you could quantify something? Or is it more a normal variation there? Jonas Warrer: I would say December was lower than we normally see and lower than expected, definitely. And then in broader terms, I think also for -- notably for our Publishing portfolio, we saw a gentler seasonal uplift than we normally do in December. So we had a very strong October and November, but December fell short of expectations there, both in sports margins and then also a little bit lighter, as I said, gentler seasonal uplift than expected. Hjalmar Ahlberg: Yes. And you saw solid profitability here, good cost control. How should you look for the OpEx from here? Will you start investing more for growth again? Or do we see more opportunities to optimize the cost structure? Jonas Warrer: I think the main focus is what I would call disciplined growth. Of course, we have really optimized the business, and I think we have a structurally much stronger cost base. Is there room to optimize further things? Maybe. But I think the focus now is, of course, of cash generation and a token in that respect, an important factor in that respect is, of course, also that going forward that we manage to grow revenue going forward. So I would call it disciplined growth and disciplined investments. We should go where we see opportunities and where we see that we can generate revenue with high margins. Hjalmar Ahlberg: Makes sense. And also a question on how to understand this. You had a kind of a positive impact from the derecognition of a customer liability. Is this something that happens from time to time in the business? Or if you can give some more information how to view that number? Mads Albrechtsen: Yes. It happens from time to time in our business. It was just a quite high amount in this quarter, and that was why we felt that it was more fair to show it separately on one line item. But yes, it is something that happens in a daily business. Hjalmar Ahlberg: All right. And you highlighted there in the presentation, a few slides on the regional development there. And it was impressive to see North America growing quite quickly, and you mentioned Paid media there. Could you elaborate a bit more on what drove that growth in North America? Jonas Warrer: Yes. So we made movements within the DFS and Predictions Markets. I would say, material movements in Q4 for Paid. So very excited about that. And now North America nearly makes up in the Q4, 20% of our player intake. So of course very positive about that. So going into 2026, exciting to see what we can get out of that. Of course, with the note that the U.S. and North America is also characterized by seasonality. So -- but it's very positive to see that we have made a breakthrough into North American market. Hjalmar Ahlberg: And interesting about the Prediction Markets. I mean how do you see that business compared to traditional betting operators? Can you elaborate a bit on how you get paid? I mean, is it very similar model where you fly a new client and you get paid? Or if you can give us some information on how it works if it's different compared to betting? Jonas Warrer: Yes sure. A very similar setup. Of course, it's a new area for us. So if we -- as you know, in Paid, we can move fast and if we want to make a move in our publishing business, it's about building up assets and websites that ranks right. So this is something we are working on and have also worked on in the start of 2026. It's equivalent to ranking well for casino or sports betting keywords. So for Publishing, it will be a little bit of a longer journey, but it's something we are working on and are excited about. And of course, then also very happy to see that we have this, if I can call it, luxury situation where we can both use Paid for the short term first and then move in with Publishing when we see the positive results we have seen. Hjalmar Ahlberg: And also -- I mean, on South America or LatAm Brazil, I have a few questions here coming from the audience as well. I mean, how should we view that market from here? Do you think it has stabilized? And I mean, what's your view on South America in general, I guess, as well? Jonas Warrer: I think the market has stabilized in Brazil now in the sense that we have seen material improvements throughout 2025. If we talk specifically about Brazil, of course, it's a market that we think has strong potential. It's a market that we can generate good business in. But of course, also looking at how the situation has been in '25, it's not a market where we're going all in. So again, disciplined approach here. We are growing there, and we see partners performing better. But we are, of course, also cautious to not overinvest based on the volatility that we have seen in 2025. On the broader lines, I would say Latin America is, of course, interesting market. I think the value for Latin America will go up for us over the next years as more and more of the market adapts into casino. What you normally see, at least what we have seen in other markets is that you start out with sports betting and then later, the broader market adapts into casino. And as you know, this is where we are strong right in casino. So I think longer term, the Latin American market will have more and more value for us. Hjalmar Ahlberg: Got it. And also a question on Europe. You mentioned that you were down 20%, I think, year-over-year. Anything particular happening there? Or if you could give some flavor on that number? Jonas Warrer: Yes. No, I would say the main flavor to give is that the Nordics remains a stable market for us. Also in the Nordic region, we saw some volatility in more what you call Central Europe. So of course, trying to see what we can do about that. Some of the players there that we did also had, I would say, lower value. So also as part of our strategy to focus the portfolio, there was an effect from that. So there is a lot of players being made from the strategic realignment that we did in April. So you can say short term, we have probably said no to some revenue and to some player intake short term with the goal of making more revenue longer term. Hjalmar Ahlberg: Understood. And also, I mean, Google update always changes every quarter. It sounds like you had a positive effect overall this quarter. Anything you want to add there? Or is it a typical update, which can impact in various ways, I guess? Jonas Warrer: Yes. It was an update we have been waiting a long time for and one we prepared very much for. So very positive to see that we benefit from it. The latest update before that was in September, and that came a little bit as a surprise to us that a few of our assets got negatively impacted there. So of course, very happy to see that we managed to do a fast turnaround and can prove that we consistently are able to deal with search volatility and to maintain strong visibility in search. Hjalmar Ahlberg: Okay. And you also mentioned investments in AI-driven platforms. Is that the kind of experimentation or do you see, I mean, material effects of those investments in terms of am I getting anything after this? Jonas Warrer: No, that's a very good question. Very interesting question, of course. We don't see any changes in search behavior right now, notably when it comes to transactional searches where users are just before they decide to place a bet on an open account with an operator. We haven't seen that impacted. But of course, we know that AI-driven platforms might take over and will take over some parts of users. So of course, we have also started optimizing for that. And I think a very clear message here that I think is important to note is that when you optimize for traditional search -- do traditional search optimizations, actually, to a very large degree, you're also optimizing for strong visibility in AI-driven platforms. Then there is a few nuances that you can say that you need to do when you -- if you want to have higher rankings or high rankings in AI-driven platforms. But a lot of the groundwork is the same. So I think we have actually in most of 2025 been on that journey. We will probably add a few extra things to activities now. And honestly, I see this more as a hedge. If the users are turning more and more into AI, we also want to be there. We haven't seen that movement yet, but we know that what we are doing and what we are working on will have a positive effect on ensuring high rankings, if I can say that, a high visibility in AI-driven platforms. I did a test myself some days ago to see to what degree our sites are used as sources, for instance, on ChatGPT. And that was a very positive result, I would say, for me personally when I saw that our sites are seen as authority websites. So will continue what we do, add a bit extra flavor and then ensure that we have maintained high visibility, whether it is in traditional search or in AI-driven platforms. Hjalmar Ahlberg: And also a question here from the audience that there's one person that sees that industry-focaled sites like maybe NEXT.io or getting premiered by Google. Is that something you see? Is it something that you reflect on when you put content on your site, so to say? Mads Albrechtsen: I think that reflects right that there has been a move from Google to use, you can say, reward at 40 websites. It's in line with what we already do. And we also have strong at 40 websites. Next.io is just another competitor joining out of many. Nothing specific there, anything notable there beyond, of course, that they have managed to do good in the market, so yes... Hjalmar Ahlberg: Interesting. And then moving over to the guidance for 2026. I mean it implies that you're returning to growth. I guess one question is, I mean, you mentioned the Football World Cup, of course. How important is that for the growth just as one part? Or is that maybe that the year will be more seasonality driven by the quarters during the World Cup? Or how big is that event for your outlook for 2026? Jonas Warrer: I would say the event that's a bit of extra sugar in the summer months that normally are very low season for us. So what we see or what we expect from the World Cup this summer is that instead of having very low summer months, we have very good summer months. We also use an event like the World Cup internally to strengthen our position within sports and to drive our sports assets forward. So there's a lot of positive, you can say, more indirect thing coming out of a big event like that. And then, of course, as we know, as we have seen before with bigger summer events that when the event is over, players have active player accounts or funded player accounts. And then we normally also see a benefit on our casino earnings after that. But it's not that the World Cup is going to save the year for us. It's an extra benefit and extra driver, but it is, of course, a sustained push throughout the year that will drive Gentoo Media forward. Hjalmar Ahlberg: And also a few questions from the audience here, if you can comment anything more on January and February this far. I think you mentioned some input in the preliminary announcement of the results. But if you have any flavor, that would be interesting. Mads Albrechtsen: January ended in line with expectations, maybe a little bit higher. Then February started out softer with lower sports margins. I think that's a thing that has been noted in the industry now that the sports margins that started in February were low. So we have to see how the remaining part of February plays out. And then, of course, very excited for March ahead of us. Hjalmar Ahlberg: And looking at the EBITDA guidance and the implied margin, it looks like you're aiming for a recovery as well. Do you also see, I guess, less special items this year because you had a lot of things going on this year, if you could update on that? Mads Albrechtsen: Yes. I think if we take the special item bucket, they mainly covers 3 different items. One thing is the redundancy part, which has been, of course, natural in a year where we had to, unfortunately, say goodbye to a lot of employees due to reorganization exercise in April. That bucket will naturally go away going forward. Then we have had a lot of investments coming out of the split. The split was made in Q4 '24. So there was also cost running into '25 related to split. That bucket will naturally also -- goes down. And then we will have a third bucket, which is more or less normal if people are resigning and not being replaced or there is important operational projects or whatever, but the bucket overall is expected to go materially down. Jonas Warrer: If I can add also, historically, we have always had very strong EBITDA margins. And I think what we have now seen is that we have restored the strong EBITDA margins that we have. And I think that's, of course, also an aim for the future, so yes. Hjalmar Ahlberg: And also, if you can -- I mean, look longer term, I mean, now you have said that growth is coming back in 2026. What do you think about the longer-term growth rates? I mean, should you look at the kind of online gambling industry for what should be reasonable for your business as well? Or if you can give some input on that would be interesting to say as well. Jonas Warrer: I think we have enough opportunities in 2026 to stay within iGaming, if that's what you're asking. That's a lot of interesting markets, a lot of interesting opportunities. Alone as we said, there's Prediction Markets now in the U.S. We also saw positive movements in DFS, sweepstakes. We can still grow in some of the markets that we have been in for many years. So I would say for '26, it's about the disciplined execution, getting more out of our websites, intensifying the conversion rate optimization efforts we do, so we can monetize our user base even better. We have just launched a loyalty program on AskGamblers. Then, of course, we need to ensure that we monetize that to the fullest. So you can say there is a lot of initiatives that we are doing and have done that we just need to keep on doing and do better and better. And then I think there's enough opportunity in the market for us right now in '26. Beyond that, the iGaming market continues to grow. But of course, we are aware that we have very strong capabilities, I would say, both in search or sale and also in paid campaigns, right? So of course, there is an opportunity at one point to look beside the iGaming market. But I don't see that happening, at least not in 2026. We have a lot of opportunities that we want to take, claim and also gain market share. Hjalmar Ahlberg: Got it. And also my question on the EBITDA margin guidance or the EBITDA guidance. What kind of -- what can drive the upside, downside? And I mean, looking at this year, the guidance compared to maybe last year's guidance, how convinced or certain are you that you will be able to deliver on the guidance? Mads Albrechtsen: I think we are fairly convinced and quite conservative. We have also provided a quite big of a range to the market, making sure that, of course, we are quite early on giving this guidance to the market. And as Jonas was saying, we need some room to do investments if that's needed to drive revenue and opportunities. But of course, it's also evident if we look at our current cost base, we can actually just take the cost base in Q3, which is maybe a bit more structurally reflected where the business long term is looking like on the cost side. Then if we take that cost base and apply on a full year basis, then we can add EUR 5 million to EUR 6 million on top of our EBITDA performance in '25. And then we are quite close to what we have guided to the market, I would say, for next year. So we are convinced that we can reach within this guidance. And I can say that with the cost base we have today, we can also look into a first quarter where margins are significantly better than Q1 '25. Hjalmar Ahlberg: All right. And if you look at the '26 year -- I mean, 2025, you had the change to Brazilian regulation, which impacted a lot. If you look at the different regions you are active in during 2026, do you see any countries or regions where there are any material changes that you know as of now that could have any impact this year? Jonas Warrer: There's, of course, a tax change coming in the U.K. that we think will have a marginal effect on us. I think there, it's more about understanding which way our operators going, our partners and which operators they want to stay or invest even more and who wants to maybe scale down after that change. So that's something we are looking into and engaging with partners on. Then is it in the summer of '27, there will be a change probably in Finland. But I think that would be the 2 main markets right now I would highlight as where we see a change, at least the markets that matters to us. Hjalmar Ahlberg: Okay. And also interesting there that you have your refinancing that it looks to progress well and you state that you are evaluating bond versus other types of financing. I don't know how much you can tell us, but is it the cost of the debt, the maturity? Or what are you evaluating, so to say? Mads Albrechtsen: We are evaluating all kind of the buckets there, both pricing terms, general conditions. We have been in the bond market very long, and we have -- we are pleased to have seen all the support we have given from bond investors throughout many years. But of course, there's always a price and attack to everything, and that's why we're currently evaluating what would be the best solution for the company going forward. Preferable, of course, it could have been good to go out today and tell the market about our considerations and where we are. We are not there right now. We need to assess this very carefully, and that's why we are giving, you can call it, the announcement today that we are evaluating the options we have on the table, and we will share the news with the market within due course. Hjalmar Ahlberg: And I mean, looking at the guidance for '26 and the pretty solid cash flow you had now in Q4, how do you think we should view leverage going forward? Do you think it's good to have a sort of leverage in your business? Or are you aiming to have only a margin leverage longer term, if you can give some input on that? Mads Albrechtsen: Yes. I think it's fair to say that throughout '25, of course, our leverage climbed above 3 for the first time, at least for many years for the business. We preferred leveraging close to 2.5, something in that ballpark. We think that that's good for our business that we always have some room for growth and investments, which we have done in the past as well. So I would say, from a structural point of view, in the bucket, close to 2.5 would be a preferable leverage for us. By year-end, we have climbed down again below 3, and we expect the numbers to come further down throughout '26 and especially the first half of '26, impacting by 2 main things. Of course, that our profitability is getting better. We are still -- if we look at last 12 months numbers, we are still heavily impacted by the first 2 quarters of '25 with kind of a low profitability compared to second half of the year and especially profitability in Q4. And the other thing is that we have taken the amount of cash flow we have generated here in Q4 and reduced our debt position as well, overall with EUR 5.5 million throughout the quarter. So I would say, on both ends, we expect leverage to climb down to a structural level 2.5 in a mix between higher profitability and reducing debt. Hjalmar Ahlberg: All right. And also, it would be interesting to hear something about if you can give some view on the M&A market. I mean both -- I mean, you've historically done some acquisitions, which have been good. And also interested to hear Genius Sports acquired Legend. So it seems like new players are entering the media affiliate space. If you have any interesting comments on that would be nice there as well. Jonas Warrer: Yes, that was, of course, a very interesting movement. There is a lot of opportunity, I would say, right now in the industry for M&A. But I think we have a very clear opinion here that we are not there right now. We have a focus on disciplined growth now, derisking the company, being very cash generative. And I think that's the focus. Then of course, if an opportunity comes up that is too good to say no to, then of course, it's something that the Board will need to discuss together with us and then things can change. But I would say at this stage, M&A is not something that is, I would say, relevant for us, we would rather continue the discipline that we have always been very good at, which is growing the business organically. We have also done some good M&As, right, but we have always been very good at growing the business organically, and that's a focus also now for '26. It's interesting to see that new players, of course, are joining the market as acquirers. I think that's probably positive for the market for obvious reasons. So yes, interesting to see how that will play out also in '26. Hjalmar Ahlberg: All right. Thank you very much, guys. Jonas Warrer: Thank you very much.

82天前Insight Analytics约5分钟阅读

WDS.AX 2025 Q4 财报电话会议

Operator: Thank you for standing by, and welcome to the Woodside Energy Group Limited Full Year 2025 results. [Operator Instructions]. I would now like to hand the conference over to Liz Westcott, Acting Chief Executive Officer. Please go ahead. Elizabeth Westcott: Good morning, and welcome to Woodside's 2025 Full Year Results Presentation. We are presenting from Sydney, and I would like to begin by acknowledging the traditional custodians of this land, the Gadigal people of the Eora nation, and pay my respects to their elders past and present. Today, I'm joined on the call by our Chief Financial Officer, Graham Tiver. Together, we will provide an overview of our full year 2025 performance before opening up to Q&A. Please take time to read the disclaimers, assumptions and other important information. And I'd like to remind you that all dollar figures in today's presentation are in U.S. dollars, unless otherwise indicated. I am very pleased to present an outstanding set of full year results today, which highlight the disciplined execution of our strategy throughout 2025. We delivered on our commitments, leveraging our track record of operational excellence, world-class project execution and financial discipline to reward our shareholders today while positioning Woodside for future value and growth. In 2025, we achieved record annual production of 198.8 million barrels of oil equivalent, exceeding our full year guidance range. This was driven by the exceptional performance at Sangomar and world-class reliability across our operating portfolio. We progressed major cash-generative growth projects to budget and schedule, including excellent progress on our Scarborough Energy project, which was 94% complete at year-end and remains on track for first LNG cargo in the fourth quarter of 2026. We recorded strong underlying net profit after tax of $2.6 billion, where record production offset lower realized prices when compared to full year 2024 underlying net profit after tax. Based on this, I'm pleased to report our Board has determined a final dividend of $0.59 per share. This brings our total fully franked full year dividend to $1.12 per share. This represents a payout ratio of 80% of underlying NPAT, which is once again at the top end of our range. Additionally, in a testament to the strength of our underlying business during a period of increased capital expenditure and softer prices, we generated free cash flow of $1.9 billion. We achieved this while continuing to invest in the next phase of value accretive growth. We demonstrated strong sustainability performance, achieving our 2025 target of a 15% reduction in net equity Scope 1 and 2 greenhouse gas emissions below our starting base. Turning to Slide 6. As outlined at our Capital Markets Day in November, we are delivering our strategy to thrive through the energy transition. Our strategy and our approach remains unchanged. Our priorities are clear and we remain firmly focused on disciplined execution to deliver long-term value. We are doing this by maximizing performance from our base business, delivering cash-generative projects and creating future opportunities for value. In 2025, we delivered across each of these areas. We combined record production with increased efficiency, reducing our unit production costs to $7.80 per barrel of oil equivalent. We achieved first production at Beaumont New Ammonia and achieved significant milestones in the delivery of our Scarborough and Trion projects. We took a final investment decision to develop the three-train, 16.5 million tonne per annum Louisiana LNG project. This game-changing investment positions Woodside as a global LNG powerhouse with greater capacity to meet growing energy demand. We also welcomed high-quality strategic partners to Louisiana LNG with Woodside's expected share of total capital expenditure now less than 60%. One of these partners, Stonepeak, is funding 75% of 2025 and 2026 project capital expenditure. We continue to actively refine our portfolio, including divestment of our Greater Angostura assets, receiving $259 million in cash. And all of this was achieved while maintaining a strong balance sheet and liquidity position with gearing within our target range. Keeping our people safe remains our top priority. During a year of increased activity, we delivered strong safety performance with no high consequence injuries recorded. We marked significant safety milestones across our global portfolio with no recordable injuries at our Sangomar project in its first 18 months of operations and construction of our Scarborough floating production unit marking 3 years of work without a single lost time incident. These achievements set the required standard for Woodside as we embed a focus on safety, drive safety field leadership and a culture of continuous learning across our global business. To Slide 8. In 2025, we once again showcased Woodside's world-class operational capabilities by delivering reliable energy to customers while driving continuous improvement through cost discipline and efficiency. We have increased production from our growing global portfolio and maintaining operated LNG reliability of approximately 98% over the past 5 years, which compares exceptionally well against our global peers. This year, we've delivered a 4% reduction in unit production costs through disciplined cost management across the business, while continuing to maximize value from our assets through brownfield developments, portfolio optimization and leveraging our marketing expertise to capture additional value. In 2026, we will execute major turnarounds to maximize longevity at existing assets and support ramp-up of new production, including at Pluto LNG in preparation for Scarborough start-up. We will also undertake dry dock maintenance for some of our Australian oil assets. Let's now turn to Sangomar on Slide 9. During 2025, operational performance continued to be exceptional with nameplate production of 100,000 barrels per day for most of the year at almost 99% reliability. This has contributed $2.6 billion to Woodside's EBITDA since startup, demonstrating Sangomar's value to our business. Based on strong early performance, we will be assessing options for a potential Phase 2, which would leverage the existing FPSO and the subsea infrastructure to unlock additional value. In December 2025, our Beaumont New Ammonia project commenced production of first ammonia. We expect full handover of the project by OCI in the first half of 2026. The production of lower carbon ammonia, which will be made possible by the supply of carbon abated hydrogen and ExxonMobil's CCS facility becoming operational, is currently targeted for the second half of 2026. Pleasingly, we have seen strong early customer uptake from Beaumont, securing offtake agreements with leading global customers to supply conventional ammonia from the facility. These contracts reflect prevailing market prices, and we are now advancing additional agreements to align with expected future output, including for lower carbon ammonia. In 2025, we continue to make excellent progress at our Scarborough Energy project, which was 94% complete at year-end and on track for first LNG cargo in the fourth quarter of this year. Major milestones included the assembly and, subsequent to the period, safe arrival of the floating production unit at the Scarborough field. The drilling campaign for all 8 development wells was successfully completed in line with pre-drill expectations. During the period, we completed the tie-in to the Pluto domestic gas export line as construction activities at Pluto Train 2 continued. We also commissioned the Integrated Remote Operations Centre at our Perth headquarters, enabling Pluto and Scarborough to be operated remotely from more than 1,500 kilometers away. Moving to Trion on Slide 12. We are targeting first oil in 2028 with the project 50% complete at year-end. During the year, we advanced construction of both the floating production unit and floating storage and offloading unit with major field activity set to start in 2026. The image shown on the slide taken this month is the lifting of the first of 3 modules onto the hull of the FPU. Preparations for the drilling and completion campaign also progressed with the deepwater drillship expected to commence drilling in early 2026. Following FID in April, we have maintained strong momentum on our Louisiana LNG project. As outlined on Slide 13, the project was 22% complete at year-end and is targeting first LNG in 2029. Key ongoing activities in 2025 included the construction of LNG tanks, soil excavation, pile installation for the main marine berth, and the establishment of material offloading facilities. We have now secured foundational transportation capacity, a key milestone in providing access to diverse and abundant supply sources. In support of feed gas supply, we also entered into a long-term agreement with BP for the supply of up to 640 billion cubic feet of natural gas to the project starting in 2029. We will continue to layer in agreements like this, ensuring access to multiple supply sources. The project's value proposition was reinforced during the year as we brought in high-quality partners. This included the 40% sell-down of Louisiana LNG infrastructure to Stonepeak and sale to Williams of a 10% interest in Louisiana LNG LLC and 80% interest and operatorship of Driftwood Pipeline LLC. The project is expected to be the primary supply source for long-term sale and purchase agreements that Woodside signed during the year with European customers, targeting delivery from 2029. We will continue to progress further sell-downs and offtake agreements in 2026 in response to ongoing interest received from potential high-quality partners and customers. Woodside views strong sustainability performance as an essential component of our overall business success and ability to make a positive contribution where we live and work. Our approach enables us to focus on the right areas, manage key risks and impacts, drive responsible decision-making and set plans and targets that add value to our business and meet the expectations of our stakeholders. In 2025, we made positive progress across key sustainability areas. A particular highlight of 2025 was the World Heritage listing of the Murujuga cultural landscape, which Woodside was pleased to support in collaboration with traditional custodians. We continued making significant contributions to local economies and communities, including $9.3 billion spent globally on goods and services. We also achieved our 2025 net equity Scope 1 and 2 greenhouse gas emissions reduction target through a combination of underlying emissions performance at our facilities and the use of carbon credits. Our gross equity Scope 1 and 2 greenhouse gas emissions were fewer than the previous year despite higher oil and gas production. This strong underlying performance allowed us to reduce our use of carbon credits to offset emissions and holds us in good stead as we progress towards our 2030 target. I look forward to providing investors with a more detailed overview of Woodside's sustainability planning and performance at our investor briefing scheduled for next month in Sydney. Let's now turn to the global market landscape. Oil is a core product for Woodside, underpinned by a robust demand outlook. The difficulty of decarbonizing hard-to-abate sectors such as heavy transport and petrochemicals means that oil demand is forecast to remain resilient as the world's energy mix evolves. Customer demand for Sangomar Oil has been strong over its first 18 months of operations, and we are very confident in continued demand for oil, including for our Trion project, which is targeting first oil in 2028. Moving to Slide 16. As countries around the world prioritize energy security and affordability while also pursuing decarbonization, we are confident in ongoing demand for LNG as a reliable and flexible energy source. This underpins our investments in long-life LNG projects like Scarborough and Louisiana LNG, which we expect to drive a step change in future sales volumes and cash flow. While periods of demand-supply imbalance may occur in the near term, we believe these are unlikely to persist. Woodside's experience reinforces this long-term demand outlook as we continue to layer new contracts to support our growing supply portfolio. Over the last year, we have contracted 4.7 million tonnes of new LNG supply to Tier 1 end customers with significant gas and LNG experience. This contracting activity speaks to our credentials as a proven operator and the growing importance placed on reliable access to energy by end users. Approximately 75% of our LNG volumes for 2026 to 2028 are contracted with most oil-linked and some gas hub link exposure. This mixture provides diversification, portfolio resilience and the ability to capture value from market dislocations as well as manage risks as additional supply comes online Some of our new contracts will see Woodside's LNG supplied into Asia and Europe through to the 2040s, further demonstrating ongoing long-term demand. Our achievements in 2025 have further supported Woodside's resilience and ability to deliver enduring value. Our financial discipline and performance underpins Woodside's strength in the near term, allowing us to fund our operations and growth projects while delivering solid shareholder returns even in tighter market conditions. Our operational excellence and balanced portfolio are central to our resilience through the cycle. High reliability and a contracted portfolio helped reduce volatility while preserving upside exposure to favorable market conditions. Our long-term resilience is reinforced by a diverse portfolio of high-quality assets that supports consistent production and creates optionality for future growth and value. I'll now hand over to Graham to provide an overview of our financial strategy and performance. Graham Tiver: Thanks, Liz, and hello, everyone. I am pleased to present a strong set of financial results. In 2025, we maintained a focus on cost control and maximizing returns from our producing assets and driving down unit cost production (sic) [ unit production costs ]. In addition, in exploration and new energy, we delivered over $200 million in cost reductions. For 2026, we will continue to focus on costs, including delivering maintenance campaigns to schedule and budget. This is particularly relevant for our Pluto major turnaround scheduled for the second quarter of 2026, where in addition to maintenance, we will complete important tie-ins for Scarborough. We maintained discipline in our investment decisions, adhering to our clear capital allocation framework. Our divestment of the Greater Angostura assets in Trinidad and Tobago highlight this disciplined investment approach. Attracting strategic partners to our major growth projects brings complementary skills and derisks our investment. This is demonstrated through our partnerships with Stonepeak and Williams on Louisiana LNG. Following the completion of these sell-downs, Woodside's expected total capital expenditure is now $9.9 billion, which is less than 60% of the total project cost announced at FID. Williams also brings complementary capabilities in U.S. natural gas infrastructure and an existing gas sourcing platform to benefit the project. We also maintained a strong balance sheet, supporting our investment-grade credit rating while progressing developments and distributing robust returns to shareholders. We actively manage liquidity and, where appropriate, we expect to hedge a modest portion of our oil volumes to provide cash flow certainty and manage price volatility. Our full year 2025 Brent hedges were in a positive position, and we have progressively hedged 18 million barrels for 2026 at approximately $70. Moving to our capital management framework, which remains unchanged. This framework underpins our disciplined approach with clear targets to ensure the strength of our underlying business and provide certainty for our shareholders. We are disciplined in how we position the balance sheet to achieve our goals and remain committed to an investment-grade credit rating. Our target gearing range is 10% to 20% through the cycle. And as I've stated previously, although we may at times temporarily sit outside this range during capital-intensive periods, we manage it very closely. This approach provides us with flexibility to fund value-accretive growth while delivering solid shareholder returns. Our dividend policy is to pay a minimum of 50% of our underlying net profit after tax, and we target a range of 50% to 80%. We know how important returns are to our shareholders. And over the last decade, we have consistently paid at the top end of this range. In 2025, we continued to deliver outstanding returns from our base business. Ongoing exceptional production performance from Sangomar, disciplined cost control, the divestment of later life assets in Trinidad and Tobago and gains on hedging, predominantly driven by favorable Brent positions contributed to an EBITDA margin of over 70% and an underlying NPAT of $2.6 billion. Furthermore, the strength of our underlying business, coupled with the cash received from Stonepeak and Williams contributed to $1.9 billion of free cash flow. Our gearing of 18.2% has remained within the target range during a period of increased capital expenditure, and we closed the year with a strong liquidity position of $9.3 billion. We maintained credit ratings of BBB+ or equivalent and continue to have access to debt markets, including the U.S. SEC registered bond market. On average, cash breakeven of less than $34 per barrel makes us resilient to less favorable price scenarios. And we are very well positioned to progress our growth projects and create future value-generating opportunities while continuing to deliver solid shareholder distributions. As highlighted on Slide 23, these achievements translated into a fully franked final dividend of $1.1 billion, bringing our total full year dividend to $2.1 billion. Our ongoing business performance means consistent returns for our shareholders, having returned approximately $11 billion in dividends since 2022, while reinvesting in the business and maintaining a strong balance sheet. We have consistently paid at the upper end of our target range for over a decade, demonstrating our commitment to shareholder returns. Thank you, and I'll now hand back to Liz. Elizabeth Westcott: Thanks, Graham. Turning to the final slide. This outlines the priorities for myself and the Woodside executive leadership team. First, we will continue maximizing performance from the base business by operating safely, reliably and efficiently. We will maintain disciplined cost control across our business, including our 2026 maintenance program, which involves a major turnaround at Pluto. We will also continue to optimize our marketing portfolio and layer in Louisiana LNG offtake. Second, we will deliver cash-generative growth, including ramp-up at Beaumont, deliver first LNG from Scarborough and continue progressing Louisiana LNG and Trion to schedule and budget. These are major generators of long-term value for Woodside. Third, we will continue creating future value through disciplined capital management. We will maintain strong liquidity, apply strict capital allocation discipline and actively manage the portfolio to protect long-term value. And underpinning all of this is our continued focus on sustainability and innovation. Our achievements in 2025 demonstrate the underlying strength of our business and execution of our strategic priorities, providing the foundation for long-term shareholder value. Operator: [Operator Instructions] The first question comes from Nik Burns from Jarden, Australia. Nik Burns: First question just on Louisiana LNG. You just offered an update on the HoldCo sell-down progress. It's been 10 months since you sanctioned the project. At the recent Capital Markets Day, Meg said that the initial 10% tranche sale had sent a message to other interested parties that they needed to move quickly if they wanted to participate. Just wondering how comfortable you are where the sell-down process is at. The Stonepeak carry largely runs out at the end of this year. So how confident are you that you will be able to complete your sell-downs in the first half of this year? Elizabeth Westcott: Yes. Thank you. Look, we are very happy with how the process is going on the sell-down for Louisiana LNG. In a short amount of time, as you noted, we've brought in Stonepeak on the infrastructure side, and we've got Williams at the HoldCo level. And we continue to target up to another 20% of HoldCo sell-down. Importantly, these transactions with Stonepeak and Williams have reduced the capital commitment for Woodside to $9.9 billion or 57% of the total CapEx. And it's really solved the infrastructure and pipeline capital spend, which is positioning us well for other partners. As you noted, Stonepeak's contribution is 75% of the capital in 2025 and 2026, and this structure has really allowed us to reduce our capital requirement ahead of full year of revenue from Scarborough in '27. And so there really has been no change in our process or momentum, but we are taking a disciplined approach. We are very committed to getting value over speed with our continued sell-downs. We do have strong interest from counterparties. We are looking for strategic partners that complement the skills and experiences of Woodside and that value long-term relationships. And I'm very pleased with the interest that we continue to have in this. Graham Tiver: I think, Nik -- it's Graham as well. It's probably worthwhile adding as well that where the balance sheet is, gearing well within the range, $9.3 billion in liquidity, we have time to ensure, as Liz said, that we find the right partner for the long term and at the right value, very similar to what we did for Scarborough, but encouraged by progress. Nik Burns: Great. Maybe another one for you, Graham. Just on Slide 23, you titled there delivering consistent reliable returns. Certainly, the payout ratio has been consistent for the last few years, but obviously, the absolute dividend has tracked underlying NPAT lower. I don't know how much you've looked at 2026, where consensus is, but the full year consensus dividend is just $0.55 a share and 80% payout, which is obviously less than the final dividend just announced here. I appreciate what can happen through the year. But I was wondering if you could provide some observations on where consensus sits at the moment. And hypothetically, if we do turn out to be right for a change, are you comfortable with this level of dividend in '26? Or would you see this additional flexibility for the company to potentially top up the dividend, say, if you complete the sell-down of additional equity at Louisiana LNG HoldCo? Graham Tiver: Thanks, Nik. Yes, you will know from our capital management framework that we do have that flexibility through the framework to be able to look at things like special dividends or buybacks. But what I would say, first and foremost, is that 2026 is very much a transition year. We have the major Pluto turnaround, which we do every 3 or 4 years. And then a part of that is doing the tie-ins relating to Scarborough. And then we also have Scarborough coming online in Q4 and delivering the first cargo. So look, I think there's some critical work that has to happen, and we'll see how work progresses through the year, and we can start to narrow that range on production. We'll also have a look at what prices are doing. We'll have a look at how Sangomar and the rest of the business is performing, and then we'll determine where we're at. But certainly, the capital management framework allows for it, but first and foremost is we need to guide through 2026, where it is a big year for us. We have a lot to do, and we'll continue to update you through the quarterlies on that. Operator: Your next question comes from Rob Koh with MS. Robert Koh: May I ask for some color on decommissioning activities this year and, in particular, I guess, Bass Strait platform removal and where that sits in the timing, if it's not this year or where is it over the next few years? Elizabeth Westcott: Yes. Thanks, Rob. Decommissioning activities, it's an important part of our portfolio. In 2025, we achieved some good highlights there. We importantly completed all the drilling and abandonment -- sorry, the production and abandonment of our wells across our closed facilities at Stybarrow, Griffin and Minerva, and we completed the infield program. And so our results include good progress on these legacy closed assets. Moving forward, we've guided that we'll be in that range of $500 million to $800 million of expenditure in 2026. And Bass Strait is going to be the major campaign coming forward with platform removals targeted for 2027. And so work will continue on decommissioning, but it is now part of the everyday business of Woodside in Australia. Robert Koh: Second question, just wondering if you can give us a sense, with your unit production costs, obviously, good performance there in 2025, but the composition of costs changing slightly with Beaumont coming in. Can you give us -- and my understanding is that the processing costs there don't necessarily fall into your unit production costs. Could you perhaps just give us a sense of how you're thinking about the overall cost structure of the business this year? Elizabeth Westcott: Yes. Maybe I'll kick off with that question, Rob, and then pass across to Graham. The operating assets continue to have cost efficiency focuses year-on-year. And as we saw in our results in 2025, we had an outstanding outcome, both in absolute costs and in unit costs. 2026 has the Pluto turnaround. So this will impact not just the production outlook for the year, but it also comes with costs. And so we will see, in 2026, increased costs at the Pluto asset. As we start to bring on Scarborough, we will have a new asset, and so that comes with additional costs. Beaumont New Ammonia will feature in 2026, as that asset continues to come up online. And we have made the distinction between production costs where we have our existing assets running facilities with upstream facilities to the costs associated with either tolling or feedstock at Beaumont New Ammonia. And so these will be separate line items that we'll be guiding you on during the course of the year. Graham Tiver: No, I think Liz captured it well. I think if anything, Rob, we're trying to increase transparency on the costs of the business going forward. As Liz touched on production, that is more about our traditional business -- production costs, more about our traditional business and very much around what we control and getting down to operational cost efficiencies, et cetera. And then as with the new line that we've provided for 2026 guidance on as a part of the Q4 production report, feed gas services and processing costs, that's including Beaumont New Ammonia and some of the tolling and feed gas processing costs. So there will be good transparency in our line items, and you'll be able to see that flow through, and it started with the guidance for FY '26. Operator: Our next question comes from Saul Kavonic with MST. Saul Kavonic: The first question, Liz, could you give us perhaps a steer on your thinking where -- hopefully, we see sell-downs sooner than later. But in the event that sell-downs take a bit longer, do you see our sell-downs being a precondition to sanctioning Trains 4 and 5 at Louisiana? Or would you -- if sell-downs haven't happened yet, would you prefer to go ahead with Train 4 and 5 anyway, because it's more optimal from a cost of development perspective? How do you lean in your thinking between those two options? Elizabeth Westcott: Yes. Thanks, Saul, for the question. Trains 4 and 5 are a great opportunity for Woodside. They would be a highly advantaged development for us, because they're able to take the benefits of the installed infrastructure that Trains 1, 2 and 3 already have. Importantly, the site where we're installing Louisiana LNG has all the permits in place to enable 2 additional trains and FEED was completed. So we have a lot of a head start on Trains 4 and 5. But as you referenced, the important feature for us, particularly in 2026, is getting further sell-down in the HoldCo level for Trains 1, 2 and 3. And the foundation partners of Stonepeak and Williams, they've got opportunity to participate in expansion if that's something that is progressing. But our focus does continue to be on HoldCo sell-down of Trains 1, 2 and 3. I think it's also worth noting that we have a number of opportunities to do additional developments on our assets. We talked to Trains 4 and 5. And in Capital Markets Day, we showed the benefit of expansion in 4 and 5 in terms of our sales volume growth and our cash flow benefit. We also have additional opportunities that we'll be competing with Trains 4 and 5 for capital. So we'll be very disciplined around our assessment of where to invest further. The capital allocation framework remains unchanged, as Graham mentioned, and all our investments will need to be assessed against that. And then they will actually need to compete with each other for capital going forward. Saul Kavonic: Second question on Scarborough. You've got the floater on site now. You're giving, I think, about a 9-plus month window into your first cargo. That's double the length of time, for example, that Santos targeted for Barossa. Can you give us some color as to why that time is so lengthy and what your level of confidence is on Scarborough starting in September versus first cargo out just after Christmas? Elizabeth Westcott: Thank you. Yes, Scarborough Energy project at year-end was 94% complete, as you noted. And we continue to be on track for that fourth quarter cargo, the first cargo. Let me help you understand what's ahead of us, though. Offshore, we need to complete the installation of the floating production unit, and we need to pull in the risers and the umbilical. Then we need to go through a process of dewatering subsea equipment, and then we complete the commissioning of the topsides. And then that allows us to start opening up the wells and flowing hydrocarbons and pressuring the trunk line. And I think importantly, these offshore activities are subject to weather conditions. And so there is variation in the assumptions on how long all of this will take. Onshore, though, we need to complete construction and commissioning activities at Pluto Train 2. And once we have the gas from Scarborough, we then go through a process of start-up activities, working from the front to the back of the train, you go through cooling down of the systems and then achieving steady-state operation. We are absolutely laser-like focused on delivery of this project. And so we are confident in our ability to meet our fourth quarter 2026 delivery. Operator: Your next question comes from Dale Koenders from Barrenjoey. Dale Koenders: I was hoping -- maybe it's a question for Graham, you could help us understand what the contracting status is for Beaumont in terms of gas supply and ammonia, what prices they're exposed to if this is spot? And with the ramp-up of the project, how you think that earnings growth will come through over the next 12 or 18 months? Elizabeth Westcott: Yes. Thanks, Dale. Look, I might kick off and then I'll pass across to Graham. So the Beaumont New Ammonia project, we achieved first ammonia, as we highlighted, in December 2025, and we're in a process of ramping up the full capacity of that facility. OCI continue to be the operator of Beaumont until we reach the performance conditions, and they'll pass that facility across to Woodside targeted for the first half of this year. And then as we move into 2026, we'll be progressively moving to a lower carbon opportunity as we get the facilities from Linde up and running and the CCS project that ExxonMobil is doing will commence operations. Regarding supply, the supply of both nitrogen and hydrogen is done by others supporting the project. Our investment in Ammonia was the ammonia element of the project. And so we are reliant on upstream suppliers meeting their obligations to supply the facility. And so those contracts continue to operate through 2026, and we look forward to ramping up the facility going forward. In terms of offtake, we have seen genuine interest in the ammonia products, both the conventional gray ammonia as well as the lower carbon ammonia. And so we continue to layer contracts and commitments with customers as the facility continues to ramp up its production. Graham Tiver: Yes. And I think all I would add is the approach the marketing team and B&A team are taking is we want that flexibility through ramping up to full production. And I think the way the team are layering in contracts is good. We have a good fair share of the volumes locked away, mostly domestically. And it's worthwhile noting, it could change tomorrow, Dale, but the domestic prices in the U.S. for ammonia at the moment are over $600 a tonne. So we are coming online in a healthy environment at this point in time. Dale Koenders: Yes. I guess the question is, you've previously said that the project would be earnings accretive when you get to the clean ammonia stage. But given that real strength in pricing domestically, it seems like you might actually see earnings contribution sooner. Graham Tiver: Yes. Look, it will come down to the startup, the ramp-up and how it progresses. But yes, I would like to think from a cash cost perspective, we should be in a favorable position. But there's a lot of water to pass under the bridge. There's a lot of work to do as we ultimately take control or operatorship and then start to ramp up. But it's a healthy market. Yes, I'd love to be in a position to report back on these results in a year's time talking about how well it's performing and the cash flow it's generating. But this first year, there's a lot of things we need to work through. Operator: Your next question comes from Tom Allen with UBS. Tom Allen: Sort of big bet on tax today despite the guidance released in January. But looking into '26, we expect a step-up in petroleum resource rent tax with Scarborough coming online. I was hoping you could provide some commentary on how we should be scoping that lift in PRRT into '26 and '27 relative to '25. And if you could clarify some of the key uncertainties that might dictate where PRRT lands? Graham Tiver: Yes. I can take that, Tom. Look, I think before I answer your question, it's worthwhile calling out that, as we mentioned in our results, our all-in effective tax rate globally was 45%. And also for Australia, it was 44%. PRRT is only one component of the taxes we pay from our business in Australia. In 2023, '24, the ATO noted that we were Australia's largest PRRT payer, and we're the eighth largest corporate taxpayer. So look, I just want to give a little bit of context and background to what we do pay. It's more than just PRRT. North West Shelf alone through its royalties and excise has paid $40 billion at 100% since its inception. So it's only one component of a broader basket of taxes that we pay, which brings our all-in effective underlying tax rate in Australia of 44%. So I just wanted to put that first, Tom, so you could hear that loud and clear. In terms of PRRT, it is a broad calculation. It relies a lot on prices. But in theory, with what you're saying, with Scarborough coming online and the changes in the PRRT legislation back in '24, yes, Scarborough will be paying PRRT, and that should increase the overall amount of PRRT we're paying. But as I said, a lot of it relies on the pricing that we're incurring. The higher the prices, the more PRRT we pay. So there's a lot of moving variables. But all up, we pay our fair share of tax in Australia at 44% all in. Tom Allen: Thanks, Graham. That came through loud and clear on the tax contribution. I'm sure the journos heard too. But just to follow that, are you able to provide some sort of guide just on the year-on-year movement in PRRT. It's obviously difficult to forecast, but it becomes an important part of getting our underlying NPAT and dividend outlook right. Any type of quantitative guidance you can share on where that might move over the next couple of years, on your planning assumptions? Graham Tiver: We haven't put anything out on that, Tom. So I prefer not to say at this point in time just on the basis that there's so many moving parts. As we have a greater line of sight on the ramp-up of Scarborough, we'll provide more insight to PRRT. Tom Allen: That's helpful. Last comment for me was just the North West Shelf joint venture continues to be reshaped. We're reading that Shell now, following Chevron over 12 months ago, seeking an exit from that joint venture. Can you comment on the indicative CapEx key activities that Woodside intend to progress around backfill for the joint venture and in particular, Browse over the next couple of years? Elizabeth Westcott: Yes. Thanks, Tom. Yes, as you know, Shell has shared that they're looking to take an offtake for their equity in the North West Shelf. So we say across that. The North West Shelf joint venture, though, continues to be interested in taking third-party gas. It's important to note that it already is doing that, the Karratha Gas Plant. It processes gas through the Pluto interconnector for the Pluto joint venture. It also processes gas from Waitsia. And so it's demonstrated its capability at processing third-party gas. And really, the opportunity is to see where Browse could be processed through the Karratha Gas Plant. The Browse joint venture remains committed with 3 very important activities needed before progression can be seen. We need to ensure that we have an investable project and that the concept continues to be refined to enable that. We need to have commercial agreements in place between the Browse joint venture and the North West Shelf joint venture, which continue to be worked, and we need environmental approvals. And so the Browse project is very committed to progressing each of those work streams, and that will then enable work to progress, and we can see whether the Karratha Gas Plant will be the solution for Browse. Operator: The next question is from Gordon Ramsay with RBC Capital Markets. Gordon Ramsay: I got another question on Beaumont New Ammonia. Just trying to understand how you move forward with Phase 2 in that project and how dependent you are on signing up contracts for clean ammonia sales if there's not legislation globally to encourage that. What are the key factors that will move that project forward? I know, Liz, you mentioned, obviously, the carbon sequestration by ExxonMobil and hydrogen and nitrogen supplies are obviously critical. But assuming they're there, is there a potential for this project to slow down if you aren't going to be able to sell the ammonia at a premium price because it's classified as low carbon or clean ammonia? Elizabeth Westcott: Yes. Thanks, Gordon. As you highlight, look, our focus at the moment is on the Phase 1 of the project and building out not only the production from the facility, but understanding the customer appetite for lower carbon ammonia. We're targeting 3 key regions for our customers. We're looking at the U.S. domestic market. We're looking at Europe and Asia Pacific. And it's fair to say that while there's interest in lower carbon ammonia, the uptake in demand is slower than we had forecast. And so we remain attuned to where customers are at in their desire for lower carbon ammonia. That's going to be an important part in playing into the timing of a Phase 2 development at Beaumont itself. So we have a really great opportunity to be able to expand that facility. It will be able to take advantage of all the installed capital to date. And so it will be advantaged economically as a project, but it absolutely needs to have a customer market for it. And so that's something that we'll continue to keep a watch on. And it will need to meet our capital allocation framework. So we're going to be very disciplined with what we progress. Gordon Ramsay: Okay. And my second question relates to, I think when you were discussing Slide 8, you mentioned there was going to be dry dock maintenance of some of the Australian oil assets. Can you provide a bit more detail on what that involves? Elizabeth Westcott: Yes. So all of our assets undertake periodic turnarounds. And for FPSOs, that often involves a dry dock. And so we do have 2 of our assets going for dry dock this year. It's on a sort of 5-year type cycle that they do. And so that's something that's normal course of business for us, just like it is to have turnarounds at our LNG facilities. And yes, the teams are well progressed for that. And that just features in our production outlook for the year. Gordon Ramsay: Can you mention the assets in the downtime. Is that possible? Elizabeth Westcott: Look, I think we'll get the team maybe to follow up offline with you on details like that, but it's just a normal part of our maintenance program for the year. Operator: Your next question comes from Henry Meyer with Goldman Sachs. Henry Meyer: Firstly, on production, guidance for the year implies quite a steep decline in oil production. I'm guessing that's primarily from Sangomar as it comes off plateau, which is normal. But it's obviously a function of lots of different variables. So hoping you could step through what the annual decline rate you're expecting at Sangomar is for this year and maybe the next few years before it tapers off to 10%, 15%, let's say? Elizabeth Westcott: Yes. Thanks, Henry, for that question. As you noted, there are a lot of different variables that go into the guidance for 2026, and for the liquids production. It's important to note, there isn't a particular target range. We've got a range, sorry, rather than a single point outlook here. And there's a number of little factors. I'll give you a sense of them. We do have natural field decline across both our Australia assets as well as our Gulf of America assets. And so that's built into the outlooks. We also have the Julimar-Brunello transaction occurring, which is built in the FPSO maintenance program that we just spoke about. So they're all built in. The Pluto turnaround is also built in into liquids outlooks. We had the divestment in Angostura and then we have Sangomar. So Sangomar has done fantastically well with sitting on plateau for the bulk of 2025, and it is now commencing decline. And so a variable for us is understanding that decline curve, as you're asking. And so we've made our best assessment, but we'll continue to guide during the course of 2026 as we understand how Sangomar performs. Graham Tiver: And I think as we touched on earlier in the call, Henry, the 3 key drivers for us this year in terms of overall production performance and business performance is the Pluto turnaround, it's Scarborough coming online in that first cargo in the fourth quarter, and then it's the Sangomar reservoir performance. And as Liz touched on, it has come off plateau, but it continues to perform very, very well. But we'll keep you updated through the quarterly production reports on how that's progressing. Henry Meyer: Okay. And maybe a follow-up on the guidance for the services and processing costs for the year, which is good to get that transparency. Could you split that down to a few different components, if possible, particularly how much of that tolling cost should be Scarborough gas going through Pluto that we can expect in the second half and then ramping up in '27 as we hit capacity? Graham Tiver: Yes. So we haven't provided that exact breakdown at this point in time, Henry. As I said, there's a lot of moving variables. But obviously, the core components are your B&A operating costs, including the gas purchases, et cetera. And then it will include the tolls for Scarborough, which is really the fourth quarter. So you can sort of draw a few dots together and a lot of that will relate to Beaumont New Ammonia. But as we have more insight to ramp-up and how Scarborough is progressing as well, we can provide more clarity on that over time. Operator: The next question comes from Tom Wallington with Citi. Tom Wallington: Just on the Marketing division performance, we saw margins soften through second half on higher trading activity, and noting that the segment contributed around 8% of group level EBIT for the year driven by a stronger first half performance, I was hoping that you could perhaps clarify some of the reasons behind this margin compression. And I guess, to what extent this was driven by tighter JKM and Henry Hub spreads, or if there were potentially fewer arbitrage opportunities or any portfolio mix factors to have been considered? Elizabeth Westcott: Yes. Thanks for your question, Tom. As we sort of highlighted in our opening presentation, marketing continues to be a very important part of the value equation for Woodside, and it's consistently contributed around 10% of our earnings before income (sic) [ interest ] and tax for the last 3 years. And that's no change. However, we do see some quarter-to-quarter volatility, and we will see movement in certain line items depending on our optimization strategy. So in third quarter, for example, we had an opportunity with timing of produced equity cargoes where we're able to purchase a third-party cargo at gas hub prices and deliver it into a crude-linked contract. The way this turns out in the accounts can make it harder to see some of these benefits, but we are very committed to understanding the benefit marketing brings to us, and we're very comfortable that we continue to see great uplift from the marketing activities. Tom Wallington: Yes. Great. And I guess just to lead into -- so I'm trying to get a gauge for how we should think about these margins through the cycle, obviously, given the context of Louisiana LNG and Woodside's trading and optimization capabilities as being a key lever that it can pull in terms of getting to that 30% internal rate of return. Is there any further confidence or guide that you can give us that might see sort of some uplift or support from this particular segment? Elizabeth Westcott: Yes. Thanks, Tom. Look, marketing is going to continue to be very important to us. But I think the best guidance we can give you is this contribution of 10% EBIT year-on-year. And our 3-year track record demonstrates that, that's something we achieve. I think where we sit today, that's going to be the best guidance for you. Operator: Your next question comes from Baden Moore with CITIC CLSA. Baden Moore: Just on the hedging component that you talked to, I think it was 16 million barrels (sic) [ 18 million barrels ] in '26. Just wondering what metric you're targeting through that kind of program? Is there a credit metric or -- just struggling to understand why -- what value that's getting you? And whether you -- how do we think about whether you roll that forward -- would you target to roll that forward into '27 is my first question. And then second question, just it's been a bit in the press on the CEO succession, obviously. Just wondering if there's any updates on timing for that process. Graham Tiver: Okay. I'll take the hedging. I'll leave the second one to Liz. But yes, look, it's a good question, Baden. And let's be very clear, we don't hedge to take a crystal ball on where prices will be. We very much hedge from a defensive perspective in the context of a heavy capital period for us. Over the last few years, we've hedged around the 30 million barrels, and that provides a baseload certainty on cash flows for us, and that allows us, in very simple language, to be able to pay our bills. And so we're not trying to second guess or take a position on oil prices. We're just trying to lock in a certain stream or flow of cash flows for the business. Where our business sits, it's unlikely you'll see us hedge on a forward curve below $70. But anything above $70, we will look at that. As I've said, we've got a past history of going up to 30 million barrels, but we'll just wait and see what the forward curve looks like. But it's very much defensive and it's about securing and locking in a certain volume of cash, if you want to call it. Elizabeth Westcott: All right. Moving to your next question, CEO succession. I just want to acknowledge that the appointment of the CEO is a very important activity, and I know everyone is very interested in the outcome. But I want to reinforce that what I'm interested in and what I know is very important, along with the rest of the executive leadership team, is that we continue to execute against our strategy and deliver shareholder value through our disciplined decision-making and our operational excellence. As we outlined in Capital Markets Day, we have a lot of priorities for 2026, and they're very clear. We need to have safe and efficient operations. We have a lot of projects that we will be executing, and our focus continues to be on the strategy that we shared at the end of 2025. So the Chair has made it clear that the Board is assessing a number of internal candidates and external talent and that they intend to make an announcement in the first quarter of 2026. So we'll all wait to see that. Operator: Your next question comes from Sarah Kerr with Argonaut. Sarah Kerr: Just my first question is starting in the U.S. So we start the year with a total war for gas demand between LNG facilities and domestic demand, and we're seeing an ever-increasing demand coming from utilities, especially with more and more data centers being more and more power hungry. I was just wondering how do you see Louisiana LNG in that landscape? And does that give you confidence in the market, I guess, going forward that you can get feedstock at a reasonable price? Elizabeth Westcott: Thank you for the question. Look, the Louisiana LNG project is ideally situated to benefit from the supply in the U.S. We have a very large opportunity with domestic supply in the U.S., notwithstanding the interest from data centers and others in accessing domestic gas, more than 1.1 trillion cubic feet of gas that is available to LNG projects and others to use. We have a lot of transport infrastructure that we've already committed the foundation requirements we need with pipeline options, and we've got a foundational contract with BP for supply. So we're confident that our project will be able to access the gas it needs going forward. And we continue to see opportunity as an LNG producer to be able to access gas. Sarah Kerr: And just a quick question in Australia. So looking at Bass Strait, obviously seeing a renewed exploration phase going through in offshore there. We're seeing some discoveries as well. There's also some fantastic projects that smaller developers have close to Woodside's infrastructure. Just wondering, is Woodside looking at doing more of your own organic backfill or looking to possibly tie in and partner with the small developers? Elizabeth Westcott: Yes. Bass Strait supplies approximately 40% of the East Coast gas demand, and there's been a real backstay of the East Coast gas market over decades, and we'll be taking operatorship from ExxonMobil in the middle of 2026. As part of that decision and as operator, we've identified 4 potential development wells that we believe could be progressed to deliver up to 200 petajoules of sales gas to the market. And so we'll be taking those through the technical development phases as we take over operatorship. And so we continue to be interested in available development for the Bass Strait and look forward to being the operator going forward. Sarah Kerr: Thank you very much. Elizabeth Westcott: Now I might recognize the time here and call the end to questions. Thank you, everybody, for listening in and participating today. Just a reminder, we will be hosting our sustainability investor briefing on the 16th of March, which I invite you all to join. And I look forward to speaking with you at other upcoming events. Thank you.

82天前Insight Analytics约5分钟阅读

LLC.AX 2026 Q2 财报电话会议

Anthony Lombardo: Good morning, and thank you for joining the Lendlease 2026 Half Year Results Presentation. I'm Tony Lombardo, Group Chief Executive Officer and Managing Director of Lendlease. With me is Simon Dixon, Group Chief Financial Officer. Sitting here at Barangaroo in Sydney, we're on the land of the Gadigal people, and I extend my respects to their elders past and present. Today, I'll provide an overview of our half year 2026 results. Simon will talk through the financials, and I will then cover the outlook and strategy. We'll then open for questions. Starting on Slide 4. FY '26 is a transitional year for Lendlease as the strategy reset announced in May 2024 continues to be executed. There are 3 core components of the strategy that I want to highlight today. The group is being repositioned to focus on our market-leading Australian operations and international investments platform, reported as Investments Development and Construction, or IDC. These businesses have historically delivered double-digit returns on equity through the cycle and continue to show strong operating momentum. The other core element of our strategy was the establishment of the Capital Release Unit, or CRU, to facilitate the recycling of capital from underperforming or non-core parts of the group. At the May 2024 strategy update, we announced that $2.8 billion of CRU assets were on the market alongside a further $1.7 billion of CRU assets identified as being available for sale. We have now announced or completed the exit of $2.8 billion of CRU assets. In addition, we've made strong progress with advancing the remaining asset pool with a further $1.5 billion of assets targeted for the second half. In May 2024, we also announced our intent to launch a securities buyback subject to specified preconditions. The main outstanding condition is achieving a clear contractual visibility to a sustainable underlying gearing level of 15%. In the first half, we've increased that contractual visibility through the signing of the announced TRX transaction and are progressing the satisfaction of conditions precedent for both the joint venture with the Crown Estate and the sale of our TRX interest. The divestment process for Keyton Retirement Living, the U.K. build-to-rent assets and the recapitalization of APPF Retail are all now in exclusivity. Capital recycling initiatives for our Victoria Cross investment and many other assets are also underway. We are targeting the completion of $3 billion in announced and active transactions in the second half of 2026 across both IDC operations and CRU. The 15% gearing threshold is assessed on a forward-looking basis and requires a degree of contractual certainty on the receipt of sale proceeds translating into net debt reduction. As that certainty increases, we should be in a position to commence the buyback. The group maintains a strong financial position with $3.3 billion of liquidity and flexibility provided by the recent hybrid issuances. This position enables us to take a measured approach to capital recycling. Turning now to Slide 5 and our half year financial performance. As anticipated, with limited completions in development and lower transaction earnings in investments, the IDC segment EBITDA of $204 million was down from $341 million with an improved performance from the Construction segment being a highlight. Moving to CRU. As we have stated, the segment's primary purpose is capital recycling with $500 million of further progress made in the period. At the group level, a statutory loss for the half of $318 million was recorded, including $118 million of noncash negative investment property revaluation and impairments, primarily in the U.S., U.K. and Singapore. The group operating loss after tax of $200 million included a positive $87 million contribution from IDC and a loss of $287 million from CRU. The CRU operating loss included a $95 million write-down of community land parcels as previously flagged last calendar year, and that is after tax, $95 million, and a further $44 million provision in relation to tail risks in the exited international construction businesses. Reported statutory gearing was 25.8%, benefiting from the hybrid issuance. The group continues to target underlying gearing of 15% by the end of FY '26 subject to the completion of targeted recycling initiatives across both CRU and IDC. Simon will talk to our balance sheet position and capital management later in the presentation. Our Investment segment earnings highlighted on Slide 7 are derived from funds under management and contributions from our directly held co-investment portfolio. Our team's focus is on performance, liquidity and growth to drive positive outcomes for our investors. Funds under management was stable at $48.7 billion and included $1.5 billion of additions. The group held $2.9 billion of co-investment capital at the half. We continue to actively manage this position to support an appropriate balance between capital alignment and our role as manager of third-party capital. Portfolio movements in the period included increasing our investment in the APPF Industrial Fund and downweighting ownership in LREIT. The co-investment portfolio remains well diversified with a primary weighting to workplace and retail assets. The co-investment yield driven by underlying asset performance remained consistent with a gross yield of 4.4%. Our investments platform continues to grow with more than 80 investors. We have $2.8 billion of capital available to deploy across existing mandates. And we have $4.7 billion of capital being raised for a Japan value-add mandate, a new Australian private credit partnership and existing funds and develop to call product. We remain highly active in the market, completing $4.4 billion of gross property transactions across our investment platform in the period. Turning to development on Slide 8. There were $1.3 billion of development completions this half, including Victoria Cross in North Sydney. Across our residential business, gross apartment presales increased to $3.3 billion with settlements weighted to FY '27, expected to deliver gross cash proceeds to Lendlease of circa $1 billion. We've made strong progress growing the Australian development pipeline with more than $4.7 billion of new projects secured in the half, and we remain well positioned to achieve our $10 billion target for this financial year. Sydney Metro Hunter Street West Over Station development was secured as was the luxury residential project 175 Liverpool Street in Sydney, alongside existing partners, Mitsubishi Estate Asia and Nippon Steel Kowa Real Estate. We are focused on unlocking $12 billion of future development opportunities from balance sheet holdings at the RNA Showgrounds in Brisbane and our Roselle Bay site in Sydney. We currently have 2 residential opportunities that we are pursuing in Melbourne, representing a further $4 billion of project and value. In the half, we secured a role as Master Development Manager for C Capital for the rezoning of land in Victoria for industrial use, leveraging Lendlease's development planning capabilities. Lendlease expects to earn new development management fee streams with rezoning targeted by FY '28. Lendlease has the option to secure all or part of the industrial land post rezoning, which is expected to have an end value of around $4.5 billion. Our origination efforts remain focused in Australia, deploying a capital-light joint venture partnering model. Together with our strong liquidity position, this enables us to remain well capitalized to pursue new development opportunities as we continue to replenish the development pipeline. Moving now to the Construction segment on Slide 9. Revenue growth for the half was strong, up 22%, driven by new project commencements such as the new Melton Hospital and multiple data center projects. Disciplined project execution saw an EBITDA margin of 3.7% recorded for the half. There was $4 billion of new work secured, another very strong result led by the Hunter Street West Over Station development contract following $3.8 billion secured in the prior period. New wins contributed to a strong Australian backlog revenue position of $8 billion, up 36% on FY '25, with an existing social infrastructure and defense backlog. We continue to pursue and win high-quality work with an additional $9 billion of active bids underway, including major transport, social infrastructure and data center projects. This backlog revenue, together with a preferred work book of $6.9 billion places the business in a strong position to increase its future revenues and earnings with circa $15 billion of secured and preferred work. Before I hand over to Simon, I'd like to make a few remarks. Today's financial result will be Simon's last for Lendlease, with Simon finishing in his role as Group Chief Financial Officer at the end of February as he relocates to Asia. I'd like to take this opportunity to thank him for his dedication and contribution to the organization and wish him every success in his future endeavors. I would also like to welcome Andrew Nieland into the role from the 1st of March. I look forward to working with him in his new capacity. I'll now hand over to Simon to talk through the financials. Simon Collier Dixon: Thanks, Tony, for your kind words, and good morning, everyone. I'd like to acknowledge what a privilege it has been to spend the last 4.5 years working at Lendlease. I firmly believe the strategy that we have in place is the right strategy for the benefit of our security holders, customers and our people, and I wish the team every success in continuing to execute it. Starting with the group's financial performance on Slide 11. As Tony mentioned earlier, limited completions in development and lower transaction earnings in investments led to a lower IDC segment EBITDA of $204 million, down from $341 million with an improved performance from construction. In Investments, segment EBITDA of $101 million reflected a stable underlying operating performance with the prior period including transaction earnings associated with the formation of the Vita Partners joint venture of $129 million. In Development, segment EBITDA of $34 million reflected the timing of major completions with the prior period including $118 million from Residences Two, One Sydney Harbour. In Construction, segment EBITDA of $69 million was driven by 22% higher revenues and improved project performance. The CRU segment reported an EBITDA loss of $284 million, down from a prior period gain of $34 million, reflecting previously mentioned noncash write-downs and provisions and the limited completion of capital recycling transactions. Group corporate costs decreased 4% to $55 million, reflecting cost savings from downsizing and productivity improvements, partially offset by elevated costs of finance transformation. Operating EBITDA fell to a loss of $135 million compared with a gain of $318 million in the prior period. Depreciation and amortization reduced materially as IT amortization wound down and tenancies were exited following the simplification of the group. Net finance costs decreased to $85 million, reflecting a lower average cost of debt and lower average net debt levels. The group recorded an OPAT loss of $200 million compared to a gain of $122 million in the prior period. This includes an $87 million positive contribution from IDC operations, representing $0.126 per security. Moving to a summary of segment performance on Slide 12, beginning with the Investment segment. The segment performance was stable across key measures. Total EBITDA of $101 million reflected a stable underlying performance. Management EBITDA from funds management activities reduced modestly to $48 million, reflecting lower fees and margins in Australia, offset by a stronger performance in Asia. Management EBITDA margin of 40.7% reduced from the prior period, although was comparable to FY '25's full year margin of 40.6%. Co-investment EBITDA of $42 million was lower due to a lower level of co-investment as a result of asset divestments and recapitalizations. In the Development segment, a return on invested capital of 3.2% was achieved as there were limited completions in FY '26 to date as anticipated. Capital was also transferred to the segment from CRU in the period in relation to the announced development joint venture with the Crown Estate and the Comcentre project in Singapore, which is a joint venture with Singtel and along with production capital spend during the period resulted in a $1 billion increase in the development capital balance to $2.1 billion. In the Construction segment, revenue increased by 22% on the prior period, reflecting a higher level of project activity, including commencement of the New Melton Hospital and a number of data center projects. EBITDA increased to $69 million. The segment achieved an EBITDA margin of 3.7%, demonstrating continued strong performance from the second half of FY '25. Turning now to Slide 13. The primary role of the Capital Release Unit is to accelerate the release of capital. To date, we've completed or announced $2.8 billion of CRU capital recycling initiatives, including $500 million of new asset sales this half. CRU recorded an EBITDA loss of $284 million, which included the write-down of Communities development land of $136 million pretax, provisions taken in relation to tail risks in the exited international construction businesses of $44 million and the underlying cost base, which includes people costs, IT costs, legal costs, insurance and other overhead. The segment loss for the period compares to first half FY '25 gain of $34 million that included profits on capital recycling and land sales of $160 million that were not repeated this half. The CRU cost base is expected to reduce progressively as capital recycling completes and retained risks are resolved, although it is expected to remain elevated in the second half of FY '26. As we complete the remaining CRU initiatives, the release of capital will be a key enabler for our capital management priorities. This includes further reducing gearing, returning capital to security holders and creating capacity for disciplined reinvestment in accordance with our capital allocation framework. Moving now to Slide 14, which highlights our cost savings achievements. Net overheads reduced $58 million to $197 million, a run rate of below $400 million. This reflects the full run rate benefit of FY '25 cost savings and the early impact from further cost initiatives actioned in FY '26. In the half, we actioned pretax run rate savings of $21 million with further cost savings to be actioned by the end of FY '26. The full benefit of our $50 million in savings target is expected to be realized in FY '27 with a targeted exit run rate for overheads of circa $350 million at the end of FY '26. This will be achieved through the completion of asset divestments and productivity initiatives, including the removal of technology costs. Turning now to net debt on Slide 15. We have provided a walk summarizing key cash flows for the period, rounded to the nearest $100 million and outline the key cash inflows and outflows for each of the IDC segments and CRU segment. Reported net debt, excluding capital from hybrid securities, closed the period at $3.3 billion. Net debt is anticipated to reduce in FY '26 due to $3 billion of CRU and IDC transactions that are announced and underway. These include the targeted completion of announced TRX and The Crown Estate transactions. Transactions under exclusivity for Keyton Retirement Living, U.K. build-to-rent assets and the recapitalization of our APPF retail fund and capital recycling on Victoria Cross Tower. Offsetting these inflows across CRU and IDC are expected net production spend, interest costs, corporate costs and other. Achievement of our group gearing target of 15% by the end of FY '26 is subject to successful completion of these outlined initiatives this year. Turning now to Slide 16, covering group debt and liquidity. Half year '26 reported gearing was 25.8%, including the benefit of hybrid issuance in the half. Excluding this benefit, underlying group gearing was 32.9%. The group maintained strong available liquidity of $3.3 billion, comprising $2.7 billion of committed available undrawn debt and $600 million of cash and cash equivalents, providing balance sheet flexibility as further capital recycling is progressed. Debt maturities are well balanced with an average maturity of 2.5 years. Maintaining our investment-grade credit ratings remains a priority. I'll now hand back to Tony. Anthony Lombardo: Moving now to Slide 18, the FY '26 financial outlook. FY '26 remains a transitional year with IDC earnings guidance maintained at $0.28 to $0.34 per security. The second half of earnings for IDC is expected to be stronger than the first half, supported by a similar underlying performance and anticipated transactional profits. IDC earnings are expected to further recover in FY '27, supported by major development completions, a strong construction pipeline and growth initiatives across investments. As transactions complete, CRU earnings volatility and associated financing costs are expected to reduce progressively, supporting the strengthening of the balance sheet. As such, no guidance has been provided for CRU earnings per security in FY '26 as the segment's focus remains accelerating capital recycling while balancing value realization and speed of execution for security holders. We are well progressed on our capital recycling initiatives and are targeting a total of $2 billion of CRU capital recycling in FY '26. Additionally, the group's strong liquidity position enables us to balance executing our recycling program with realizing value for security holders. Underlying group gearing is targeted to reduce to 15% by the end of FY '26, subject to the completion of our capital recycling initiatives. On costs, we are targeting an exit run rate of $350 million at the end of FY '26, reflecting $50 million of targeted cost-saving initiatives to be actioned throughout FY '26. Our current priorities remain strengthening our balance sheet, returning capital to security holders and importantly, redeploying capital for future growth in earnings in our IDC segment. Moving to Slide 19 and our medium-term growth and earnings profile from FY '27 onwards. In Investments, we expect to see management EBITDA margins above 40% in FY '27 and growing towards 50% by FY '30. We anticipate average FUM growth of 8% to 10% annually through the cycle, delivering scale benefits across the platform. We currently have $2.8 billion of available capital to deploy in the near term. We are raising more than $4.7 billion of further capital, supporting FUM and future earnings growth. Investor demand remains strong in a number of our key markets and sectors, including our core funds and mandates, where we have demonstrated capabilities and a proven track record, allowing Lendlease to deliver differentiated investment products. In Development, we're looking to secure more than $5 billion of development projects in the second half of FY '26 to achieve our $10 billion-plus target. We expect this momentum to continue with $4 billion of origination targeted per annum in FY '27 and beyond. In FY '27, we're on track for $4.5 billion of development completions, expecting to receive cash and profits from the settlement of One Circular Quay in Sydney and the Regatta in Victoria Harbour. We'll also generate new development management fee streams as a capital-light Master Developer on both the joint venture with the Crown Estate and Victorian Northern Freight Project for C Capital. In FY '28, there are $3.9 billion of completions targeted, including Comcentre in Singapore and One Darling Point. Lendlease should earn ongoing development management fees from its joint venture with the Crown Estate once completed. The JV also expects to earn profits from plot sales and will unlock potential development opportunities from its $50 billion development pipeline. This includes more than $20 billion of future investment product. In Construction, annual revenues are expected to reach over $4.5 billion in FY '27, stepping up to over $5 billion by FY '28, supported by strong backlog revenues and preferred work. We also expect to sustainably deliver EBITDA margins within the target range of 3% to 4% while pursuing both a disciplined approach to pricing and risk profile of future work. Additionally, the group will benefit from working capital inflows as the business grows. These key drivers provide confidence in the outlook for the group. Moving to Slide 20. In closing, my management team and I remain committed to delivering on our May 2024 strategy and our stated FY '26 objectives. We continue to build momentum across our investments, development and construction segments. Throughout the half, we continue to execute on strategic initiatives that we announced in May 2024. And we continue to lay the groundwork for FY '27 and beyond and have strong visibility to earnings in coming years. The group's strategic direction remains unchanged with a continued focus on disciplined execution, performance and long-term value creation for our customers, investors and security holders. Finally, I want to thank our hard-working and talented Lendlease people for their ongoing commitment to turning this great company around. Their efforts in delivering on our strategic priorities are vital to the future success of the business. And I'm personally committed to doing my part to ensure we achieve our FY '26 targets and continue building the momentum needed for long-term success. We'll now open up for analyst questions. Operator: The first question will come from David Pobucky with Macquarie Group. David Pobucky: And best of luck to you, Simon, going forward. Just in relation to the guidance range for IDC, the $0.28 to $0.34. If you could just talk to the moving parts between now and the end of the year that kind of drives the top and the bottom end of that range, please? Simon Collier Dixon: Perhaps I'll have first go at that. The -- in the first half, IDC delivered $0.126 per security. To achieve the $0.28 to $0.34 per security range for IDC, mathematically, the second half has to deliver $0.154 to $0.214 per security. So the outcome of that range is primarily dependent on firstly, the continued underlying operational delivery across Investments, Development and Construction, completion timing of TRX and the completion timing of the Crown Estate joint venture. So the bottom of the range assumes more conservative settlement timing whilst the top of the range assumes those major completions occur in FY '26. David Pobucky: And my second one on the provisions and the write-downs announced in the period. Firstly, could you just reiterate how much of that is noncash? And then secondly, in terms of the Communities land parcel, have discussions with the land parcel owner stopped in terms of negotiating an outcome? Anthony Lombardo: So the noncash was $180 million. So it was $136 million for the Communities parcel pretax and $44 million in provisions on the international construction. In terms of the land parcel, we continue to have discussions with the landowner. Simon Collier Dixon: And I would note that the write-down of the Communities parcel is absolutely noncash writing down of the existing balance. The provisioning on the international construction provision whilst there will be a timing difference, that will flow into cash outflows in the future. Operator: Your next question will come from Simon Chan with Morgan Stanley. Simon Chan: There was a lot of detail in the presentation regarding asset sales, et cetera, and you called out a $3 billion number, right, for the second half. But if I were to get you to dumb it down for me guys, and split the $3 billion just into 3 simple buckets. Can you give me an indication as to how much of the $3 billion is locked in and you just need to wait for the cash to come in through the door? How much of the $3 billion is in the final stages of discussions? And how much of the $3 billion is probably closer to the start or the middle of the sale campaign? Anthony Lombardo: So firstly, the joint ventures with Crown Estates and TRX are contracted, and we're working through the CP. So that's some $640-odd million there. We've announced 3 exclusive transactions. So that is Keyton, the U.K. build-to-rent and the recapitalization of APPF, which will deliver over $1 billion. And then we've called out Victoria Cross, which we've now completed around looking to recycle some of our capital in that asset and a number of other investments. So that other group makes up the remainder. All those transactions are underway at the moment. Simon Chan: Okay. That's quite clear. Next question, just on the actual results, there are 2 things I was hoping to get some more details on. One, I think you called out there was an interest expense benefit as a result of the hybrid in the first half. Can I just get an indication as to the P&L impact of that benefit? And part 2 of my question, I saw that there was a $47 million benefit from a reversal of a prior period impairment that came through in the first half. Can you give me some color as to what that is? Simon Collier Dixon: So for the -- Simon, thank you. I'll take the first part. The hybrid benefit in the first half is $9 million. That was kind of relatively late issuances in terms of the -- during the second quarter that we issued. Simon Chan: Okay. That's fine. And $9 million was booked through as a dividend rather than interest. Simon Collier Dixon: That's right. Yes, just like all the other hybrids in the market. Anthony Lombardo: And just on development, as we're progressing a number of unlocking our different development projects, there has been some provisions which have reversed through the period. And as we continue to progress those, we'll keep the market informed. Simon Chan: So did the $47 million increase your NPAT -- I guess, sorry. So your NPAT increased by $47 million in the first half because of that reversal. Is that a fair way of looking at it? Anthony Lombardo: That's the way to look at it. Simon Chan: And just a final one, just a follow-up on the previous guy's question, Simon. I think when you were talking about the outcome for the second half, you talked about continued underlying operational delivery across investments and completion of TRX and Crown Estate, I thought TRX was in Crown. Am I wrong? Anthony Lombardo: No. So CRU, we flagged that once the TRX completes, it will then move across as a funds management product. There was negligible profits as we called out on the asset. It was on the ASX slide. Simon Collier Dixon: That's right. And it's part of it comes down also to timing around capital and the impact that has on interest expense. The Crown Estate JV is now clearly in IDC. You're right, the bulk of TRX sits within CRU, but the residual element of that will transfer into IDC. So in terms of ordering, it would be, firstly, continued underlying operational delivery across IDC; second, completion timing of the Crown Estate JV; third, completion timing of TRX for the kind of the 3 major components. Operator: The next question will come from Ben Brayshaw with Barrenjoey. Benjamin Brayshaw: I just got a question for Simon. Could you clarify the construction provision of the $44 million post tax, what does that relate to? And secondly, is that a net number inclusive of reversals of prior provisions? Simon Collier Dixon: It's not a net number. It's a new provision. It relates to a long-standing project that have previously been delivered where we had ongoing liability. We've been able to assess and quantify that liability sort of late in the period. Benjamin Brayshaw: And secondly, on APPF Retail, there's obviously been a lot of media commentary on the current situation with respect to providing unitholders with liquidity. Could you just give an update on the situation and also comment on whether Lendlease intends to retain its $200 million stake in the fund? Anthony Lombardo: Yes. So we flagged today that the team had been working through liquidity. We're pleased that we have now in exclusivity with the party to recapitalize the APPF fund. And we intend to, as part of that, sell down our stake in that fund as part of the recapitalization, as I noted earlier. Benjamin Brayshaw: And could that come through, just to clarify, in the second half? Or is it just too early to say of transaction timing? Anthony Lombardo: We're anticipating to complete the recapitalization in the next few months. Operator: The next question will come from James Druce with CLSA. James Druce: Simon, best wishes with your new endeavor. I just want to get a sense what's the -- with CRU, what's the underlying expenses per annum if you see that in capital profits that you just need to sort of bear, like it looks like it's sort of over $100 million for the half. How do we think about that if you're not actually -- just literally the expense, if you're not actually delivering any capital profit through the year? Simon Collier Dixon: I think a couple of -- yes, you're right, that's roughly the number if you back out the provisions. About 3/4 of that really is kind of direct expense, which is relates to employees, tenancy-related overhead. There's another sort of allocation, central allocation. Clearly, there's a lot of involvement from the center in managing out CRU. Those balances are required or those costs are required to manage the capital. There's still substantial capital and very large sort of projects being delivered within CRU and risk being managed within CRU. But clearly, we're watching that very closely. And one would expect progressively that will be managed down as capital is recycled. Tony, I'm not sure if there's anything you want to add. Anthony Lombardo: No. Look, I think the key focus there is they are people, as to Simon, people, insurance, legal, technology costs that are making that up. As we round down and aim to complete the CRU divestments over the next coming 6 months, we will be progressively be targeting that cost base. We've already targeted costs to come down overall by another $50 million, and we'll continue to work through that as we progressively execute on CRU. James Druce: Yes. So you provided a pretty helpful sort of medium-term thinking -- or '27, '28 thinking in your prepared remarks, Tony. So for CRU next year, you're talking about an aggressive cost reduction. Is that sort of what we should take away just from your comments then? Anthony Lombardo: Yes. I think, CRU, the purpose of the CRU was intended for capital recycling. So that's its primary purpose. So we're very focused on completing that. We set ourselves a target this year of $2 billion. As we talked about, we've progressed $500 million. We've got $1.5 billion to still complete and so there's the focus. At the same time, we're completing that, we are looking at progressively taking that cost out. And so we are focused as a team to get that cost down to a more manageable base for next year going forward. Simon Collier Dixon: James, this is Simon, we're acutely aware, obviously, of the holding costs associated with CRU and those management costs. We're also acutely aware of our cost of capital, which is why we are looking at any way possible really to accelerate that capital recycling through CRU through FY '26 and FY '27. James Druce: Okay. And my second question is just around sort of management changes at the leadership level. Obviously, it's been publicly announced, Simon and Tony. But you've also had the Head of CEO of Construction move on, I believe, the Chief Risk Officer, the CEO of Development as well. Is there anyone else at that senior leadership that I'm missing there? And I'm just trying to get a sense of the confidence in the turnaround, some of this challenging sort of turnover that you guys have had? Anthony Lombardo: Look, each of the executives that we've announced, there's either been retirement, personal or exploring other opportunities. So we've got a great depth of talent. I would say our new CFO, Andrew, spent over 18 years in the business. He was previously the Controller, and he's currently the CFO of the Investment Management. So he now steps up into the CFO role. Construction, Steph Graham has been in the organization for greater than 20 years. She actually had been running the Australian Construction operations for the last 18 months. Of course, as we've exited all international construction, that was the right time for Steph to now step up to the CLT in that role. Claire Johnson, who was running the CEO of the U.S. and as we finish up those, she was looking to relocate back to Australia. And pleasingly, Claire now steps into the role as our Head of Development for the organization. So there has been a number of moves in terms of leadership, but we've got the right leadership in place to take the business forward for many years to come. Simon will stay on in a capacity as an advisory role. He's going to help chair the CRU, as we called out, just to make sure we continue that focus on executing our capital recycling plan. Operator: Your next question will come from Richard Jones with JPMorgan. Richard Jones: Gearing is, I think, pretty consistently been higher than where you've guided. Can you provide some color as to what production spend and interest and overheads you anticipate in the second half? Simon Collier Dixon: Sure. Thanks, Richard. I'll have a go at that. So we obviously didn't guide so much to kind of the half year until we gave a bit of an update sort of pre-blackout. We've kind of landed pretty much where we said we would in terms of the balance sheet. Clearly, it's very linked to the timing of the capital recycling transactions, many of which will progress, as Tony has alluded to. If we kind of roll forward to -- and again, this sort of is how to sort of think about the confidence levels around on a forward-looking basis of getting down to 15% gearing, excluding the benefit of the hybrids. But clearly, we have the $3 billion of CRU and IDC transactions, which are announced or underway, which we'll benefit from when they settle. On the -- in terms of the outflows, within IDC and CRU, it's pretty -- within IDC, it's a relatively standardized sort of outflow for the second half. In terms of net production spend, it's expected to be approximately $400 million. On the CRU side, we've got net production spend of approximately $200 million going out the door. Those amounts are fully incorporated into our gearing forecast. So there's nothing particularly unusual about those. The key is in terms of that forward-looking gearing is really around capital recycling and making sure that we continue to progress those transactions. Operator: The next question will come from Suraj Nebhani with Citi. Suraj Nebhani: Firstly, a quick one on the impairments, this period. Can you just talk a bit more about that? And also... Anthony Lombardo: Suraj, can you please just repeat because it just broke up. Suraj Nebhani: Sorry, can you hear me now? Anthony Lombardo: Yes. Suraj Nebhani: Yes. Sorry about that. So just the impairments in Amenities and the Construction division, Simon talked about earlier. Looking forward, can you give us a bit more comfort around the non-recurrence of this? And firstly, give us a bit more detail on what drove the Communities impairment, please and whether you sort of sure this is it? Anthony Lombardo: So I will just repeat that question just to make sure because it's come a bit broken up. You've talked about the provisions that we have taken, in particular, the Communities, gross provision of $136 and the Construction -- international construction provision of $44 million. So just in relation to both of those, Suraj. So firstly, Communities, we did flag, we talked about we're in the courts on a parcel on Communities for the land in Gilead. The courts have found adversely against that. And therefore, we had flagged the risk around that $136 million. So we have now taken a provision against that, which is a noncash item. What we are doing is we're still in discussions with the landowner as we are trying to come up with a position to work that forward. So that's the Communities land parcel. On the International construction, we did call out, as Simon mentioned earlier, there was a risk around a project in the sold and exited parts of the business. We've now taken a provision of $44 million against that based on those known risks as of today. So that's the 2 key matters and the provisions we've taken in this period. Suraj Nebhani: And Tony, just looking forward, how do you think about the provision-related risk in the business? Obviously, things can be uncertain, but just keen to get a sense of whether there's any potential businesses where you see some risk maybe something on that? Anthony Lombardo: Look, again, I think it is breaking up a bit, Suraj. But in terms of you're asking of go-forward risk, what I would say is based on the known risk we know today, we've taken the known and appropriate provisions for the organization to cover that risk. What I would say is as we complete out a number of those contracts and different things that are ongoing, I'd say that risk is diminishing. Calling out that we recently completed the Melbourne Metro main part of the project. There is still some works that are ongoing there. But again, that's remained within the provisions that we had provided for as a group. So... Simon Collier Dixon: Similar with the Building Safety Act in the U.K., similar story. Through the passage of time, those risks do diminish. But clearly, we'll continue to monitor and assess any other emerging risks in the balance of the portfolio as we move forward. But through the passage of time, these risks either dissipate or they become real and accessible. Operator: The next question will come from Richard Jones with JPMorgan. Richard Jones: Sorry, just a follow-up. Is 15% gearing target, is that predicated on $2 billion or $3 billion of divestments? Anthony Lombardo: It's predicated on $3 billion, of which $2 billion is in the CRU and $1 billion in our IDC. But as I think there was a question asked is that it's broken into 3 categories: $640 million relating to contracted JVs with the Crown Estate and then the TRX we're completing CP, $1 billion related to the exclusivities of both 3 things that was Retirement Living, Keyton, APPF R recapitalization, U.K. build-to-rent. So that was over $1 billion. And then we are looking to recapitalize Victoria Cross now that's completed and a number of other transactions that make up that $3 billion. Richard Jones: Okay. Can I then just ask on Slide 42, you've got the breakdown on the CRU invested capital. There seems to be limited progress on international land and inventory international JV projects looks like you've invested about $500 million once you adjust for the moving of the Crown Estates and Comcentre to development. And then the team projects and other haven't shown any progress either. Can you just provide some color as to what's happening in each of those buckets and when you might start getting some of that capital back as well? Anthony Lombardo: Yes. I mean there are a number of projects that we called out at the Strategy Day that said we needed some $1 billion of further capital that needed to be invested and they related to things like Habitat, that related to 1 Java, that related to the Italian joint ventures that we've got underway, where we've got various things occurring at MIND in partnership with capital partners and also Elephant Park. So it's not a static balance. So you can't look at it that way, Richard, because there's capital and production capital that's being spent. Simon called out a further $200 million of production capital in the CRU that needs to be spent in the period. So as we've called out previously, in this period alone, there was some $100 million of capital that we recycled from land holdings that sit within the joint ventures. Now as a number of assets do complete like Habitat and Java, we will be looking to work out ways to best recycle some of that capital, same with some of the assets that are under development at MIND. Richard Jones: Okay. Can you maybe give a bit more color just in terms of when the timing on more of that capital is going to get released because it's obviously a big drag on group earnings. Yes, so I don't know whether you can give us any more color... Anthony Lombardo: So Richard, as we previously announced in the guidance, $2 billion of accrued capital that we're aiming to recycle this year, $500 million of that we've already announced in the period, and that was $400 million relating to TRX and $100 million relating to other land sales. So that was the $500 million we've achieved. We're targeting another $1.5 billion in the second half of this year. Operator: There are no further questions at this time. I would like to hand the call back over to Mr. Lombardo for any closing remarks. Please go ahead, sir. Anthony Lombardo: Again, thank you for joining today's half year results call. And again, I just wanted to thank Simon for his support over the last 4.5 years, and I look forward to catching up with our investors and analysts over the coming weeks. So thank you.

82天前Insight Analytics约5分钟阅读

EDEN.PA 2025 Q4 财报电话会议

Bertrand Dumazy: Good morning, everybody. Thanks for being with Virginie, the Edenred CFO and myself for the Edenred 2025 results. We are together for the next 90 minutes. So first part is the presentation of our results. The second part, we will be pleased to answer any questions you may have. In the executive summary, there are 5 message I want to share with you. First of all, yes, 2025 was a year of strong commercial and operating performance. Second message, we exceeded the guidance 2025 in terms of like-for-like EBITDA growth and free cash flow generation and free cash flow conversion. Third, yes, thanks to those results, we are able to post some strong shareholders' return. My fourth message is you know the Edenred growth equation. It's a very simple equation. We are looking for more users and more value per user. Finally, 2026 will be a rebasing year before renewed sustainable and profitable growth in 2027 and 2028 with a growth of between 8% and 12% of our EBITDA like-for-like for 2027 and 2028. With those 4 messages, now let's go into the details, and I propose that we move directly to Slide 6. Edenred delivered a strong operating and financial performance in 2025. Our operating revenue has been growing at 6.2% like-for-like versus 2024. Our EBITDA has been growing at 11.2% like-for-like versus 2024, which is above our guidance set at more than 10% growth like-for-like. Our EBITDA to free cash flow conversion has reached 82%, which is an increase of 12 points as compared to 2024 and which is vastly above our guidance of more than 70%. Finally, our adjusted EPS is reaching EUR 2.59, and it means an increase of 10% versus 2024. So now let's look at the breakdown of this growth in terms of operating revenue. As you see on the left part of the chart, we have been growing at 6.2% like-for-like. And in fact, if you exclude the impact of the Italian regulation, the 6.2% would have been 9.1%. Where does the growth come from? First of all, in Mobility, representing about 26% of our operating revenue, we have been growing at double digit, 11.7%. In Benefits & Engagement, which represents 64% of our operating revenue, we have been growing at 5.9%. And finally, in Complementary Solutions, with all the work we have been doing on the portfolio, we have a negative growth of 4.6% in 2025 versus 2024. Now if we look at the breakdown of the operating revenue per geography, Europe representing 60% of our operating revenue has been growing at 1%. In fact, if you exclude the Italian regulation impact, the growth would have been 4.5%. Mobility -- sorry, Lat Am has been growing double digit at 13.2%. And finally, the Rest of the World has been also growing at double digit at 16.8%, the Rest of the World representing about 30% of our operating revenue. In fact, this strong commercial performance is translating into solid revenue and EBITDA growth. So the total revenue has been growing at 5.7% because of the Other revenue that has been growing at 1%. And finally, in terms of EBITDA, the growth of EBITDA in 2025 is 11.2% like-for-like without the impact of the Italian regulation, this growth would have been around 16%. So what does it mean in terms of profitability? What you see on the 2 charts on the left, first of all, we have been increasing our operating EBITDA margin significantly by 280 basis points, moving from 39.1% to 41.4%. And as to the EBITDA margin, once again, the same story, i.e., a strong increase of our EBITDA margin by 230 basis points, reaching 45.9% in 2025. Another point to notice, we have an acceleration of our intrinsic operating revenue growth in H2. When you look at the graph in red, what you see is the first half of the year, a growth of 7.1%. The second part of the year, acceleration in Q3 at 8.2%. And then due to the Italian regulation, a growth at 2.7%, leading to a full year at 6.2%. There is another way to read it to understand the intrinsic growth of Edenred. Without the Italian regulation, the growth in Q3 would have been 9% and the growth in Q4 would have been 9.7%. That's why we are saying that we see an acceleration of the intrinsic revenue growth of Edenred, which is, in fact, a very good sign for 2026, but also for the years after. Then if we move to the EBITDA growth, you see also an intrinsic acceleration of the EBITDA growth. So when you read it, 14.4% in H1, 8.3% in H2, leading to 11.2% for the full year. If you exclude, in fact, the Italian regulation, the growth would have been 16.5%, so for the entire year, 15.6%. So now let's move to how did we reach this level of EBITDA and this level of EBITDA margin. In fact, part of the answer is into our Fit for Growth program. You remember, we shared that with you. It's a program that is in 2 phases. The Phase 1 was between the end of 2024 and 2025. In fact, we launched and we set up the Fit for Growth program, and we got some quick wins in 2025. So we have more workforce efficiency. We have been renegotiating the suppliers and distributors contract, and we did some IT internalization, which creates, in fact, more efficiencies. That's why you see our level of OpEx like-for-like growth at plus 1.3% in 2025. Then the question is what does it mean for 2026 and beyond. In fact, based on the acceleration of our growth, we are totally convinced that Edenred is set for the future. That's why we will accelerate our strategic investments, especially in sales and marketing and data and AI because AI for Edenred is a plus and only a plus. That's why we want to accelerate our investments. And the second thing is to generate some efficiencies in 2027 and 2028, we will accelerate our platform convergence that is going to give us scale, but also best-in-class customer journeys. The second thing we will do in 2026 is the standardization and the streamlining of our support function. So after a growth of 1.3% in terms of OpEx like-for-like, we're going to accelerate our OpEx level in 2026 to prepare for the next 3 years in terms of EBITDA generation. The other thing we shared with you as to what we will -- what we wanted to put in place in 2025 is, in fact, what we call a performance and product improvement plan. This plan is made of 6 key actions: 4 to improve the top line growth; and 2, which are about the portfolio review. If I start by the first 4 to improve the top line growth, first of all, we said we want to revamp our offer in terms of gifting, especially with the Edenred Plus new platform. And in fact, we did it and it works because when we look at the results of the European gift business volume, we have a growth of circa 10% in Q4 2025 versus Q4 2024. Why Q4? Because it's the peak season of the gifting for Edenred. The second thing we shared with you is Edenred Finance. You remember that we lost a big client in Romania, but we have a unique position. So we revamped our offer. We accelerated our investment from a sales and marketing point of view, and it works because, first of all, we are very pleased to share with you again the signature of our partnership with Shell in Q3 2025. And when you look at the growth in Q4, the growth has been more than 20%. The third action in terms of improving the top line is to work on CSI. CSI, which is our corporate payment solutions in the U.S. We decided to refocus on key verticals and business excellence, and we start seeing the benefits of these focuses in the last month of December with a growth that was between 5% and 10%. Finally, in terms of incentive, it was time for us to revamp our digital offer. We did it. And in fact, in Europe, we see a growth now on this product line of more than 10%. The second part of the plan is our portfolio review. 2025 was a unique occasion to question ourselves on where do we want to accelerate and where do we want to, in fact, to stop or work differently. As to the PSP, so the public social program, we review our entire European portfolio. It's completed, and we are now focused on the most profitable programs. As to the BaaS B2C, BaaS, meaning Banking as a Service, we decided to leave that segment, the B2C one to be focused on the B2B one. And for us, it's a derisking through this progressive exit, and it's done. We are on target. We still have a few things to do for the first half of 2026. But we can consider that the effort is behind us, and it's going to have a positive impact on the profitability and the derisking profile of the group. So based on all those elements, a solid growth on the top, a very good control of our OpEx. We -- and so a good generation of EBITDA. The impact on the free cash flow is an increase of 34% in 2025. So it's based on the record FFO generation, funds from operation. So it comes directly from the EBITDA, but also our activity in benefits is working well. So we have a float increase. And thanks to Virginie and her team, we increased our discipline in cash collection. That's why you see the EBITDA to free cash flow conversion rate moving from 70% to 82%. Based on this strong generation of free cash flow plus a strong return to shareholders through dividends and share buyback for a total in 2025 of EUR 463 million, we are able, in fact, to decrease significantly our net debt. The net debt has decreased by 31%. That's why our leverage ratio has moved from 1.4x to 0.9x. At Edenred, not only we are working on the economic performance, but also the extra economic performance, and we are very pleased to post excellent results on that on our 3 pillars: People, planet and progress. Just to take one of them, our greenhouse gas emission reduction on Scope 1 and 2 versus the point of departure 2019 has been now reduced by 31%. And in fact, all those efforts have been recognized by leading ESG ratings. To name a few, we received the gold medal for the first time with a 5-point increase by EcoVadis. Or if you think about the S&P Global, we increased our score by 6 points, and we are now a member of the Sustainability Yearbook. When I say now, in fact, for the fifth year in a row. So after having gone through the results of 2025, economic and extra economic. I propose that I share with you a quick update on our new strategic plan called Amplify, Where do we stand on that? You remember, Edenred has a strong and unique value proposition. We are serving 1 million corporate companies. We have 60 million users, and we are driving business traffic for merchants via 2 million merchants. What does it mean? 1 million companies. It means that on Benefits & Engagement, we propose solution for HR directors to answer the equation, attract, engage and retain, but also solutions for fleet manager to manage their fleet and optimize their TCO, but also to organize the transition to electrical vehicles and reduce the CO2 emissions. As to the 60 million users, we propose mobile-first solutions for those users to increase their purchasing power and to have in mobility hassle-free drive. As to the merchant, 2 million of them, we increased traffic and loyalty, and we propose to them a very efficient cost of client acquisition. So that's our strong and unique value proposition. And to be able to do that and to amplify that, we have, in fact, a very unique and unrivaled asset to pursue the growth. First of all, remember that we are the leaders of our industry and our relative market share is very high. Second thing, we have the deeper portfolio on earth as to benefits and engagement, but also mobility. Third, we are the only player who is able to process internally the business volume with more than 90%. So this mission-critical infrastructure is very distinctive versus the competition. We are the best orchestrator you can find on our EBITDA growth. And we are also the biggest player as the leader. So our investment capacity are very strong. In tech, OpEx and CapEx, we're able to invest more than EUR 500 million per year to prepare and to amplify the growth. We are very efficient in terms of go-to-market. And also, we have a very resilient and recurring revenue model. Only one number, our net retention rate in Benefits and Engagement in 2025 is at 104%. So with those assets, we also have a very diversified portfolio of solution. As you can see, Benefits & Engagement, 64%; Mobility, 26%; Complementary Solution, 10% of our total operating revenue. In this diversified portfolio of solution, as you can see, what is, in fact, beyond the core, which is the core fuel and the core meal and food, it represents now 42% of our total revenue, i.e., the diversification of Edenred is well in place and is amplifying. Then if we go even deeper, you realize that the largest client we have represent less than 1% of our business volume. The largest merchant represent less than 2% of the redemption volume and the largest program we have, i.e., a country and a solution. So the combination of both represents about 10% of our operating revenue. So it's a super diversified portfolio of solution. If we focus once again on meal and food, as you can see, Brazil, Italy and France represent 27% of the total group operating revenue and the rest of the meal and food represent, in fact, 15% of our total revenue, but spread out of 24 countries. As I said, the diversification of Edenred is amplifying. Another way to look at it is beyond the core meal and food and the core fuel, what is the percentage of the total operating revenue it represents. In fact, Beyond Food has moved to 34%, increasing by 1 point and Beyond Fuel has increased by 2 points, moving from 31% to 33%. Now if I take, in fact, one second on the situation in Brazil as to the presidential decree. Here, you have a chart explaining, in fact, the legal track to help you reading this chart and to make it very clear. First of all, a presidential decree was, in fact, signed on the 11th of November. As we said, Edenred went for a legal action and Edenred won the first legal action. And so the presidential decree is suspended. As expected, the government went for an appeal in front of the Federal Tribunal, and we are waiting for the answer of the Federal Tribunal. Here, there are 2 options. If Edenred wins, the government has many opportunities to go for an appeal, an appeal that could be suspensive or not of the presidential decree. But if Edenred is losing in front of the federal tribunal, then the appeals of Edenred will not be suspensive, and we will wait for the second legal track, which is the judgment on the merits and the judgment on the merits will not happen before the end of 2026. What does it mean? It means that, in fact, we will know better by the end of the year at best. And in between, many things can happen in terms of implementation or not of the presidential decree. That's why our guidance 2026 is based on a worst-case legal scenario. Another way to say it, the minus 8% to minus 12% for 2026 is based on the fact that the President of the Federal Tribunal is asking for the implementation of the presidential decree. And to stop the implementation, we will know it only by the end of the year. So as I said, many things can happen. Today, the decree is suspended. It could be reinitiated or not. And whatever they or not, the final decision will be by the end of 2026 at best. So let's go back to our growth equation. Our growth equation is very simple, more users and more value per user. More user, it means attract more clients and users on the Edenred platform, 50% to 60% of our growth for the coming years. More value per user, 2 levers, enrich and activate, enrich between 30% and 40%. Behind enrich, 2 levers, upselling and cross-selling. As to activate, that will represent between 10% and 20% of Edenred growth, activation is really the monetization of our very qualified user base, but also new services for the merchants. That's the very simple and magic growth equation for Edenred. So now if we go into the details of those 3 levers, and we start with attract, which is about 50% of the future growth of Edenred. Yes, we have been able to accelerate our client acquisition in 2025. How did we do it? First of all, we reinforced our digital acquisition. So we have more and more digital lead generation and AI automation for sales processes. What does it mean? Our level of SME users in 2025 has increased by more than 700,000. So the engine is in place and the engine is amplifying week after week. The second example I would like to share with you is the ability to extend our customer reach. What does it mean? Edenred is selling directly its solution via the very unique platform, but is also now using more and more distribution partner. So I take the example in mobility. Now our solutions are distributed by Daimler, by Man, by Shell for the financial services or by Arval, a leasing company for the maintenance services. What is true in mobility is also true, in fact, in benefits. Here, we take the example of Brazil, where our solutions for toll payment, in fact, are now, in fact, distributed by Nubank, the first e-bank in the world, but also some other banks, in fact, in Brazil, like Ater, CCredit or CCOB. To make a long story short, our network of indirect distribution partners has increased by 30 in 2025 versus 2024. So we amplify our extension of the customer reach, and there will be more to come in the next years. The second lever of Amplify is enrich, enrich with 2 levers. The first one is cross-selling. The second one is upselling. Here, you have the example of what we did in Brazil. You remember, we made the acquisition of RB. RB is a ticket transport provider. The offer of RB is now integrated on the Edenred platform, and this integration has allowed for more cross-selling on our customer base. And so the RB total revenue growth in 2025 has been circa 60%. It's an example of what we can do in cross-selling. The other lever we have is upselling. Upselling, what does it mean? It's to translate the maximum legal face value increase into users' benefits. What has happened in 2025, if we look at portfolio of ticket restaurants around the world, we had more than 40% of the business volume that has been positively concerned by a face value increase. And in fact, this momentum is going to accelerate in 2026 because as of today, the ratio is not more than 40%, but the ratio is more than 50%. And to give a few examples, in Italy, the Italian government decided to increase the face value by 25%. It has not happened for the last 6 years. In Belgium, the government has decided to increase the legal face value by 25%. Nothing has happened on the legal face value in Belgium for the last 10 years. And in Romania, the government decided to increase the legal face value by 12.5%. So as you can see, the upselling engine of Edenred based on face value increase, notably is going to work well for the years to come because it takes about 2 years to benefit from 85% of the legal face value increase. So we know that this growth engine will amplify in the coming years. Finally, the last lever is activate. So the idea is provide more services to our merchants and better monetization of our very qualified user base. You have an example of a retail media campaign that has been done by Reward Gateway, the engagement solution of Edenred. And we see the first very encouraging results. Our retail media revenue has been growing by more than 30% in 2025. So to conclude, we can count on an enrich revenue model because, in fact, our model is based on solution-based fees, but also nontransactional fees and some new revenue streams that are coming from our platform for our user activation and our merchant services. The combination of this enrich revenue model with, in fact, the 3 levers I shared with you before, is putting Edenred on its way to increase the average revenue per user, which is at EUR 45 in 2025, up to EUR 70 in 2030. And as a reminder, what are the growth drivers of this average revenue per user. It's going to be upsell, it's going to be cross-sell. It's going to be our mix of solution, our portfolio diversification, but also some M&A that we can do. A good example was the RB acquisition in ticket transport, another benefit for the Brazilian worker. Finally, a quick point on data and AI. Data and AI is only a plus for Edenred. And because it's only a plus for Edenred, we're going to increase our investment in data and AI by multiplying by 6 our annual data and AI investments during the course of the Amplify plan. Here, you have 2 examples of a concrete application of the AI at Edenred, concrete application within the services we propose to our clients and our users. On the left part, now we are able to propose an AI augmented customer journey. It's called EdenHelp. It's powered by, in fact, the leaders of AI in the world like Agentforce and Zion. And it allows us and the user to benefit from hyper personalization and an unrivaled customer service. And by the way, we won, in fact, an award on self-care and chatbot services in 2025. Another example is our engagement solution in Latin America in 5 countries. It's called GOintegro. Now if you are a user of GOintegro, you will not be alone. You will have your everyday companion. It's a virtual HR agent, but you will also have an AI agent to help you in the content moderation. So the AI revolution is on its way at Edenred. And as I said, it's only a plus for our clients and users. That's why we increased our level of investments. Thank you for your attention. It's now time to go into the detail of our 2025 financial performance under the leadership of Virginie. Virginie J. Duperat-Vergne: Thank you so much, Bertrand, and good morning, everyone. Let's dive into our Edenred '25 detailed financial performance. So first, starting here, you can see that we delivered EUR 2.961 billion of total revenue in '25, growing 7.6% like-for-like if we exclude Italian change of regulation impact. All in all, with a negative foreign exchange impact of minus 4.6% weighing on our total revenue growth, reported growth is at plus 3.7%. Operating revenue amounted to EUR 2.7 billion and reflects 8% like-for-like growth when we exclude the Italian new regulation. Foreign exchange impact on our 2025 operating revenue was a negative minus 4.3% offsetting a positive scope effect of plus 2.9%, which reflects the contributions of the recently acquired activities, mainly Transport voucher in Brazil, the IP Fuelcard energy activity in Italy. And all in all, this resulted in an as published growth of plus 4.7% for the year '25. Now regarding other revenue, we recorded EUR 229 million in '25, showing a minus 7.1% in reported figures, but this is a 1% growth in like-for-like. Foreign exchange effect was a negative minus 8.1%, and it reflects mainly the evolution of Latin American currencies on our other revenue. Now in Europe, overall, on this page, you can see that operating revenue in Europe amounts at EUR 1.6 billion, and it represents 60% of the group operating revenue. In '25, operating revenue in Europe grew 3.4% as reported and 1% like-for-like, benefiting from a positive scope effect due to the contribution of the acquired IP Energy Cards business in Italy. Zooming on Q4, Europe operating revenue was at EUR 433 million and decreased minus 3.4% on a like-for-like basis. that reflects mainly the impact of the Italian meal voucher regulatory changes. Excluding this impact, European performance would have been an 8% like-for-like growth, confirming the improvement observed since the second quarter of '25. Zooming in France, we delivered EUR 363 million of operating revenue in '25, up 0.5% like-for-like on a full year basis. In the fourth quarter, operating revenue was stable, down minus 0.2% like-for-like. Mobility confirmed its strong sales momentum with double-digit growth over the quarter, led by rising demand for electric vehicle charging solutions. Meal & Food delivered steady growth with good commercial development in challenging macroeconomic conditions and the year-end gift campaign was boosted by the new digital offering. Meanwhile, this performance was offset by the tail end of the cyclical downturns in software solutions. In rest of Europe, Edenred delivered 8% growth in 4Q '25, excluding the new regulation in Italy on the back of a good performance in Southern countries and in Germany with the Ticket City solution. Mobility also benefited from a good commercial traction in Italy with IP and with Beyond Food solutions with Edenred Finance, for example. Our recent partnership between Spirii and Daimler on electric vehicle demonstrates the relevance of our solutions. Then finally, as regards to complementary solutions, we had lower revenues on Romanian public social programs and the ongoing exit of Banking-as-a-Service B2C activity that Bertrand mentioned earlier is still in our like-for-like computations and continue to weigh negatively on the growth. In Latin America now, if we dig into our performance, we see operating revenue up to EUR 826 million in '25, representing 30% of the group operating revenue. This Edenred region has been robust and resilient all year long, delivering double-digit growth both in 4Q and in full year. Brazil delivered good level of growth in meal and food, but it's worth to mention that our Beyond Food activities also propelled this good performance with our employee ticket transport solutions, for instance, RB, that delivered 60% total revenue growth in 2025. On Mobility, both Fuel and Beyond Fuel solutions delivered solid level of growth in Brazil and emphasize the relevance of Edenred diversification in the country. Hispanic Latin America delivered a lower growth with 2.3% like-for-like in Q4 on the back of a high comparison basis in Benefits and Engagement due to strong Mexican performance last year. In the regions, the performance remained strong, supported by favorable dynamics in mobility, growing double digit as demand remains robust for Beyond Fuel solutions, notably in Argentina and in Mexico. Other revenue. Now other revenue was better than anticipated. We can see that we started the quarter with a boosted higher volume in float, interest rates remaining higher for longer, and we faced a less detrimental effect of currency translation. And overall, we delivered EUR 229 million of other revenue, which is slightly above our latest expectation of around EUR 220 million. Indeed, with higher business volume in Latin America and interest rates, notably in Brazil, all this led to a 7.2% like-for-like growth in 4Q versus last year. Overall, despite a less favorable interest rate environment, especially in Europe, where most of the float is located, other revenue are up 1% like-for-like. This performance reflects the group float increase generated by higher issue volume. What does it mean for '26? For '26, we expect other revenue to have lower dynamic because of interest rate decrease and just notably in Europe. We remain though confident with the EUR 210 million floor that we gave you at the Capital Market Day, knowing that the Brazilian decree needs to be taken into account as an additional computation to that number. Now a little bit of view on our P&L. That illustrates the increase in profitability that Edenred achieved in '25. Operating expenses growth remained really contained at 1.3%. Indeed, scale effect of our per platform and the first milestones of our Fit for Growth program that Bertrand talked about previously, have been instrumental to enhance the group profitability. The group delivered an operating EBITDA of EUR 1.131 billion, corresponding to an operating EBITDA margin of 41.4%, increasing 2.8 points like-for-like in '25. EBITDA was EUR 1.360 billion, and EBITDA margin was at 45.9%, increases by 2.3 points versus last year. Now on this page, you have a detailed view of our P&L that led us to the solid increase of the adjusted EPS by 10% in '25. And if I comment quickly on each line to give you a little bit more color. First, on D&A, you can see an increase, which is in line with our CapEx regular increase. And moving forward, you'll see D&A continue to increase in line with CapEx growth. PPA-related D&A increased in '25 due to the finalization of the purchase price allocation exercises relating to Spirii, RB and IP acquisitions that we acquired in '24. As the group has not made any additional big acquisition in '25, this amount should remain relatively stable year-on-year. In terms of other income and expenses, we were at EUR 46 million this year, and that merely reflects the restructuring cost that we incurred, notably on the back of our portfolio optimization actions. On the tax rate, tax rate was up in '25 as our normative tax rate reflects our geographic mix with a higher share of Brazil, offsetting a lower Italian contribution. We do not expect Brazilian contribution to significantly lower next year as a lower contribution will be partly offset by the expected tax rate increase in that country. Number of shares continue to decrease in line with the execution of our share buyback, and we bought back EUR 125 million over the year. Minorities interest are growing in line with the increase of profitability of the group, and our EPS is EUR 2.18 for '25, growing 5.7%, while our adjusted EPS stands at EUR 2.59, growing 10% year-on-year. Record cash flow generation. Our cash flow was EUR 1.111 billion, up 34% versus last year. And if we look to how our cash flow is built, you'll observe once again that the EBITDA to free funds from operation conversion rates remains the main and constant constituent to the free cash flow generation of Edenred. Looking to balance sheet movements. The material improvement on working capital variation is coming from the increase in float, reflecting higher business volume in Q4, especially in Latin America. Our other working capital benefited from cash collection discipline in mobility, a good momentum in VAT reimbursements coming from the European tax administrations as well as the positive effects coming from the portfolio optimization actions we undertook last year and notably some public social programs not weighing anymore on our balance sheet. CapEx are at EUR 198 million for the year '25, down EUR 20 million year-on-year, thanks to our technology cost renegotiation efforts. And overall, CapEx represented 6.7% of our total revenue, well within our 6% to 8% range. As a result, free cash flow to EBITDA conversion rate was a strong 82% for '25, up 12 points versus last year. Let's have a look now on our net debt position. We started '25 with EUR 1.8 billion net debt and the leverage ratio, which has been now lowered from 1.4x end of '24 to 0.9x end of '25. This leverage improvement results from the strong cash generation, slightly offset by the shareholders' return, which amounts to EUR 463 million in '25. We then closed the year with a net debt position of EUR 1.2 billion. This gives us full flexibility on our capital allocation and illustrates our fast deleveraging profile. Now moving to our robust financial position. We do have a strong liquidity position with EUR 5.2 billion as current financial assets, a debt well spread over the years and the access to an undrawn credit facility of EUR 750 million. Moreover, our A- rating with stable outlook has been confirmed by S&P at the end of November '25 again. As you may have seen, we successfully issued a EUR 500 million bond earlier this year with a 7-year maturity, a coupon of 3.75% and an order book more than 3x subscribed, showing the confidence of bond investors into Edenred's credit quality. This refinancing increases our average bond maturity to 4.1 years. Overall, we decreased the cost of debt down to 3.3%. If we move now to capital allocation, which is focused on both growth and shareholder returns. First, growth remains our top priority. We plan to invest and pursue organic growth initiatives to deliver the Amplify plan with annual CapEx between 6% to 8% of our total revenue. Second, we want to take advantage of our solid balance sheet to seize value-accretive M&A deals and be opportunistic while maintaining strong focus on strategic and financial discipline. We focus on key deal considerations such as further consolidation, opportunities to accelerate our Beyond strategy and further diversify, strong potential for revenue synergies as well as sustainable business models. Now in terms of shareholders' return, we will propose to the shareholders a dividend on EUR 1.33 per share for 2025, which is a 10% increase compared to '24. This material increase is in line with our progressive dividend policy and reflects Edenred's confidence to continue to deliver sustainable and profitable growth in the long run. We continue to execute our current share buyback extension program of EUR 300 million, out of which EUR 125 million have been already executed during the year '25. And finally, we remain committed to maintain a strong investment-grade rating with our A- S&P rating reaffirmed in April and November last year. Last page for me, I want to show you the Edenred 2025 performance presented under the new reporting structure by business line that we announced during our Capital Market Day and which we will fully use starting 1Q '26. This enhanced reporting structure will provide operating revenue, operating EBITDA margins for each business line. And as a consequence, business lines become our prime segment reporting geographies moving to the secondary dimension. This change also includes limited scope adjustments between business lines that you can track in the appendix of the presentation. As shown on the page, Benefits and Engagement and Mobility have similar operating EBITDA margin at 43% and 40%, respectively. And these are both in progression compared to 2024. As for Payment Solutions and New Markets, operating EBITDA margin is at 29%, up 9 points versus last year on the back of all management actions that have been undertaken in '25. I'd like to thank you for your attention, and I now hand you back to Bertrand for the '26 outlook. Bertrand Dumazy: Thank you, Virginie. So a few words of conclusion as to the outlook for 2026 and beyond. So first of all, yes, 2026 is a rebasing year for Edenred. Intrinsically, the EBITDA growth will be between 8% and 12% like-for-like, and it's going to be powered by 2 engines. The first one is the total revenue growth, but also the structural operating leverage we are able to generate, thanks to the platform. However, in 2026, we have to rebase based on one thing, which is the impact of the regulation change in Italy and Brazil. It's going to impact negatively in 2026, our EBITDA growth. Then we are going to accelerate our investments to achieve, in fact, the management actions and the portfolio optimization we talked about. And finally, as explained by Virginie, our overall revenue will decrease slightly outside the regulatory change in Brazil, and it's going to be probably the last year because our float is increasing, and we are moving towards a stabilization of the interest rates. The combination of all those elements, an interesting growth of 8% to 12% plus the regulatory change will lead to a guidance for 2026 between minus 8% and minus 12% like-for-like. Once again, as to the Brazilian impact, we took the worst legal case, i.e., an implementation of the presidential decree. Then based on that, what does it mean for beyond, i.e., 2027 and 2028, back to the growth of Edenred between 8% and 12% starting in 2027 for the EBITDA like-for-like growth and the free cash flow to EBITDA conversion rate after the regulation impact in 2026, we are back to the 65% and more in 2027. To make a long story short, what are the key takeaways of the 2025 results, our Amplify plan, 4 messages. First of all, 2025 was a year where we are able to post a new set of record results from the top line to the EPS. Yes, we are able to generate sustained revenue growth with an acceleration in the second part of the year, which is a very good sign for 2026, but we are also benefiting from our structural operating leverage. We are a platform business. It's the scale business. The more we grow, the more we are able to generate increased margin. The second thing is, yes, we see in 2025, the first effects of our performance and product improvement plan and all the efficiency measures we took, the constraints creates the talent. Finally, we are a highly cash-generative business, and that's why we have been able to post strong cash generation in 2025. What does it mean? It means that based on all those elements, 2026 is a rebasing year before we resume sustainable and profitable growth trajectory starting in 2027. We will mitigate the impact of the regulatory step back, thanks to our very diversified portfolio. We will continue and amplify our management actions to deliver further efficiencies. And finally, we know that we can count on our product and tech leadership in large to continue to grow on vastly underpenetrated markets. Based on our results in 2025, we have been able to reinforce our fast deleveraging profile. And so we have a very strong balance sheet that leaves Edenred ample room for organic growth investments, especially in data and AI, but not only, also focused M&A opportunities while continuing our high level of shareholder returns in terms of dividends, but also share buyback. Based on that, we also have a long-term vision. This long-term vision is called Amplify with a magic growth equation that is simple, i.e., to increase the number of users and to increase the average revenue per user. And all those elements allow us to reiterate our ambition to reach EUR 5 billion of total revenue in 2030. Thanks a lot for having listened to us. And Virginie and myself, we are all yours to answer any questions you may have. Operator: [Operator Instructions] The next question comes from Estelle Weingrod from JPMorgan. Estelle Weingrod: To start with, can I just ask on Brazil. So thanks for the slide regarding the legal process ongoing. I just wanted to clarify a couple of things. So do we know how long it will take to hear back from the government's appeal? And in the meantime, the decree is suspended, so you are not implementing the decree, which should on paper start now. Is that correct? So that's the first question. And the second question -- sorry, there's 2 in 1, but then the second question, on CSI, you mentioned a good growth of 5% to 10% in December. What are you expecting in '26? And should we expect Complementary Solutions to remain in positive growth territory? Or we would still see some impacts from the actions you took last year? Bertrand Dumazy: Okay. Estelle, thank you for your questions. I will take all of them. So first of all, the decision or, let's say, the decision of the federal body or legal body can happen any time now. So it can be tomorrow, it can be in a few weeks. So we are waiting the answer and the answer can be as early as tomorrow. In between, there is a suspension of the decree for Edenred and I think for 9 other issuers in Brazil. So we did not implement the decree. We are ready to implement it if the decision of the federal jury goes against the suspension. Your second question is as to CSI, yes, we start seeing a good dynamic, and we start seeing it as well for all the complementary solutions because 2025 was also a year of, let's say, cleaning our portfolio, especially in the BaaS B2C to derisk from this activity. So you can expect complementary solution to grow, in fact, in 2026. So I remind that in 2025, we are at minus 4.6% in terms of operating revenue. You will see some good growth in complementary solution in 2026. Operator: The next question comes from Sabrina Blanc from Bernstein. Sabrina Blanc: Yes. I have 2 questions for my part. The first one is regarding the cost efficiency. Can you provide more details about the 200-something improvement, if we could have more color by segment or by areas. And the second question is regarding the environment in France. We see that the growth was almost stable in Q4. But in the same time, you have mentioned that the gift campaign was very good in Europe. So just to understand what's happened in France and notably in terms of economic environment. Bertrand Dumazy: Sabrina, thank you for your 2 questions. First of all, as to the cost efficiency, so OpEx growth of 1.3% in 2025, where does it come from? If you look at the, let's say, the OpEx structure of Edenred, 50% of our OpEx are payroll. And in fact, the payroll is the combination of the total number of people and the average increase. In fact, in 2025, we employed less people at Edenred than in 2024. And we worked on, let's say, salary moderation in 2025. But in fact, behind that, when we say we employ less people, in fact, around 30% to 40% of less people is coming from the synergies coming from the acquisition. So we talked, for example, about RB, Ticket Transporte in Brazil. We have a platform. They have a platform in Ticket Transporte. Obviously, there is cost synergies, and we implemented those cost synergies. And unfortunately, people that you employ are part of those synergies. So in fact, you have between 30% and 40% that are coming from the synergies. Then you have what we call portfolio rationalization. So for example, when you progressively exit from BaaS B2C. In fact, at the end of the day, in this division, you employ less people because we are exiting this activity. So let's say, between 15% and 20% of, in fact, those payroll stabilization is coming from what we call the portfolio rationalization. And then the entire Edenreders, so the employees of Edenred, we all made some efficiencies for everybody everywhere. It has been well balanced. And as I said, the constraint creates the talent. So 50% was, in fact, a work on our payroll coming mainly from the total number of people with the #1 driver, which is synergies coming from the acquisition and efficiencies and portfolio rationalization. Then you have, in fact, what we call the cost of sales. And in fact, cost of sales is about 15% of our OpEx. And basically, we renegotiated with some of our distributors new formula, but we also sold less hardware at Spirii that are, let's say, impacting in terms of cost of sales. So that's the reason why the cost of sales in percentage of our operating revenue has slightly decreased. And then you have the other charges. And here, the other charges are representing 35% of the total. The other charges in percentage versus the operating revenue went down. Why? Because we sat down with all our suppliers and we renegotiated with them or we readjusted our needs. When you think about our tech investments, we are buying a lot of tech from everybody around the world. And sometimes we have not been efficient enough in the past in terms of what do we need exactly, how do we use it? So we sat down, we reviewed the way we were working, and we have been able to renegotiate. So to make a long story short, 2025 was a very good year to work on our efficiency, whether on the payroll, the cost of sales, but also the other charges. Then you had the second question as to the environment in France. In fact, in France, everything goes well at the exception, as we said, of the software sales for the workers' council. So the ticket restaurant in France is doing well. The gift is doing well. The only blow we have in 2025, and we explained that in the past is we have a negative growth in software sales. And in fact, why? Because now you have a new, let's say, elective process in France, it's every 4 years. And it means that the year before the election, you will see, in fact, a huge increase of our software sales. And in between, it's more slow. So we expect the activity to rebound sharply in 2026 and even sharply in 2027. So for France, everything goes well, Ticket Restaurant, gifting, to name a few, but a big blow on software sales, but we will back on track. We will be back on track very soon and the rebound will start in 2026. Operator: The next question comes from Hannes Leitner from Jefferies. Hannes Leitner: Yes. I got 2 questions. So you called out that business volume exposure, meal and food are over 50% experiencing a face value increase led by Italy, Belgium and Romania. Can you maybe square that why shouldn't that give more confidence in '27, '28 targets given that those face value increases were only pending at the CMD. And then the second question is, if we calculate the Italian headwinds, they come up to EUR 10 million in Q3 and EUR 44 million in Q4. So slightly below your EUR 60 million indications. Should we expect that the balance now to the EUR 120 million is coming in 2026? Or should we just think that the same thing will be replicated? Bertrand Dumazy: Hannes, thank you for your 2 questions. So first of all, as to the face value increase, yes, it gives us a lot of confidence in terms of upselling. And that's why there is a bracket between 8 and 12, the bracket was the same at the Capital Market Day. Then it depends on where we are going to be on the bracket. But it's true that, thanks to, in fact, those very good news in terms of upselling, it will have a positive impact on our guidance, but let's do 1 year after another. As to Italy, yes, we confirm that the total impact for the Italian regulation is EUR 120 million. And what I can confirm as well is as soon as it is swallowed, you will see double-digit growth in Italy in 2027 and in 2028. Operator: The next question comes from Julien Richer from Kepler. Julien Richer: Two ones for me, please. The first one on Reward Gateway. Could you please give us some details on its deployment and the impact of that deployment on the number of solutions per head and ARPU. And the second one on your dividend policy. If you look to 2026, let's assume a worst-case scenario where your reported earnings will be down, let's say, 10%. Do you still expect your dividend to grow in absolute terms in '26? Bertrand Dumazy: Julien, thank you for your 2 questions. So I start with the dividend. We commit -- we have been committing for the -- for many years into progressive dividend policy. So you will see the dividend growing, in, in fact, 2026 paid in 2027. Now the question is the intensity of the growth, and it's a debate that we are going to have with the board and the proposal to the shareholders. But we are committed to a progressive dividend policy. So by definition, in absolute value, the dividend is going to progress in 2026. By the way, can we do it? Yes, we are a cash-generative company. We are fully deleveraged with a ratio of 0.9, and we are strongly confident in our ability to generate between 8% and 12% EBITDA growth like-for-like starting 2027. So that's why I'm able to answer like that. Then Reward Gateway, the deployment. The deployment is going to accelerate in France, Italy and we said France, Italy and Belgium. As I said, in 2025, we had very good successes in Belgium. In Italy, 2025 was a pause because we had to renegotiate 14,000 contracts in a few months. So when you do that, and I'm a great believer in the focus, when you do that, you have to make some choices. So 2026 is going to be the year of the extension of our engagement solutions in Italy. And in fact, in France, we have been pleased by the signature in the second part of the world of a few, let's say, large contracts with very well-known French companies. So we will see an amplification in 2026 on those 3 countries. What is the impact on ARPU? The impact, in fact, is going to be positive and also in terms of number of users because it's another point of entry to have access to Edenred solution. It goes one way and the other. You are currently an Edenred user and client and in fact, engagement is going to increase the cross-selling. So that's one way. Or the other way is you are not a user of Edenred solution and you enter into the Edenred world via the engagement solutions. And our goal is to satisfy you so much that, in fact, you will beg for the other solutions of Edenred on your digital application. So Reward Gateway, amplification of the deployment in France, Italy, Belgium with a specific focus on Italy and France because Belgium is well launched. And probably, we're going to also accelerate the deployment in Spain and in India in 2026. Operator: The next question comes from Justin Forsythe from UBS. Justin Forsythe: A few questions from me here. So thank you for the detail on Brazil. That was super helpful. Just wondering, is there a potential third avenue, which might be you settling out of court with the government. Are there any terms that you might find attractive, whether that's like a phased interchange cap, maybe not a day 1 move to this 3.6% or the 2% or anything else that would be attractive to you. It may be a delay in the 15-day settlement requirement or something of that nature that you might be interested in. Virginie, I wanted to ask a little bit about the free cash flow guidance. The 35% conversion. I think that at least by my math, implies over 60% decline compared to where you reported in '25. Now I understand that's inclusive of the Brazil regulation. So maybe that has something to do with your expectations around float in concert with the overall drop in EBITDA. But maybe you could dig into that a little bit. And just wanted to give you guys credit because RB seems like it's doing really, really well in Brazil. Maybe you could talk a little bit about how you expect penetration of that solution to go. Are you expecting higher attach rates with your corporate customers? Could you get to maybe close to 100% of those that are using a voucher solution in Brazil? Bertrand Dumazy: Sorry, Justin, your last question was about what? Virginie J. Duperat-Vergne: RB. Bertrand Dumazy: About RB. Okay. Justin Forsythe: RB. Yes. Bertrand Dumazy: So I propose that I take the #1 and #3 and then Virginie, the #2 as to the free cash flow. First of all, is there a third avenue? Yes, there is a third avenue. That's why we were pushed to go for legal action, but the industry is willing to discuss with the Ministry of Labor, the Ministry of Economy with open arms to try to find a solution because at the end of the day, what is good for the workers is good for the industry. And what is good for the workers is 2 things. First of all, you have 20 million users of the PAT, so in Brazil. And in fact, when you look at the full potential, the full potential should be 40 million users. So what can we do together hand-in-hand with the government to accelerate the development of those solutions in Brazil. By the way, the main target is probably the SMEs. And when you look at our growth in Brazil in 2025, we have been growing at almost 15%, in fact, in benefits in Brazil. It is, in fact, the proof in the pudding that there's still a long way to go in terms of penetration, especially for the SME users in Brazil. Once again, we consider that full potential, there should be 20 million more. So based on this potential, yes, there is a third avenue to discuss because we want more users of the PAT in Brazil and the government has exactly the same, let's say, willingness. And the second thing is for the program to be sustainable, it has to be well filtered. And so well filtered, it's not possible at all with an open-loop solution. And it's complex. It takes time to explain. We need to reinforce our explanation, and it's part of the third avenue. So you are right, Justin. On one side, there is legal action. And on the other side, as usual, with Edenred, open arms to sit down and to say, okay, what is best for the workers, what is best for the program and how can we find a compromise. Your second question was about RB. Yes, Ticket Transporte is doing well and the level of cross-selling is still, in fact, below, let's say, 40%. So there's still a long way to go, knowing that Ticket Transporte is a mandatory benefit, in fact, in Brazil. So it has to be given by the employer. And we still have many employers who are giving this benefit, but not using yet the Edenred platform. That's why all our commercial efforts in terms of cross-selling will amplify because the potential is there. As to the free cash flow guidance, Virginie? Virginie J. Duperat-Vergne: Thank you, Bertrand. So thank you, Justin, for the question. So sorry to do a little bit of mathematics guys, but maybe that helps. It's a ratio. So we have to look to both parts, the numerator and the denominator. And number one, you have one element which is touching numerator and the denominator at the same time, which is that next year, we will be impacted by some lack of revenue and then EBITDA, obviously, in -- coming from Brazil and from Italy. But in addition to that, and that's not helping the ratio, definitely, our numerator is even more hit than the denominator is because of the elements coming from working capital variations and the lack of float effectively, as you noticed, Justin, that will be hitting us. And that has an impact quite sensitive on the calculation of the ratio. So to help you a little bit on that, as we said, we are moving from a guidance to 2% to 4% before the announcement of our new decree in Brazil down to minus 8%, minus 12%. That gives you an idea of the magnitude of the impact on the Brazilian regulation on our EBITDA. Bertrand stated it again based on the worst legal case scenario, that's the one that we reinstate for '26. And then that's the way we compute what will happen to our free cash flow. So on that part, we said it in November. We estimate that more or less 85% is operating revenue and the rest is coming from the other revenue. So then if I compute the float, which is touched the other way around, knowing that our interest rates are around 12%, a little bit more in Brazil, you'll be able to go to quite a sensitive amount in terms of missing float that we will lose from Brazil. Another way to look at it is to start from the volume of float that we have in Brazil. In Brazil, remember, that 20% is coming from Latin America of our float and Brazil is 3/4 of that. And then we have a bit of a big part of it, which is on the merchant side because Brazilian people used to consume their vouchers a bit faster than it is happening in Europe. And then the vast majority of our float is based on the merchant delay. So then you cut that by half of it and you'll compute almost the same figure, which is going really to hit us. So that has an impact. And obviously, as we said, on free cash flow, you will lose both the EBITDA part and that float part. And remember also that what we stated to Capital Market Day is that mobility growing and mobility having a very slightly negative working cap position. Then on average, we expect it to go to 65%, meaning that the starting point that we expect to see also for next year is also touched by that. That being reinforced by a mix where you have less benefits and engagement and more mobility, mobility has no impact of Brazilian and Italy regulation. So that's what it did. Just maybe to help everyone call on that, it's a 1-year effect. You will have to suffer into brackets the working capital variance once. And after that, we'll go back to a usual cash generation ratio. And that's what we reinstate with our guidance, what we see for '27 and '28, assuming '26 is taking the impact is that we go back to the 65% cash generation ratio because we won't have to absorb twice working cap variance. Operator: The next question comes from Kate Xiao from Bank of America. Kate Xiao: My first question is still Brazil. I guess if my understanding is correct, if there's going to be an unfavorable ruling at the end of the day, that decision is only going to come towards end of 2026. Then why are you still holding your 2026 guide of the full impact? Is it because if there is a more negative decision, it could be applied retrospectively to the full year of 2026? And my second question is, I noticed you used to disclose the benefits and engagement section take-up rate. It was 5.6% in 2024. Just wondering what the latest rate is for 2025. And obviously, let's say, in 2026, there's still going to be some impact from the full impact of Italy and Brazil. If we assume both markets, it's fully -- the impact fully happens and it's fully derisked, what would that take-up rate look like in that normalized environment? Bertrand Dumazy: Okay. So let me take those 2 questions. Yes, your understanding is not correct. So let me repeat it. Today, the presidential decree is not applied, and it was supposed to be applied starting February 11. It's not applied as of today. Why? Because we won the first part of the legal battle, and we are not the only one because out of 12 issuers that went into court, 9 of them won and the other ones are waiting for their appeal. So it is not applied. The government has made an appeal with a federal judge. The answer of the federal judge can come as soon as today or tomorrow or even 1 month. So waiting for the answer of the judge, the decree is not applied. But if the judge is giving reason to the State, then we will have to implement the decree. But if the judge doesn't give right to the State, the State has multiple ways to go for an appeal and the appeal could be suspensive, i.e., the implementation -- the decree would have to be implemented. So to make a long story short, as long as we don't have the answer of the federal judge, the decree is suspended. As soon as the decree might not be suspended, then the next step for us is an answer on the merits of the decree, and it's going to happen by the end of 2026. That's why we don't know. And because we don't know, every day that goes without the implementation of the decree is a good news. So you will see us probably if it takes longer, you will see us more on the top of the bracket than on the bottom. So that's how it works. And I hope my clarification is helping you. Your second question is as to, in fact, the take-up rate. In fact, the take-up rate is a notion that makes less and less sense for Edenred as we explained during the Capital Market Day. Why? Because the take-up rate is a percentage on the transaction. And as you can see, we are providing more and more services that do not have anything to do with the amount of the transaction. So if you think about engagement, it has nothing to do with the amount of transaction. If you think, in fact, in terms of maintenance services in mobility or telematics, it doesn't have anything to do. So when you look at the Beyond part, which represents more than 40% of our total revenue today, the vast majority of Beyond is decorrelated from, in fact, the value of the transaction. That's why we are moving to measurement that are much more the average revenue per user and the number of users. Having said that, to make the link between the old Edenred and the new Edenred without the impact of Italy, the take-up rate would have increased in 2025 at Edenred. Operator: The next question comes from Pravin Gondhale from Barclays. Pravin Gondhale: My first question is on free cash flow. The 2025 free cash flow conversion was very strong, and you sort of flagged that you benefited from the stronger float position at the year-end. Do you expect a part of that to reverse in 2026 and hence, the guidance of greater than 65% FCF conversion, excluding Brazil regulations is kept unchanged? What are the dynamics here? And then secondly, on the operating EBITDA margins, they were quite strong in 2025. Can you help us understand the moving parts of that margin progression between what's recurring and you expect that to happen in 2026? And what is -- what was -- what were sort of the one-off majors in 2025? Bertrand Dumazy: Pravin, thank you for your question. I start with the margin, and I'll let you work on the free cash flow, unless you want to do the margin, Virginie. Okay. So I go for the margin. So first of all, in 2026, our operating EBITDA margin and so our EBITDA margin will go down. Why? Because we have to swallow the EUR 60 million, the remaining part of Italy, plus for now, the worst-case legal scenario in Brazil. So our EBITDA and operating EBITDA margin will go down in 2026. After that, you will see both margins going up. Why? First of all, this business is a scale business, i.e., the more you grow, the more you are able to dilute your fixed costs on the revenue that you generate. So you will see the margins going up based on the current plan we have in 2027 and after. So that's how I see the evolution of the EBITDA margin and the operating EBITDA margin. The scale effect is a powerful engine for us to increase our margin. The second thing you will see as a powerful engine is the efficiency program that we put in place. As I said, it's called Fit for Growth. We are now in the Phase 2 of Fit for Growth. And so we have a plan. We have a plan in terms of efficiencies. We have a plan in terms of streamlining certain functions. We have a plan in terms of convergence of platform. I give you one very simple example. By the end of 2026, 100% of our users will be upgraded to our new platform in France. It's a very good news. First of all, from a cost point of view, we will stop the historical platform. So we're going to run with one platform. And if the law is voted in France, there will be no more paper. So today, I'm running with 3 different systems, the paper system, the Edenred platform and the Edenred Plus, the new platform. By the end of 2026, there will be most probably only one platform. So not only it's good for our cost base in France, but it's also excellent in terms of user satisfaction because if you go on the web and you look at the ratings we have on this new platform, you will see that they are absolutely outstanding. So it's a very good thing for, in fact, the churn and a very good thing for the profitability of the business. So based on the scale effect that are natural in our business, plus all the product and performance improvement plan part 2 of Edenred, you will see the EBITDA margin going up after a drop in 2026. Virginie J. Duperat-Vergne: Maybe I jump on free cash flow. On free cash flow '25, you're right, Pravin, was strong because you have a big movement on working capital element. If you look to free funds from operation, the conversion is very much in line with what we have every year and which is fully in line with our anticipation of a cash conversion rate of 70%. Why do we do not only 70%, but 82% this year in addition to the good EBITDA performance and obviously, a big numerator and denominator at the same time is nurturing your free cash flow is that we have this movement on working cap element, which is an increase in float. So an average increase on volume in float just because we had bigger business volume to start with during the year. In addition, some other elements and especially in Latin America with additional volumes of orders by the end of the year, which pushed the cash up. And also, as I said, some elements around the rest of the portfolio, which is namely the -- what we call other working capital variance and refers to the rest of our business, mobility, for example, or also the headquarter and so on. Bertrand just referred to all our efforts also in terms of negotiation on suppliers and so on. So that has a direct impact on the supplier debt that you have on the face of the balance sheet. But we also have very good cash collections on the side on mobility. Remember, we talked about some missing elements when we disclosed the H1 free cash flow and some cash collection that needed to be back in, and that has been done since then, obviously. So that's definitely helping. And then we have a lot of receivables in various countries in terms of VAT credits to be reimbursed. Here also, you can see that the tax administration in each and every country are progressively digitalizing themselves. And then they become more efficient and then we get reimbursement a bit more in advance. I cannot predict or anticipate whether it will be exactly the same next year in that respect. But part of the positive, depending the way you take the photography at year-end can move one way or the other, and then you might have a slightly better or a slightly lower variance in working cap next year to take into account in the computation of the free cash flow. But really, the guidance on '26 is the elements I described earlier to Justin and the fact that we'll be missing quite a significant volume of float and this volume of float missing will create a decrease -- a strong decrease and movement in our working cap variance that will negatively impact the absolute value of the free cash flow. Bertrand Dumazy: The cash flow management is well under control at Edenred. Operator: The next question comes from Andre Juillard from Deutsche Bank. Andre Juillard: Two follow-up questions, if I may. First one about Mexico. You didn't talk about this market. And could you give us some more color about the trend? And do you have any fears with the actual events? Second question about the leverage. Your leverage is quite low at the moment, 0.9x net debt on EBITDA. Do you have a target in mind just to help us to manage the anticipation that we could have in terms of reinvestment return to shareholders and so on? Bertrand Dumazy: Andre, thank you for your question. First of all, as to what's going on right now in Mexico, no, we don't have fears. That's part of life. We are in 44 countries. The trends in Mexico are good for Edenred. So in mobility, we have a sustained growth in 2025 and very good prospect, in fact, in 2026. And I'm very pleased by the performance of the new CEO of Edenred Mexico in Mobility. As to benefits, we also have very good perspective with the success of the deployment of Edenred Plus in France. In fact, we started a few weeks ago the deployment of Edenred Plus in Mexico. And so we'll come with a new offer, totally renewed, revamped. And based on the good results we have in France, we are very positive for what it's going to mean for Mexico in the coming years. As to the leverage, so yes, we are at 0.9. Do we have a target? No, we don't have a target. We know the maximum. We want to stay strong investment grade. So we know that to stay strong investment grade, you need to be in a normative band that is no more than 2, 2.5. Then you have a period of grace depending on the acquisitions of 18 months. So more or less, we are well, let's say, capped on the maximum. As to -- in between, in fact, it's a very good news for Edenred to be at 0.9 because it gives us all the flexibility to accelerate our investment for the future growth of Edenred. It gives us a lot of flexibility to continue acquiring some companies in buildup or bolt-on with the same financial discipline in terms of strategy, but also in terms of return on investment. It gives us flexibility, for example, in EV, it's a growing trend in Europe. We have some successes. We started with the acquisition of Spirii. The market is moving fast. We are seeing opportunities every day. So maybe that's another thing where we could continue to invest. So we love the idea that we are very well deleveraged because we can fuel the organic growth, but also the very targeted growth in M&A to enrich our offer and consolidate our leadership position. Finally, we want to continue to have the progressive dividend policy and share buyback. So with the balance sheet we have, Edenred is well in order to accelerate the growth to go over the year 2026 for 2027 and 2028. Andre Juillard: Just maybe one follow-up on France. Bertrand Dumazy: It's really the last one, Andre because... Andre Juillard: Did you have recent discussion with the government about regulation in France or nothing. Bertrand Dumazy: Okay. Very quickly, the association of the issuers obviously met the ministers in charge. Their willingness is to push for a law voted in 2026. They have a preference for the first half of the year, but it's going to depend on the calendar. So to make a long story short, the current government is exactly on the same page as the previous ones. They want the reform to be voted because we think it's a good thing for all the workers in France to have, first of all, the end of paper and second thing to have a clarification on the usage. So we have today ministers who want more Ticket Restaurant in France. Once again, the penetration in France is only 28%. So as compared to many other countries, the penetration is not that high in France. So they all want more Ticket Restaurant solutions in France, and they want the law to be voted along the lines I just shared with you. Thank you, Andre. Thanks a lot for all your questions, and I wish you a very good day.

82天前Insight Analytics约5分钟阅读

GLPG.AS 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Galapagos Year-End 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Glenn Schulman, Head of Investor Relations. Please go ahead. Glenn Schulman: Good day, everyone. This is Glenn Schulman, Head of Investor Relations, and I'd like to thank you all for joining us today as we report Galapagos' full year 2025 financial results and fourth quarter business update. Last evening, we issued a press release outlining these results. This release, along with today's presentation, can be found on the Galapagos Investor website at www.glpg.com. Before we begin, I would like to remind everyone that we will be making forward-looking statements. These forward-looking statements include remarks concerning future developments of our company and our pipeline and possible changes in the industry and competitive environment. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those indicated by these statements and are accurate only as of the date of this recording, February 24, 2026. Galapagos is not under any obligation to update statements regarding the future or to conform to these statements in relation to actual results unless required by law. You are cautioned not to place any undue reliance on these statements. Joining us on today's call from the executive team are Henry Gosebruch, Chief Executive Officer; Aaron Cox, Chief Financial Officer; Sooin Kwon, Chief Business Officer; and Dan Grossman, Chief Strategy Officer of the company, all of whom will be available during the Q&A session. With all that, let me now turn the call over to Henry Gosebruch, CEO of Galapagos. Henry? Henry Gosebruch: Thank you, Glenn, and thank you all for joining us today. Galapagos had a transformative 2025, focused on turning the page from cell therapy, implementing a new strategic direction and laying a strong foundation for long-term value creation. We are entering this new chapter with approximately EUR 3 billion in cash at year-end 2025 in a strong position to pursue transformative business development opportunities with significant strategic flexibility. The new team is in place to execute on the strategic vision. We have been very deliberate in assembling the right leadership team to execute the strategy, and I could not be more pleased with the level of talent we've been able to attract to Galapagos. We've assembled a management team with world-class business development expertise and a shared mission of leveraging our unique position to create significant shareholder value. Collectively, our team has executed hundreds of transactions in the life sciences sector and is working well together with the goal of creating value for our shareholders. We have also evolved our Board composition, welcoming 5 new directors who bring the deep transaction, capital allocation and operating experiences needed for this next phase of growth. Our objective is not incremental rebuilding, but a fundamental reshaping of the company around programs we believe are capable of delivering meaningful patient impact and sustainable shareholder returns. We are aggressively evaluating opportunities across our focus areas and maintaining a broad dialogue with companies and innovators globally. We are encouraged by the level of potential transactions we have in our deal pipeline and our opportunity to become a unique player in the biotech deal ecosystem and carve out niches where we can be competitively differentiated. At the same time, we are disciplined and selective. We will allocate our capital carefully and thoughtfully with clear financial metrics in mind. Our focus remains on clinically derisked opportunities in areas where we are able to bring unique insights that represent competitive advantage. Lastly, our collaboration with Gilead remains a key strategic advantage and potential competitive differentiation. We are working very closely with Gilead and continue to have active and constructive dialogue as we evaluate opportunities. Their global development and commercialization expertise, combined with our capital base, agility and deal-making skills creates a powerful platform as we shape this next phase of growth for Galapagos. Let me briefly provide an update on our legacy R&D asset, TYK2 or GLPG3667. In December, we announced top line Phase II results for GLPG3667 in patients with dermatomyositis and systemic lupus erythematosus or SLE. GLPG3667 met the primary endpoint in the dermatomyositis study, demonstrating a statistically significant clinical benefit and meaningful improvement on secondary measures of disease activity compared to placebo. We are currently evaluating all strategic options for this program, including pursuing potential partnerships with other i&i players to accelerate the development of GLPG3667. In conclusion, Galapagos is well positioned for the future. Our year-end cash position of approximately EUR 3 billion, our strong business development and capital allocation experience provides the strategic flexibility to pursue business development opportunities while maintaining a disciplined focus on value creation. With that overview, I would like to now turn the call over to Aaron Cox, our CFO, to review our full year 2025 financial results and 2026 guidance. Aaron? Aaron Cox: Thanks, Henry, and hello, everyone. In the press release issued last night, we detailed our full year 2025 results, provided an update on fourth quarter performance and shared our 2026 guidance. Total operating profit from continuing operations amounted to EUR 295.1 million in 2025 compared to an operating loss of EUR 188.3 million in 2024. This operating profit was primarily due to the release in revenue of the remaining deferred income balance of EUR 1,069 million associated with the exclusive access rights granted to Gilead under the OLCA. As a reminder, in conjunction with this transaction in 2019, Galapagos recognized a contract liability of approximately EUR 2.3 billion, which was to be recognized as revenue on a straight-line basis over the 10-year term of the agreement. Following the 2025 OLCA amendments, the intention to wind down and related events in 2025, as of December 31, it was assessed that there were no remaining obligations that would justify this specific contract liability to be maintained in our IFRS financial statements. We do not expect any cash tax impact in 2025 related to this recognition of revenue. Importantly, while the OLCA still remains in force, we expect that any future business development transaction will be completed under terms that would be different than the existing terms of the OLCA. Now turning to expenses. Operating expenses were negatively impacted for a total of EUR 399.8 million by the decision to wind down the cell therapy activities with an impact of EUR 275 million, consisting of an impairment of the cell therapy activities of EUR 228.1 million, severance costs of EUR 33.3 million, costs for early termination of collaborations of EUR 16.3 million, deal cost of EUR 10.1 million, EUR 1.5 million for additional accelerated noncash cost recognition for subscription right plans, and EUR 7.5 million of other costs, partly offset by a positive fair value adjustment of the contingent consideration payable of EUR 21.8 million. Additionally, the executed strategic reorganization related to the small molecules business announced in 2025 for EUR 124.8 million. Financial investments and cash and cash equivalents totaled EUR 2,998 million on December 31, 2025, as compared to EUR 3,317.8 million on December 31, 2024. Our cash and cash equivalents and current financial investments included EUR 2,159 million held in U.S. dollars versus EUR 726.9 million on December 31, 2024. These U.S. dollars were translated to euros at an exchange rate of 1.175. Since year-end, we have converted more euros to U.S. dollars and now hold approximately 72% of our cash in U.S. dollars and 28% in euros. We expect to continue increasing the portion of cash in U.S. dollars as the year progresses. Turning now to our guidance for 2026. As part of the transformation to the new Galapagos, we announced our intention to wind down our cell therapy activities last fall, and we are now executing on this process following the works council processes that were completed last month. Given the progress we've made on this execution, I can now share that we expect the cell therapy wind down to be substantially completed by the end of the third quarter of 2026. In connection with the wind down of the cell therapy activities, we expect an operating cash outflow of up to EUR 50 million in Q1 2026 as well as one-time restructuring cash impact of EUR 125 million to EUR 175 million in 2026. This reflects a EUR 25 million reduction compared to the prior guidance range of EUR 150 million to EUR 200 million. In addition, we anticipate cash costs of approximately EUR 35 million to EUR 40 million for the final implementation of the restructuring announced in January 2025. Costs related to the ongoing TYK2 program, including completion of the Phase II clinical trials in DM and SLE, as well as ongoing support to advance the program towards Phase III development are expected to be up to EUR 40 million in 2026. Away from the spend items, we continue to expect meaningful cash flow to come from interest income, royalties and tax credits. As a result, we expect to be cash flow neutral to positive by the end of 2026. We also anticipate we will have approximately EUR 2.775 billion to EUR [ 2.850 ] billion in cash, cash equivalents and financial investments at December 31, 2026, excluding any business development activities or currency fluctuations. Now let me turn it back to Henry to wrap up. Henry Gosebruch: Thanks, Aaron. In closing, 2026 will be a pivotal year for Galapagos as we focus on building long-term value through transformative business development, leveraging our strong balance sheet, our deal-making expertise and our unique collaboration with Gilead. Our shares remain at a significant discount to the cash figures, Aaron just reviewed. We will be focused on closing the gap through execution on our business development plan, thoughtful capital allocation and engagement with shareholders to rebuild trust and confidence. We are encouraged by the momentum we've built so far as we reshape Galapagos with a clear strategy in place. With a disciplined approach to capital allocation, we remain focused on pursuing the right opportunities to build a pipeline of novel therapeutics designed to deliver meaningful benefits for patients and a sustainable value for shareholders. We are still early in this new chapter of our company, but we are off to a strong start, and we are excited about the future ahead. So with that, thank you all for your attention, and we will now open it up for your questions. Operator? Operator: [Operator Instructions] And our first question comes from the line of Brian Abrahams from RBC Capital Markets. Brian Abrahams: Just as you continue to progress on business development, just kind of curious if anything has evolved in terms of what you might be looking for? And then is there any deadline or any sort of change that we might expect based on the Gilead agreement if you're not able to identify assets to bring in by a certain time point? Henry Gosebruch: Yes. Brian, it's Henry. I'll take those questions. So no, our strategy is really consistent with what we've been talking about since last fall in terms of focusing on derisked late-stage clinical assets, not exclusively, but primarily in the i&i and oncology space. And I'd say we continue to see a lot of good opportunity there. And as we said in the prepared remarks, we're focusing on opportunities where we think we can bring unique insight, unique competitive advantage. But I think there's, again, a lot of opportunity, and we're working through our deal funnel and remain confident that there's a lot of attractive opportunity for us. With respect to your second question, as we said previously, we're not going to set a deadline for a specific deal. Again, we'll remain patient, disciplined. Again, we do have some good activity going on, but it's more important to do the right deal than to do a deal by a certain period of time. The OLCA does expire. Now it doesn't expire for about 3 years and change. So ultimately, that is a deadline. But certainly, we're focused on getting an important transaction, transformative transaction done ahead of that ultimate expiration of OLCA. Brian Abrahams: Got it. And if something does not happen before then? Henry Gosebruch: Well, if something does not happen by then, despite working really hard on, trying to make it happen, then OLCA would expire, and we would go on without the OLCA in place. Operator: Our next question comes from the line of Phil Nadeau from TD Cowen. Philip Nadeau: Our question is on GLPG3667. In the past, you've suggested that the bar to moving that forward internally and investing in it further would be rather high. We're curious to get an update on your thoughts there. I know you said you're pursuing all possible avenues of moving that forward. But how does management weigh developing that internally and investing in it versus out-licensing? Henry Gosebruch: Yes, Phil, I would say those comments also stands. We have a high bar. Frankly, we have a high bar, not just for 3667, but for any asset, be it internal or external, we really look at it with the same unbiased lens. Now with respect to where we are, again, it's still early. We, as you know, get the topline data just before the holiday. Data is still coming in. So we don't have the full package in place. We are in the process of talking to partners. Again, given that we don't have the full infrastructure required to really take this into Phase III, it makes sense to see where some of the players are that, that have that. And maybe in working with a partner, we can do more, do it faster, do it more capital efficient and ultimately create more value. So we're focused on looking at that. We're focused on getting our arms around the data that's still trickling in. But again, the bar is exactly the same bar that we've always set for ourselves. Operator: [Operator Instructions] Our next question comes from the line of Sean McCutcheon from Raymond James. Sean McCutcheon: Can you speak to your current view on capital allocation, specifically as it relates to the pool of capital you aim to put forth for acquisitions for BD? And how much you need to reserve for operating expenses going forward and how the Gilead partnership informs deal sizing and optionality on that front? Henry Gosebruch: Yes, it's Henry. Thanks for the question. So look, at a high level, I mean, some of what I'm going to say is it's pretty obvious, but we have EUR 3 billion in capital. And as you point out, that capital needs to account both for any consideration to a partner or acquisition target and of course, our development expenses we would have in any transaction. Now when you say sort of how does the relationship with Gilead inform our capital allocation, as we said on calls previously, the dialogue with Gilead is quite strong. It's very, very constructive. They continue to indicate openness to contribute in both deal terms, meaning paying some of the upfront consideration as well as taking on some of the development spend operation. So ultimately, in working with Gilead, we can go beyond the EUR 3 billion we have. And I think that's one of the features we think is very attractive in working with Gilead. So as we think through it, we don't just think about our pool of capital. We also think about what in working with Gilead can we add to the pie and therefore, kind of go beyond what we could do on our own. I don't know if that's where you were going with your question or if you want to clarify maybe what I didn't answer. Sean McCutcheon: No, I think that covers it. Operator: There are no further questions at this time. So I'll hand the call back to Glenn for closing remarks. Glenn Schulman: Thanks, [ Mel ]. I think in the Q&A queue, we do have one more or a couple more coming in, if possible, it would be great to take. I think there's a question from KBC. Operator: Please go ahead Mathijs Geerts Danau from KBCS. Mathijs Geerts Danau: Mathijs coming for Jacob. I had a question on the lower cell therapy wind-down costs. Do you maybe expect that to lower further in the future? Or do you see any possibility in that? Henry Gosebruch: Yes, Mathijs, thanks. It's Henry. Thanks for getting the question, and I'll let Aaron answer that. Aaron Cox: Yes, thanks. We're not providing future guidance here, but we'll obviously update folks on how that cost envelope is progressing on future calls. But yes, we did lower the range from a previous range of EUR 150 million to EUR 200 million in terms of one-time restructuring costs. We lowered that range by EUR 25 million with this release. And as we continue to progress through the wind down, we'll provide updated costs on future calls. Operator: [Operator Instructions] Our next question comes from the line of Delphine Le Louet from Bernstein. Delphine Le Louet: I was wondering and coming back to the capital allocation and the decision you've been taking especially regarding the cash and the cash allocation, the move from euro to dollar, considering the fact that you didn't gain as much as financial income as last year. And so I was questioning about what was the rationale on the back of that? What was the exact timing for us to be clear? And shall we consider the breakup of, let's say, 2/3 U.S., 1/3 euro as being a picture for your next investment portfolio or for the picture we should have from your investment income in the near future? Aaron Cox: Yes. Thanks, Delphine. So mid last year, we started transitioning more euros to dollars, and that was primarily based on where we expected our BD activity to be driven and also where our cost base is starting to move towards, which is more U.S.-based. We provided a range on this call of EUR 2.775 billion to EUR [ 2.850 ] billion for the year. And as I mentioned before, we'll update that as we go through the year. In terms of continued transition to U.S. dollars, we did -- as you heard from my remarks, we do expect to transition more to U.S. dollars as the year progresses, but still keeping a portion in euros as we still have meaningful operating expenses in euro denomination over the year as we move through this wind down. We do see higher earnings rates in terms of what we're receiving on our U.S. dollars. As you look at rates across the environment, you could estimate euros earning around 2% and U.S. dollars earning around 4%. So while the exchange rate does move, we are seeing significant uptake in terms of the interest earned on the U.S. dollars versus euros. Delphine Le Louet: Can I ask another one? Or do you have to go back in the queue? Henry Gosebruch: Go ahead, Delphine. Go ahead. Delphine Le Louet: I was wondering if you have or if you can communicate any expectation regarding your -- the breakeven in terms of operating income. Henry Gosebruch: You cut out a little bit. You're asking about what regarding operating income? Delphine Le Louet: Yes. When do you expect to breakeven for the operating income? Aaron Cox: Yes. We've indicated we expect to be cash flow neutral to positive by year-end. Obviously, as we work through the wind down and associated costs, those costs are going to be chunky kind of throughout the year. So it's hard to predict exactly which quarter some of those costs are going to fall in, but we do expect to be cash flow neutral and positive by year-end. Operator: [Operator Instructions] Our next question comes from the line of Nora Lazar from [indiscernible]. There are no further questions at this time. So please go ahead, Glenn, for closing remarks. Glenn Schulman: Thanks, [ Mel ] and thanks, everyone, for taking the time to join us this morning on the call. Just a couple of upcoming activities on the Investor Relations front, the Galapagos team is going to be at the TD Cowen Conference next week up in Boston, attending the Jefferies by the Beach Conference in a couple of weeks, Kempen Conference coming up in April 15 and the Bank of America Conference in May. Those interested in meeting with the team, please feel free to reach out to your sales contact at those respective institutions to schedule a meeting. Lastly, I just want to mention that our annual report will be filed near the end of March, March 26. So there'll be additional information coming out then. And if you need anything in the meantime, don't hesitate to reach out to me. Thank you all for your attention today, and have a great week. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

82天前Insight Analytics约5分钟阅读

ARBFF 2026 Q2 财报电话会议

Lachlan McCann: Good morning, ladies and gentlemen, and welcome to the ARB Corporation 2026 Half Year Financial Results Presentation. To all of those online, thank you for taking the time to join us this morning. My name is Lachlan McCann, Chief Executive Officer at ARB. And joining me today to present is Damon Page, ARB's Chief Financial Officer and Company Secretary. Today, Damon will take you through the financial update of the half year results, and I'll present an update to the company's sales and operations. [Operator Instructions] At the conclusion of today's presentation, Damon and I will answer these questions. I'll now hand over to Damon, who will take you through a financial update. Damon Page: Thanks, Lachlan, and good morning, everybody. Thank you for joining us as we present ARB's results for the 6 months ended 31 December, 2025, for the first half of the financial year ending 30 June, 2026. This presentation follows the company's market update released to the ASX on 20 January, 2026. The final market -- the final report released to the ASX this morning and forming the basis of this presentation is consistent with that market update release dated 20 January, 2026. If we move to Slide 3, we see an outline of the company's sales revenue, profit before tax and profit after tax. To the left of the slide, ARB sales declined 1% in the first half of the 2026 financial year, generating total sales revenue of $358 million. The sales environment in the past 6 months was challenging with the sale of new vehicles declining globally and consumer sentiment constrained. Sales into the U.S. were the standout contributor with growth of 26.1%. Performance by sales channel is outlined on the following slide. ARB's reported profit before tax of $57.1 million declined 18.8% compared with last year. After adjusting for one-off items, including gains from real estate sales and costs associated with the termination of the Thule distribution agreement, the profit before tax decline was 16.3%. Lower sales margins driven by the weaker Australian dollar compared with the Thai baht and lower factory overhead recoveries were the key factors driving the decline in profitability. We will cover this in more depth on Slide 6. Costs were otherwise relatively contained with the exception of non-cash depreciation resulting from the company's recent elevated capital expenditure program. Reported profit before tax represents 15.8% of total revenue, below the 19.4% achieved last year. Driving sales growth and focusing on restoring margins is key to achieving the company's target of 20% profit before tax to sales. To the left of the slide, reported profit after tax of $42.2 million declined 17.2% compared with last year, marginally better than the company's reported profit before tax result and earnings per share declined 17.9%. Slide 4 outlines sales performance by channel. And we see there the sales into the Australian aftermarket declined 1.7% in the first half, affected by lower new vehicle sales for ARB's core model platforms and the ongoing shortage of accessory fitment resources. Sales were marginally down in all states, except for in Western Australia. ARB's retail store network grew by 4 stores to a total of 79. 5 new stores were opened in Mittagong and Griffith in New South Wales, in Mildura in Victoria and in Rockingham and Midland in Western Australia, whilst the store in Burnie, Tasmania was sold but continues to trade as a private stockist. While sales declined during the half, customer demand remains at historical highs and the open order book ended the half year 5% higher than at December 2024. Export sales increased 8.8% during the half. Sales grew -- sales growth of 26.1% was achieved in the U.S. driven by the strategic relationship with Toyota U.S., the eCommerce site in the U.S. and growth through the ORW and 4-Wheel Part retail networks. Other export markets were impacted by lower new vehicle volumes and reduced government funding to the aid and relief sector. The decline in sales to original equipment manufacturer customers of 38.2% or $11.2 million reflects increased inventory levels held by the OEMs, resulting from lower new vehicle sales and slower sell-through of inventories purchased previously. Across on to Slide 5, we see the company's profit and loss statement for the financial half year ended 31 December, 2025. It highlights sales revenue was down 1%. Underlying profit before tax was down 16.3% and reported profit before tax was down 18.8%. Some key items to call out include the combination of a decline in sales revenue of $3.7 million and the increase in materials and consumables used of $6.9 million, representing a $10.6 million reduction in gross profits and accounts for most of the $11.3 million decline in underlying profit before tax. The 2 factors driving the decline in ARB's gross margin being the significantly weaker Australian dollar against the Thai baht and lower factory recoveries as inventory levels materially increased in the prior comparable period are covered in more detail on the following slide. Consequently, materials and consumables used represented 43.7% of sales, which compared with a historically low 41.4% of sales achieved in the prior half year. Costs were otherwise relatively well contained with the exception of depreciation expense, which increased $2.4 million or 16%, resulting from ARB's elevated capital expenditure program over recent years. Also of note, employee expenses were flat at $90.5 million. Operating expenses, including advertising, distribution, finance and maintenance expenses, all declined marginally over last year. Pleasingly, ARB's recorded its $777,000 share of equity accounted profits from its investment, primarily in ORW and 4 Wheel Parts. Regular monthly profits recorded by ORW are ahead of the business case. Overall, the underlying profit of the business declined $11.3 million or 16.3%, of which $10.3 million relates to lower gross profits resulting from the 1% decline in sales and lower sales margins. Adjustments to profit include a $1.3 million gain on the sale of a retail store following a relocation to a larger flagship site and costs associated with the discontinuation of the Thule distribution agreement with Thule choosing to operate in the Australian market directly. Sales and profits associated with Thule were not material to the business. Slide 6 provides more detail around the reduction in gross profits referred to earlier in the presentation. Firstly, ARB manufactures the majority of its fabricated products in one of its 3 Thai factories where the costs are denominated in Thai bahts. Unfortunately, the Thai baht traded at its historically strongest range, i.e., between THB 21 to THB 21.5 to the Australian dollar throughout all of calendar 2025. Based on a 3-month lag, representing inventory holdings and timing of creditor payments, the baht averaged THB 21.17 to the Australian dollar in the first half of FY 2026. This compares with THB 23.71 to the Australian dollar in the comparative first half of FY 2025. This represents an 11% decrease in the purchasing power of the Australian dollar against the Thai baht, meaning the Thai manufactured product was significantly more expensive in the first half of FY 2026, which is reflected in the lower sales margins and ultimately, the lower company profit achieved. Secondly, factory overhead recoveries in the first half of FY 2026 were lower than in the first half of FY 2025. During that period -- during that prior period, ARB's inventory levels increased materially from $240 million to $278 million, resulting in an over-recovery of factory costs. Inventory was subsequently reduced in second half FY 2025 and again in the first half of FY 2026, leading to lower factory cost recoveries and contributing to the overall decline in profitability in the first half of FY 2026 compared with the prior December half year. On a positive note, the company has largely hedged its Thai baht exposure for the second half of FY 2026 at rates slightly more favorable than those contracted in the prior corresponding period and overhead recoveries are forecast to be consistent with second half FY 2025. Consequently, sales margins in second half FY 2026 are expected to be broadly in line with those achieved in the second half of FY 2025. Slide 7 calls out major company cash flows during the year. The company generated cash from operating activities of $63.9 million, which is marginally higher than the profit after tax of $41.2 million and the non-cash depreciation and amortization expense of $17.8 million, reflecting relatively flat working capital. The company invested $11.7 million on property, plant and equipment during the half year, $5.2 million on land and buildings and $6.5 million on factory plants and equipment. The company paid $59.3 million in 2 dividends during the period, net of dividend reinvestments. The final dividend of $0.35 for FY 2026 was a cash outflow of $24.2 million and the $0.50 special dividend was a cash outflow of $35.1 million. Both dividends were fully franked at 30%. The company was holding $59.4 million in cash at the end of the half year and has no debt. This was a decrease of $9.8 million from 30 June 2025, reflecting the special dividend paid. Slide 8. The Board has declared an interim fully franked dividend of $0.34 per share. This is consistent with last year and represents a payout ratio of 67.2%. The dividend reinvestment plan and bonus share plan will both be in operation for this dividend with a 2% discounts and will be paid on 17 April, 2026. I'll now hand the time back to Lachlan. Lachlan McCann: Thank you very much, Damon. Let's begin with new vehicle sales in the 6 months to the end of December 2025, and on to Slide 10. New vehicle sales for 4x4 pickup and SUV variants where ARB has its highest attachment rate was challenged. This not only affected the Australian aftermarket business, but also ARB's OEM channel. Given ARB's association with Ford through our Licensed Accessory Program, we watch the Ranger and Everest sales very closely. Despite a strong month in December for the Ford Ranger, it finished the year -- the half year down by 1%, while the Everest was down 9% on the prior corresponding period. ARB produces aftermarket and OEM products for Isuzu and Mazda. In the half, the D-Max, MU-X and BT-50 all declined over the prior 6 months, most notably the D-Max pickup sales were down 13%. Toyota recovered its Prado 250 sales in the half with a 67% increase, comping off the model change in the prior corresponding period. The iconic Land Cruiser 70 series and 300 series both experienced soft sales. While ARB continues to invest in existing and new product for the BYD Shark, models where we are confident of higher accessory attachment rates such as the new Ford Super Duty and Toyota HiLux have been prioritized through the business. Unfortunately, January 2026 new vehicle sales continued this negative trajectory, which we will hope to see recover during the balance of the financial year. On to Slide 11. Touching on the Australian aftermarket. And today, ARB's store network comprises of 79 stores nationally, up from 75 stores this time last year. In line with new vehicle sales in the first half of the financial year, the ARB domestic aftermarket declined by 1.7%, which now represents 56.9% of total sales. With resolute confidence in the future of the business, ARB and our independent store owner network continue to invest in the future expansion, which I'll dive into further in the following slide. As Damon has commented, the back order -- the order book at the end of the half finished up 5% compared to December 2024, which gives us confidence as we head into the second half of the financial year. In lockstep with our independent store owners, ARB is exploring expansion opportunities for specialized resellers for specific products where ARB may not necessarily access a customer through our ARB store network. Specialized mechanical driveline shops for our air locking differentials or auto electrical stores for ARB's aftermarket lighting lineup are examples which we are currently pursuing. The partnership between Ford Motor Company and ARB continues to flourish. Whether it's on a Ford national television advertising campaign or driving pass the Victorian Police Ford Ranger adorned with ARB product, the solution Ford and ARB provides to our collective customer base has definitely resonated with the market. In later slides, I'll speak to the launch of the Super Duty platform, which has now been integrated to the FLA program. Moving on to Slide 12. In the half, we completed one upgrade of a flagship corporate site and added 2 all-new independent flagship stores. Confident in the future of ARB and the profitability of these stores, our mapping of Australia combining new vehicle sales, distribution of wealth by postcode and other key inputs suggests there remains a lot of headroom for store expansion. To our partners, James Whitworth and the team in Mildura, Mildura Victoria and to Matt Powalski and the team in Griffiths, New South Wales, thank you for your commitment and effort to launch all new flagship showrooms. It's deeply appreciated. To our ARB corporate team members in Launceston Tasmania and to our new employees in Warragul, Victoria, we appreciate your contributions to the business in bringing your stores to market in the last 6 months. Pleasingly, for the balance of 2026, we have 2 priority development. Globally, ARB's largest footprint store in Townsville, Queensland will launch in FY 2026, in addition to an all-new corporate site in Metro Sydney region. In FY 2027, the expansion continues with 2 all new stores and 3 flagship upgrades. Moving on to Slide 13 and our eCommerce program. When COVID arrived on our doorstep 5 years ago, there was a reflection point on our retail strategy in Australia as we were unable to transact with customers online. While we're far from a box-in, box-out business given the need for our -- the majority of our products to be fitted, there is a customer demographic that either prefers to shop online or are capable of DIY fitting that do make our products less accessible by exclusively being a brick-and-mortar retailer. This really challenged ARB's management during COVID with an incredible temptation to stand up a simple eCommerce platform. After careful consideration, we knew there was a much bigger long-term play in designing a best-in-class integrated 4x4 accessory e-com site that provides a seamless customer interaction online with the incremental benefit of our omnichannel offering where a digital experience is complemented by our in-store customer service. The road to a best-in-class site required significant investment in proprietary tools that supported the success of this site. These include an e-catalog, which provides a guaranteed fit of ARB parts to the complex car park in Australia. We've worked extensively with our independent store network to ensure their business is integrated to the new site and their primary market area is respected online. We've also worked with premium vendors to ensure our site uses best-in-class technology. As referenced on screen, we have 1 million unique visitors to the ARB USA -- the arb.com.au website today, which with quick calculations referencing our eCommerce site in the U.S.A. based on average order value and conversion rates suggest this will become an important commercial channel for ARB. Additionally, we note that the different demographic between an in-store customer to those browsing the ARB website where over 60% are aged between 29 to 44, suggesting opportunities to reach new customer demographic and bring these guys into the brand. The store is now live as of last week. We've traded seamlessly through our first weekend. Orders and quotes are strong, and we're looking forward to a brave new world for ARB. I'll play the following video shortly, which will give you a quick recap of the features of this brand-new site. [Presentation] Lachlan McCann: Excellent. To all those online, please jump on the new website and have a browse. We think it's pretty special. Just a quick update on the Ford license accessory program. Just as a reminder, this is where we've partnered with Ford Australia and Ford globally to deliver in excess of 180 branded accessory products for the Ford Ranger and Everest platforms available through Ford dealerships with a full 5-year Ford-backed warranty. As an extension of the partnership, Ford and ARB have collaborated on a special interest pack for Raptor. These special interest packs support an OEM's mid-model life cycle strategy to reignite excitement in a model that is in the middle of its lifetime. In the half, Ford released the Ford Raptor Desert Pack, which features ARB branded sports bar, 4 NACHO Quatro lights, along with a number of other Ford upgrades. The Desert Raptor Pack is now available to order for dealerships. Again, the Ranger Super Duty is now in market. Our FLA partnership has flowed through this model. And as presented at the AGM, we believe is a customer profile directly in the bull's eye for ARB product. Early indications suggest accessory attachment rates are high and in some products exceeding our expectations. We continue to discuss with Ford further product expansion opportunities for this model. Later in the presentation, I'll quickly touch on ARB's marketing push for the Super Duty. Moving on to our international business. And on Slide 17, we see ARB's export business achieved 8.8% growth in the half and now represents 38% of our total business. Asia, New Zealand and the Pacific region performed well with 6% growth. Unfortunately, our European, Middle East and African business declined 6.9%, which I'll speak to later in the presentation. The U.S.A. again outperformed, achieving a fantastic 26.1% growth to the half. Despite very challenging economic and political environments with the recent tariff news is seemingly going to continue, we're dedicated with the progress of our sales, marketing and distribution channels in the Americas. It's important to note that the Off Road warehouse for parts and NACHO revenue is not consolidated, and therefore, this revenue is excluded in the outdoor sales of the ARB U.S.A. business. Moving on to Slide 18. And again, as a quick recap, on September 9, 2004 -- 2024, my apologies, ARB announced that Off Road Warehouse, ARB's associate company in the U.S.A. had entered into an asset purchase agreement to acquire the 4 Parts business, which includes 42 retail stores in the U.S. alongside associated IP, including the 4 Parts eCommerce business. The acquisition was finalized on the 18th of October, 2024 for a provisional amount of USD 30 million, which was subsequently adjusted down by USD 4 million as a result of excess and obsolete inventory. Combined with ORW's existing 11 stores, this significantly expanded the retail network of -- to 53 stores and provided ARB with the majority opportunity for a long-term brand and sales expansion in the U.S. To facilitate ORA's funding of the acquisition, ARB increased its ownership interest from 30% to 50% for $16.7 million and provided a loan to ORW of $7.5 million. The main shareholder partner of Off Road Warehouse is Greg Adler. Greg's family founded 4 Parts in the 1960s. Greg has spent the majority of his time -- sorry, my apologies. Greg has spent the majority of his working life in the business, including over 2 decades as CEO of 4 Parts and is happily back at the driving wheel running the family business to its former glory. Moving on to an update on Slide 19. In the 8 months of trading, 4 Parts has successfully integrated over 500 employees to the business, transitioned the ERP system, closed a total of 5 stores, 3 of which were geographically close to other stores and 2 are underperforming. The business now has a total of 48 stores. We've restructured a loss-making eCommerce business back to profitability. And as a result, the business has achieved a net profit before tax shift of USD 3.5 million from the second half of 2025, noting that we acquired a loss-making business. At 30 of June 2025, ORW had a positive cash balance of USD 14.5 million and as reported by Damon, has repaid its ARB debt facility in full. With all of that, the comeback has just started. Through a lot of operational heavy lifting, Greg and the team have begun to raise their eyes to grow the business. Optimization of existing store network remains a strategic priority. And while we're better in many of these stores, there's a lot of room for improvement. We have fantastic engagement with our supply partners who are eager for a deeper engagement with a fresh looking forward parts business. TruckFests have been a long-term known strategy where the business plans and executes customer-facing retail shows to provide access for manufacturers directly to the retail public. Four events have been planned for 2026 and with great excitement from our retail customers and valued suppliers alike. And then expansion opportunities across new locations and possibly specific house branded categories are being considered. Moving on to Slide 20, which speaks to the ARB product sales inside ORW in 4 Parts stores and again, a good news story where ARB product sales have achieved excellent results. The product exposure and education are a priority through the retail and eCommerce sites, both of which have significantly improved. On a like-for-like store basis, ARB product sales through the ORW 4 Parts channels are growing at over 100% on prior corresponding periods. I'm pleased to report that the store-in-store ARB displays past probation, and we now move on to our next batch of 6 stores, which include in April, Kearny Mesa, California, Las Vegas, Nevada, Denver, Colorado; and then in May 2026, Dallas, Texas and Orlando and Doral in Florida. Following the completion of these stores, we will assess the timing and activation of our next bunch of store developments. ARB, of course, will also have a fantastic presence within the TruckFests, presented on the previous slide. Moving on to Slide 21. And with great credit to our team at ARB U.S.A. led by Rich Botello, we're delighted by our continued growth of 26.1% in the half and the continued strengthening of the ARB brand in the U.S. market. All sales channels performed well in the U.S., Latin America and Canada, including our strengthening partnership with Toyota U.S.A. On to Poison Spyder, and as a part of the Wheel Pros Chapter 11 process, there was an opportunity to acquire an iconic Off road brand in the U.S.A., which is close to the hearts of Jeep enthusiasts and rock crawlers alike. This is Poison Spyder. Rock crawling legend, Larry McRae, drove the brand to its original heights after various ownership changes, including time as a part of the 4 Parts family, the sleeping icon has laid dormant or semi dormant for a number of years. Under ARB's ownership, the brand has now relaunched with much excitement, both online and at events such as King of the Hammers in Johnson Valley, California. Product is now in market. Demand has exceeded original expectations, and we're in back order. The dedicated eCommerce site has now launched, and we're looking for product expansion opportunities. Watch this space. To finish, ARB USA updated the -- sorry, to finish the U.S. update, ARB has leased an 8,100 square meter facility in Norco, California, which is approximately 80 kilometers from downtown L.A. The expansion site will support ARB's future growth on the U.S. West Coast, housing engineering, Poison Spyder, the expansion of 4 Parts ORW and new products ARB will bring to the market in coming months and years. Unsurprisingly, today, our largest single market on the West Coast of East California, we're servicing this market from our current Seattle location, is slow and expensive. As a result of this, we will close the Seattle distribution center, but retain a core team of marketing, product management, operations and administration in Seattle. Moving on to Slide 22 and talking through further international business. Planning for ARB's presence in China through our wholly owned foreign entity remains on track, confident with this presence, we will stabilize and grow this important market. Opening is planned for April 2026, where customers, OEM partners and key dignitaries will attend the event. Product is on the water, and we look forward to providing sales updates in future presentations. An important miss for the half was our business in Europe, Middle East and Africa. The business was materially impacted by 3 factors: a reduction in customer demand in the aid and relief sector. ARB has previously reported our framed agreements with organizations such as the UNHCR, World Food Program, Medecins Sans Frontieres, all have experienced cuts to their funding in the last 6 months. Isolated non-recurring issues with key customers in Africa have also weakened the first half trading, in addition to which lower 4x4 pickup sales in key European markets affected sales, as reported by Damon. Offsetting the lower aid and relief sector spending, we've seen increased tendering and contracts in the defense space, which we anticipate will support improved sales in this region in the second half of the financial year. Truckman in the U.K. performed well in achieving 5.2% lift in revenue. This result was achieved despite a 13% reduction in registrations of pickup models, key to the Truckman business in the first half of the financial year. ARB product sales, combined with additional defense spending, supported this growth. Moving on to Slide 23 and ARB's OEM channel. The OEM channel -- so the next slide, sorry, 24. Thank you. The OEM channel has had a tough 6 months with a 38.2% decline. While we previously flagged a reduction in sales, a combination of increased inventory holdings by OEM partners and lower vehicle sales affected platforms and compounded this result. The result does not reflect the loss of any OEM contracts. It does indicate softening of specific models key to ARB's OEM and aftermarket business. In the prior corresponding period, ARB was delivering Toyota Genuine Prado bull bars at this -- which as this vehicle ramped up, exacerbated the decline in revenue in this first half. Given the multiyear time frame of these OEM programs, ARB is actively pursuing business with both new and existing OEM customers. Moving on to Slide 25. Consistent with our Trailhunter program in the U.S., investors will have seen an increase in ARB brand partnership collaborations with Toyota markets outside Australia. ARB has been working with Toyota for over 40 years and is immensely proud of this partnership. ARB is delivering branded content on the recently released FJ Cruiser in the top right-hand corner of the screen, which is a platform restricted to specific markets outside Australia. We also collaborated closely with Toyota Thailand on the release of the HiLux vehicle, which we hope to see further commercial opportunities into the future. Now I'll move on to our product section. And firstly, to Slide 27 on the winch. ARB has respected our long-term partnership with Warn Industries, the global leader in the design and manufacture of electric recovery winches. This relationship was specific to the Australian market, but in markets outside Australia, where the recovery winch remains an important accessory, we didn't offer a solution to our customers. Given ARB's investments in distribution, particularly retail-facing channels, this is an incredibly important accessory to complement our bull bar offering. Over the last 2 years, our engineering team have been working on innovation in this product category to bring something new to market. The ARB winch in addition to its fantastic styling also integrates the contactor pack back into the winch to enhance both performance and the ease of installation to vehicle platforms. Demand has again exceeded initial forecast where we have prioritized our international business units. First shipments will begin arriving with customers in March 2026. Now the next few slides, we won't move slides yet, speak to the application engineering, which has consumed the lion's share of our development resource over the last 6 to 8 months. Speed to market is everything in our industry, and we're incredibly fortunate not only to have an outstanding design and production engineering team in Kilsyth to get products ready, but also a highly capable factory that lets us build first units in Australia to put product in customers' hands as close to vehicle launch as possible. The next video showcases the already mentioned Ford Super Duty. If we can please play the video. [Presentation] Lachlan McCann: From our Summit Mark II (sic) [ MKII ] bull bar to the Slimline BASE Rack, Old Man Emu suspension and our MITS Alloy service body, thanks to our partnership with Ford, ARB was ready at vehicle launch with a full complement of products. These products were incredibly well received by customers, which today is converting to very strong product demand. Moving to Slide 30. Just in market is the facelift Toyota HiLux. Again, ARB benefited through our association with Toyota Corporate with early access to vehicle data and a physical vehicle to prepare for launch. Conscious of the differences in vehicles between international markets in Australia and also to integrate our offering, we have taken time with an Australian specification, HiLux, to fine-tune designs of products and as such -- such as the bull bar canopy and suspension. These products are now in production in Kilsyth and shortly in Thailand. Deliveries to customer back orders are now imminent. While there has been differing opinions in the market to the new pickup vehicle, it's a Toyota, and those loyal to the quality of product and the service offered by Toyota will continue to buy HiLux. When the ARB offering was presented to market, it was very well received, which we're seeing come through now in initial customer orders. On to Slide 31 and to recap ARB's 50-year celebration. From our very humble beginnings out of the family garage in Croydon, Victoria in 1975, the company has come a long way in 50 years to be a true global leader in the design, manufacture, marketing and distribution of our 4x4 accessories to outdoor and off road enthusiasts around the world. We used 2025 to thank our employees, suppliers and also engage with our incredible customer base who follow ARB's journey. The 50th year celebration gave us the opportunity through various digital channels to explore our most popular Australian destinations, but also provide aspirational insights to operating in far-reaching locations, such as Mongolia, South Africa, the UAE and Morocco. As you can see on screen, the engagement with our fan base was remarkable and will serve as a great springboard as we strive to grow brand awareness of ARB through the next 50 years. And finally, on to the outlook. Sales margins in the second half of 2026 financial year are expected to be broadly in line with the first half. As explained by Damon, in recent weeks, we've taken the opportunity with the strengthening Australian dollar to hedge our Thai baht exposure, largely removing this headwind in the second half. The Australian aftermarket remains a challenge. We actively monitor through OEM partners new vehicle supply. In the second half, we see the Super Duty and HiLux as a tailwind, although we remain concerned about the supply of models such as the 70 Series Land Cruiser and 300 Series Land Cruiser. The customer order book remains strong and looking beyond the next 4 months, ARB's investments in new store developments as well as new channels such as eCommerce will be incremental to ARB's revenue growth over time. The outlook in export is positive. We're confident headwinds experienced in the first half are behind us. The order book in export is well ahead of December 2024, and we continue to see a long runway for growth in the U.S.A. as a result of strategic investments made in recent years. The OEM result in the second half will largely depend on new vehicle sales of those models ARB supports our partners with. The OEMs have reduced their inventory levels, which vehicle sales dependent should support improved sales in the second half. Overall, ARB's financial performance in the second half is expected to improve relative to the first half of FY 2026 and trade closer to the prior corresponding period. Closing the half with a very strong balance sheet and $59 million of cash in the bank puts us in a very strong position to invest in our future. ARB management and the Board remain positive about the long-term growth prospects of the business. An increasing population of 4x4 pickup vehicles, the best distribution network for specialized 4x4 accessories in the world, a strong and growing global brand and a high-performing management team, remain very excited about the future of the business. That concludes today's presentations. Again, thank you very much for everybody online for taking the time to join us. I'll now hand back over to Damon for -- to answer some questions that have come through. Damon Page: Thanks, Lachlan. A number of questions coming through on margin impact. So I'll just consolidate an answer to cover all of that thereof. If we could perhaps just go back to Slide 6 in the presentation, and I'll just address the impact of the foreign exchange on the margins going forward. So on Slide 6, on the left-hand side, you'll see the average exchange rates for the half year. So second half FY 2025 being January to June 2025, you'll see that the average exchange rate over that period is THB 21.7. So we bought THB 21.7 to the Australian dollar at that time. Now we've locked in the majority of our currency requirements for the second half this year at a rate just slightly above that 21.7 (sic) [ 21.70 ]. You do lose some forward points as you move your forwards out to May and June. And so in terms of the exchange rate, we expect the exchange rate will -- we expect that the exchange rate will be very consistent with the second half of last financial year. We do have a little bit more to lock in, but it's not going to materially change that impact. In terms of the price increase that went through in February, that price increase -- it was suggested on one of the questions that it was a large price increase of 4% to 5%. It was an average price increase of about 3%. That price increase went through in February. We expect to see the benefit of that flowing through the back end of the second half, so probably through that late April, May and June period there. So we will get a little bit of uplift from the price increase, but it will take approximately 3 months to flow through, February, March and April, before we see the benefit of that flowing through to our results given the order book we have and the open and back orders in place. Just again, in terms of the Thai baht, look, if the Thai baht stays where it is, we'll obviously start at some stage looking to take cover into the first half of the next financial year into that July and post-July period. And we should see some favorable impact as we move forward into the new financial year. A question here about, as GP margins deleverage with the weaker baht and lower factory absorption, shouldn't we see those -- shouldn't we see it reverse should those conditions change? The answer is yes. But the Thai baht is now trading back below THB 22. So it won't be as material a change upward as it was on the way down when it went from THB 23.7 last year to THB 21.1 this year. So we -- if the Thai baht strengthens back to THB 23, we'll see a complete reversal of what has occurred in this first half. If it sits where it currently is, then obviously, those margins will continue forward, and we'll get some price -- some improvement in gross profits from the price that was taken in February for the price increase. A question around second half financial performance being closer to the prior period, that's in reference to absolute dollars rather than to profit before tax margin percentage. So just to be clear, that's in reference to absolute dollars. I think that's it by way of margins and financial questions. Lachlan, if any more come through, I'll pick those up, but I'll just hand back to you to respond to the other questions. Lachlan McCann: Okay. So thanks, everybody, for the questions that have come in. I'll just start with one around the timing and the release of the ramp-up of the Toyota Asia partnership in terms of supplying product. In limited quantities, product has commenced supply. There's a number of products if you've got a K9, including the roof rack and a couple of other things on the FJ Cruiser. We have further products that we have been contracted with, on that model, that have not yet commenced supply, but a limited number of accessories have commenced supply into Toyota Asia, which is fantastic. The next question relates to the BYD Shark. ARB is watching BYD Shark accessory uptake. How does it compare currently to, say, ARB's key models? How do you balance having product ready for Shark versus the uncertainty on accessory take-up? There is a finite engineering resource at ARB. We do not -- we do believe BYD as clearly an opportunity in market, which is obvious. They've done a great job in bringing that vehicle to market. Do we see the attachment rates on a BYD Shark as high as platforms like the Super Duty and like the HiLux? And clearly, the answer to that is no. We have prioritized those 2 models as examples of product that we have pushed through our design and production engineering teams. With that said, and as has been presented to market previously, product is available for the BYD Shark today through ARB channels, and we'll continue to increase that offering on that platform. Again, just conscious, with constrained engineering resources, we have taken the decision to prioritize those other 2 platforms. So I certainly would suggest that we don't ignore the success of the BYD Shark. We just know with confidence that both the Super Duty and the HiLux have higher attachment rates. How confident are you, is the next question, in your growth earnings for FY 2027? I think in the outlook, we've provided enough update as we're prepared to give. So hopefully, that gives you some indication as to where we sit both for the balance of the year and hopefully, some indications about where we see the future. The next question, where you say the Australian aftermarket, the company's order book remains healthy with daily sales and order intake close to historical highs, are you implying that revenues are on track towards $201 million? So again, there, we've given, I think, as much information as we're prepared to provide on the outlook slide. So that hopefully covers that one off. Can you explain further to what drove the softer results within EMEA, spoke to unassociated challenges versus non-recurring? Yes. I suppose with transparency, it does speak to a major distributor who had a significant health concern during the year, which slowed the business down, which on reflection, it's a succession planning and corporate management piece that we have to organize. That health condition is behind the owner of that business. The business has started to pick up, but it does highlight for the business some weakness or susceptibility with respect to succession that when a single individual goes out of the business, we can have that type of slowdown. So that's certainly something we're looking to address going forward. Can you provide further details on the composition of export business within EMEA? How is the split between military, foreign and independent retail? It's a very good question. What I would speak to in my exposure in the 25 years to those markets is, there has been a shift away from retail to fleet. Fleet is a growing and important part of those businesses and something that we have actually invested in dedicated resources in that space, including the OEM channel for the European market so that we can continue to grow. I wouldn't say by any stretch that means that the retail market in Europe is softening. There are certain product commodities that continue to be very, very positive. Our product offering, given its practical use application, is definitely more targeted towards that fleet demographic and is a part of the growth of our European business, in particular, over the last sort of decade or so. I think I've covered off the European questions. What percentage of total export sales does ARB USA currently represent? The answer to that is 43%, covers that off. Toyota has commenced calendar year 2026 at a slower rate. Are you seeing supply impacts within Toyota? Or has the HiLux launch been a little lacklustre relative to prior new generation launches? Do you expect Toyota volumes to improve over the next 6 months? Look, there's publicly available information, for example, on the Land Cruiser 70 series where Toyota has actually indicated they've stopped taking orders. We are -- we receive forecast from OEMs, which are their best view of the future. What I would say is, my understanding is Toyota is supply constrained, not demand constrained. Every model that we know of, that Toyota has, is back ordered within the system. We actively monitor key models such as the 300 series, the 70 series, the HiLux and the Prado. And on a lot of those months, you are waiting many months, up to 6 to 8 months for a new vehicle if ordered today. Now the soup of Toyota and how they decide in their way of playing [ golf ] between their international markets is quite confusing. The Land Cruiser Prado, which is built in Japan for the U.S. market, has been incredibly popular and has outperformed expectations, which may have a supply impact to the Australian market, possibly. We see models like the Toyota HiLux, which is now in market in Australia. We know that, that vehicle is not going to be available to purchase in the U.K., for example, until the back end of this calendar year. So like the person who wrote this question, we too are quite confused in some instances about how Toyota decides to allocate vehicles to market. There's compliance issues. There's all sorts of things that I'm sure go into their thinking there, but it's something we obviously, certainly watch a lot. Can -- the next question, can you please discuss how the vehicle model changes affects the OEM revenues and aftermarket revenue timing? This is something not well understood, and it also opens up on Europe impact of vehicle supply patchiness, et cetera, et cetera. I think in answering the last question, that is sort of covered off. I'd really again take the time to highlight -- and this is not only something that's relevant to Toyota, but certainly, Ford fights this as well, where it's not always a question of demand in the market. It's definitely a question of supply. We know for a handful of those models, and certainly for the Super Duty right now, if Ford could build more vehicles and send them to Australia, they'd be selling more vehicles, which is a good news story. I don't know how to translate this question. Just to clarify the 100% product sales with reference to the entire 4 Parts network. Okay. So this question just is seeking to clarify our doubling effectively of ARB product sales through the 4 Parts ORW network. So this does not just represent the one to 2 stores. This is a year-on-year comparison to the prior corresponding period. Through the 48 stores, our sales have doubled. We have to highlight that they are coming off a weaker volume, but we're seeing incredibly strong penetration through those stores. The next question speaks to the probation, which is interesting wording, probation set for the 2 stores? So there were some commercial decisions wrapped around those 2 stores on probation. There was some customer experience that we baked into the decision to move ahead with further stores. There was certainly a lot of feedback from the store managers that we baked into our decision. There's also us making sure that the experience resonated with the customers. We call it bull bar, bull bar, they call it a [ bumper ]. There's different ways that they present suspension to market, et cetera, et cetera. So we just wanted to make sure that the physical representation of our products into those stores resonated with the market, which we're confident that it has. And so again, we move forward, which is incredibly exciting. Have ARB products needed to stop the U.S. door in store rollout being booked in sales? It would -- if it was, it would be immaterial to the business. So I don't think that's necessarily relevant in terms of revenue and our good [ accountants ] would probably capitalize that investment anyway. There is one more question. Any comment on the tour impact on aftermarket sales and profitability? Immaterial on both fronts, yes. So that covers that question off. Damon, do you have any more? Damon Page: Look, Lachlan, I just wanted to -- I'm conscious you haven't seen these, but just wanted to give you an opportunity just to respond to whether it's worth investing more in engineering capability given the changes in the car park? Lachlan McCann: Yes. Good question. And look, there's a couple of answers to that. Number one, we've presented before the market the investments that we are making in the U.S. And so yes, and we certainly are planning for further engineering expansion in Australia. I suppose the best way to speak to that is the explosion of models and the proliferation of new entrants to the market, means that we have to have more engineering resources to get more product to market. And it would be a fair criticism to say we've had to prioritize HiLux and Super Duty over BYD Shark. Why can't we do all of them at once, and we would accept that feedback. And of course, including the Kia Tasman, which has also come to market recently. Damon Page: Lachlan, we've cited fitment resources as a headwind to results again. Question is around, have we increased the number of fitment bays in flagship stores and focused on labor? So does this get resolved is the question? Lachlan McCann: Yes. Look, it was only because we see it as a perennial issue facing the business on a go-forward basis. We've restructured the incentive plan for fitters in the first half of the financial year, where there's some performance-based incentives, which we really only finalized the rollout in December. And the effect of that has been really positive. We're actually seeing retention rates improve. But rather than speak to that with limited data in this half year results presentation, we wanted the time to have that mature in the second half of the financial year, so we can report back more specifically. Initiatives across the board, again, the Filipino fitters and the international fitters continue to be a focus. Our onboarding of team members is a weak point that we need to improve so that we get better engagement earlier and retain those fitters. So as always, there's a raft of measures that we're undertaking through HR and through the business to continue to improve in that space. And I would say, in the first half of the financial year, we have made inroads, particularly to holding on to those staff members that join us. We hope to be able to present further to this in the full year presentation. Okay. We're nearly 1 hour in. So that will conclude today's presentation. Both Damon and I, again, would like to really take the time to thank you all for joining online, and we look forward to seeing you at the next presentation. Thank you again.

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MAX 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by. Hello, and welcome to the MediaAlpha Inc. Q4 2025 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the call over to our Investor Relations, Alex Liloia. Please go ahead. Alex Liloia: Thanks, Dustin. Good afternoon, and thank you for joining us. With me are Co-Founder and CEO, Steve Yi; and CFO, Pat Thompson. On today's call, we'll make forward-looking statements relating to our business and outlook for future financial results, including our financial guidance for the first quarter of 2026. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements. All the forward-looking statements we make on this call reflect our assumptions and beliefs as of today, and we disclaim any obligation to update such statements, except as required by law. Today's discussion will include non-GAAP financial measures, which are not a substitute for GAAP results. Reconciliations of these non-GAAP financial measures to the corresponding GAAP measures can be found in our press release and investor supplement issued today, which are available on the Investor Relations section of our website. I'll now turn the call over to Steve. Steven Yi: Thanks, Alex. Hi, everyone. Thank you for joining us. 2025 was a pivotal year for MediaAlpha. We delivered exceptional results in our P&C insurance vertical as auto insurance carriers and agents accelerated advertising spend, and we captured more than our fair share of that growth. At the same time, we narrowed the scope of our Under-65 health insurance business, improving our risk profile and sharpening our strategic focus. We generated significant free cash flow, reflecting the strength of our operating model and our disciplined approach to expense management. We returned a significant portion of that capital to shareholders, completing $47.3 million worth of share repurchases or roughly 7% of shares outstanding. Our fourth quarter results were strong with adjusted EBITDA above the high end of our guidance range. While transaction value came in modestly below guidance due to more normalized seasonality in our P&C vertical, open marketplace demand partners leaned in, driving solid revenue growth and a higher-than-expected take rate during the quarter. Our P&C business is off to a strong start in 2026, and we expect continued positive momentum for the full year and beyond. Carriers remain solidly profitable and are increasingly focusing on growing their customer base. As is typical in the early stages of a soft market, competition is beginning to intensify with many carriers lowering rates to gain share. Beyond pricing, advertising is the other primary growth lever available to carriers, and we expect advertising budgets to continue to increase. Given our unmatched scale and targeting capabilities across hundreds of supply partners, we expect carriers to allocate a growing share of wallet to our platform. We're particularly focused on the significant opportunity to scale underpenetrated carriers in our marketplace, helping them optimize their campaigns and drive profitable policy growth. As these partnerships ramp, we expect our transaction value mix to shift gradually to our open marketplace where we offer highly differentiated, predictive AI-driven optimizations for our partners. Looking ahead, I want to address the rapid pace of AI innovation and the tailwinds it's creating for our business. AI-driven search is emerging as an important new starting point for insurance shopping. Against the backdrop of accelerating LLM-driven traffic growth, we increased P&C click volume by more than 20% year-over-year in the fourth quarter, and we expect even stronger growth in Q1. This performance reflects our role as a core infrastructure layer, connecting carriers with high-intent shoppers regardless of where they start their journey. At the same time, we're embedding AI across our platform to price media with far greater precision, leveraging our massive proprietary data set as the largest marketplace in the category. This allows us to price traffic more granularly, improving publisher yield while simultaneously delivering strong return on ad spend for carriers and agents. Our industry-leading scale and data advantage make these AI systems increasingly more effective over time, further strengthening our already powerful network effects. As we think about the potential for AI to reshape the insurance shopping and purchase experience, it's important to distinguish between how a consumer initiates a search and how a transaction is ultimately completed. Quoting and binding require real-time integration with proprietary carrier rating systems and carriers are highly protective about how and where their rates are displayed. Major carriers invest billions each year in their brands, underwriting and distribution, and they have historically resisted any model that commoditizes their product into a side-by-side price comparison or transfers transactional control to a third-party technology platform. As a result, we believe that most major carriers will continue to keep their pricing from being freely accessible through third parties, including through LLMs. While AI is likely to influence where and how shopping begins and create incremental advertising-based acquisition channels, we believe the infrastructure we provide to connect online shoppers to carrier-controlled quoting and binding systems will remain essential and highly defensible. Taken together, we believe the current industry backdrop, including the evolution of AI, is strengthening our role in the ecosystem. As demand expands and distribution channels evolve, scale, data and performance will matter more, not less, and we believe we're well-positioned to capture that opportunity and to continue delivering sustainable, profitable growth in the years to come. With that, I'll hand it over to Pat. Patrick Thompson: Thanks, Steve. I'll start with some full year highlights, followed by key drivers of our Q4 results and then cover our outlook. 2025 was a record year. We crossed several significant milestones, $2 billion of transaction value, $1 billion of revenue and $100 million of adjusted EBITDA, all for the first time. Transaction value grew 45%, driven by 65% growth in our P&C vertical, which was more than -- which more than offset the expected reset in Under-65 Health. Excluding contribution from Under-65 Health, our core business delivered adjusted EBITDA growth of approximately 55%. Turning to the fourth quarter. Transaction value was $613 million, up 23% year-over-year. Our P&C vertical grew 38% year-over-year, while our health vertical declined 40%. Revenue was $291 million, down 3% year-over-year as reported, but up 9%, excluding Under-65 Health. Health declines were mostly offset by P&C growth. Under-65 Health contributed approximately $7 million of revenue in 2025, down from $41 million in 2024. Adjusted EBITDA was $30.8 million, down 16% year-over-year. Excluding contribution from Under-65 Health, our core business delivered adjusted EBITDA growth of approximately 10%, reflecting the strong momentum in our P&C vertical. We converted 66% of contribution to adjusted EBITDA, which reflects our efficient operating model. Our Q4 take rate was 7.6%, slightly above expectations, driven by favorable open marketplace mix. We expect take rates in Q1 to be above Q4 levels. Moving to the balance sheet and cash flow. In 2025, we generated $99 million of free cash flow, which for us is operating cash flow less CapEx, excluding the FTC payment of $34 million or $65 million on a net basis. We ended the year with $47 million in cash, providing us with continued financial flexibility to support our strategic priorities. Also on the balance sheet, we met the U.S. GAAP requirements to release the valuation allowance on our deferred tax assets and recognize the related tax receivable agreement liability, resulting in a gross up to our balance sheet. As a reminder, our long-standing Up-C structure generates tax benefits from which we retain 15% of the savings through basis step-ups over the next 15 years. On capital allocation, we remain committed to returning capital to shareholders through share repurchases. In Q4, we repurchased approximately 1.1 million shares for $14 million. Full year share repurchases were $47 million, representing approximately 7% of the company. Based on our strong and growing free cash flow outlook, our Board has authorized a $50 million increase in our share repurchase program to $100 million. We expect to complete the vast majority of this program in 2026. Now turning to Q1 guidance. We expect transaction value of $570 million to $595 million. up approximately 23% year-over-year at the midpoint, with P&C growing approximately 35% year-over-year, driven by strong carrier demand and continued share gains. We expect first quarter transaction value in our health insurance vertical to decline approximately 50% year-over-year, driven primarily by Under-65 Health. Revenue, we expect to be $285 million to $305 million, up approximately 12% year-over-year at the midpoint. We expect adjusted EBITDA of $29.5 million to $31.5 million, up approximately 4% at the midpoint. Excluding contribution from Under-65 Health, adjusted EBITDA is expected to grow approximately 25% year-over-year at the midpoint of the guidance range. And finally, we expect contribution less adjusted EBITDA to be approximately $500,000 to $1 million higher than in the fourth quarter of 2025. And while we're not giving formal 2026 annual guidance today, let me frame how we're thinking about the year. We expect P&C transaction value will continue driving growth with healthy year-over-year gains as carriers increasingly seek to grow in this attractive soft market operating environment. In Health, our transformation into a smaller, more focused operation is ongoing. While we expect this vertical to account for a mid-single-digit percentage of total transaction value this year, we continue to believe Medicare Advantage represents a meaningful long-term growth opportunity. Finally, we expect to generate $90 million to $100 million in free cash flow, including the final $11.5 million FTC payment we made in January. This gives us plenty of firepower as we look to execute on the vast majority of our $100 million buyback program in 2026. With that, operator, we are ready to take the first question. Operator: [Operator Instructions] And we will take our first question from Tommy McJoynt of KBW. Thomas Mcjoynt-Griffith: Yes. My first question, I appreciate some of your comments around some of the changes that are happening through the developments in AI. I want to expand on that. Does anything functionally or financially change with your role and your value proposition to carriers when a consumer starts their search with an LLM rather than through Google? Steven Yi: Well, yes, I'll take that, Tommy. I mean the short answer is no. What we expect AI -- the impact that we expect AI to have is really focused on the upper part of the funnel, the research and shopping experience. I think what really what you have to understand is that no matter really where they start their shopping experience, ultimately, as they start to get closer to the quote and the buying, that's where the carriers really want to maintain control over where their quotes are displayed and obviously, where their policies are bound. And so typically and historically, well over 2/3 of the marketplace made up by direct -- the big direct-to-consumer carriers, as well as the captive agent carriers, have been very reluctant to let their rates be shown anywhere else on third-party sites, particularly in a side-by-side rate comparison environment. And certainly, they've been very reluctant to let anyone bind their policies anywhere other than through their agents or their websites. And so ultimately, we're the infrastructure that facilitates that handoff between the insurance shoppers and the publishers where that insurance shopping activity takes place with the quoting and binding infrastructure that the carriers maintain. And regardless of whether they start their search on Google or on an insurance comparison site or on an LLM, ultimately, that connection and handoff has to be made. And so at the end of the day, we believe that the ecosystem with the LLMs, again, being an important starting point for insurance search is going to look a lot more like the current system than not. Thomas Mcjoynt-Griffith: And to clarify, so did the LLMs become their own supply partners, or did the supply partners that you currently partner with, perhaps they will integrate within the LLMs directly? Steven Yi: I think it's a good question. I see either possibilities happening. I think, we think it's more likely that it's more of the latter, that the LLMs become a traffic source for most of our existing supply partners. I mean, certainly, some of our supply partners may not make the adjustment and are not able to acquire traffic in an efficient way from the LLMs. But once the LLMs layer on an advertising model, we think that, that could be a tremendous tailwind for our supply partners as that introduces an incremental advertising traffic acquisition source for them. Right now, I think they're making some good headway in acquiring traffic from the LLMs. I think anecdotally, our supply partners are telling us that somewhere in the mid- to high single digits of their traffic is coming from the LLMs, and this is in the early stages. I think as you've seen a couple of our supply partners have introduced apps for the LLMs. We're certainly benefiting from that because the traffic is hitting their site ultimately that we're monetizing on their behalf. And so as our publishers and the supply partners get smarter about doing that and building more apps, finding ways to be discovered by the LLMs and then ultimately, taking advantage of the advertising ecosystem that the LLMs are going to create, we think that ecosystem is going to look a lot more like the current Google ecosystem than one where the LLMs are connecting directly with us as a supply partner. I mean, certainly, we've had discussions with them. And if they are open to doing that, we would welcome that. But again, our guess is that the LLMs will evolve into something more like Google than one of our supply partners. Thomas Mcjoynt-Griffith: Got it. That all makes sense. And then just my second topic of questions here. You made some encouraging remarks about continuing to scale with the underpenetrated carriers in the marketplace. Is there anything different about your go-to-market strategy or sales pitch that's getting more of these underpenetrated carriers to sign up? What's resonating with them that, that works around the cycle? Steven Yi: Well, I think that's a great question, and I appreciate that. It's -- there is a different message, right? And that's where we're investing heavily into our platform solutions capabilities. And really, what that means is that we're moving beyond just creating a marketplace layer for the media that's transacted and really working directly with these carriers who have been, again, historically underpenetrated in our channel to provide more of a platform where we own parts of the pre-quote conversion process so that we can optimize more of that conversion funnel for them. As you can imagine, we have capabilities and we have access to data that enable us to do that very well and oftentimes better than a lot of carriers who are less experienced in that area. And so the ability for us to really go in and again, not just offer media from our marketplace, but also to offer a hosted optimized conversion experience that, again, takes the first 1 to 2 to 3 steps of that conversion process and really optimize that on behalf of a lot of these historically underpenetrated carriers, I think has gone over really well, has enabled us to optimize their campaigns in our marketplace really well and enable them to be a lot more competitive in our marketplace than they otherwise would have been had we not offered these types of solutions. Operator: Our next question comes from the line of Mike Zaremski from BMO Capital Markets. Michael Zaremski: First question is on the P&C side, on seasonality, and I appreciating it's already late February. So I'm just -- so your guidance is clearly robust. But are we not seeing as much seasonality as you had maybe thought 6 months ago or 3 months ago? Or is this kind of the normal expectations you'd say? Patrick Thompson: Yes. And Mike, this is Pat. I would say that I think the last few years, we've seen pretty robust volume in Q4. I would say Q4 of this year maybe was a little bit less robust than we maybe thought it would be, but it was robust. And kind of what we've seen in Q1 is probably a little bit muted versus what we maybe have seen in some past years. Having said that, what we've seen is some of the smaller carriers that have underpunched their weight historically in our marketplace, being the ones that have really been leaning in so far in Q1 and some of the bigger ones have maybe taken their foot off the gas just a tiny bit on it. And we're in a spot where it's been probably a number of years since we've had a really normal year from a seasonality standpoint. And we feel like Q1 is off to a good start. We're feeling pretty good about where the rest of February and March are going to end up, and we're feeling optimistic about the year. So we're obviously feeling pretty good, although it's still early overall in the year. Michael Zaremski: Got it. That's helpful. And moving back to, I know it's not easy to forecast the future in regards to AI and your comments have been very thoughtful so far. If we were to kind of bucket up into a profile of insurance carrier that was much more sophisticated data-wise than peers and also offered on average, a much lower cost or a lower cost policy on average, would that profile make that insurance carrier more likely to test the waters to offer their pricing to third parties and LLMs? Or I don't know if there's any kind of way to maybe differentiate your broad strokes to kind of a certain subset of insurance carriers? Steven Yi: Yes, and infact -- yes, I think the I think you can think about the universe of auto insurance carriers as being split up into the captive agent carriers where you have exclusive agents. The State Farm is a typical example that you think of that a network of agents who only sell State Farm policies. And so you have the captive agent carriers, you have the direct-to-consumer carriers or the direct writers, again, big brands like GEICO and Progressive. And then typically, you have a lot of smaller carriers that write through independent agents. And so it's as you think about historically, the carriers that have allowed their rates to be aggregated and put into a comparison environment, something akin to a kayak for auto insurance, right? It's really been those smaller midsized independent agent carriers that are used to selling in, in a multi-carrier environment through independent agents. And so what we expect is that to the extent that the LLMs start to pull in rates, right, typically by working with an insurance agency, right, that the rates that they'll be pulling in are going to be limited largely to those rates from independent agent carriers. And again, the captive agents and the direct agents -- direct-to-consumer model make up over 2/3 of the overall ecosystem. And so what you'll see is some rates, but you'll see really a subset of the carriers that the typical consumer is looking for. And to analogize it back to Kayak, it would be like doing a search on Kayak for airfare and seeing rates from a couple of -- a handful of carriers, but really missing the rates from an American Airlines, United Airlines and Delta Airlines. And so it's a good consumer experience. Some of our publishers have that type of consumer experience. But by no means is it a complete and holistic search. And so to the extent that rates are pulled into an LLM environment, we expect that it's going to remain similar to what it is now, which is -- and being limited to those independent agency carriers. Patrick Thompson That's helpful. And just lastly for Pat, on some free cash flow, quick clarification. The $90 million to $100 million, is that subtracting the final payment? So we should -- and also, is there any cash taxes or cash receivable payments within the $90 million or whatever that's the number you're guiding. Patrick Thompson: Yes. And Mike, the guidance is for $90 million to $100 million of free cash flow this year, and that includes the $11.5 million payment that was made to the FTC. So kind of absent that, we would be at $101 million to $111 million. And from a cash tax standpoint, there is a TRA payment that's going out in Q1. It's kind of a mid-single-digit millions payment going out, and that's kind of the star of the show from a cash tax standpoint for calendar 2026. Operator: Our next question comes from the line of Andrew Kligerman from TD Cowen. Andrew Kligerman: And I'm a little confused still from your response to Mike's question about 2/3 of the market being tied up in captive and direct -- and that it would be just focused on the LLMs would be just focused on the smaller midsized independent carriers. Because if I think of the large ones, that do go independent. And I'm not necessarily pointing to them, but Progressive has a big independent channel. Allstate has a growing independent channel. I think GEICO might be starting to dip into that. So my question is, is it possible down the road, or is it actually happening now that big names such as the ones that I mentioned, and it doesn't have to be those specifically. Is it possible that they're already in the mix and starting in these early stages with the LLMs? And why wouldn't that be the case a few years from now regardless? Steven Yi: Sure. It's a great question. And so we talk to our carrier partners. And by and large, most of them -- and these are the carriers that, again, are the typical large brand captive agent carriers as well as the primarily direct-to-consumer direct writing model that you referred to. And really, I don't think that they're in any hurry to make their rates available through the LLMs. Again, I think that what you have to understand is that these carriers spend billions of dollars, right, every year in being part of a small consideration set through brand advertising. And they invest similar amounts, right, in building their underwriting capabilities and the distribution capabilities. And to the extent that they make their rates available through the LLMs, really the only reason that they would want to do that or an LLM would want to do that is to make that comparison, that rate comparison model right, much more readily available. And that's really the model that the carriers have really fought strenuously against for the past 20 years. The technology to be able to pull in rates into a third-party environment has been there for 20-plus years, right? The technology to actually have rates be compared side by side has been there for 20-some years. It's really the carriers and those carriers that I mentioned and their reluctance to see that type of a model really evolve in the United States, which has been the limiting factor in actually offering a Kayak for auto insurance model. And there's some real good business reasons for that as well because it's extraordinarily hard to actually get a bindable rate across multiple carriers through one user experience. And I think the carriers are justifiably concerned not just about being commoditized just to the lowest price, right, but also making sure that the consumers aren't being shown one price when really after all the inputs have been answered that the carrier specifically needs to deliver a bindable quote that there is no significant change from the quote that they saw when they started that process. And so overall, you're right in that some of these carriers are building independent agency capabilities or the capability of selling through those agencies. But I think at the end of the day, those big direct writers, the big captive agent carriers are going to prevent rates from their major brands, right? Maybe their subsidiary brands might be included, but they're certainly going to prevent rates from their big brands from being aggregated onto the LLMs. Andrew Kligerman: And then the other question, I think Pat mentioned earlier that he sees Med Advantage being a strong long-term growth opportunity. And I know it's been a tough -- I don't know, I want to say 3, maybe 4 years -- no probably 3 -- yes, 3 or 4 years of pressures in that area for distribution. Could you talk a little bit about why you kind of -- it sounds like you're seeing an inflection point now. And why do you see that? And how do you see the trajectory of Med Advantage business on your platform? Patrick Thompson: Yes. And this is Pat. I'm happy to take that one. So I think we're probably now in the fourth year of a challenging market for Medicare. I think '23 was probably when it started. And I think this year is going to be another challenging year in Medicare. And looking at the crystal ball, I think early signs point to next year being challenging as well given some of the reimbursement news that's out there. And I would say for our health vertical, we've given the guidance for this year that we expect it to be a mid-single-digit percentage of total transaction value, so a very small portion of the mix. Having said that, when we look at Medicare Advantage, this is a large product that there are tens of millions of consumers that have opted into Medicare Advantage. It is a product set where the number of eligible people is growing and the number of people opting in are growing. In terms of total spend on Medicare Advantage premiums, it's a bigger market than personal auto. And it's a market that has the wind at its back in terms of seniors aging into Medicare, you are much more likely to look to the Internet either as part of their shopping journey or their first port of call when it comes to shopping. And so while the market backdrop for Medicare has been and likely will continue to be challenging for the next year or 2, we look at all of these market dynamics and all of these wins are blowing in the right direction and in a direction that suits us very well. And so as a result, we're long-term bullish, but not banking on kind of significant financial contribution from that business in the short term. Andrew Kligerman: Got it. And maybe I could sneak one more in. Do you see the proprietary component kind of continuing to pick up? Or do you see that -- because I guess private this quarter was about 53.7%, up from 41% last year and the full year was a similar pickup. So it's been happening. Where do you see the private percentage of transaction value leveling out? Are we there yet? Or does it get bigger? Patrick Thompson: Yes. And we're in a spot where I think the trend is the guidance for Q1 envisions the business move shifting a bit private or a bit open, apologies, towards the open marketplace and away from private. And I think we talked pretty consistently in our earnings calls and our materials last year that we have this view that as kind of more carriers caught up in terms of rate adequacy that we would see some of the smaller and midsized carriers and some of the folks that historically underpunch their weight in our marketplace start to lean in. And we saw that kind of happen as we went through Q4 of this year, and we've seen kind of a furtherance of that trend thus far in Q1, and we've envisaged that in our guidance for Q1. And so we're feeling like we're in a pretty good spot as far as that goes. We, as a company, go quarter-to-quarter with guidance, so we don't give long-term numbers on that, but we feel pretty good kind of about where we're at, at this point in time. Andrew Kligerman: I see. So that would be the driver of why guidance in revenue is like $285 million to $305 million against a consensus number that's lower than the lower end of the range. That's kind of the bigger piece of why you have such really solid guidance going forward, correct? Yeah. Patrick Thompson: That would be correct. Yes, that the business is effectively more open than folks may have been expecting. Operator: Our next question comes from the line of Eric Sheridan from Goldman Sachs. Eric Sheridan: I'll just really ask one. As you see this underpenetrated opportunity playing out in the coming quarters, how much of it is a dynamic in which you need to execute on putting the right tools and mechanisms in place of folks across the carrier landscape to incent them to come on to the platform, invest in the platform? And how much of it is just an output of some of the competitive environment we're seeing today? It's sort of the in your control, out of your control component of scaling the underpenetrated opportunity. Steven Yi: Yes, Eric, that's a great question. I think ultimately, it's both, but I would say that the more important factor is the fact that just the overall market ecosystem, the competitive dynamics at play there. I think that the -- as our numbers are starting to reflect, I think it is a broadly growth-oriented marketplace, and it's to an extent that I certainly haven't seen in my history at a company. And so I think that after several years of really not acquiring new policies and over the last 1.5 years to 2 years, we've really seen a softening of the market as a very small number of carriers started to lean into growth and spend heavily to acquire new policies. The vast majority of carriers just didn't do that. And so I think this year, what you're seeing is that the overall personal auto marketplace is firmly in a soft market cycle. And you have essentially every single carrier really leaning into growth and finding ways to actually increase their policy count and being open to new ways of doing that and new partnerships to really accelerate their -- the impact that they can have by investing in a channel like ours. And so really, where we come in with our platform solutions, as well as the AI that we apply to enable these carriers to bid far more efficiently than they could on their own, right, in our marketplace. That really stems from our ability and our willingness to really help them scale up their spend once they make the decisions to really lean in. And so I don't know which one is more important. I would say maybe the latter is more important and that market forces are certainly driving them to lean into marketing and customer acquisition, and we expect those market forces to last for the next 2 to 3 years. But certainly, I think our capabilities, both with predictive AI and the experience that we have and the scale that we have to be able to offer the platform solutions that no one else can, certainly is, I think, has a really big part in helping these advertisers and these carriers, these underpenetrated carriers really scale much more effectively than they would otherwise on their own. Operator: Thank you. There are no further questions. That concludes our question-and-answer session. That also concludes our call for today. Thank you all for joining. You may now disconnect.

82天前Insight Analytics约5分钟阅读

VVX 2025 Q4 财报电话会议

Operator: Thank you for joining us for the V2X Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Gary, and I'll be the operator for today's call. [Operator Instructions] And now I'll pass the call over to your host, Mike Smith, Vice President of Treasury, Investor Relations and Corporate Development at V2X. Please go ahead. Michael Smith: Thank you. Good afternoon, everyone. Welcome to the V2X Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us today are Jeremy Wensinger, President and Chief Executive Officer; and Shawn Mural, senior Vice President and Chief Financial Officer. Slides for today's presentation are available on the Investor Relations section of our website, gov2x.com. Please turn to Slide 2. During today's presentation, management will be making forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. Please review our safe harbor statements in our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements. The company assumes no obligation to update its forward-looking statements. In addition, in today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC, both of which are available on the Investor Relations section of our website. At this time, I would like to turn the call over to Jeremy. Jeremy Wensinger: Thank you, Mike, and good afternoon, everyone. Thank you for joining us today. Please turn to Slide 3. Today, we'll be providing a recap of our fourth quarter and full year financials for 2025. We will also share more on our positioning and expectations for 2026. I'm pleased with the team's execution and our financial performance, which underscores the strength of our strategy and alignment with national security priorities for readiness and modernization. Looking to the future, we are focused on leading with innovation. We are continuing to prioritize investments and expanded partnerships to deliver innovative solutions that anticipate and fulfill our customer requirements. These growth priorities are further supported by the strength of our capital structure. We continue to see momentum across the business coming through contract wins in our key growth areas, and we are encouraged by the ongoing demand for our mission solutions. As we continue to execute our strategy and innovate the base, we are doing so from a strong position. Our focus on cash generation has yielded positive results. We have a strong capital structure and the flexibility to strategically deploy capital. We believe V2X is well positioned to continue delivering enhanced value for both customers and shareholders in 2026 as supported by the financial outlook we provided today. With that, let's turn to Slide 4, with more detail around the fourth quarter and full year 2025 results and the progress we've made. We reported solid top line growth and strong operating performance. In the fourth quarter, we drove record quarterly revenue, adjusted EBITDA and adjusted cash flow. This is a testament to our commitment to generate value. Revenue increased 5% year-over-year to a record $1.22 billion. For the full year, revenue grew 4% to $4.48 billion, hitting the upper end of our 2025 guidance range. Adjusted EBITDA was $88.7 million for the quarter, a record for the company, and exceeding our expectations, we delivered a full year adjusted EBITDA of $323.3 million with a margin of 7.2%. Adjusted net income was $49.3 million and adjusted EPS was $1.56, both representing double-digit year-over-year growth. Adjusted net income was $166.8 million for the full year, representing a 20% increase year-over-year. Adjusted diluted EPS was $5.24 for 2025 and increasing 21% year-over-year. Our ongoing emphasis on reducing debt and generating cash allowed us to improve our net debt by $116 million, compared to last year. As a result, our net leverage ratio now stands at 2.2x. Shawn will share more of our financials and our outlook later in the presentation. Turning to Slide 5. The progress we have made this year exemplifies how our readiness enabled solutions continue to support our customers' evolving requirements and create tailwinds for continued growth. We have won a number of recent contracts across key growth areas, reflecting both the depth of our customer relationships and our ability to deliver at scale complex high-consequence missions. In 2025, we delivered 2 contract wins valued at more than $1 billion each and 10 awards each exceeding $100 million. In supporting mission readiness, the successful T-6 Aircraft award represents approximately $4.3 billion and underscores customer confidence in our execution and industry-leading readiness rates. Similarly, the F-16 Modernization and Services award reflects our ability to support fleet readiness through modernization, sustainment, integrated support and capabilities that remain essential to our customers' mission priorities. We are also seeing continued traction in training and services. The more than $100 million General Motors training award demonstrates how our core competency translates effectively across both defense and commercial environments. In advanced capabilities, the MDA Shield IDIQ award positions us to extend our space domain awareness and emerging missile defense priorities. The Advanced Technology Support Program IDIQ, reflects our growing role in rapid development and fielding of emerging technologies, an area where speed, integration and trust matter deeply. For National Security Programs, our classified awards across cyber operations and systems reinforce the relevance of our capabilities in highly sensitive mission-critical environments. Looking ahead, our qualified pipeline stands at more than $60 billion, reflecting both scale of opportunities and demand for our offerings. We talked through 2025 about an increase of 50% in bid velocity, and that's exactly what we did. Our continued investment in people, process and technology have allowed us to pursue expanded opportunities. In 2026, we are targeting an additional 30% increase as we further leverage investments to capture larger and more complex programs. We are confident in our momentum exiting 2025 and our ability to carry it forward. We are aligned with well-funded priorities, have secured long duration programs and are positioned with customers who value proven execution. Before we move on, I want to note that this slide really represents a company that's winning. V2X excels in mission-critical work with long-term customers and areas aligned with national security priorities. As we look ahead, we believe this foundation positions V2X well for continued growth. Turning to Slide 6. I'd like to discuss something that we are very excited about and the transformation it represents. We are continuing to build our technology first foundation, including targeted investment and best-in-class partnerships. These efforts are driving innovation across our base and improving outcomes for our customers. Let me walk through how we think about this. Our investments are focused on high-growth opportunities, where technology can accelerate modernization and strengthen our technical depth for customers. These investments are designed to use data to move us faster from concept to deployment while remaining tightly aligned with mission needs. Second, we are partnering with the best. We recognize that innovation at scale requires access to world-class platforms and capabilities. That's why we've established partnerships with leading technology companies that bring AI, data automation and advanced robotic capabilities to deliver mission outcomes. Recently, we announced a partnership with Amazon Web Services to advance smart warehousing and global logistics automation. This partnership helps modernize supply chains, improve visibility and enhance resilience across distributed operations. We also recently partnered with Google public sector to deploy secure, responsible AI solutions in a way that meets the stringent security and compliance requirements of our customers. These partnerships allow our customers to benefit from proven scalable platforms. And V2X provides a mission context, integration experience and operational know-how needed to deploy them effectively at speed. These initiatives allow us to apply top-tier innovation across our base. We will be able to innovate program execution through predictive data-enabled solutions to improve decision-making, increase speed and drive more consistent outcomes. Simply put, we are deepening our bias for innovation. We are transforming our global presence into a true global persistence through speed and execution, with operations expanding some of the most complex environments in the world, speed matters. By connecting data, systems and teams across geographies, we will be able to execute faster, respond quicker and deliver consistent performance at scale. We are turning our footprint into a strategic advantage. When we put it all together, you can see how our capabilities come to life. This is what we mean by technology first solutions, mission tested engineering and global persistent operations working together. No one is better positioned than V2X to meet the mission needs of our customers today and tomorrow. Our recent progress reflects our strategy and as we continue to invest, partner and innovate with discipline, we believe V2X is uniquely positioned to extend that momentum, delivering greater value for our customers and creating sustainable long-term value for our shareholders. With that, I'll turn the call over to Shawn for a review of our financials. Shawn Mural: Thank you, Jeremy. Good afternoon, everyone. Please turn to Slide 7. The value V2X delivers for its customers was clearly demonstrated in the fourth quarter, with notable top line growth and strong operating performance. Revenue in the fourth quarter increased 5% to $1.219 billion. Growth was primarily fueled by our training, foreign military sales and rapid prototyping programs. Adjusted EBITDA in the quarter was $88.7 million, a record for the company. Adjusted EBITDA margin was 7.3%. Interest expense in the fourth quarter was $19.6 million. Cash interest expense was $18 million, improving $4.7 million year-over-year. Net income for the quarter was $22.8 million. Adjusted net income was $49.3 million, up 16% year-over-year. Fourth quarter diluted EPS was $0.72, based on 31.6 million weighted average shares. Adjusted diluted EPS in the quarter increased approximately 17% year-over-year to a record $1.56. Adjusted operating cash flow in the fourth quarter was $172.4 million. I feel an important to highlight that the extended government shutdown did not have a material effect on our financial results in the fourth quarter, further demonstrating the enduring and mission-aligned nature of our business. Please turn to Slide 8, where I'll discuss our full year results. Revenue in 2025 increased 4% on a year-over-year basis to $4.480 billion. Adjusted EBITDA for the year was $323.3 million, exceeding the high end of our guidance range. Interest expense for the year was $79.9 million. Cash interest expense was $73.7 million, improving approximately $27 million compared to the prior year period, demonstrating our proactive repricing activities, debt pay down and cash flow generation. Net income for the year was $77.9 million. Adjusted net income was $166.8 million, increasing 20% year-over-year. Diluted EPS for the year was $2.45. Adjusted diluted EPS increased 21% year-over-year to $5.24 exceeding the high end of our range. Year-to-date net cash provided by operating activities was $182 million. Adjusted net cash provided by operating activities was $148.3 million. The ability to generate strong cash is an important characteristic of our business and is further highlighted on Slide 9. In 2025, our solid cash flow generation drove a $116 million year-over-year improvement in net debt to $758 million. This positive performance yielded a net leverage ratio of 2.2x, representing over 1 full turn of improvement in just 24 months. We thought it important to highlight that we achieved this success while executing our capital allocation strategy, which included deploying over $50 million in the second half of the year to accelerate value creation. The strength of our balance sheet and cash flow provides substantial flexibility and optionality to deploy capital, including internal investments and to strategically acquire complementary capabilities, access to new channels and solutions that accelerate our growth strategy. In summary, we are executing on the capital allocation strategy, we outlined in the second quarter and see further opportunities in 2026 and beyond. Please turn to Slide 10. Our backlog and recent wins provide a clear path to revenue growth as we look into 2026. Our backlog at the end of the year was $11.1 billion. Funded backlog improved slightly from the last quarter to $2.3 billion. Important to note that our backlog at the end of the year does not include the approximate $4 billion T-6 award. Subsequent to the fourth quarter, the award decision to V2X was upheld, and we expect to book this award to backlog in the first quarter. This is a great outcome for V2X, representing a milestone program that we expect to add positively to our backlog and revenue visibility. We look forward to delivering our industry-leading mission readiness rates for this important training platform. The book-to-bill ratio for the trailing 12 months was 0.9, in line with our expectations and consistent with our commentary last quarter. Also, as previously mentioned, we expect book-to-bill will be above 1 in 2026. Please turn to Slide 11. We made exceptional progress executing our strategy in 2025. Looking ahead, we believe our recent wins, backlog, limited recompetes and solutions that are transforming the speed with which our customers can achieve mission readiness positions us to continue this momentum. For 2026, revenue is expected to be $4.675 billion to $4.825 billion. We expect revenue growth to accelerate to 6% or $4.75 billion at the midpoint, which compares favorably when taking into account 2025 revenue was at the upper end of our guidance range. Revenue in 2026 incorporates the incremental contribution from our training, foreign military sales and rapid prototyping programs as well as the initial ramp on T-6 and completion of previously referenced certain mission support activities in the Middle East. Additionally, a percent of revenue expected to come from recompetes has improved going into 2026 and now represents approximately 3% of revenue at the midpoint of the guide. Adjusted EBITDA is estimated at $335 million to $350 million. Adjusted EBITDA contemplates the above-mentioned items as well as some internal investments. Adjusted diluted earnings per share guidance is $5.50 to $5.90, representing 9% growth at the midpoint. We expect adjusted net cash provided by operating activities to be $150 million to $170 million. Cash flow in 2026 assumes one additional payroll in 2025, which is estimated at approximately $50 million. We believe cash flow should be in line with our normal seasonal pattern and cash generation occurring in the second half of the year. Cash interest expense is expected to be approximately $69 million with other expenses of $15 million. Capital expenditures for the year are estimated at approximately $25 million. In summary, 2025 was a successful year on many fronts, in both supporting our customers' missions and achieving our commitments to our shareholders and employees. We are well positioned going into 2026 and look forward to discussing our progress with you throughout the year. Jeremy, back over to you. Joseph Gomes: Thanks, Shawn. 2025 was a great year for V2X. We are accelerating our position as a leading provider of mission capabilities. Before I turn it over to Q&A, I'd like to take a moment of appreciation for over 16,000 employees across the globe. Their execution and commitment to our customers' mission propels V2X forward, and prepares us today to take on the missions of tomorrow. With that, I'd like to open it up for questions. Operator: [Operator Instructions] Our first question today is from Tobey Sommer with Truist. Tobey Sommer: I was wondering if you could comment on what has been the trajectory of the company's revenue and activity in the Middle East region with the shifting of resources that direction towards Iran? Shawn Mural: Yes. Good to hear from you, Tobey. Thanks. Yes. So at this time, obviously, the situation is, I'll say, fluid. Our priority right now is to make sure everyone's safe. I'd like to think that we'll participate in whatever the outcome looks like eventually. But today, it's like I said, fairly fluid with ensuring the safety of all of our employees in the region that we have throughout that area. So we'll certainly see how things evolve as time progresses, but that's kind of where we are today. Jeremy Wensinger: Tobey, it's Jeremy. I think the one thing I'd add to that Shawn is right. We were highly concerned for our employees. And we have actually an activity every day that allows us to understand where everybody is. But I do think presence matters. And we talk about that all the time. I think being in the region allowing and supporting our customer in terms of what they're going to do in the region is something that's very important. Whatever happens there, I think presence matters. But the single most important thing we're doing right now, and I think everybody needs to keep this in mind, is that our employee safety and our concern for them is number one. Tobey Sommer: And how much contribution do you expect from the T-6 contract? And is that -- do you think that there will be additional legal hurdles to that transition? Shawn Mural: And I can't speculate on legal hurdles, Tobey. I'll tell you the assumptions that we've made. So you heard what we said in the prepared remarks, we will effectively start that program on March 1, where transition will be complete. You may recall, we began executing that in the mid-third quarter through the fourth quarter, we were paused for a brief period after the first of the year. And so now we'll pick it up in March. From a planning standpoint, here's a little bit about the assumption that we've made on that. There's an inherent lag. This is a largely material receipts job for us, at least at first. And there's a 90- to 120-day type of lag. So in the guide that we gave at the midpoint, you should think it's somewhere around $140 million to $160 million of revenue for us this year. Tobey Sommer: I appreciate that. And what are you seeing in your intel business, which kind of the exposures are relatively new to you, but you had some classified work announced not too long ago. What's the trajectory of that in your guide. Is that area sort of a source of accretive growth there? Jeremy Wensinger: Yes. I think what we did with the QinetiQ's acquisition was positioning us well to augment what we do today. We're excited about what that business brings to us. I'm excited about the fact that it builds on a pipeline that is going to only grow. So I think that is a business that we're very excited about. Operator: The next question is from Andre Madrid with BTIG. Andre Madrid: So I know last year, we had -- you guys have called out 5, $1-plus billion opportunities that you were targeting. On Slide 5, I know you called out $2 billion being awarded. Is there a status update that you can give on the remaining opportunities? Are those still stuff that you're actively bidding on? Or any color there? Jeremy Wensinger: I think the 2 that we retired, obviously, we're thrilled about. We obviously have that plus we've added to that portfolio this year in terms of where we're bidding when we talk about a 30% increase in overall bid velocity. But yes, we're waiting on adjudication on the remaining 3 that we feel very good about. But again, we got to wait for adjudication. But again, the fact that we were able to retire 2 of them. in the fiscal year plus the [ 10-plus $100 million one ], I think those bode well for the business in terms of not only this velocity, but also our ability to win. So I think those bode well for the company. Shawn Mural: Yes Andre, to put a fine point on it. So 1 of those was bid in the fall. 1 of the 3 was bid in the fall, 2 were captured as exactly as Jeremy said and then there's 1 to be bid this year and 1 to be bid in '27. And there's about a year lag between the time the bid goes in and any award assumption that we would have on those things, not counting any protest periods or anything like that. So very modest to any impact in '26 as a result of any of those captures. We'll be talking about those for some time to come, I suspect, but remain very happy with where we're positioned on those. Teams worked extremely hard to put together wonderful offerings and teammates. Andre Madrid: That's very helpful. And then, I mean, pivoting -- it seems like everybody wants to talk about the Middle East, but I know you guys called out the Indo Pacific as a growth area for you throughout much of 2025. Any updates that you could provide there as to how that market is materializing? Shawn Mural: Yes. When you look at the breakdown in the details that we provided, it was flat to slightly down, and we're seeing that, I'll say, continue into '26. So folks may recall, 20 odd-numbered years tends to be training years in the region. We didn't necessarily see that materialize to the volume that we had historically seen. Now we saw an increase in, I'll say, requests to put things in front of customers, they didn't necessarily materialize. So we'll see how things play out in '26. But as I sit here today thinking about where the growth will come from, how we're positioned. There's very good ops tempo. We're really happy with the positioning. Jeremy consistently talks about presence and there's not a month that goes by that we don't talk about opportunity sets in the region. I don't know if there's anything imminent, as I sit here today, Andre, and we think about kind of early 2026. But we'll see. It's -- we're just starting with early innings. Operator: The next question is from Peter Arment with Baird. Peter Arment: Jeremy, Shawn, Mike, nice results. Jeremy, On the -- you had a really strong year in kind of ramping up the bid velocity and you talk about a big pipeline. How should we think about -- are there more like opportunities the size of the T-6 of the world? Or is this going to be more kind of the ones you mentioned where you had 10, $100-plus million awards. How should we think about just the pipeline and what you're bidding on? Jeremy Wensinger: No, it's a really good question, Peter, because I think we're trying to balance it. We're trying to balance what I call big game hunting with singles and doubles. And I think both of them sit in the portfolio very well. But clearly, the administration and prior administrations have kind of consolidated some of these buys into bigger buys, which at our scale allows us to compete. But again, I think the singles and doubles are just as important and I think they add to the overall value of the company. And so when I look at it, candidly, I look at big velocity as the metric. As long as I'm getting the bid volume out the door, it could be big ones, it could be small ones, it can be intermediate ones. And I think that's important to the company because I think that's what feeds the system. Peter Arment: That's helpful. And then just also, there were some pursuits around that you guys have had a lot of opportunities to think about contracts, maybe moving to fixed price or things of that nature. Has there been any kind of further advancing of that with the administration now kind of more, I guess, up and running with the Department of War. Are there opportunities you think you're pursuing on a fixed price basis? Jeremy Wensinger: Yes. I think we're seeing more fixed price opportunities than we have in the past. I don't know, Shawn, if you want to add to that. But yes, I think it's clearly an avenue for us, which we're really good at. Shawn Mural: Customers that have historically been cost type have approached us. It hasn't translated into an award yet as fixed price, Peter. But between, I'll call it, late -- mid- to late fourth quarter and as we sit here today, we've seen a higher ops tempo with customers asking and soliciting those type of offerings from us. So we'll see how that plays out. But encouraging to see, I'll say, some more traction around getting contracts and the appropriate parties that would make that happen engage. So it's gone from more than just talk to words on paper. Peter Arment: And just lastly, Shawn, on the net leverage, you guys have done an incredible job, obviously, setting yourselves up. How are we thinking about kind of the go forward? Is it further reduction? Or are you looking at other pursuits on an M&A perspective? Shawn Mural: Yes. Listen, I think we've said we'll look at all options for value creation for the shareholders. And that remains the case, Peter, right? We're extremely happy with the leverage that the company is at. And Jeremy said consistently, that opens up optionality. I think I highlighted it in the remarks, really happy to deliver $2.2 billion while deploying $40 million, $50 million of capital last year to further enhance shareholder value. So we'll see how '26 plays out, but it's a good spot for us to be in to have those options in front of us. Operator: The next question is from Trevor Walsh with Citizens JMP. Trevor Walsh: I wanted to start with the AI partnerships with Google and AWS. Can you maybe just click in one level deeper around what those opportunities look like kind of broadly as you look at them going forward? Are they more technology-centric type of implementations with the smart warehousing? Or is it more just traditional IT system integrator type work? Just trying to get a sense of what that could look like? And then kind of relatedly, how does that maybe shift by opportunity around like what the margin contract kind of profile might be of those opportunities? Jeremy Wensinger: No, it's a really good question, and I appreciate you asking it. I think AWS was an opportunity for us to look at somebody who does some of the smart -- the best smart warehousing around the globe and use them on things that we do every day. I mean if you think about everywhere we are around the globe, there's a warehouse. And I think AWS is 1 of the best in the world at the ability to manage a warehouse and put their smart warehouse and capability in play. We own all the data. And what they own is the process. And so I think the combination between us and AWS and us and Google, who is clearly invested in AI is taking our data and using our data in a way that's going to enable my customer to have better outcomes, faster outcomes, better outcomes and more efficient outcomes. So I wanted to put myself in a position where I was partnered with the best in the industry to deliver these capabilities because all the data I have and I own. And so they're going to use my data to deliver better outcomes for my customer using their technology. And I think at the end, it ended up being a perfect partnership between them. If you think about AWS, Google and IBM, it was a perfect partnership for us to go with. Shawn Mural: And there's a speed-to-market aspect here, too, right, in terms of how quickly we can deploy things you've heard us talk about the global footprint, right? So don't think about it only from a pursuit standpoint, but capability that we have that we can deploy in a broad scale today, and we'll see how things evolve. But exactly, as Jeremy said, a wonderful partnership to go forward and deliver, we think, enhanced capability to our customers at speed and at scale. Jeremy Wensinger: I mean we're already doing on the WTRS program, where we're giving them capability that they've never had before, and I'm looking forward to extending that to other customers. Trevor Walsh: Great. That's fantastic. Shawn, maybe just a quick follow-up then for you. On the T-6 contract, appreciate that color that you gave around the revenue. Can you maybe provide a little bit of color as well on how that's going to affect backlog? I realize the whole amount will go into backlog in Q1, as you mentioned. But could you maybe give us a sense of what would be funded or unfunded if you have like maybe a high level take just as we think about that? Shawn Mural: I don't have the funding and unfunded portion yet. We're working through that with the customer. But if it's like other programs we have, it wouldn't shock me if it was funded annually or slightly less. In terms of the -- what we would get incrementally, that's not at all unusual in these type of programs. I do think the booking that we will take in Q4 will not be the entire value that we were awarded. There's options in there that cannot all be exercised. And I say that it's kind of one or the other from an optionality standpoint, Trevor, right? So we'll -- the team is going through that right now from a bookings and backlog practice, you should all think of this as being tying our booking to what our performance obligations on the contract to include the options will be. And that's what we'll end up in our backlog here at the end of the quarter. Operator: The next question is from Jonathan Siegmann with Stifel. Sebastian Rivera: This is actually Sebastian Rivera on the line for Jon Siegmann. Congrats on the strong print here. I guess I just wanted to start with a broader question. There's kind of been some AI existential threat jitters recently to service names and I kind of wanted to just get your glass half full view, if you will, on how AI will be a lever for the company over the short to medium term and kind of perhaps in the context of some of your recent wins and partnership announcements. Jeremy Wensinger: Yes. I think Sebastian that's why we lean forward with partnerships that we have. We decided that we wanted to be on with partners whose critical path was the future of AI. And I think Google is that. And I think Google also recognized that we have the information that makes AI operate. And so when I look at the transformational aspect of AI in our business, I wanted to partner with somebody who brought a tool, and I brought the data and I brought to mission capability and I want that in the context and the contract that enable that AI to work. So it was a natural partnership that occurred and I'm thrilled to have that part of the team. I'm thrilled to have Amazon part of the team. I'm thrilled to have IBM part of the team. I think our business is going to be enabled by this transformational technology because we have all the mission know-how. I mean I'm the guy on the ground. I'm the guy doing all the work. And they're going to enable me to network much better, much faster and much more efficient and delivering my customer a much better outcome. So we're excited about that. Shawn Mural: And Sebastian, I'll say that think of this in increments, right? There's not a big bang here. There's incremental filtering, sorting, sourcing, those types of things that can be done to demonstrate speed and agility to our customers by using capabilities that already exist. And exactly as Jeremy again has said before, we have data, we have presence. So let's leverage those things and make incremental progress on this -- the adoption of these tools and capabilities as we go forward. Sebastian Rivera: Yes. That's super helpful. And then on the back of the recent Shield IDIQ. Can you maybe provide some more high-level color on kind of where you see the company kind of positioning with regard to Golden Dome requirements over time, I guess, kind of beyond the COBRA DANE and COBRA KING if you have that visibility today. Shawn Mural: I think that's going to be a long-term play. Again, I would call presence and also contract vehicles as the key to participating. Obviously, getting on the contract, having the presence on the ground, having the presence at the local facilities is everything. So as this thing evolves, our goal was to get into the mix that allow us to be a participant to enable the government to deliver Golden Dome, and we think we're well positioned to do that. Operator: The next question is from John Godyn with Citi. John Godyn: I wanted to follow up on the commentary about book-to-bill and just to make sure I understand it. The T-6 award is hitting in the first quarter. Is that correct? Jeremy Wensinger: Correct. Yes, we will book it. The protest was resolved here in the first quarter, and so we will reflect it in our backlog at the end of Q1. John Godyn: And the pipeline, some of the commentary around that, it seems very positive and optimistic. I was curious the guidance of being above a 1x book-to-bill for the full year. Is that -- would that still be the case if we excluded the T-6 award -- or is the T6 award kind of critical in hitting the greater than 1x book-to-bill for the full year? Shawn Mural: Yes, I'd say the T-6 award we should certainly be above 1 with the T-6. Like I said earlier, it's early innings in the year. We will see how some things played out, but we're confident that we'll be at one. There's opportunity to be well above 1, 1.4, 1.5 or more, depending on how some other things play out. But we'll see the timing of certain awards as they play out in the year. We can never -- we can never predict those things perfectly and protest factors and such. But again, feel very comfortable, where we sit today with the guide that we've put out. Jeremy Wensinger: I think, John, the thing I would probably burn your calories on is we bid 50% more last year than we did the year before. We're projecting to mid 30% more this year than we did last year. Our win rates are -- I'll stand them up against anybody in the industry. That's an easy way for you to think about it. John Godyn: But it sounds like we need that T-6 award in the number to be above 1x book-to-bill. Is that -- am I hearing that right? Shawn Mural: Yes, that's a fair interpretation. John Godyn: And then if we just look at the full year guidance, just simple question about kind of the sensitivity or just the range around kind of low end versus high end. Maybe you guys can talk a little bit about on the revenue and the margin side, what drives the sort of midpoint versus the high end of the guide. Shawn Mural: Yes, mostly timing of things, right? So I think we put out there we only -- we're down to about 3% of the revenue at the midpoint is up for recompete. And so timing of other new business activities or on-contract growth, things of that could sway it right relative to that ops tempo and when we might see some things materialize, we're feeling very good as we sit here today, for the line of sight we have to the total year, but specifically in the first half, and we'll see the timing of awards. But it's nothing more than that, really. Operator: The next question is from Ken Herbert with RBC. Kenneth Herbert: Just wanted to follow up maybe -- just wanted to follow up on the margin discussion. How do we think about with the T-6 and incremental bookings you're seeing this year, what's the potential to see better than sort of the flattish margins in '26? Or what are maybe the key puts and takes as we think about potential margin upside? Shawn Mural: Yes. So I'll go to the many of our programs that start out early, and we've got several this year that are contributing to growth. They start out at margins that are somewhat dilutive to the company composite, and then they grow. And so T-6 in the early phases, we'll see. We're going to do the EAC here in Q1, and we'll see. But it wouldn't shock me if it follows the profile for most of our programs that are like that, that we tend to grow into the margins. It takes a little bit of time because what you do is you reengineer the process around delivering those industry-leading readiness rates that we have across the majority of the platforms that we have. And so you've kind of got to tear things down and then build them back up. You've got the supply base. All of those things that go into it, but we're really happy with the performance that we ultimately get. So I don't know that I look at that as being a real margin enhancement activity here in 2026. But I think we have full confidence that the team will deliver to the commitments, 100%. Jeremy Wensinger: Look, I think Shawn is right. I think every program kind of goes through its life cycle. But once my team gets in and they're able to get a hold of the supply chain, and they're able to get a hold of the employment base and they're able to understand what's the best-in-class way to do things, to deliver the readiness rates that we deliver. I have all confidence in that team's ability to do this. Does it take us a little bit of time to do it? Yes, because you're taking over someone else's preexisting program, but it takes us a moment to just conform it to the way we do business. And once we do, we do exceptionally well. Kenneth Herbert: Yes. That's great. If I could, Jeremy, maybe just obviously, the scale of what you're bidding is up significantly, and I can appreciate then the tailwinds on the top line. Is it fair to say that the stuff you're bidding today to the extent to which you're successful on it would support sort of a structural step-up in margins over time, obviously, as the new work ramps? Jeremy Wensinger: I would say we're bidding work that's accretive to the overall business as a norm to do our posture going forward. That is our posture. Now to Shawn's point, well, we have programs that start out because of where we inherit something that is not accretive day 1, but it grows into itself, absolutely. But as a corporate policy and process, we are -- we have a strong conviction around growing margins. Operator: Next question is from Noah Poponak with Goldman Sachs. Noah Poponak: Last year and the year prior, the top line growth was stronger in the back half than the first half. I'm just curious if that holds this year or if with the much easier compares in the first half and then tougher compares in the back half if the shape of this year is different? Shawn Mural: Yes, it is a little bit different. This year, I think it's more balanced. No, I think it's more 50-50 in terms of what that profile looks like on the revenue side. Noah Poponak: Helpful. And Shawn, can you just walk us through the moving pieces on cash flow as you wrapped up '25, you had the -- you sort of flagged the possibility of collections related to government shutdown, ended up coming in fairly close to the low end of the original range. I guess I would have thought '26 would have maybe grown from the '25 original range and then also had that working capital catch up. Can you maybe just bridge us through that? Or just sort of where should we think of -- how should we think of converting the EBITDA to the free cash flow going forward? Shawn Mural: Yes. Yes. So I think -- yes, you're right, '25 did come in a little bit, certainly higher than the midpoint of the guide that we gave at the $148 million, having a couple of extra days, we saw significant receipts, I'll say, right at the end. And candidly, that's why we adjusted because there was timing that was, I'll call it, somewhat unpredictable. In terms of 2026, I think when we look at -- we have an extra pay period in 2026 that is worth about $50 million. And I think when we think about net income conversion at the midpoint of the guide, we put out, we're about 115% net income conversion. So I think it's -- I think we're pretty good this year. There are some -- that we will be cash negative in the first half of the year. As always, the profile will look probably very similar to what played out in 2025. Noah Poponak: And then just maybe zooming out and thinking about long-term growth, you have some new programs ramping this year that drives a pretty good looking growth rate relative to the industry. That has to keep growing. And then you've discussed a pretty healthy bid pipeline. Can you grow what you're forecasting this year for multiple years? Or do you start to hit just a higher base and tougher compares that drives it to decelerate from here? Jeremy Wensinger: No. I think we're sitting on a target-rich environment. When I look at the pipeline, we are very, very selective about what ends up in the pipeline. And it is all around our ability to capture and win and not burn unnecessary resources on something that's a flier. And so when I look at that pipeline that Roger has put together and I look at the win rates that are reflective of that, I feel very good about the fact that we can continue to grow. We are -- we have -- look, we're not touching the vast majority of what's an addressable market. And we have nothing but opportunity in front of us. We continue to build out Roger's organization in terms of growth. We continue to hire new people all the time. That is the least of my concerns about having something to grow on is trying to make sure that we're prepared for that growth. That's where my focus is. Operator: The next question is from Mariana Perez Mora with Bank of America. Mariana Perez Mora: So first one on '26 guidance, could you mind discussing for the midpoint, what kind of recompete risk you are thinking about? And then like what are the major programs like that are driving this growth? Like this WTRS ramping that much or even within like you mentioned FMS and international with [indiscernible] IDIQ also expanding? Like what are the main drivers for that midpoint? Shawn Mural: Yes, sure. So I'll give you color around what I said in the prepared remarks. So from an FMS standpoint, we're growing from a range standpoint, think of $150 million to $170 million in that area. From a training standpoint, year-over-year, we're about $130 million to $150 million. I mentioned the T-6. We do have, and I previously mentioned some Middle East mission support activities that are concluding and kind of ramping down. And so when you net all those things together, you get the midpoint year-over-year growth of about 6%. You hit on recompetes. Recompetes are about 3% today of the revenue -- projected revenue growth at the midpoint. Mariana Perez Mora: And then how should we think about like at the midpoint, how much is already covered by the funded backlog? And how much you guys have to still go on like get. And then as a link to that, the context or the framework for this question is, we have seen a shutdown. We are getting into a year where we'll see midterm elections later in the year, like how is the award environment and how that could affect this range for '26? Shawn Mural: Sure. So I'll answer your question on the backlog, the revenue in backlog, although I would distinguish its total. It's not necessarily funded at this time because funded has seasonality to it when contract performance is flipped in the middle of the year and that sort of stuff. But approximately 85% of the total year's revenue is backlog today. That, of course, excludes T-6 that I mentioned earlier because we will book that in Q1. From an award cadence standpoint, I think the fourth quarter played out almost exactly as we thought in terms of where we ended up. The first quarter is playing out kind of very, very similar. We'll see how the stuff progresses throughout the year. But I'll go back even a year ago, when we play -- when 2025 played out, the booking cadence was, by and large, on plan in terms of what we saw. Will that persist for all the reasons that you just mentioned, Mariana, I don't know. But in terms of cadence, in terms of an expectation and aligned with what our internal plans have been, I think it's been pretty consistent. Jeremy Wensinger: Yes. I think Mariana is the way you need to think about us is persistence at the mission level requires somebody to be there. And almost entirely what we did is keeping aircraft in the air, keeping the base running delivering technology and capability, those things. And yes, they could be influenced by an election that could be influenced by budgets, whatever you want to do. But candidly, we saw very little implications associated with the government shutdown associated with the fact that every -- people want to keep aircraft in the air. People want to keep bases running. People want to have technology delivered. We saw very few implications with that. And so do I think we could be impacted by politics, absolutely. Did we see it to Shawn's point, No, everything pretty much stayed on schedule, which we were pleasantly surprised by. Mariana Perez Mora: All right. And last 1 from me. You mentioned throughout the call how you want to use capital deployment and partnerships to be prepared to get to, I don't know, support is like more complex and larger programs and particularly around rapid development and fielding of these new technologies. Could you mind discussing number one, if you already -- how strong is the M&A pipeline? And number two, any particular efforts that you can highlight that you are doing internally to be able to support these things and to have the best technologies? Shawn Mural: Yes. I think 1 of the things that we're really happy about from an investment standpoint and the way things have played out for us has been some of our rapid prototyping activities, right? We talked about that last year. The team's ability to field assets go from a paper design to field an asset in a very short period of time has just been remarkable. We measure that in months or weeks in some cases, right? So that speaks to some of the investments that we've made internally as well as -- and people might not think of it this much, but we get co-investment from our customers or CRAD dollars to help support those rapid prototyping, that development work, certainly low risk to us, but speaks to our ability to get things fielded in a very timely manner that we think distinguishes us in the marketplace. Jeremy Wensinger: I would agree with that. But I would also tell you, Mariana, we decided in August of '24 to make fundamental shift in how we think about the next 3 to 5 years in the business. And I think when you saw the announcements that we put out, it was because we made those investments. We made those investments in the future of the company. And those investments are going to pay dividends because we believe that our ability to be effective for our customer means that we are going to deliver technology into our mission. And that is the only way in which our customer is going to benefit long term is taking advantage of what is commercially available to everybody else, and we're leveraging it into what we do today. Operator: The next question is from Joe Gomes with NOBLE Capital. Joseph Gomes: Most of which have already been asked, but I'll throw this one out there. So lot of positives. But as you look at '26, what do you see as kind of the biggest risks for the company through achieving the '26 guidance? Jeremy Wensinger: Joe, it's a great question because I think it always comes down to -- we are a very responsive company. And if the customer tells us to move left, we move left. If they tell us to move right, we move right. We don't always get to see like in the Middle East, what may or may not happen. So that is not always a benefit in terms of foresight for us. But I do think that it creates opportunity for us and it has for a long time because we're so responsive. I don't view it as risks as much as it is being prepared, making sure our recruiting team is prepared, making sure that our team is prepared on the ground, making sure we're able to move when the customer needs us to move, building whatever they need us to build, making sure the aircraft is in the air. Those are things that we are very good at. I don't see the risk in '26 as much as -- it keeps me up at night is making sure we're prepared for that customer when they move at that moment's notice on those mission requirements that we're there to support them at the time and the speed at which they need us to be. That's what keeps me up at night. Operator: The next question is from Kristine Liwag with Morgan Stanley. Kristine Liwag: Just following up on Noah's question earlier on cash flow. When we look at adjusting the operating cash divided by adjusted EBITDA, it looks like 2024 was a higher watermark 52% of that conversion versus 46% last year. And the midpoint of your guide for this year implies 47%. I guess I would have thought that this would have been trending higher, especially as the leverage comes down and you get some tailwind from interest expense. So how should we think about these metrics? Is this the right way to think about the cash generation of the business? Is there anything that's changing in the cash cycle or cash milestones that we should think about? Shawn Mural: No, it's really just the additional payroll that we have this year, which is worth about $50 million. So if you adjust it for that on the midpoint of the guide, the conversion would be about 115% against net income. And so it's really nothing more than that. Kristine Liwag: And then does that mean for 2027 with the extra payroll for '26, you should see a higher number for that conversion for that following year. Would that be fair? Shawn Mural: All else being equal, yes. Kristine Liwag: Great. And following up on what you said on the Middle East, you've got some contracts that are sunsetting that's factored into your guidance. Depending on how we see Iran play out this year, is there potentially more upside to that opportunity set in the region? And how do you think about potential timing or magnitude if anything does materialize? Shawn Mural: No, no, no. It's very early. So our guide doesn't contemplate anything today because we don't have any requirements to react to, right? As we said earlier in the call, we're ensuring the safety of all of our employees in the region. Could things develop? Yes, they have in the past. And those things it would purely be speculative at this point, Kristine, to think about what that could turn into or where it might be. We know that there's a very large mobilization effort going on in the region. I think they said the highest amount since 20 -- or since 2003 in terms of assets in the region. So could there be some space for us. Yes, we have not contemplated any of it today. No. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jeremy Wensinger for any closing remarks. Jeremy Wensinger: Thank you for joining us today. I really appreciate you taking the time to share with us what we did in 2025. I'm so proud of the team. I'm proud of the 16,000-plus employees and what they do for us every day. And I appreciate your interest in V2X. And I hope that we were fulsome and clear in our remarks. So thank you so much. Take care. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

82天前Insight Analytics约5分钟阅读

NAN.AX 2026 Q2 财报电话会议

Catherine Strong: Hello, and welcome, everyone, to the Nanosonics Half Year Results for FY '26. My name is Catherine Strong, and I'm Head of Investor Relations & Corporate Communications here at Nanosonics. As we start the webinar, all participants will be in listen-only mode, and we'll have a presentation of the results from Michael Kavanagh, Chief Executive Officer & President; and Jason Burriss, Chief Financial Officer. During the presentation, the management team will speak to a selection of the slides lodged with the ASX earlier this morning, which we will display via the webinar. If you've joined by conference call only, you may prefer to join via the webinar in addition. [Operator Instructions] I would now like to hand the call over to Michael Kavanagh. Michael Kavanagh: Thank you very much, Catherine. And a very good morning, everybody, and thank you all for joining us. By now, I assume, many of you will have seen and had an opportunity to have a quick browse through our first half results, which I believe demonstrates another really good and positive half, both financially and operationally for the organization. And there's a lot of detail in all the materials that have been submitted. And before we get into some of those details, there really are a number of key takeaway points I'd like to highlight first. The first being, the company does continue to deliver disciplined growth. You'll have seen revenue increase 9% versus pcp, while operating margin expanded 27%, and that's driven by disciplined cost growth of just 4%. Our recurring revenue from consumables and service continue to grow and all of that's underpinned, of course, by continued expansion of our installed base of the trophon devices. And you'll have seen that upgrades now are also becoming quite meaningful to our growth. In fact, in the half, we delivered 20% total unit installation growth in the half, and that's reflecting both strong new installed base placements and a record level of upgrades in North America. This performance highlights sustained customer preference for the trophon solution. And it is worth pointing out that in the first half, the majority of the upgrades worked actually to trophon2, noting that our next-generation platform, the trophon3 was launched midway through the period and that many of the units in our pipeline were well progressed in the budget approval process. So they stuck with the trophon2. And while this mix together with large volume deals moderated the average selling prices in the near term, these trophon2 installations, they can certainly meaningfully continue to expand our recurring revenue opportunity base and certainly positions us well for software-led value capture over time because those trophon2s now have access to trophon T2 Plus, which effectively gives them the opportunity to upgrade with software to the trophon3 platform. Hence, why many of them decided to go with the trophon2 based on where they were at in the budget approval process. The CORIS commercialization, that's progressing as planned with key milestones during the half being met. And you will have seen our announcement on Friday about the commencement of the Controlled Market Release in the U.K. which, of course, marks a really important milestone and of course, more to follow in the not-too-distant future. And finally, we reaffirm our guidance for the full year. We expect continued growth in core consumables and services alongside ongoing growth in capital unit volumes. So we reaffirm our guidance for the full year. So before we get into some of the details, I think as a brief reminder, and certainly for those of you who may be new to the story. The Nanosonics, every year, our technologies help protect millions of people globally from the risk of cross-contamination through our leadership in our ultrasound probe reprocessing through our trophon platform. And with -- just over 38,000 trophon devices installed worldwide, we now continue to see the power of a large and growing installed base driving recurring revenue, but also capital revenue as well as we continue now driving upgrades and continue to deliver value to our customers. And at the same time, with our innovative endoscope cleaning device, CORIS, so now entering the phased commercialization, we believe that we have a compelling opportunity to extend this -- our proven reprocessing and automation expertise into the endoscope reprocessing, and hopefully unlock a significant new growth avenue for the business. So moving on to a quick overview of some of the financial highlights. The first half delivered very solid operating performance, generating revenue of $102 million, and that was up 9% compared to pcp or 8% in constant currency. And this outcome reflects continued momentum across both our recurring and capital revenue streams. As we predicted and outlined at our full year results in August, gross profit margin percentage, it did moderate a bit down to 76.3% for the half, and that was driven by tariffs, but also, we did have some increased air freights and the product mix between capital and consumables as we're seeing that capital, and particularly the upgrades, beginning to kick in. But importantly, those impacts on the gross margin were anticipated and managed within our broader financial framework. And in doing so, we maintained a disciplined approach to cost management and operating expenses increased by just 4% to $69.5 million. And that's also important that we continue to invest to support our ongoing growth strategy across R&D and our key growth priorities for the business. This operating leverage, it translated into a 27% expansion in operating margin for the business and with operating profit reaching $8.5 million. EBIT on a consolidated basis was $8.4 million, and that represents a 3% decline on a reported basis. However, on a constant currency basis, EBIT actually increased 15%, and that does demonstrate the strong underlying performance of the business. The constant currency view, of course, takes into consideration the impact of foreign currency movements in the first half where there was a net loss of $0.7 million versus a gain of $1.3 million in the prior corresponding period. So there was a $2 million swing in the realized net foreign FX movements. Similarly, profit before tax, that was $8.4 million (sic) [ $10.6 million ], and which was an increase of 13% actually at constant currency. So I think overall, these results, they do highlight the strength and the resilience of our overall business model with revenue growth and disciplined cost management translating into meaningful earnings for the half. But it's not just about the financial performance. The first half also saw strong operating progress across innovation in our operations and digitalization with each initiative reinforcing the foundations for sustained growth into the future. The slide that you'll see just shows a selection of some of the achievements in the half. And from an innovation perspective, as you all know, we advanced the trophon platform with the launch of the next-generation trophon3 and the trophon2 software upgrade halfway through the period. And that's helping and will continue to help capital sales growth volume moving forward. We also achieved important milestones with CORIS, securing our regulatory registrations across Australia, Europe and the U.K. and making important steps towards the phased commercial rollout of the product. In addition, we submitted our first 510(k) application for expanded scope indications. And again, that further strengthens the long-term growth pathway for CORIS, and thus 510(k) is currently under review by the FDA. Operationally, a couple of important achievements as well in the first half. We secured and signed for a new headquarter site, and that move is planned for around April 2027. And this new headquarters, which also includes an expanded manufacturing and technical facility that will significantly strengthen our global operating backbone really, and position us to scale efficiently as the business continues to grow. And importantly, in the half as well, we also appointed new leadership talent to lead key parts of the business through our next phase of growth, and that includes a new Regional President for North America, Bill Haydon, as well as a new Chief Marketing Officer and Head of Asia Pacific, Kimberly Hill. And finally, we made meaningful progress also across from a digital perspective, so successfully implementing and launching the new ERP system and going live with our cloud-based traceability solutions. And these cloud-based solutions -- the initiatives, they really enhance visibility, efficiency and customer engagement while creating a strong digital foundation to support future growth. So overall, I think that the progress we made in the first half reflects the business that's executing well. We're investing with discipline and also continuing to build capabilities to deliver ongoing scalable, profitable growth over the long term. But I'll hand over now to Jason to go through some of those financials in a little bit more detail. Jason? Jason Burriss: Thanks, Michael, and good morning, everyone. On this slide, you can see the continued strength of our core business model. We ended the half with 38,080 devices in the global installed base, up 6% on the prior corresponding period, reflecting sustained momentum in new installed base devices. That expanding footprint is fundamental to how we grow the business and importantly how we protect patients. Today, that installed base supports the protection of approximately 29 million patients each year. This scale is translating directly into recurring revenue growth. Recurring revenue increased 9% on pcp, driven by solid performance across consumables and service. Core consumables grew in line with the installed base. Ecosystem consumables continued to expand and service and repairs grew strongly at 24%, reflecting deeper customer engagement and the maturity of the fleet. Spare parts, as you can see, declined 23% on pcp, largely due to customer inventory dynamics and lower replacement requirements as more customers upgrade to newer generation systems. Moving on to the installations. This highlights the strength of our installation activity in the half and the quality of the demand we are seeing across our customer base. Total installations increased 20% on the prior period to 2,070 devices, reflecting continued momentum in new placements and importantly, a record level of upgrade activity in North America. That upgrade cycle is a key driver of our long-term value creation. It refreshes the installed base, extends customer relationships and supports recurring revenue through consumables, service and our new connectivity offerings. As Michael mentioned, during the half, the majority of these upgrades were to trophon2 devices, remembering that trophon3 was launched midway through the period and customer budget approvals for trophon2 upgrades were already well progressed. Capital revenue growth was 9% on the previous period to $26.5 million in the half. This included several large-scale upgrade agreements and the capital revenue growth reflects volume-based pricing, which saw a slightly lower average selling price for trophon. Importantly, these trophon2 upgrades are expected to underpin software-led value capture over time with the trophon2 Plus software offerings. Turning to the P&L. We continue to demonstrate strong operating leverage with operating margin growing faster than revenue, reflecting the ongoing discipline in how we manage and scale the business. As Michael already mentioned, total revenue grew 9%, reaching $102.2 million for the half, with growth in both recurring and capital revenue. Gross profit margin was 76.3%. This, as expected, is down 2.2 points on the prior year, reflecting the impacts of tariffs in the U.S. and some headwinds on air freight and product mix impacts. At the same time, we maintained tight operating expense discipline with OpEx growing just 4%, well below revenue growth, while continuing to invest in our priority areas, including R&D. As major development programs mature, R&D has stepped down as a percentage of revenue, demonstrating increasing efficiency while preserving our commitment to innovation. EBIT was $8.4 million, down 3%. The decline in reporting EBIT reflects FX movements with a net FX loss this half versus a gain last year. On a constant currency basis, EBIT improved 15%. I'll just take a moment to expand a little on that last point. In H1 '26, EBIT was impacted by an FX loss of $0.7 million. This relates to the revaluation of non-Australian dollar asset balances, mainly U.S. dollar asset balances as of 31 December, '25. The loss was driven by a strengthening Aussie dollar versus U.S. dollar to 0.67 or approximately 2%, the majority of which is unrealized FX losses. Profit before tax was $10.6 million, down 3%, but again, up at constant currency, plus 13% -- improving operating leverage. On this slide, we're showing the way in which we're driving operating margin expansion through gross margin and cost control. Gross profit margin grew by 6% to $78 million. At the same time, we maintained tight operating expense discipline with OpEx growth held to 4%, well below revenue growth, while continuing to invest in our priority growth initiatives. This combination delivered meaningful operating margin expansion with operating margin increasing 27% to $8.5 million in the half, demonstrating our ability to scale the business, manage cost pressures and continue to expand margins through disciplined execution. We continue to separate out the trophon-only business, highlighting its strength and scalability. The trophon-only business delivered operating margin of $25.6 million, representing 20% growth on the prior period. This business also delivered 9% EBIT growth. Importantly, operating margin as a percentage of sales expanded to 25%, up from 22.9%. This demonstrates the operating leverage inherent in the trophon business model with high-margin recurring revenue continuing to scale efficiently as the installed base grows. The trophon business also continues to generate significant cash, providing funding capacity for working capital, ongoing investment in CORIS and our broader long-term growth strategy while maintaining strong financial flexibility. And with that, just turning briefly to cash and the balance sheet. During the half, cash flow was a modest outflow of about $1.4 million, which reflects our planned investment in inventory as we ramp up for CORIS, continued investment in the CORIS system and the commencement of our share buyback. It also reflected the timing of receivables, which we've seen already improve in January. We've executed around $4 million of our buyback and expect to resume following the blackout period in the coming days. Importantly, we remain debt-free with a strong cash balance of $159.8 million, providing flexibility to fund growth initiatives, support CORIS commercialization and continued disciplined capital management. I'll now hand back to Michael, who will talk briefly about our growth drivers for the trophon business, provide an update on CORIS and take you through our reaffirmed financial guidance for '26. Michael Kavanagh: Thanks, Jason. We've previously talked about the 7 growth drivers of our trophon business. On the capital side, you've got the new installed base and upgrade sales. And we've now just recently introduced a new capital software upgrade opportunity for all existing and new trophon2 users with the trophon2 Plus. And that software upgrade brings many of the new benefits of trophon3 to them via the upgrade. Then on consumables, we have the core disinfecting consumables and a broader set of ecosystem consumables necessary for the full reprocessing process such as wipes and clean probe covers, et cetera. Then of course, there is the service component, both service contracts or PAYG for those that don't have a service contract. And service, as you all know, comes into place a year after purchase because there's a 1-year warranty period on the device. And then, of course, we've got the -- with the trophon3 and trophon T2 Plus, we've got new and broader traceability solutions within connectivity. So there's a robust ecosystem of growth drivers for the trophon business. And on the next slide, this slide sort of brings them together by illustrating the applicability of each of the growth drivers over the lifetime of the device. Now each trophon device has a typical life span of up to 10 years or sometimes 7 to 10 years and sometimes longer. After which customers, of course, then can upgrade to the latest generation, and we're seeing that now with the EPRs being upgraded to T2 to T3. But from the day a unit is installed, it begins to generate high-quality recurring revenue through those core and ecosystem consumables. And those can scale with customer procedure volumes, so if ultrasound procedure volumes increase, well, then those consumable products increase. And then over time, that's complemented by the service and repair contracts. And that obviously helps customers protect their devices and uptime and overall performance of the technology. And of course, then looking ahead, just mentioned that connectivity and software-based subscriptions can further enhance this model. And these offerings, for the customer, they really support compliance, traceability and workflow efficiency while adding another layer, of course, to our recurring revenue. So together, this combination of capital, upgrades, multiple recurring revenue streams that truly does underpin the strength and resilience and scalability of the trophon franchise. And as Jason highlighted, the performance of the trophon-only business itself is an excellent performance in the first half. Moving quickly to CORIS. As I've already mentioned, during the half, we successfully achieved a number of key milestones. We submitted the first 510(k) for expanded scope indications, and that's in the U.S. And we are currently awaiting the FDA's determination on that. We achieved European, U.K. and ANZ regulatory registrations for the device. And of course, subsequent to the period, just recently, we commenced a Controlled Market Release. And looking ahead, the milestones in front of us include additional regulatory submissions with the FDA for even broader scope expansion of indications. We will be starting further CMRs shortly here in Australia and some more in Europe with the U.S. will commence after the 510(k) -- the first 510(k), and we'll probably wait and get some preliminary insights as well from the initial CMRs prior to commencing. And broader commercialization is then likely to start on a region-by-region basis based on when the CMRs are completed. But as previously indicated, we expect commercialization to start in FY '27. So overall, the CORIS is now executing to plan with clear progress achieved and well-defined steps ahead as we move towards full commercialization. And the image that you see there in the slide is actually the first unit at our first CMR site in the U.K. And I can say that customers over there are quite excited. You can see by the quote, they are definitely expecting to see a lot of benefits coming from the device over time. So we're quite excited by the start of that first CMO. Finally, I'll just move on to our guidance. And as I mentioned at the beginning, we are reaffirming our '26 guidance at constant currency. And that reflects continued confidence in the underlying performance of the business. With that, we expect ongoing capital unit growth half-on-half, noting that the capital average selling price we saw in the first half could be expected to continue into H2, and that will totally depend on the T2, T3 mix and the size of upgrade deals. And we're very, very happy to look at -- there are a number of deals that are quite large. And of course, it's quite customary to do volume-based pricing for deals like that. We're also expecting recurring revenue to continue to grow. And so all of that together, we expect the overall revenue to be within the 8% to 12% as guided back in August. Gross margins, again, we are expected to be in the range of 75% to 77%, and that guidance assumes tariff rates to remain at the H1 levels. We also will continue our focus on operating expense discipline into the second half, whilst maintaining the investments that we're making, not only in CORIS, but also with other priority growth projects that we're investing in. So overall, our guidance reflects a balance of continued growth, disciplined cost management and investment for the long term. It is worth noting, of course, that the guidance is based on FX rates that we provided in 20 August, and that was at the USD 0.65. We do have, as you all know, an ongoing currency hedging program in place. And we also all know that the Australian dollar has strengthened. And if revenue range were recast using an average exchange rate of approximately $0.70 for the second half, then taking into -- taking hedging into consideration, then the revenue range would be approximately 3% lower. So in summary, I think the first half saw the company deliver a very solid operational and financial performance, and we're in a strong position, not only for the growth into the second half, but into the future. So with that, I'll now hand back to the operator for any questions. Operator: [Operator Instructions] And your first question comes from the line of Shane Storey with Canaccord Genuity. Shane Storey: I'm going to start with Jason, please. Thanks for the way of, I guess, looking at the revenue guidance under sort of altered FX conditions. Maybe could you help us understand, I mean -- and also thanks for the detail around how the FX played into the EBIT. But if rates were to stay sort of around current levels, can you give us a feel for how those non-Australian dollar asset balances and I guess, other sort of effects might play through the EBIT line? Jason Burriss: Thanks for the question, Shane. Yes, I think on the constant currency translations and FX, you'll see that page in the appendix. And what we've tried to do is separate out the 2 different impacts of FX. So on that page, you'll see points one and two, we have the FX impacts on the P&L on a monthly basis, and that will obviously impact our revenue and offsetting that slightly our operating expenses. But the second element to the constant currency is the revaluation as at balance date of the non-Australian dollar asset balances. So in the discussion that I just shared with you, we had a 2% movement in that currency from the last balance date, and that cost us around $700,000. So if you then compute that to a rate of around $0.70, that's a 4%, 4.5% sort of movement. So you can do the math and work out that the impact that we would have on an unrealized FX balance in the second half is more than likely 2x, 2.5x what we saw in the first half. Shane Storey: That's very helpful. Last question I had was really just, I guess, I suppose to Michael and in relation to the recurring revenue in the USA. Could you give us maybe some further insights just how the other parts of the ecosystem grew, say, excluding just the Nanosonics' consumable in isolation, please? Michael Kavanagh: Yes. The service side of the business grew quite strongly. So that was up 24% on pcp. Obviously, you saw the core consumables, they were up about 9% on pcp, and the ecosystem that was up about 6% on pcp. Included in that recurring revenue in the past has always been spare parts as well. And as Jason explained, spare parts came down in the half. That was sort of anticipated because as we have no upgrades to newer machines, but then the requirement for spare parts dropped temporarily. So the spare parts were down about 23%. Operator: And your next question comes from the line of Davin Thillainathan with Goldman Sachs. Davinthra Thillainathan: I guess I just wanted to understand your revenue guidance range of 8% to 12% at a constant currency level. I think in the first half, revenues grew about 8% on a constant currency basis. So for us to sort of think about that growth rate potentially stepping up towards the midpoint of that guidance range. Could you sort of help us understand what drivers you're looking at for the second half, please? Jason Burriss: Yes. So again, we're reaffirming that we'll be within that guidance. And I think to -- you saw upgrades come through quite strong. So if we see continued strong momentum in upgrades, that can certainly help get you into the midranges. There's normally a H2 pop-up in service revenue as well and that's just associated with the timing of service contracts that happen and when the revenue is realized. So really to get into the mid-ranges or upper ranges of that guidance it just really means performance across really the majority of the growth levers that I outlined in the presentation. Davinthra Thillainathan: And my next question is on the new installed base in the U.S. I think you did 1,080 units for the half, and that's grown, which is, I guess, good to see. Could you sort of help us understand the ability for you to keep that level of units into the second half? Just sort of any sort of other dynamics that we should be thinking about from a half-on-half perspective, please? Michael Kavanagh: I think, Davin, we've sort of always guided in recent years that in the U.S. that we'd like to think that we can do between 1,800 and 2,000 new installed base on an annual basis. And we feel confident in that with the U.S. We've got visibility of what the pipeline looks like. But what you can expect to see is that the number of upgrades just in capital units will surpass or begin to surpass the number of new installed base. But importantly, what we're doing is getting growth on both. Operator: And your next question comes from the line of Josh Kannourakis with Barrenjoey. Josh Kannourakis: Just first question, obviously, quite a bit of activity in terms of both the upgrades and installed base in the period. And you mentioned -- called out around the higher volume deals that you did. As you look into the second half with some of that visibility, how do you think that breakdown looks in terms of the split, I guess, in terms of some of those higher volume deals versus potentially a bit of a recurrence to some of the more regular as is? Or are the upgrades likely to be just higher because I guess it's earlier in the trajectory in some of the original customers? Michael Kavanagh: Yes, for the upgrades, it's about 9,000 EPRs still out there. And many of the hospitals had adopted the EPR as their standard of care. So there's still great opportunity for some high-volume deals. And sometimes they take a bit longer, because they're enterprise-wide, but there's still great opportunity for some high-volume deals. And indeed, there's a number of them in our pipeline. And they're all supplemented with those deals for 2, 3, 4, 5 sort of units as well. But we do expect to see more high-volume deals coming through in the second half. And so that's why when we look at our capital revenue, even though we don't break those things out from a guidance perspective, we're mentioning that the ASPs that we were achieving in the first half could be similar in the second half because of that mix. Josh Kannourakis: Got it. And then you also mentioned a good point with regard to the -- I guess, the additional add-ons and ability to upsell those customers over time into the broader ecosystem. How do you think about from a sales process, just, I guess, the life cycle of those clients when you do bring them on, how quickly do you think you can potentially add some of those additional features and functionality? Michael Kavanagh: Yes, that's a great question. I think that's a really important point to emphasize is, if somebody has just upgraded to a trophon2 and even if you've got a lower price associated with that because of volumes or trade-ins and things like that. But the reality of it is, we can still add value, further value for that customer through that software upgrade. Now it's unlikely that they're going to do it immediately. And to be honest, we would prefer that our sales force are out there driving all those capital upgrades as fast as possible and then go back. And our new regional president over there is certainly looking at these things infrastructurally as to what sort of structure he puts in to make sure we're driving across the whole 7 growth drivers. But your point is extremely valid that even if we've got a lower ASP, there's a high opportunity for us to capture back some of that plus more associated with the software upgrades over time. And I think you're going to start seeing an uptick in those. There'll be some in the second half, but I think I'm anticipating a lot more in FY '27. Josh Kannourakis: Great. And then just one for Jason, final one on OpEx. So good cost control there in the period, and you've given obviously the guidance there as well. As we think and we look to the CORIS commercialization, as you mentioned, in '27. Maybe you can just give us a little bit of a framework for how we should be thinking about OpEx there. I know, obviously, that's been a focus for the market, but you've got obviously a pretty established base in terms of infrastructure there already. So any extra context you can give on how we should think about incremental sort of OpEx as we get closer to commercialization would be very helpful. Jason Burriss: Thanks Josh. Yes, look, I think it will continue as we are today. You'll see in our first half results. But the trophon OpEx was plus 1%, whereas the increase in OpEx was driven by CORIS, which was plus 16% half-on-half. And so what we've said previously still continues today, which is, as we ramp up with CORIS, we will gradually add resources that will supplement the existing sales teams. They may be people that help us out with installations and project management, things that will come out of the Controlled Market Release that we will learn that will help us direct where we need to do the resource investment to roll out CORIS as smoothly and as quickly as possible. But they will be supplemental and we continue to try and drive the operating leverage, which we've been able to achieve in previous halves. And we'll look to continue that certainly in the trophon business as we go through fiscal year '27. Josh Kannourakis: Got it. So just, I guess, to confirm there, though, Jason, like in terms of -- as we're thinking, it's not a big step-up necessarily into '27, it's a more gradual progression from the half-on-half that we'll see going forward? Jason Burriss: Correct. Operator: And our next question comes from the line of Taj Wesson with RBC Capital Markets. Taj Wesson: I'm just curious as to what makes you confident around the customer base, fully understanding the trophon3 value proposition relative to trophon2? And extension to that, maybe if you could provide some more color around the composition of upgrades into the second half, so trophon2, trophon2 Plus and trophon3? Michael Kavanagh: If I understand the question, it's more what makes us confident in the customer understanding the trophon3 value proposition. But really, that comes down to the marketing and the sales and ensuring when we're in front of customers, that's their job is to help everybody understand. And also, remember, a lot of what's in trophon3 was driven by customer insights as well. In terms of the composition between T2 and T3 in the second half, we expect that to start moving towards T3 over time. A lot of what's dictating at the moment, the mix on T2 is just based on where approvals are in budget approval processes with the hospitals. But ultimately, over time, we expect the absolute majority to be moving towards trophon3. One other point I'll make on that is, don't -- not to underestimate there's over 25,000-plus trophon2s in the market today as well. So it's not just about talking to customers who are the original EPR customers about trophon3, it's also talking over time to all existing trophon2 users because they now have the opportunity to upgrade with that software -- the T2 Plus software to enable them access a lot of the benefits of trophon3 as well. And that's a significant opportunity when you think there's 20,000 to over 25,000 of those T2s in operation. Taj Wesson: Great. I guess what I was just trying to understand is, if there is any friction around the pricing of trophon3 relative to trophon2 and customers maybe not understanding that premium that could potentially be unlocked? Michael Kavanagh: We're not seeing that at the moment. No. Taj Wesson: And then just around the larger volume deals and sort of the ASP sort of impacts of that. I was just wondering if that extends to consumables as well if there's any concessions provided as a part of those deals. Michael Kavanagh: No. All right. I think that's the last question in. Again, I want to thank everybody for taking -- I know it's a busy morning on the markets this morning. But I think in summary, again, I think we, as the company has delivered a very solid operational and financial performance in the half. And we're in a strong position, reaffirming our guidance for the second half, but not just for the second half, but all the foundations that are in place for the future as well. And I look forward to catching up with many of you over the coming days. Thanks very much. Operator: Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.

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NNCSF 2026 Q2 财报电话会议

Catherine Strong: Hello, and welcome, everyone, to the Nanosonics Half Year Results for FY '26. My name is Catherine Strong, and I'm Head of Investor Relations & Corporate Communications here at Nanosonics. As we start the webinar, all participants will be in listen-only mode, and we'll have a presentation of the results from Michael Kavanagh, Chief Executive Officer & President; and Jason Burriss, Chief Financial Officer. During the presentation, the management team will speak to a selection of the slides lodged with the ASX earlier this morning, which we will display via the webinar. If you've joined by conference call only, you may prefer to join via the webinar in addition. [Operator Instructions] I would now like to hand the call over to Michael Kavanagh. Michael Kavanagh: Thank you very much, Catherine. And a very good morning, everybody, and thank you all for joining us. By now, I assume, many of you will have seen and had an opportunity to have a quick browse through our first half results, which I believe demonstrates another really good and positive half, both financially and operationally for the organization. And there's a lot of detail in all the materials that have been submitted. And before we get into some of those details, there really are a number of key takeaway points I'd like to highlight first. The first being, the company does continue to deliver disciplined growth. You'll have seen revenue increase 9% versus pcp, while operating margin expanded 27%, and that's driven by disciplined cost growth of just 4%. Our recurring revenue from consumables and service continue to grow and all of that's underpinned, of course, by continued expansion of our installed base of the trophon devices. And you'll have seen that upgrades now are also becoming quite meaningful to our growth. In fact, in the half, we delivered 20% total unit installation growth in the half, and that's reflecting both strong new installed base placements and a record level of upgrades in North America. This performance highlights sustained customer preference for the trophon solution. And it is worth pointing out that in the first half, the majority of the upgrades worked actually to trophon2, noting that our next-generation platform, the trophon3 was launched midway through the period and that many of the units in our pipeline were well progressed in the budget approval process. So they stuck with the trophon2. And while this mix together with large volume deals moderated the average selling prices in the near term, these trophon2 installations, they can certainly meaningfully continue to expand our recurring revenue opportunity base and certainly positions us well for software-led value capture over time because those trophon2s now have access to trophon T2 Plus, which effectively gives them the opportunity to upgrade with software to the trophon3 platform. Hence, why many of them decided to go with the trophon2 based on where they were at in the budget approval process. The CORIS commercialization, that's progressing as planned with key milestones during the half being met. And you will have seen our announcement on Friday about the commencement of the Controlled Market Release in the U.K. which, of course, marks a really important milestone and of course, more to follow in the not-too-distant future. And finally, we reaffirm our guidance for the full year. We expect continued growth in core consumables and services alongside ongoing growth in capital unit volumes. So we reaffirm our guidance for the full year. So before we get into some of the details, I think as a brief reminder, and certainly for those of you who may be new to the story. The Nanosonics, every year, our technologies help protect millions of people globally from the risk of cross-contamination through our leadership in our ultrasound probe reprocessing through our trophon platform. And with -- just over 38,000 trophon devices installed worldwide, we now continue to see the power of a large and growing installed base driving recurring revenue, but also capital revenue as well as we continue now driving upgrades and continue to deliver value to our customers. And at the same time, with our innovative endoscope cleaning device, CORIS, so now entering the phased commercialization, we believe that we have a compelling opportunity to extend this -- our proven reprocessing and automation expertise into the endoscope reprocessing, and hopefully unlock a significant new growth avenue for the business. So moving on to a quick overview of some of the financial highlights. The first half delivered very solid operating performance, generating revenue of $102 million, and that was up 9% compared to pcp or 8% in constant currency. And this outcome reflects continued momentum across both our recurring and capital revenue streams. As we predicted and outlined at our full year results in August, gross profit margin percentage, it did moderate a bit down to 76.3% for the half, and that was driven by tariffs, but also, we did have some increased air freights and the product mix between capital and consumables as we're seeing that capital, and particularly the upgrades, beginning to kick in. But importantly, those impacts on the gross margin were anticipated and managed within our broader financial framework. And in doing so, we maintained a disciplined approach to cost management and operating expenses increased by just 4% to $69.5 million. And that's also important that we continue to invest to support our ongoing growth strategy across R&D and our key growth priorities for the business. This operating leverage, it translated into a 27% expansion in operating margin for the business and with operating profit reaching $8.5 million. EBIT on a consolidated basis was $8.4 million, and that represents a 3% decline on a reported basis. However, on a constant currency basis, EBIT actually increased 15%, and that does demonstrate the strong underlying performance of the business. The constant currency view, of course, takes into consideration the impact of foreign currency movements in the first half where there was a net loss of $0.7 million versus a gain of $1.3 million in the prior corresponding period. So there was a $2 million swing in the realized net foreign FX movements. Similarly, profit before tax, that was $8.4 million (sic) [ $10.6 million ], and which was an increase of 13% actually at constant currency. So I think overall, these results, they do highlight the strength and the resilience of our overall business model with revenue growth and disciplined cost management translating into meaningful earnings for the half. But it's not just about the financial performance. The first half also saw strong operating progress across innovation in our operations and digitalization with each initiative reinforcing the foundations for sustained growth into the future. The slide that you'll see just shows a selection of some of the achievements in the half. And from an innovation perspective, as you all know, we advanced the trophon platform with the launch of the next-generation trophon3 and the trophon2 software upgrade halfway through the period. And that's helping and will continue to help capital sales growth volume moving forward. We also achieved important milestones with CORIS, securing our regulatory registrations across Australia, Europe and the U.K. and making important steps towards the phased commercial rollout of the product. In addition, we submitted our first 510(k) application for expanded scope indications. And again, that further strengthens the long-term growth pathway for CORIS, and thus 510(k) is currently under review by the FDA. Operationally, a couple of important achievements as well in the first half. We secured and signed for a new headquarter site, and that move is planned for around April 2027. And this new headquarters, which also includes an expanded manufacturing and technical facility that will significantly strengthen our global operating backbone really, and position us to scale efficiently as the business continues to grow. And importantly, in the half as well, we also appointed new leadership talent to lead key parts of the business through our next phase of growth, and that includes a new Regional President for North America, Bill Haydon, as well as a new Chief Marketing Officer and Head of Asia Pacific, Kimberly Hill. And finally, we made meaningful progress also across from a digital perspective, so successfully implementing and launching the new ERP system and going live with our cloud-based traceability solutions. And these cloud-based solutions -- the initiatives, they really enhance visibility, efficiency and customer engagement while creating a strong digital foundation to support future growth. So overall, I think that the progress we made in the first half reflects the business that's executing well. We're investing with discipline and also continuing to build capabilities to deliver ongoing scalable, profitable growth over the long term. But I'll hand over now to Jason to go through some of those financials in a little bit more detail. Jason? Jason Burriss: Thanks, Michael, and good morning, everyone. On this slide, you can see the continued strength of our core business model. We ended the half with 38,080 devices in the global installed base, up 6% on the prior corresponding period, reflecting sustained momentum in new installed base devices. That expanding footprint is fundamental to how we grow the business and importantly how we protect patients. Today, that installed base supports the protection of approximately 29 million patients each year. This scale is translating directly into recurring revenue growth. Recurring revenue increased 9% on pcp, driven by solid performance across consumables and service. Core consumables grew in line with the installed base. Ecosystem consumables continued to expand and service and repairs grew strongly at 24%, reflecting deeper customer engagement and the maturity of the fleet. Spare parts, as you can see, declined 23% on pcp, largely due to customer inventory dynamics and lower replacement requirements as more customers upgrade to newer generation systems. Moving on to the installations. This highlights the strength of our installation activity in the half and the quality of the demand we are seeing across our customer base. Total installations increased 20% on the prior period to 2,070 devices, reflecting continued momentum in new placements and importantly, a record level of upgrade activity in North America. That upgrade cycle is a key driver of our long-term value creation. It refreshes the installed base, extends customer relationships and supports recurring revenue through consumables, service and our new connectivity offerings. As Michael mentioned, during the half, the majority of these upgrades were to trophon2 devices, remembering that trophon3 was launched midway through the period and customer budget approvals for trophon2 upgrades were already well progressed. Capital revenue growth was 9% on the previous period to $26.5 million in the half. This included several large-scale upgrade agreements and the capital revenue growth reflects volume-based pricing, which saw a slightly lower average selling price for trophon. Importantly, these trophon2 upgrades are expected to underpin software-led value capture over time with the trophon2 Plus software offerings. Turning to the P&L. We continue to demonstrate strong operating leverage with operating margin growing faster than revenue, reflecting the ongoing discipline in how we manage and scale the business. As Michael already mentioned, total revenue grew 9%, reaching $102.2 million for the half, with growth in both recurring and capital revenue. Gross profit margin was 76.3%. This, as expected, is down 2.2 points on the prior year, reflecting the impacts of tariffs in the U.S. and some headwinds on air freight and product mix impacts. At the same time, we maintained tight operating expense discipline with OpEx growing just 4%, well below revenue growth, while continuing to invest in our priority areas, including R&D. As major development programs mature, R&D has stepped down as a percentage of revenue, demonstrating increasing efficiency while preserving our commitment to innovation. EBIT was $8.4 million, down 3%. The decline in reporting EBIT reflects FX movements with a net FX loss this half versus a gain last year. On a constant currency basis, EBIT improved 15%. I'll just take a moment to expand a little on that last point. In H1 '26, EBIT was impacted by an FX loss of $0.7 million. This relates to the revaluation of non-Australian dollar asset balances, mainly U.S. dollar asset balances as of 31 December, '25. The loss was driven by a strengthening Aussie dollar versus U.S. dollar to 0.67 or approximately 2%, the majority of which is unrealized FX losses. Profit before tax was $10.6 million, down 3%, but again, up at constant currency, plus 13% -- improving operating leverage. On this slide, we're showing the way in which we're driving operating margin expansion through gross margin and cost control. Gross profit margin grew by 6% to $78 million. At the same time, we maintained tight operating expense discipline with OpEx growth held to 4%, well below revenue growth, while continuing to invest in our priority growth initiatives. This combination delivered meaningful operating margin expansion with operating margin increasing 27% to $8.5 million in the half, demonstrating our ability to scale the business, manage cost pressures and continue to expand margins through disciplined execution. We continue to separate out the trophon-only business, highlighting its strength and scalability. The trophon-only business delivered operating margin of $25.6 million, representing 20% growth on the prior period. This business also delivered 9% EBIT growth. Importantly, operating margin as a percentage of sales expanded to 25%, up from 22.9%. This demonstrates the operating leverage inherent in the trophon business model with high-margin recurring revenue continuing to scale efficiently as the installed base grows. The trophon business also continues to generate significant cash, providing funding capacity for working capital, ongoing investment in CORIS and our broader long-term growth strategy while maintaining strong financial flexibility. And with that, just turning briefly to cash and the balance sheet. During the half, cash flow was a modest outflow of about $1.4 million, which reflects our planned investment in inventory as we ramp up for CORIS, continued investment in the CORIS system and the commencement of our share buyback. It also reflected the timing of receivables, which we've seen already improve in January. We've executed around $4 million of our buyback and expect to resume following the blackout period in the coming days. Importantly, we remain debt-free with a strong cash balance of $159.8 million, providing flexibility to fund growth initiatives, support CORIS commercialization and continued disciplined capital management. I'll now hand back to Michael, who will talk briefly about our growth drivers for the trophon business, provide an update on CORIS and take you through our reaffirmed financial guidance for '26. Michael Kavanagh: Thanks, Jason. We've previously talked about the 7 growth drivers of our trophon business. On the capital side, you've got the new installed base and upgrade sales. And we've now just recently introduced a new capital software upgrade opportunity for all existing and new trophon2 users with the trophon2 Plus. And that software upgrade brings many of the new benefits of trophon3 to them via the upgrade. Then on consumables, we have the core disinfecting consumables and a broader set of ecosystem consumables necessary for the full reprocessing process such as wipes and clean probe covers, et cetera. Then of course, there is the service component, both service contracts or PAYG for those that don't have a service contract. And service, as you all know, comes into place a year after purchase because there's a 1-year warranty period on the device. And then, of course, we've got the -- with the trophon3 and trophon T2 Plus, we've got new and broader traceability solutions within connectivity. So there's a robust ecosystem of growth drivers for the trophon business. And on the next slide, this slide sort of brings them together by illustrating the applicability of each of the growth drivers over the lifetime of the device. Now each trophon device has a typical life span of up to 10 years or sometimes 7 to 10 years and sometimes longer. After which customers, of course, then can upgrade to the latest generation, and we're seeing that now with the EPRs being upgraded to T2 to T3. But from the day a unit is installed, it begins to generate high-quality recurring revenue through those core and ecosystem consumables. And those can scale with customer procedure volumes, so if ultrasound procedure volumes increase, well, then those consumable products increase. And then over time, that's complemented by the service and repair contracts. And that obviously helps customers protect their devices and uptime and overall performance of the technology. And of course, then looking ahead, just mentioned that connectivity and software-based subscriptions can further enhance this model. And these offerings, for the customer, they really support compliance, traceability and workflow efficiency while adding another layer, of course, to our recurring revenue. So together, this combination of capital, upgrades, multiple recurring revenue streams that truly does underpin the strength and resilience and scalability of the trophon franchise. And as Jason highlighted, the performance of the trophon-only business itself is an excellent performance in the first half. Moving quickly to CORIS. As I've already mentioned, during the half, we successfully achieved a number of key milestones. We submitted the first 510(k) for expanded scope indications, and that's in the U.S. And we are currently awaiting the FDA's determination on that. We achieved European, U.K. and ANZ regulatory registrations for the device. And of course, subsequent to the period, just recently, we commenced a Controlled Market Release. And looking ahead, the milestones in front of us include additional regulatory submissions with the FDA for even broader scope expansion of indications. We will be starting further CMRs shortly here in Australia and some more in Europe with the U.S. will commence after the 510(k) -- the first 510(k), and we'll probably wait and get some preliminary insights as well from the initial CMRs prior to commencing. And broader commercialization is then likely to start on a region-by-region basis based on when the CMRs are completed. But as previously indicated, we expect commercialization to start in FY '27. So overall, the CORIS is now executing to plan with clear progress achieved and well-defined steps ahead as we move towards full commercialization. And the image that you see there in the slide is actually the first unit at our first CMR site in the U.K. And I can say that customers over there are quite excited. You can see by the quote, they are definitely expecting to see a lot of benefits coming from the device over time. So we're quite excited by the start of that first CMO. Finally, I'll just move on to our guidance. And as I mentioned at the beginning, we are reaffirming our '26 guidance at constant currency. And that reflects continued confidence in the underlying performance of the business. With that, we expect ongoing capital unit growth half-on-half, noting that the capital average selling price we saw in the first half could be expected to continue into H2, and that will totally depend on the T2, T3 mix and the size of upgrade deals. And we're very, very happy to look at -- there are a number of deals that are quite large. And of course, it's quite customary to do volume-based pricing for deals like that. We're also expecting recurring revenue to continue to grow. And so all of that together, we expect the overall revenue to be within the 8% to 12% as guided back in August. Gross margins, again, we are expected to be in the range of 75% to 77%, and that guidance assumes tariff rates to remain at the H1 levels. We also will continue our focus on operating expense discipline into the second half, whilst maintaining the investments that we're making, not only in CORIS, but also with other priority growth projects that we're investing in. So overall, our guidance reflects a balance of continued growth, disciplined cost management and investment for the long term. It is worth noting, of course, that the guidance is based on FX rates that we provided in 20 August, and that was at the USD 0.65. We do have, as you all know, an ongoing currency hedging program in place. And we also all know that the Australian dollar has strengthened. And if revenue range were recast using an average exchange rate of approximately $0.70 for the second half, then taking into -- taking hedging into consideration, then the revenue range would be approximately 3% lower. So in summary, I think the first half saw the company deliver a very solid operational and financial performance, and we're in a strong position, not only for the growth into the second half, but into the future. So with that, I'll now hand back to the operator for any questions. Operator: [Operator Instructions] And your first question comes from the line of Shane Storey with Canaccord Genuity. Shane Storey: I'm going to start with Jason, please. Thanks for the way of, I guess, looking at the revenue guidance under sort of altered FX conditions. Maybe could you help us understand, I mean -- and also thanks for the detail around how the FX played into the EBIT. But if rates were to stay sort of around current levels, can you give us a feel for how those non-Australian dollar asset balances and I guess, other sort of effects might play through the EBIT line? Jason Burriss: Thanks for the question, Shane. Yes, I think on the constant currency translations and FX, you'll see that page in the appendix. And what we've tried to do is separate out the 2 different impacts of FX. So on that page, you'll see points one and two, we have the FX impacts on the P&L on a monthly basis, and that will obviously impact our revenue and offsetting that slightly our operating expenses. But the second element to the constant currency is the revaluation as at balance date of the non-Australian dollar asset balances. So in the discussion that I just shared with you, we had a 2% movement in that currency from the last balance date, and that cost us around $700,000. So if you then compute that to a rate of around $0.70, that's a 4%, 4.5% sort of movement. So you can do the math and work out that the impact that we would have on an unrealized FX balance in the second half is more than likely 2x, 2.5x what we saw in the first half. Shane Storey: That's very helpful. Last question I had was really just, I guess, I suppose to Michael and in relation to the recurring revenue in the USA. Could you give us maybe some further insights just how the other parts of the ecosystem grew, say, excluding just the Nanosonics' consumable in isolation, please? Michael Kavanagh: Yes. The service side of the business grew quite strongly. So that was up 24% on pcp. Obviously, you saw the core consumables, they were up about 9% on pcp, and the ecosystem that was up about 6% on pcp. Included in that recurring revenue in the past has always been spare parts as well. And as Jason explained, spare parts came down in the half. That was sort of anticipated because as we have no upgrades to newer machines, but then the requirement for spare parts dropped temporarily. So the spare parts were down about 23%. Operator: And your next question comes from the line of Davin Thillainathan with Goldman Sachs. Davinthra Thillainathan: I guess I just wanted to understand your revenue guidance range of 8% to 12% at a constant currency level. I think in the first half, revenues grew about 8% on a constant currency basis. So for us to sort of think about that growth rate potentially stepping up towards the midpoint of that guidance range. Could you sort of help us understand what drivers you're looking at for the second half, please? Jason Burriss: Yes. So again, we're reaffirming that we'll be within that guidance. And I think to -- you saw upgrades come through quite strong. So if we see continued strong momentum in upgrades, that can certainly help get you into the midranges. There's normally a H2 pop-up in service revenue as well and that's just associated with the timing of service contracts that happen and when the revenue is realized. So really to get into the mid-ranges or upper ranges of that guidance it just really means performance across really the majority of the growth levers that I outlined in the presentation. Davinthra Thillainathan: And my next question is on the new installed base in the U.S. I think you did 1,080 units for the half, and that's grown, which is, I guess, good to see. Could you sort of help us understand the ability for you to keep that level of units into the second half? Just sort of any sort of other dynamics that we should be thinking about from a half-on-half perspective, please? Michael Kavanagh: I think, Davin, we've sort of always guided in recent years that in the U.S. that we'd like to think that we can do between 1,800 and 2,000 new installed base on an annual basis. And we feel confident in that with the U.S. We've got visibility of what the pipeline looks like. But what you can expect to see is that the number of upgrades just in capital units will surpass or begin to surpass the number of new installed base. But importantly, what we're doing is getting growth on both. Operator: And your next question comes from the line of Josh Kannourakis with Barrenjoey. Josh Kannourakis: Just first question, obviously, quite a bit of activity in terms of both the upgrades and installed base in the period. And you mentioned -- called out around the higher volume deals that you did. As you look into the second half with some of that visibility, how do you think that breakdown looks in terms of the split, I guess, in terms of some of those higher volume deals versus potentially a bit of a recurrence to some of the more regular as is? Or are the upgrades likely to be just higher because I guess it's earlier in the trajectory in some of the original customers? Michael Kavanagh: Yes, for the upgrades, it's about 9,000 EPRs still out there. And many of the hospitals had adopted the EPR as their standard of care. So there's still great opportunity for some high-volume deals. And sometimes they take a bit longer, because they're enterprise-wide, but there's still great opportunity for some high-volume deals. And indeed, there's a number of them in our pipeline. And they're all supplemented with those deals for 2, 3, 4, 5 sort of units as well. But we do expect to see more high-volume deals coming through in the second half. And so that's why when we look at our capital revenue, even though we don't break those things out from a guidance perspective, we're mentioning that the ASPs that we were achieving in the first half could be similar in the second half because of that mix. Josh Kannourakis: Got it. And then you also mentioned a good point with regard to the -- I guess, the additional add-ons and ability to upsell those customers over time into the broader ecosystem. How do you think about from a sales process, just, I guess, the life cycle of those clients when you do bring them on, how quickly do you think you can potentially add some of those additional features and functionality? Michael Kavanagh: Yes, that's a great question. I think that's a really important point to emphasize is, if somebody has just upgraded to a trophon2 and even if you've got a lower price associated with that because of volumes or trade-ins and things like that. But the reality of it is, we can still add value, further value for that customer through that software upgrade. Now it's unlikely that they're going to do it immediately. And to be honest, we would prefer that our sales force are out there driving all those capital upgrades as fast as possible and then go back. And our new regional president over there is certainly looking at these things infrastructurally as to what sort of structure he puts in to make sure we're driving across the whole 7 growth drivers. But your point is extremely valid that even if we've got a lower ASP, there's a high opportunity for us to capture back some of that plus more associated with the software upgrades over time. And I think you're going to start seeing an uptick in those. There'll be some in the second half, but I think I'm anticipating a lot more in FY '27. Josh Kannourakis: Great. And then just one for Jason, final one on OpEx. So good cost control there in the period, and you've given obviously the guidance there as well. As we think and we look to the CORIS commercialization, as you mentioned, in '27. Maybe you can just give us a little bit of a framework for how we should be thinking about OpEx there. I know, obviously, that's been a focus for the market, but you've got obviously a pretty established base in terms of infrastructure there already. So any extra context you can give on how we should think about incremental sort of OpEx as we get closer to commercialization would be very helpful. Jason Burriss: Thanks Josh. Yes, look, I think it will continue as we are today. You'll see in our first half results. But the trophon OpEx was plus 1%, whereas the increase in OpEx was driven by CORIS, which was plus 16% half-on-half. And so what we've said previously still continues today, which is, as we ramp up with CORIS, we will gradually add resources that will supplement the existing sales teams. They may be people that help us out with installations and project management, things that will come out of the Controlled Market Release that we will learn that will help us direct where we need to do the resource investment to roll out CORIS as smoothly and as quickly as possible. But they will be supplemental and we continue to try and drive the operating leverage, which we've been able to achieve in previous halves. And we'll look to continue that certainly in the trophon business as we go through fiscal year '27. Josh Kannourakis: Got it. So just, I guess, to confirm there, though, Jason, like in terms of -- as we're thinking, it's not a big step-up necessarily into '27, it's a more gradual progression from the half-on-half that we'll see going forward? Jason Burriss: Correct. Operator: And our next question comes from the line of Taj Wesson with RBC Capital Markets. Taj Wesson: I'm just curious as to what makes you confident around the customer base, fully understanding the trophon3 value proposition relative to trophon2? And extension to that, maybe if you could provide some more color around the composition of upgrades into the second half, so trophon2, trophon2 Plus and trophon3? Michael Kavanagh: If I understand the question, it's more what makes us confident in the customer understanding the trophon3 value proposition. But really, that comes down to the marketing and the sales and ensuring when we're in front of customers, that's their job is to help everybody understand. And also, remember, a lot of what's in trophon3 was driven by customer insights as well. In terms of the composition between T2 and T3 in the second half, we expect that to start moving towards T3 over time. A lot of what's dictating at the moment, the mix on T2 is just based on where approvals are in budget approval processes with the hospitals. But ultimately, over time, we expect the absolute majority to be moving towards trophon3. One other point I'll make on that is, don't -- not to underestimate there's over 25,000-plus trophon2s in the market today as well. So it's not just about talking to customers who are the original EPR customers about trophon3, it's also talking over time to all existing trophon2 users because they now have the opportunity to upgrade with that software -- the T2 Plus software to enable them access a lot of the benefits of trophon3 as well. And that's a significant opportunity when you think there's 20,000 to over 25,000 of those T2s in operation. Taj Wesson: Great. I guess what I was just trying to understand is, if there is any friction around the pricing of trophon3 relative to trophon2 and customers maybe not understanding that premium that could potentially be unlocked? Michael Kavanagh: We're not seeing that at the moment. No. Taj Wesson: And then just around the larger volume deals and sort of the ASP sort of impacts of that. I was just wondering if that extends to consumables as well if there's any concessions provided as a part of those deals. Michael Kavanagh: No. All right. I think that's the last question in. Again, I want to thank everybody for taking -- I know it's a busy morning on the markets this morning. But I think in summary, again, I think we, as the company has delivered a very solid operational and financial performance in the half. And we're in a strong position, reaffirming our guidance for the second half, but not just for the second half, but all the foundations that are in place for the future as well. And I look forward to catching up with many of you over the coming days. Thanks very much. Operator: Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.

82天前Insight Analytics约5分钟阅读

ARB.AX 2026 Q2 财报电话会议

Lachlan McCann: Good morning, ladies and gentlemen, and welcome to the ARB Corporation 2026 Half Year Financial Results Presentation. To all of those online, thank you for taking the time to join us this morning. My name is Lachlan McCann, Chief Executive Officer at ARB. And joining me today to present is Damon Page, ARB's Chief Financial Officer and Company Secretary. Today, Damon will take you through the financial update of the half year results, and I'll present an update to the company's sales and operations. [Operator Instructions] At the conclusion of today's presentation, Damon and I will answer these questions. I'll now hand over to Damon, who will take you through a financial update. Damon Page: Thanks, Lachlan, and good morning, everybody. Thank you for joining us as we present ARB's results for the 6 months ended 31 December, 2025, for the first half of the financial year ending 30 June, 2026. This presentation follows the company's market update released to the ASX on 20 January, 2026. The final market -- the final report released to the ASX this morning and forming the basis of this presentation is consistent with that market update release dated 20 January, 2026. If we move to Slide 3, we see an outline of the company's sales revenue, profit before tax and profit after tax. To the left of the slide, ARB sales declined 1% in the first half of the 2026 financial year, generating total sales revenue of $358 million. The sales environment in the past 6 months was challenging with the sale of new vehicles declining globally and consumer sentiment constrained. Sales into the U.S. were the standout contributor with growth of 26.1%. Performance by sales channel is outlined on the following slide. ARB's reported profit before tax of $57.1 million declined 18.8% compared with last year. After adjusting for one-off items, including gains from real estate sales and costs associated with the termination of the Thule distribution agreement, the profit before tax decline was 16.3%. Lower sales margins driven by the weaker Australian dollar compared with the Thai baht and lower factory overhead recoveries were the key factors driving the decline in profitability. We will cover this in more depth on Slide 6. Costs were otherwise relatively contained with the exception of non-cash depreciation resulting from the company's recent elevated capital expenditure program. Reported profit before tax represents 15.8% of total revenue, below the 19.4% achieved last year. Driving sales growth and focusing on restoring margins is key to achieving the company's target of 20% profit before tax to sales. To the left of the slide, reported profit after tax of $42.2 million declined 17.2% compared with last year, marginally better than the company's reported profit before tax result and earnings per share declined 17.9%. Slide 4 outlines sales performance by channel. And we see there the sales into the Australian aftermarket declined 1.7% in the first half, affected by lower new vehicle sales for ARB's core model platforms and the ongoing shortage of accessory fitment resources. Sales were marginally down in all states, except for in Western Australia. ARB's retail store network grew by 4 stores to a total of 79. 5 new stores were opened in Mittagong and Griffith in New South Wales, in Mildura in Victoria and in Rockingham and Midland in Western Australia, whilst the store in Burnie, Tasmania was sold but continues to trade as a private stockist. While sales declined during the half, customer demand remains at historical highs and the open order book ended the half year 5% higher than at December 2024. Export sales increased 8.8% during the half. Sales grew -- sales growth of 26.1% was achieved in the U.S. driven by the strategic relationship with Toyota U.S., the eCommerce site in the U.S. and growth through the ORW and 4-Wheel Part retail networks. Other export markets were impacted by lower new vehicle volumes and reduced government funding to the aid and relief sector. The decline in sales to original equipment manufacturer customers of 38.2% or $11.2 million reflects increased inventory levels held by the OEMs, resulting from lower new vehicle sales and slower sell-through of inventories purchased previously. Across on to Slide 5, we see the company's profit and loss statement for the financial half year ended 31 December, 2025. It highlights sales revenue was down 1%. Underlying profit before tax was down 16.3% and reported profit before tax was down 18.8%. Some key items to call out include the combination of a decline in sales revenue of $3.7 million and the increase in materials and consumables used of $6.9 million, representing a $10.6 million reduction in gross profits and accounts for most of the $11.3 million decline in underlying profit before tax. The 2 factors driving the decline in ARB's gross margin being the significantly weaker Australian dollar against the Thai baht and lower factory recoveries as inventory levels materially increased in the prior comparable period are covered in more detail on the following slide. Consequently, materials and consumables used represented 43.7% of sales, which compared with a historically low 41.4% of sales achieved in the prior half year. Costs were otherwise relatively well contained with the exception of depreciation expense, which increased $2.4 million or 16%, resulting from ARB's elevated capital expenditure program over recent years. Also of note, employee expenses were flat at $90.5 million. Operating expenses, including advertising, distribution, finance and maintenance expenses, all declined marginally over last year. Pleasingly, ARB's recorded its $777,000 share of equity accounted profits from its investment, primarily in ORW and 4 Wheel Parts. Regular monthly profits recorded by ORW are ahead of the business case. Overall, the underlying profit of the business declined $11.3 million or 16.3%, of which $10.3 million relates to lower gross profits resulting from the 1% decline in sales and lower sales margins. Adjustments to profit include a $1.3 million gain on the sale of a retail store following a relocation to a larger flagship site and costs associated with the discontinuation of the Thule distribution agreement with Thule choosing to operate in the Australian market directly. Sales and profits associated with Thule were not material to the business. Slide 6 provides more detail around the reduction in gross profits referred to earlier in the presentation. Firstly, ARB manufactures the majority of its fabricated products in one of its 3 Thai factories where the costs are denominated in Thai bahts. Unfortunately, the Thai baht traded at its historically strongest range, i.e., between THB 21 to THB 21.5 to the Australian dollar throughout all of calendar 2025. Based on a 3-month lag, representing inventory holdings and timing of creditor payments, the baht averaged THB 21.17 to the Australian dollar in the first half of FY 2026. This compares with THB 23.71 to the Australian dollar in the comparative first half of FY 2025. This represents an 11% decrease in the purchasing power of the Australian dollar against the Thai baht, meaning the Thai manufactured product was significantly more expensive in the first half of FY 2026, which is reflected in the lower sales margins and ultimately, the lower company profit achieved. Secondly, factory overhead recoveries in the first half of FY 2026 were lower than in the first half of FY 2025. During that period -- during that prior period, ARB's inventory levels increased materially from $240 million to $278 million, resulting in an over-recovery of factory costs. Inventory was subsequently reduced in second half FY 2025 and again in the first half of FY 2026, leading to lower factory cost recoveries and contributing to the overall decline in profitability in the first half of FY 2026 compared with the prior December half year. On a positive note, the company has largely hedged its Thai baht exposure for the second half of FY 2026 at rates slightly more favorable than those contracted in the prior corresponding period and overhead recoveries are forecast to be consistent with second half FY 2025. Consequently, sales margins in second half FY 2026 are expected to be broadly in line with those achieved in the second half of FY 2025. Slide 7 calls out major company cash flows during the year. The company generated cash from operating activities of $63.9 million, which is marginally higher than the profit after tax of $41.2 million and the non-cash depreciation and amortization expense of $17.8 million, reflecting relatively flat working capital. The company invested $11.7 million on property, plant and equipment during the half year, $5.2 million on land and buildings and $6.5 million on factory plants and equipment. The company paid $59.3 million in 2 dividends during the period, net of dividend reinvestments. The final dividend of $0.35 for FY 2026 was a cash outflow of $24.2 million and the $0.50 special dividend was a cash outflow of $35.1 million. Both dividends were fully franked at 30%. The company was holding $59.4 million in cash at the end of the half year and has no debt. This was a decrease of $9.8 million from 30 June 2025, reflecting the special dividend paid. Slide 8. The Board has declared an interim fully franked dividend of $0.34 per share. This is consistent with last year and represents a payout ratio of 67.2%. The dividend reinvestment plan and bonus share plan will both be in operation for this dividend with a 2% discounts and will be paid on 17 April, 2026. I'll now hand the time back to Lachlan. Lachlan McCann: Thank you very much, Damon. Let's begin with new vehicle sales in the 6 months to the end of December 2025, and on to Slide 10. New vehicle sales for 4x4 pickup and SUV variants where ARB has its highest attachment rate was challenged. This not only affected the Australian aftermarket business, but also ARB's OEM channel. Given ARB's association with Ford through our Licensed Accessory Program, we watch the Ranger and Everest sales very closely. Despite a strong month in December for the Ford Ranger, it finished the year -- the half year down by 1%, while the Everest was down 9% on the prior corresponding period. ARB produces aftermarket and OEM products for Isuzu and Mazda. In the half, the D-Max, MU-X and BT-50 all declined over the prior 6 months, most notably the D-Max pickup sales were down 13%. Toyota recovered its Prado 250 sales in the half with a 67% increase, comping off the model change in the prior corresponding period. The iconic Land Cruiser 70 series and 300 series both experienced soft sales. While ARB continues to invest in existing and new product for the BYD Shark, models where we are confident of higher accessory attachment rates such as the new Ford Super Duty and Toyota HiLux have been prioritized through the business. Unfortunately, January 2026 new vehicle sales continued this negative trajectory, which we will hope to see recover during the balance of the financial year. On to Slide 11. Touching on the Australian aftermarket. And today, ARB's store network comprises of 79 stores nationally, up from 75 stores this time last year. In line with new vehicle sales in the first half of the financial year, the ARB domestic aftermarket declined by 1.7%, which now represents 56.9% of total sales. With resolute confidence in the future of the business, ARB and our independent store owner network continue to invest in the future expansion, which I'll dive into further in the following slide. As Damon has commented, the back order -- the order book at the end of the half finished up 5% compared to December 2024, which gives us confidence as we head into the second half of the financial year. In lockstep with our independent store owners, ARB is exploring expansion opportunities for specialized resellers for specific products where ARB may not necessarily access a customer through our ARB store network. Specialized mechanical driveline shops for our air locking differentials or auto electrical stores for ARB's aftermarket lighting lineup are examples which we are currently pursuing. The partnership between Ford Motor Company and ARB continues to flourish. Whether it's on a Ford national television advertising campaign or driving pass the Victorian Police Ford Ranger adorned with ARB product, the solution Ford and ARB provides to our collective customer base has definitely resonated with the market. In later slides, I'll speak to the launch of the Super Duty platform, which has now been integrated to the FLA program. Moving on to Slide 12. In the half, we completed one upgrade of a flagship corporate site and added 2 all-new independent flagship stores. Confident in the future of ARB and the profitability of these stores, our mapping of Australia combining new vehicle sales, distribution of wealth by postcode and other key inputs suggests there remains a lot of headroom for store expansion. To our partners, James Whitworth and the team in Mildura, Mildura Victoria and to Matt Powalski and the team in Griffiths, New South Wales, thank you for your commitment and effort to launch all new flagship showrooms. It's deeply appreciated. To our ARB corporate team members in Launceston Tasmania and to our new employees in Warragul, Victoria, we appreciate your contributions to the business in bringing your stores to market in the last 6 months. Pleasingly, for the balance of 2026, we have 2 priority development. Globally, ARB's largest footprint store in Townsville, Queensland will launch in FY 2026, in addition to an all-new corporate site in Metro Sydney region. In FY 2027, the expansion continues with 2 all new stores and 3 flagship upgrades. Moving on to Slide 13 and our eCommerce program. When COVID arrived on our doorstep 5 years ago, there was a reflection point on our retail strategy in Australia as we were unable to transact with customers online. While we're far from a box-in, box-out business given the need for our -- the majority of our products to be fitted, there is a customer demographic that either prefers to shop online or are capable of DIY fitting that do make our products less accessible by exclusively being a brick-and-mortar retailer. This really challenged ARB's management during COVID with an incredible temptation to stand up a simple eCommerce platform. After careful consideration, we knew there was a much bigger long-term play in designing a best-in-class integrated 4x4 accessory e-com site that provides a seamless customer interaction online with the incremental benefit of our omnichannel offering where a digital experience is complemented by our in-store customer service. The road to a best-in-class site required significant investment in proprietary tools that supported the success of this site. These include an e-catalog, which provides a guaranteed fit of ARB parts to the complex car park in Australia. We've worked extensively with our independent store network to ensure their business is integrated to the new site and their primary market area is respected online. We've also worked with premium vendors to ensure our site uses best-in-class technology. As referenced on screen, we have 1 million unique visitors to the ARB USA -- the arb.com.au website today, which with quick calculations referencing our eCommerce site in the U.S.A. based on average order value and conversion rates suggest this will become an important commercial channel for ARB. Additionally, we note that the different demographic between an in-store customer to those browsing the ARB website where over 60% are aged between 29 to 44, suggesting opportunities to reach new customer demographic and bring these guys into the brand. The store is now live as of last week. We've traded seamlessly through our first weekend. Orders and quotes are strong, and we're looking forward to a brave new world for ARB. I'll play the following video shortly, which will give you a quick recap of the features of this brand-new site. [Presentation] Lachlan McCann: Excellent. To all those online, please jump on the new website and have a browse. We think it's pretty special. Just a quick update on the Ford license accessory program. Just as a reminder, this is where we've partnered with Ford Australia and Ford globally to deliver in excess of 180 branded accessory products for the Ford Ranger and Everest platforms available through Ford dealerships with a full 5-year Ford-backed warranty. As an extension of the partnership, Ford and ARB have collaborated on a special interest pack for Raptor. These special interest packs support an OEM's mid-model life cycle strategy to reignite excitement in a model that is in the middle of its lifetime. In the half, Ford released the Ford Raptor Desert Pack, which features ARB branded sports bar, 4 NACHO Quatro lights, along with a number of other Ford upgrades. The Desert Raptor Pack is now available to order for dealerships. Again, the Ranger Super Duty is now in market. Our FLA partnership has flowed through this model. And as presented at the AGM, we believe is a customer profile directly in the bull's eye for ARB product. Early indications suggest accessory attachment rates are high and in some products exceeding our expectations. We continue to discuss with Ford further product expansion opportunities for this model. Later in the presentation, I'll quickly touch on ARB's marketing push for the Super Duty. Moving on to our international business. And on Slide 17, we see ARB's export business achieved 8.8% growth in the half and now represents 38% of our total business. Asia, New Zealand and the Pacific region performed well with 6% growth. Unfortunately, our European, Middle East and African business declined 6.9%, which I'll speak to later in the presentation. The U.S.A. again outperformed, achieving a fantastic 26.1% growth to the half. Despite very challenging economic and political environments with the recent tariff news is seemingly going to continue, we're dedicated with the progress of our sales, marketing and distribution channels in the Americas. It's important to note that the Off Road warehouse for parts and NACHO revenue is not consolidated, and therefore, this revenue is excluded in the outdoor sales of the ARB U.S.A. business. Moving on to Slide 18. And again, as a quick recap, on September 9, 2004 -- 2024, my apologies, ARB announced that Off Road Warehouse, ARB's associate company in the U.S.A. had entered into an asset purchase agreement to acquire the 4 Parts business, which includes 42 retail stores in the U.S. alongside associated IP, including the 4 Parts eCommerce business. The acquisition was finalized on the 18th of October, 2024 for a provisional amount of USD 30 million, which was subsequently adjusted down by USD 4 million as a result of excess and obsolete inventory. Combined with ORW's existing 11 stores, this significantly expanded the retail network of -- to 53 stores and provided ARB with the majority opportunity for a long-term brand and sales expansion in the U.S. To facilitate ORA's funding of the acquisition, ARB increased its ownership interest from 30% to 50% for $16.7 million and provided a loan to ORW of $7.5 million. The main shareholder partner of Off Road Warehouse is Greg Adler. Greg's family founded 4 Parts in the 1960s. Greg has spent the majority of his time -- sorry, my apologies. Greg has spent the majority of his working life in the business, including over 2 decades as CEO of 4 Parts and is happily back at the driving wheel running the family business to its former glory. Moving on to an update on Slide 19. In the 8 months of trading, 4 Parts has successfully integrated over 500 employees to the business, transitioned the ERP system, closed a total of 5 stores, 3 of which were geographically close to other stores and 2 are underperforming. The business now has a total of 48 stores. We've restructured a loss-making eCommerce business back to profitability. And as a result, the business has achieved a net profit before tax shift of USD 3.5 million from the second half of 2025, noting that we acquired a loss-making business. At 30 of June 2025, ORW had a positive cash balance of USD 14.5 million and as reported by Damon, has repaid its ARB debt facility in full. With all of that, the comeback has just started. Through a lot of operational heavy lifting, Greg and the team have begun to raise their eyes to grow the business. Optimization of existing store network remains a strategic priority. And while we're better in many of these stores, there's a lot of room for improvement. We have fantastic engagement with our supply partners who are eager for a deeper engagement with a fresh looking forward parts business. TruckFests have been a long-term known strategy where the business plans and executes customer-facing retail shows to provide access for manufacturers directly to the retail public. Four events have been planned for 2026 and with great excitement from our retail customers and valued suppliers alike. And then expansion opportunities across new locations and possibly specific house branded categories are being considered. Moving on to Slide 20, which speaks to the ARB product sales inside ORW in 4 Parts stores and again, a good news story where ARB product sales have achieved excellent results. The product exposure and education are a priority through the retail and eCommerce sites, both of which have significantly improved. On a like-for-like store basis, ARB product sales through the ORW 4 Parts channels are growing at over 100% on prior corresponding periods. I'm pleased to report that the store-in-store ARB displays past probation, and we now move on to our next batch of 6 stores, which include in April, Kearny Mesa, California, Las Vegas, Nevada, Denver, Colorado; and then in May 2026, Dallas, Texas and Orlando and Doral in Florida. Following the completion of these stores, we will assess the timing and activation of our next bunch of store developments. ARB, of course, will also have a fantastic presence within the TruckFests, presented on the previous slide. Moving on to Slide 21. And with great credit to our team at ARB U.S.A. led by Rich Botello, we're delighted by our continued growth of 26.1% in the half and the continued strengthening of the ARB brand in the U.S. market. All sales channels performed well in the U.S., Latin America and Canada, including our strengthening partnership with Toyota U.S.A. On to Poison Spyder, and as a part of the Wheel Pros Chapter 11 process, there was an opportunity to acquire an iconic Off road brand in the U.S.A., which is close to the hearts of Jeep enthusiasts and rock crawlers alike. This is Poison Spyder. Rock crawling legend, Larry McRae, drove the brand to its original heights after various ownership changes, including time as a part of the 4 Parts family, the sleeping icon has laid dormant or semi dormant for a number of years. Under ARB's ownership, the brand has now relaunched with much excitement, both online and at events such as King of the Hammers in Johnson Valley, California. Product is now in market. Demand has exceeded original expectations, and we're in back order. The dedicated eCommerce site has now launched, and we're looking for product expansion opportunities. Watch this space. To finish, ARB USA updated the -- sorry, to finish the U.S. update, ARB has leased an 8,100 square meter facility in Norco, California, which is approximately 80 kilometers from downtown L.A. The expansion site will support ARB's future growth on the U.S. West Coast, housing engineering, Poison Spyder, the expansion of 4 Parts ORW and new products ARB will bring to the market in coming months and years. Unsurprisingly, today, our largest single market on the West Coast of East California, we're servicing this market from our current Seattle location, is slow and expensive. As a result of this, we will close the Seattle distribution center, but retain a core team of marketing, product management, operations and administration in Seattle. Moving on to Slide 22 and talking through further international business. Planning for ARB's presence in China through our wholly owned foreign entity remains on track, confident with this presence, we will stabilize and grow this important market. Opening is planned for April 2026, where customers, OEM partners and key dignitaries will attend the event. Product is on the water, and we look forward to providing sales updates in future presentations. An important miss for the half was our business in Europe, Middle East and Africa. The business was materially impacted by 3 factors: a reduction in customer demand in the aid and relief sector. ARB has previously reported our framed agreements with organizations such as the UNHCR, World Food Program, Medecins Sans Frontieres, all have experienced cuts to their funding in the last 6 months. Isolated non-recurring issues with key customers in Africa have also weakened the first half trading, in addition to which lower 4x4 pickup sales in key European markets affected sales, as reported by Damon. Offsetting the lower aid and relief sector spending, we've seen increased tendering and contracts in the defense space, which we anticipate will support improved sales in this region in the second half of the financial year. Truckman in the U.K. performed well in achieving 5.2% lift in revenue. This result was achieved despite a 13% reduction in registrations of pickup models, key to the Truckman business in the first half of the financial year. ARB product sales, combined with additional defense spending, supported this growth. Moving on to Slide 23 and ARB's OEM channel. The OEM channel -- so the next slide, sorry, 24. Thank you. The OEM channel has had a tough 6 months with a 38.2% decline. While we previously flagged a reduction in sales, a combination of increased inventory holdings by OEM partners and lower vehicle sales affected platforms and compounded this result. The result does not reflect the loss of any OEM contracts. It does indicate softening of specific models key to ARB's OEM and aftermarket business. In the prior corresponding period, ARB was delivering Toyota Genuine Prado bull bars at this -- which as this vehicle ramped up, exacerbated the decline in revenue in this first half. Given the multiyear time frame of these OEM programs, ARB is actively pursuing business with both new and existing OEM customers. Moving on to Slide 25. Consistent with our Trailhunter program in the U.S., investors will have seen an increase in ARB brand partnership collaborations with Toyota markets outside Australia. ARB has been working with Toyota for over 40 years and is immensely proud of this partnership. ARB is delivering branded content on the recently released FJ Cruiser in the top right-hand corner of the screen, which is a platform restricted to specific markets outside Australia. We also collaborated closely with Toyota Thailand on the release of the HiLux vehicle, which we hope to see further commercial opportunities into the future. Now I'll move on to our product section. And firstly, to Slide 27 on the winch. ARB has respected our long-term partnership with Warn Industries, the global leader in the design and manufacture of electric recovery winches. This relationship was specific to the Australian market, but in markets outside Australia, where the recovery winch remains an important accessory, we didn't offer a solution to our customers. Given ARB's investments in distribution, particularly retail-facing channels, this is an incredibly important accessory to complement our bull bar offering. Over the last 2 years, our engineering team have been working on innovation in this product category to bring something new to market. The ARB winch in addition to its fantastic styling also integrates the contactor pack back into the winch to enhance both performance and the ease of installation to vehicle platforms. Demand has again exceeded initial forecast where we have prioritized our international business units. First shipments will begin arriving with customers in March 2026. Now the next few slides, we won't move slides yet, speak to the application engineering, which has consumed the lion's share of our development resource over the last 6 to 8 months. Speed to market is everything in our industry, and we're incredibly fortunate not only to have an outstanding design and production engineering team in Kilsyth to get products ready, but also a highly capable factory that lets us build first units in Australia to put product in customers' hands as close to vehicle launch as possible. The next video showcases the already mentioned Ford Super Duty. If we can please play the video. [Presentation] Lachlan McCann: From our Summit Mark II (sic) [ MKII ] bull bar to the Slimline BASE Rack, Old Man Emu suspension and our MITS Alloy service body, thanks to our partnership with Ford, ARB was ready at vehicle launch with a full complement of products. These products were incredibly well received by customers, which today is converting to very strong product demand. Moving to Slide 30. Just in market is the facelift Toyota HiLux. Again, ARB benefited through our association with Toyota Corporate with early access to vehicle data and a physical vehicle to prepare for launch. Conscious of the differences in vehicles between international markets in Australia and also to integrate our offering, we have taken time with an Australian specification, HiLux, to fine-tune designs of products and as such -- such as the bull bar canopy and suspension. These products are now in production in Kilsyth and shortly in Thailand. Deliveries to customer back orders are now imminent. While there has been differing opinions in the market to the new pickup vehicle, it's a Toyota, and those loyal to the quality of product and the service offered by Toyota will continue to buy HiLux. When the ARB offering was presented to market, it was very well received, which we're seeing come through now in initial customer orders. On to Slide 31 and to recap ARB's 50-year celebration. From our very humble beginnings out of the family garage in Croydon, Victoria in 1975, the company has come a long way in 50 years to be a true global leader in the design, manufacture, marketing and distribution of our 4x4 accessories to outdoor and off road enthusiasts around the world. We used 2025 to thank our employees, suppliers and also engage with our incredible customer base who follow ARB's journey. The 50th year celebration gave us the opportunity through various digital channels to explore our most popular Australian destinations, but also provide aspirational insights to operating in far-reaching locations, such as Mongolia, South Africa, the UAE and Morocco. As you can see on screen, the engagement with our fan base was remarkable and will serve as a great springboard as we strive to grow brand awareness of ARB through the next 50 years. And finally, on to the outlook. Sales margins in the second half of 2026 financial year are expected to be broadly in line with the first half. As explained by Damon, in recent weeks, we've taken the opportunity with the strengthening Australian dollar to hedge our Thai baht exposure, largely removing this headwind in the second half. The Australian aftermarket remains a challenge. We actively monitor through OEM partners new vehicle supply. In the second half, we see the Super Duty and HiLux as a tailwind, although we remain concerned about the supply of models such as the 70 Series Land Cruiser and 300 Series Land Cruiser. The customer order book remains strong and looking beyond the next 4 months, ARB's investments in new store developments as well as new channels such as eCommerce will be incremental to ARB's revenue growth over time. The outlook in export is positive. We're confident headwinds experienced in the first half are behind us. The order book in export is well ahead of December 2024, and we continue to see a long runway for growth in the U.S.A. as a result of strategic investments made in recent years. The OEM result in the second half will largely depend on new vehicle sales of those models ARB supports our partners with. The OEMs have reduced their inventory levels, which vehicle sales dependent should support improved sales in the second half. Overall, ARB's financial performance in the second half is expected to improve relative to the first half of FY 2026 and trade closer to the prior corresponding period. Closing the half with a very strong balance sheet and $59 million of cash in the bank puts us in a very strong position to invest in our future. ARB management and the Board remain positive about the long-term growth prospects of the business. An increasing population of 4x4 pickup vehicles, the best distribution network for specialized 4x4 accessories in the world, a strong and growing global brand and a high-performing management team, remain very excited about the future of the business. That concludes today's presentations. Again, thank you very much for everybody online for taking the time to join us. I'll now hand back over to Damon for -- to answer some questions that have come through. Damon Page: Thanks, Lachlan. A number of questions coming through on margin impact. So I'll just consolidate an answer to cover all of that thereof. If we could perhaps just go back to Slide 6 in the presentation, and I'll just address the impact of the foreign exchange on the margins going forward. So on Slide 6, on the left-hand side, you'll see the average exchange rates for the half year. So second half FY 2025 being January to June 2025, you'll see that the average exchange rate over that period is THB 21.7. So we bought THB 21.7 to the Australian dollar at that time. Now we've locked in the majority of our currency requirements for the second half this year at a rate just slightly above that 21.7 (sic) [ 21.70 ]. You do lose some forward points as you move your forwards out to May and June. And so in terms of the exchange rate, we expect the exchange rate will -- we expect that the exchange rate will be very consistent with the second half of last financial year. We do have a little bit more to lock in, but it's not going to materially change that impact. In terms of the price increase that went through in February, that price increase -- it was suggested on one of the questions that it was a large price increase of 4% to 5%. It was an average price increase of about 3%. That price increase went through in February. We expect to see the benefit of that flowing through the back end of the second half, so probably through that late April, May and June period there. So we will get a little bit of uplift from the price increase, but it will take approximately 3 months to flow through, February, March and April, before we see the benefit of that flowing through to our results given the order book we have and the open and back orders in place. Just again, in terms of the Thai baht, look, if the Thai baht stays where it is, we'll obviously start at some stage looking to take cover into the first half of the next financial year into that July and post-July period. And we should see some favorable impact as we move forward into the new financial year. A question here about, as GP margins deleverage with the weaker baht and lower factory absorption, shouldn't we see those -- shouldn't we see it reverse should those conditions change? The answer is yes. But the Thai baht is now trading back below THB 22. So it won't be as material a change upward as it was on the way down when it went from THB 23.7 last year to THB 21.1 this year. So we -- if the Thai baht strengthens back to THB 23, we'll see a complete reversal of what has occurred in this first half. If it sits where it currently is, then obviously, those margins will continue forward, and we'll get some price -- some improvement in gross profits from the price that was taken in February for the price increase. A question around second half financial performance being closer to the prior period, that's in reference to absolute dollars rather than to profit before tax margin percentage. So just to be clear, that's in reference to absolute dollars. I think that's it by way of margins and financial questions. Lachlan, if any more come through, I'll pick those up, but I'll just hand back to you to respond to the other questions. Lachlan McCann: Okay. So thanks, everybody, for the questions that have come in. I'll just start with one around the timing and the release of the ramp-up of the Toyota Asia partnership in terms of supplying product. In limited quantities, product has commenced supply. There's a number of products if you've got a K9, including the roof rack and a couple of other things on the FJ Cruiser. We have further products that we have been contracted with, on that model, that have not yet commenced supply, but a limited number of accessories have commenced supply into Toyota Asia, which is fantastic. The next question relates to the BYD Shark. ARB is watching BYD Shark accessory uptake. How does it compare currently to, say, ARB's key models? How do you balance having product ready for Shark versus the uncertainty on accessory take-up? There is a finite engineering resource at ARB. We do not -- we do believe BYD as clearly an opportunity in market, which is obvious. They've done a great job in bringing that vehicle to market. Do we see the attachment rates on a BYD Shark as high as platforms like the Super Duty and like the HiLux? And clearly, the answer to that is no. We have prioritized those 2 models as examples of product that we have pushed through our design and production engineering teams. With that said, and as has been presented to market previously, product is available for the BYD Shark today through ARB channels, and we'll continue to increase that offering on that platform. Again, just conscious, with constrained engineering resources, we have taken the decision to prioritize those other 2 platforms. So I certainly would suggest that we don't ignore the success of the BYD Shark. We just know with confidence that both the Super Duty and the HiLux have higher attachment rates. How confident are you, is the next question, in your growth earnings for FY 2027? I think in the outlook, we've provided enough update as we're prepared to give. So hopefully, that gives you some indication as to where we sit both for the balance of the year and hopefully, some indications about where we see the future. The next question, where you say the Australian aftermarket, the company's order book remains healthy with daily sales and order intake close to historical highs, are you implying that revenues are on track towards $201 million? So again, there, we've given, I think, as much information as we're prepared to provide on the outlook slide. So that hopefully covers that one off. Can you explain further to what drove the softer results within EMEA, spoke to unassociated challenges versus non-recurring? Yes. I suppose with transparency, it does speak to a major distributor who had a significant health concern during the year, which slowed the business down, which on reflection, it's a succession planning and corporate management piece that we have to organize. That health condition is behind the owner of that business. The business has started to pick up, but it does highlight for the business some weakness or susceptibility with respect to succession that when a single individual goes out of the business, we can have that type of slowdown. So that's certainly something we're looking to address going forward. Can you provide further details on the composition of export business within EMEA? How is the split between military, foreign and independent retail? It's a very good question. What I would speak to in my exposure in the 25 years to those markets is, there has been a shift away from retail to fleet. Fleet is a growing and important part of those businesses and something that we have actually invested in dedicated resources in that space, including the OEM channel for the European market so that we can continue to grow. I wouldn't say by any stretch that means that the retail market in Europe is softening. There are certain product commodities that continue to be very, very positive. Our product offering, given its practical use application, is definitely more targeted towards that fleet demographic and is a part of the growth of our European business, in particular, over the last sort of decade or so. I think I've covered off the European questions. What percentage of total export sales does ARB USA currently represent? The answer to that is 43%, covers that off. Toyota has commenced calendar year 2026 at a slower rate. Are you seeing supply impacts within Toyota? Or has the HiLux launch been a little lacklustre relative to prior new generation launches? Do you expect Toyota volumes to improve over the next 6 months? Look, there's publicly available information, for example, on the Land Cruiser 70 series where Toyota has actually indicated they've stopped taking orders. We are -- we receive forecast from OEMs, which are their best view of the future. What I would say is, my understanding is Toyota is supply constrained, not demand constrained. Every model that we know of, that Toyota has, is back ordered within the system. We actively monitor key models such as the 300 series, the 70 series, the HiLux and the Prado. And on a lot of those months, you are waiting many months, up to 6 to 8 months for a new vehicle if ordered today. Now the soup of Toyota and how they decide in their way of playing [ golf ] between their international markets is quite confusing. The Land Cruiser Prado, which is built in Japan for the U.S. market, has been incredibly popular and has outperformed expectations, which may have a supply impact to the Australian market, possibly. We see models like the Toyota HiLux, which is now in market in Australia. We know that, that vehicle is not going to be available to purchase in the U.K., for example, until the back end of this calendar year. So like the person who wrote this question, we too are quite confused in some instances about how Toyota decides to allocate vehicles to market. There's compliance issues. There's all sorts of things that I'm sure go into their thinking there, but it's something we obviously, certainly watch a lot. Can -- the next question, can you please discuss how the vehicle model changes affects the OEM revenues and aftermarket revenue timing? This is something not well understood, and it also opens up on Europe impact of vehicle supply patchiness, et cetera, et cetera. I think in answering the last question, that is sort of covered off. I'd really again take the time to highlight -- and this is not only something that's relevant to Toyota, but certainly, Ford fights this as well, where it's not always a question of demand in the market. It's definitely a question of supply. We know for a handful of those models, and certainly for the Super Duty right now, if Ford could build more vehicles and send them to Australia, they'd be selling more vehicles, which is a good news story. I don't know how to translate this question. Just to clarify the 100% product sales with reference to the entire 4 Parts network. Okay. So this question just is seeking to clarify our doubling effectively of ARB product sales through the 4 Parts ORW network. So this does not just represent the one to 2 stores. This is a year-on-year comparison to the prior corresponding period. Through the 48 stores, our sales have doubled. We have to highlight that they are coming off a weaker volume, but we're seeing incredibly strong penetration through those stores. The next question speaks to the probation, which is interesting wording, probation set for the 2 stores? So there were some commercial decisions wrapped around those 2 stores on probation. There was some customer experience that we baked into the decision to move ahead with further stores. There was certainly a lot of feedback from the store managers that we baked into our decision. There's also us making sure that the experience resonated with the customers. We call it bull bar, bull bar, they call it a [ bumper ]. There's different ways that they present suspension to market, et cetera, et cetera. So we just wanted to make sure that the physical representation of our products into those stores resonated with the market, which we're confident that it has. And so again, we move forward, which is incredibly exciting. Have ARB products needed to stop the U.S. door in store rollout being booked in sales? It would -- if it was, it would be immaterial to the business. So I don't think that's necessarily relevant in terms of revenue and our good [ accountants ] would probably capitalize that investment anyway. There is one more question. Any comment on the tour impact on aftermarket sales and profitability? Immaterial on both fronts, yes. So that covers that question off. Damon, do you have any more? Damon Page: Look, Lachlan, I just wanted to -- I'm conscious you haven't seen these, but just wanted to give you an opportunity just to respond to whether it's worth investing more in engineering capability given the changes in the car park? Lachlan McCann: Yes. Good question. And look, there's a couple of answers to that. Number one, we've presented before the market the investments that we are making in the U.S. And so yes, and we certainly are planning for further engineering expansion in Australia. I suppose the best way to speak to that is the explosion of models and the proliferation of new entrants to the market, means that we have to have more engineering resources to get more product to market. And it would be a fair criticism to say we've had to prioritize HiLux and Super Duty over BYD Shark. Why can't we do all of them at once, and we would accept that feedback. And of course, including the Kia Tasman, which has also come to market recently. Damon Page: Lachlan, we've cited fitment resources as a headwind to results again. Question is around, have we increased the number of fitment bays in flagship stores and focused on labor? So does this get resolved is the question? Lachlan McCann: Yes. Look, it was only because we see it as a perennial issue facing the business on a go-forward basis. We've restructured the incentive plan for fitters in the first half of the financial year, where there's some performance-based incentives, which we really only finalized the rollout in December. And the effect of that has been really positive. We're actually seeing retention rates improve. But rather than speak to that with limited data in this half year results presentation, we wanted the time to have that mature in the second half of the financial year, so we can report back more specifically. Initiatives across the board, again, the Filipino fitters and the international fitters continue to be a focus. Our onboarding of team members is a weak point that we need to improve so that we get better engagement earlier and retain those fitters. So as always, there's a raft of measures that we're undertaking through HR and through the business to continue to improve in that space. And I would say, in the first half of the financial year, we have made inroads, particularly to holding on to those staff members that join us. We hope to be able to present further to this in the full year presentation. Okay. We're nearly 1 hour in. So that will conclude today's presentation. Both Damon and I, again, would like to really take the time to thank you all for joining online, and we look forward to seeing you at the next presentation. Thank you again.

82天前Insight Analytics约5分钟阅读

PAY 2025 Q4 财报电话会议

Operator: Good day and welcome to the Fourth Quarter and Full Year 2025 Paymentus Earnings Conference Call. This call is being recorded. [Operator Instructions]. At this time, I will now turn the call over to David Hanover, Investor Relations. Please go ahead. David Hanover: Thank you, operator. Good afternoon. Welcome, and thank you for joining the webcast to review our fourth quarter and full year 2025 results. Our earnings release documents are available on the Investor Relations section of the paymentus.com website. They include the earnings presentation that we'll make reference to during this webcast. This webcast is being recorded. I hope everyone's had a chance to review those documents. Our Founder and CEO, Dushyant Sharma, will make some opening comments before Sanjay Kalra, our CFO, discusses the details of the fourth quarter and full year and our guidance. Following our prepared remarks, we'll take questions. Let me just remind you that we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and we refer to non-GAAP financial measures during the webcast. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause our actual results to differ materially from expectations are detailed in our earnings materials and our SEC filings that are available on both the SEC and our websites. Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials that are available on the website. With that, I'd like to turn the webcast over to Dushyant Sharma. Dushyant? Dushyant Sharma: Thanks, David. We had a phenomenal fourth quarter and full year 2025. We are looking forward to a great 2026 and feeling even better about our business beyond that based on the durability of our growth algorithm and the broad spectrum of our innovation framework. Now that we have been public for about 5 years, I will provide additional color on how we are feeling about the next 5. 2025 was a significant milestone year for us, where for the first time, we delivered top line revenue exceeding $1 billion. I think that's particularly inspiring because if you recall, we exited 2023 with just over $600 million of top line revenue. And if you look back just 5 years ago to our IPO, we had a little over $300 million of revenue for 2020. So that would imply 100% revenue growth over 3 years. And if you then put our 2025 top line of $1.2 billion against our 2023 revenue, that's another instance of 100% revenue growth, but this time in just 2 years. This was done despite the backdrop of unprecedented inflation and other macroeconomic factors. In other words, we have quadrupled -- quadrupled of our business in the last 5 years, far ahead of our long-term CAGR model of 20% top line growth. And if I go back 10 years, we have grown the business 25x. The reason I'm sharing this context is because I believe this type of growth is possible due to our innovative DNA and thoughtful execution of a long-term business strategy. In the process of achieving this scale and strategic position, I want to point out the level of disruption already caused by Paymentus to the status quo of legacy infrastructure through our ever-growing innovation footprint. At our inception, the vast majority of all digital bill payments occurred through all school banks bill pay. And today, vintage bank bill pay represents a fraction of the overall bill payment volume. At the same time, what is now deemed as the legacy infrastructure of in-house and third-party biller-direct solutions used to be considered large and thriving bill payment solutions. This change is not an accident. This was a result of a carefully crafted long-term business strategy, executed with focus on long-term shareholder value creation, by first creating customer value through an ever-growing customer value proposition. So as you're now observing some discomfort with the broader fintech landscape, where increasingly more sophisticated buyers are rejecting strategic complacence of their service providers or not accepting niche business models. Paymentus on the other hand, is getting even more excited as that is not a surprise to us. We see this as a great opportunity for further disruption just as we saw at our inception. Compounding our excitement is the advent of GenAI that is further challenging the old-school software business models. We believe the world is moving more towards us. As a result, despite being a large-scale billion-dollar company, it is my distinct belief that we are still just getting started and the larger value will be created from here on out. I believe we are strategically better positioned now than we were even just a few years ago. We have a state-of-the-art platform, innovative DNA and a broad-based innovation footprint. We have a diverse, large existing and growing client base. We serve a large portion of U.S. households and businesses using our platform, which is becoming increasingly more pervasive. Furthermore, the industry appears right for further disruption. And as a result, I believe we have a big market opportunity and our best is yet to come. But of course, as we all know, the talk is cheap. We will still have to keep our heads down, execute and perform as we have done in the past. With that backdrop, I'm also looking forward to this year. Our initial revenue guidance of 2026, which Sanjay will cover shortly, is over $1.4 billion in revenue at the top end, which we believe we can deliver without signing any new clients. And our story is not complete without talking about profitability and margin expansion. At the same time as we are delivering this top line growth. For example, we generated $125 million of free cash flow in 2025 and exited with over $320 million of cash without any debt. In addition, for 2026, we are expecting adjusted EBITDA of $167 million at top end of our guidance, which also implies a non-GAAP net income of over $100 million, which is exciting in itself. With that, let me go into our quarterly business update. Paymentus reported both fourth quarter and full year 2025 results that surpassed our expectations. Furthermore, Paymentus ended the year with a strong bookings and backlog, which gives us a strong visibility as we head into 2026. What makes me even more excited is that we were able to achieve this year-over-year growth even with the strong results we reported in the fourth quarter of 2024. Our team continues to demonstrate solid execution when it comes to onboarding activities. Additionally, while we expected to see growth from the rising portion of large enterprise customers, the beneficial impact we saw in Q4 was even greater than we had originally anticipated. Also, as our customer mix is shifting more towards enterprise and large and mid-market clients, our revenue and contribution profit per transaction has continued to grow substantially. I'm also pleased with the growth in our adjusted EBITDA, which was 46.3% year-over-year. I think these results display the tremendous operating leverage we have in our business. They also show how we understand the economics and profitability of each piece of new business we bring in, including the large enterprise billers we signed up in the second half of 2025. In addition, our results clearly highlight our capacity to manage and calibrate our business to meet or exceed our long-term CAGR model. We have consistently shown our ability to achieve this even if we experience variability and noise of our secondary metrics from quarter-to-quarter. Now let's briefly recap our fourth quarter and full year 2025 results. Fourth quarter revenue was a record $330.5 million, an increase of 28.1% year-over-year. At the same time, contribution profit was $106.9 million, up 24% year-over-year. Adjusted EBITDA was a record $39.9 million for the quarter, representing a 37.3% margin and 46.3% growth year-over-year. Similar to the past quarters, the majority of our year-over-year growth in contribution profit fell to our bottom line. And once again, we exceeded the Rule of 40 for the quarter, coming in at 61% versus 59% last quarter. This reflects our team's solid execution and our focus on delivering consistent revenue growth alongside high-quality earnings. For the full year 2025, revenue increased 37.3% year-over-year to reach $1.2 billion. Contribution profit for the full year was $386.3 million, a year-over-year increase of 23.8%. Adjusted EBITDA was $137.4 million, representing a 35.6% margin and a 45.9% growth year-over-year. Now I'll review our fourth quarter business highlights and accomplishments. In terms of bookings, we had a very strong quarter and finished the year with a significant backlog. As I mentioned earlier, during the quarter, we saw particular strength in the large enterprise segment of the market. These large enterprise customers continue to represent a growing component of our client base. We also continue to expand and diversify our customer base by signing clients in several industry verticals, including utilities, telecommunications, government agencies, educational institutions, banking, property management, health care and insurance, among others. As a reminder, we handle both consumer and business payments for our clients and serve B2C and B2B clients and handle both inbound and outbound payment workflows based on the sophisticated platform we have created. Complementing this, we signed additional channel partners in various industry verticals to deepen our partner ecosystem. These verticals include consumer finance and utilities. In addition, onboarding of our substantial backlog remains a priority for us. During the fourth quarter, we onboarded several large enterprises. We also onboarded clients throughout multiple verticals, including insurance, utilities, government agencies, telecommunications and health care. Now I'll turn it over to Sanjay to review our financial results in more detail. Sanjay Kalra: Thanks, Dushyant, and thank you all for joining us today. Before I discuss our quarterly and full year 2025 results as well as our outlook for 2026, I'd like to remind everyone that the financial results I'll be referring to include non-GAAP financial measures. Turning to Slide 5. We ended 2025 with fourth quarter and full year results that again surpassed the top end of our guidance range across our key financial metrics. Our fourth quarter results included record revenue of $330.5 million, up 28.1% year-over-year. Contribution profit of $106.9 million, up 24%, and adjusted EBITDA of $39.9 million, up 46.3%. On the Rule of 40 basis, for Q4, we came in at 61%. During the quarter, we also continued to experience strong customer activity and demand, consistent with what we experienced throughout 2025. This solid momentum drove strong bookings and we exited the year with a significant backlog and strong free cash flow generation to support our continued growth strategies in 2026. Now let's review our fourth quarter financials in more detail. As mentioned earlier, fourth quarter revenue grew 28.1% year-over-year to $330.5 million. This higher-than-anticipated growth was driven by 2 key factors: first, the successful launch of new billers. The fourth quarter was the first full quarter where we realized the benefits from large enterprise customers that launched in the prior quarter. And second, increased same-store sales from existing billers. In the fourth quarter, we derived more revenue from these newly launched large enterprise customers with higher average payment amounts, contributing to higher revenues. While our original fourth quarter guidance did contain some upside, we took a prudent approach because it was still a bit early to gauge the precise magnitude of this beneficial effect. As you can see, it was quite substantial. Complementing this, in the fourth quarter, the number of transactions we processed grew to $192.7 million, up 16.1% year-over-year. Our average price per transaction also increased during the fourth quarter to $1.72, up over 11% from $1.55 in the prior year period. This was mainly due to the biller mix or more specifically, the large enterprise billers that launched in the third quarter with higher average payment amounts. Fourth quarter 2025 contribution profit increased 24% year-over-year to $106.9 million. This growth exceeded transaction expansion as the large enterprise billers I discussed earlier, generated a higher contribution profit per transaction. Contribution profit per transaction for the fourth quarter was $0.55, up sequentially from $0.54 in the prior quarter and also up from $0.52 in the prior year period, demonstrating our ability to capture market share while improving overall profitability. Contribution margin was 32.3% for the fourth quarter compared to 31.6% last quarter and 33.4% in the prior year period, reflecting the continued addition of large high-volume enterprise customers during the past year with healthy margins. We generated a record adjusted EBITDA margin of 37.3% as both our contribution profit per transaction and operating expense margin improved year-over-year by 5.8% and 2.4%, respectively. Furthermore, our improved contribution profit per transaction together with our strong operating leverage, generated an incremental adjusted EBITDA margin of 61.1%. As we continue to grow and diversify our client base, and add large clients to the mix, we expect to see some quarterly variability in pricing and contribution profit. As we have noted in the past, variables that are outside of our control, such as an increase in the average payment amount, or changes in the payment mix can affect contribution profit on a quarter-to-quarter basis. And therefore, we treat this as a secondary metric while our total revenue and adjusted EBITDA remain primary metrics for us. Fourth quarter adjusted gross profit grew 25% year-over-year to $89.8 million. We experienced adjusted gross profit growth that was greater than our contribution profit growth, reflecting the increased economies of scale. Fourth quarter non-GAAP operating expenses were up 11.4% year-over-year to $52.7 million, primarily reflecting higher sales and marketing as well as research and development expenses. These increases were consistent with our expectations and mainly driven by increased hiring and higher agency fees for business from resellers and partners. This enabled us to convert our strong pipeline into bookings as evidenced by our results and also to enhance our technical strengths. Using a non-GAAP tax rate of 25%, our fourth quarter non-GAAP net income was $25.4 million or $0.20 per share compared to non-GAAP net income of $16.3 million or $0.13 per share in the prior year period. Fourth quarter adjusted EBITDA grew 46.3% to $39.9 million compared to $27.3 million in the prior year period. Adjusted EBITDA also represented a record 37.3% of contribution profit for the quarter compared to 31.6% in the prior year period. This strong adjusted EBITDA performance was due to the same combination of positive factors I talked about earlier, all of which came together in the quarter. As I mentioned previously, incremental adjusted EBITDA margin was 61.1% in the quarter. Interest income from our bank deposits was $2.5 million in the fourth quarter, improved from $2 million in the prior year period as a result of our increased average cash balance and effective cash management. Related to our performance, as mentioned earlier, we once again exceeded the Rule of 40 for the quarter, coming in at 61% compared to 59% last quarter and 62% in the prior year period. Now turning to Slide 6. I will summarize the highlights of our full year 2025 results, which also came in higher than we projected. Revenue for the full year increased 37.3% to $1.2 billion, driven by a 21.3% increase in transactions, primarily from new billers as well as transaction growth from existing billers. Contribution profit increased 23.8% to $386.3 million, mainly from increased transactions. Non-GAAP operating expenses increased to $195.4 million, up 11.1% year-over-year due to higher sales and marketing and research and development expenses, as we continue to focus resources on executing our go-to-market strategy. Non-GAAP net income increased 51.2% to $84.9 million and diluted EPS increased 50% to $0.66 per share compared to the prior year. Full year adjusted EBITDA increased 45.9% to $137.4 million. We exceeded the Rule of 40 for the full year coming in at 59% for 2025, pretty much comparable to 2024 when we ended at 60%. We are also proud to report that in fiscal year 2025, $43.2 million out of $74.2 million contribution profit increase flowed through to adjusted EBITDA, representing a 58.2% incremental adjusted EBITDA margin. Now I'll discuss our quarter end balance sheet and quarterly liquidity improvement highlights on Slide 7. We ended 2025 with total cash of $324.5 million compared to $291.5 million at the end of the third quarter. The $33 million sequential increase is primarily comprised of $45.1 million of cash generated from operations, offset by $8.7 million used in investing activities primarily for capitalized software and $3.5 million spent in the net settlement of employee RSUs. Free cash flow generated during the fourth quarter was $35.7 million, and the company does not have any debt. Our days sales outstanding at the end of the fourth quarter was 28 days compared to 31 days last quarter. The sequential improvement is due to overall improvement in payment terms from our billers. Now I'll discuss our year-end balance sheet and annual liquidity improvement highlights on Slide 8. For the full year 2025, $324.5 million of total cash reflects an annual increase of $115.1 million. Free cash flow generated during the year was $125 million, representing a growth over 360% year-over-year. Our days sales outstanding at the end of the fourth quarter was 28 days compared to 43 days last year. This annual improvement in DSO is primarily due to increase in the mix from large enterprise customers with favorable payment terms. It is noteworthy that while revenues have increased 37.3% this year, our DSO has declined 35% year-over-year, which we believe implies that our working capital cycle, which is already operating efficiently has significantly improved. We paid $14.9 million in income taxes during 2025 and also generated $9.5 million from interest income. In 2026, our cash deployment priorities are unchanged. Driving organic growth remains our primary focus. Our strong cash position gives us considerable financial flexibility for working capital investments as we scale. Additionally, our strong balance sheet enables us to explore attractive M&A opportunities that may arise in order to further increase our growth prospects. That concludes my financial review. Now I'll turn to our non-GAAP guidance for the first quarter and full year 2026 on Slide 9. Before discussing our 2026 guidance in detail, as mentioned on our last earnings call, we are continuing to follow the same prudent approach to our first quarter and full year 2026 guidance that we followed throughout 2025, which I believe has served us well. Now to details. For the first quarter 2026, we expect revenues to be in the range of $330 million to $340 million. representing approximately 22% year-over-year growth at the midpoint and approximately 24% at the high end. Contribution profit to range from $103 million to $105 million, which represents approximately 19% year-over-year growth at the midpoint and approximately 20% at the high end. Adjusted EBITDA of $36 million to $38 million representing approximately 23% year-over-year growth at the midpoint and approximately 27% at the high end. This also represents a 35.6% margin at the midpoint. And a 36.2% margin at the high end. On a Rule of 40 basis, for the first quarter of 2026, our guidance implies a range of 52% to 56% ahead of the implied Rule of 40 initial guide we provided for the first quarter of 2025 around the same time last year. Now on specific details turning for the full year 2026, we expect revenue in the range of $1.39 billion to $1.41 billion, which represents 17% growth from the prior year at the midpoint and 17.8% growth at the high end. This reflects our increasing market share and diversifying customer base at scale. And as a reminder of Dushyant's earlier remarks, we can deliver the top end of this guidance without signing any new clients. Contribution profit in the range of $442 million to $452 million. This guidance represents 15.7% year-over-year growth at the midpoint and 17% at the high end. Our expected 2026 contribution profit growth at the midpoint and high end is very similar to the initial guidance we provided for 2025 contribution profit growth around the same time last year. Adjusted EBITDA to range from $157 million to $167 million. This guidance represents approximately 17.9% year-over-year growth at the midpoint and 21.5% at the high end. This also represents a 36.2% margin at the midpoint and a 36.9% margin at the high end. A non-GAAP tax rate of 25% and on a Rule of 40 basis for the full year 2026, our guidance implies a range of 50% to 54%, significantly higher than the implied Rule of the 40 initial guide we provided for 2025 around the same time last year. Once again, we are quite pleased with our 2025 results. Importantly, based on the strength of these results, our substantial bookings, sizable backlog and strong free cash flow generation, we believe we are well placed to once again deliver solid growth in this year. We are entering 2026 with considerable momentum in our business and we intend to continue this during the course of the year. Thank you, everyone, and now I'll turn it back to Dushyant. Dushyant Sharma: Thanks, Sanjay. In closing, we ended 2025 with another quarter of outsized performance that exceeded our expectations. We ended the year with a substantial backlog, giving us considerable visibility as we look forward to 2026 and beyond. In addition to our results, I remain confident in Paymentus continued success due to a number of factors, including our strong business model, which has repeatedly shown our ability to meet or exceed our long-term CAGR model of 20% top line growth and 20% to 30% adjusted EBITDA dollar growth. Our unique and ever-growing technology footprint and our ecosystem, our large, diversified and growing customer base, and the vast nondiscretionary and is still relatively untapped bill payment market that we serve. With that, I want to recognize and thank all of my team at Paymentus who have helped to make all of our success possible. That concludes our prepared remarks. I'll now open up the line for questions. Operator: [Operator Instructions] The first question comes from the line of Madison Suhr with Raymond James. Madison Suhr: I just wanted to start at a high level around AI, given the market dynamics. Can you just touch on where you see potential opportunity for AI, but then also where you see potential risks related to AI. Dushyant Sharma: Thank you, Madison. Great question, by the way. And I think given all what's transpiring in the market, I think it's good to talk about it. We feel great about what AI represents for Paymentus. We actually believe if we are going to be the ultimate beneficiary of the AI revolution in some ways, in our space anyway. The key factors are very simple. Our business is designed -- our business model is designed in a way where we offer a world-class platform to our clients, which handles all their security compliance 24/7 state-of-the-art necessity of being a central nervous system for revenue collection for our clients where they are putting very high premium on making sure that they are not trying to save pennies to lose dollars. And we provide all this platform at no cost to our clients. On top of that, right from the very beginning, we also -- our -- we designed our business model in some ways for this day actually, where a client can use the entire -- use the entirety of our platform and get the full benefit of it in their existing infrastructure as it is present today aligning Paymentus' platform to their entire existing workflows in a way that they don't have to change anything on their end, the entirety of the work is done at Paymentus, and we don't charge anything for it. So in some ways, since a company doesn't have any revenues associated with software or software components, there's no hourly income we are generating from our clients, we are only getting paid for consumption of our platform, we feel very good about where this is headed. In fact, in some ways, we believe the world is moving more towards us, where the old-school software and SaaS models were -- in some ways, if I may say it this way, are companies who were relying on the fact that they can charge a lot of subscription fees to the customers and hope customers never use it so that their margins look even better than they actually are, will pay a bigger price for it. The companies like Paymentus who actually designed its entire operating stack and expense structure in a way that it comes into a picture when someone uses this platform and only get paid when someone is consuming our services to our clients, whether it was AI, whether Paymentus was using AI or other no-code platforms, or whatever Paymentus was doing is entirely up to Paymentus. But as far as our clients were concerned, they were getting the full benefit of our platform without paying anything for it other than what is in terms of the transactions what we get paid. Now to the opportunities -- so this is a defensibility part. But the opportunity for us is phenomenal. Where AI has, in some ways, they opened the floodgates of opportunity for Paymentus. Everywhere we look, we are seeing opportunities. We are, after all, a technology company. We have been making investments in no-code platforms and have a great software stack and have been very focused on AI for a long period of time. I've shared this publicly, actually, we almost attempted to buy an AI company. It didn't work out many, many years ago. So for us, AI has been on top of our minds. So we see AI bringing a lot more opportunities as we have thousands of clients, and we are serving them and serving their needs of running as a central nervous system for their revenue collections, we see a lot more opportunities for us. And AI will play a big role in that. So we are feeling great about where this is all headed. And in some ways, we like our chances as AI becomes -- the world becomes more agentic and AI becomes a little bit more pervasive. Madison Suhr: Okay. That's awesome. I appreciate all the details there. Just a quick follow-up on numbers. The 2026 guide implies an incremental margin of just over 40% at the midpoint. You guys just said 61% in the quarter, 58% for the year. Totally appreciate the conservative outlook. But just anything to call out in terms of incremental investments? Or why you think incremental margins would kind of decelerate from here? Dushyant Sharma: So Madison, I'll point out 2 things. Number one, in Q3, we launched large enterprise customers, and we had experience of half a quarter approximately for Q3 and full quarter for Q4. We have kind of 1.5 quarters of experience with these large billers, and we follow a prudent approach that not to make the same run rate for 1.5 quarters for the next full year. We want to see seasonality. We want to see how the trends move. We really need an experience for 4 full quarters before we can bake into our guidance and forecast properly. And as you know, from historical trends, we don't count eggs before they hatch. So we need proper experience. Hence, our guidance is prudent. At the same time, at the high end, which we have guided today that can be achieved without booking any new customer. I understand your question is mainly on the incremental adjusted EBITDA margins, we also are factoring in decent operating expense for sales and marketing at this point in time because the opportunity in front of us is massive. The pipeline is massive for us. We are diversifying into more verticals than we were. In fact, there are a couple more new verticals, which we have not named it yet, but we have seen an entry into that in this quarter. So we want to expand our horizons there as well and see how more, how quickly we can scale. We are already disrupting the market at a very decent pace. In fact, achieving 37.3% growth annually in top line, despite of improving margins. I think that's remarkable. But we want to see if we can continue this trend. So on the guidance side, we remain prudent. Although at the same time, we have raised the guidance from what we proactively provided in the previous call, especially on adjusted EBITDA margin. But we stay grounded when it comes to guidance. Second thing I said was operating expense, we are also prudent in planning for more because we want to expand our horizons on a few other vertical. Otherwise, we remain committed to deliver great results and maintain the momentum of what our trends indicate. Operator: Next question comes from the line of Darrin Peller with Wolfe Research. Darrin Peller: Congrats on the good year. I guess I want to follow up for a minute on guidance because I know you always try to be somewhat conservative around it just the way you -- the nature of your guide. But just given the recurring revenue nature of your business and the magnitude of how much you see every exiting the year, especially on the bookings front, I'd love to hear a little bit more on just where you've embedded some conservatism? Is it around transaction growth, enterprise ramp timing perhaps or payment mix or margin and then obviously, on the other side of that, what would need to go right operationally or commercially for you to outperform the guidance as the year progresses. We'll just start there, and then I have a follow-up on the enterprise side, if that's okay. Dushyant Sharma: Yes, Darrin. So it entails a lot of things. I would say it's a confluence of multiple factors on why we are prudent and why we feel bullish at the same time on how the business is. I'll start with bookings. The bookings are very good. In fact, the composition of bookings is more intriguing to us because we are diversifying into multiple verticals. That is helpful. At the same time, the pipeline is also very big. And you already know we operate in a very large TAM. And we have around 4.3% market share at the end of 2025. So a pretty small share and a large market to capture and the pace at which we are, I think things are looking very good. The visibility is very high. But we remain grounded as I said to earlier question from Madison. But at the same time, I think delivering good results is our goal. And at the end of the day, the free cash flow generation we have, which we have seen especially in the last quarter and last year has given us a further boost to stay grounded and execute, and that's where this confidence is coming from. Darrin Peller: Okay. Understood. Can I follow up on -- in the past, you've outlined, I think it's really about 4 different growth vectors. When we think about new biller launches, same-store sales, enterprise, go-lives and then the IPN. Could you just maybe rank order the contributors you're seeing this quarter? And then which of those do you expect to be the primary drivers going forward to '26, especially those that you exited the year with the most momentum around? Dushyant Sharma: Yes. So new implementations is generally the largest vector and will continue to remain the same. I would say the second vector would be same-store sales, which actually is doing really well. And in fact, as we have launched the new large enterprise billers since past few quarters, we are analyzing their trends as well. And that also the same-store sales continues to be very strong. And early implementations is one thing which could provide an upside. At the same time, any new customer bookings if they happen. And if they get long, the timing works in a way, that could provide an upside. But at the same time, IPN continues to be a strong vector as well. We have actually done really well in the past few years on IPN, and that also is a very important vector. So upsides could are possible, but we keep fingers crossed, and we don't count the egg before the hatch, as I said. Operator: Next question comes from the line of Tien-Tsin Huang with JPMorgan. Tien-Tsin Huang: Great results. Just following up on Darrin's question with same-store sales, maybe on the penetration side. I'm curious how much more room is there left for say, AutoPay amongst your larger billers that are in the -- more in the back book than the recent additions. It sounds like there's still a lot more to go, but I just wanted to get an update there. Dushyant Sharma: Yes. Actually, thank you, Tien-Tsin, for the question. We see tremendous opportunity there. In fact, as we have shared publicly, we could more than double our business in our existing customer base and it's still not be done 100%. There's a lot of opportunities still left. So same-store sales remains a big focus for us, continued adoption. So if you think about it from the way to look at it is, we have only recognized 4.3% of the revenues from the customers we have -- of the total TAM, but there is a lot more TAM to be captured even in our existing customer base as we go from here. So that, combined with all of the open opportunities and the wide open market as the way we think of it. And frankly, in some ways, the ever growing TAM based on all the areas you're expanding into, it gives us a lot of confidence that our best is very much ahead of us. Tien-Tsin Huang: Great. And just my follow-up, just on the -- I know I always ask about the pipeline, but I'm just curious about where that stands today versus this time last year. I know large enterprise has been a big contributor to growth. How does that look today versus last year when you qualify the pipeline? Dushyant Sharma: We're feeling great. Pipeline is looking great. Backlog is strong. I think all of the aspects you would want to see in a business which is doing well and growing and it's all moving in the right direction. We are feeling great. Operator: The next question comes from the line of Will Nance with Goldman Sachs. William Nance: I wanted to follow up on a couple of comments you made around the large enterprise billers. I think at several points, you talked about that being one of the drivers between the increased revenue per transaction. And I was hoping you could unpack that. I think when most people think about more enterprise in that market, they think about kind of revenue compression. But I think the way you're characterizing it, you're speaking more about, I don't know, higher -- larger transaction sizes, driving higher revenues. So I was wondering if you could maybe unpack that a bit. What is driving that? What verticals are maybe contributing to the growth that's causing the average transaction sizes to increase? And just how do you think about the mix shift embedded in kind of outlook or pipelines today from like a vertical perspective? Dushyant Sharma: Yes. Well, I'll start with -- we are -- we feel really good about how the revenue per transaction is trending, achieving an 11% growth year-over-year is very interesting to us. And actually, that's reflective of the disruption we are causing in the marketplace by increasing our market share and gaining large enterprise customers. Some of them are household names. The average price per transaction for some of them is actually high, as you alluded to in your question, and that's also contributing to increase in revenue price -- revenue per transaction. And that's boiling down to contribution profit also per transaction, which, as you noted, that's also improved year-over-year by 5.8%. So all headed in the right direction. In terms of breakup, it's many verticals, I would say, definitely, utilities is our backbone. Utilities is there. Insurance is there. So there are a few verticals, which actually, in a combination get to this revenue per transaction improvement. William Nance: Got it. That's helpful. And just maybe following up on the AI discussion. I think you did a nice job addressing some of the concerns out there from a software perspective. Just from a payments perspective, I was hoping you could talk a little bit about how you guys see agentic payments. It would seem that bill pay could be a good candidate for more agentic transactions over time. They're fairly low risk. They're highly recurring in nature. So just how have you guys engaged with the Googles, the Stripes and the other kind of sponsorships of sort of agentic protocols? And how do you -- how far off do you think we are from seeing more agentic penetration in the bill pay space? Dushyant Sharma: I think we see agentic AI playing a big role in bill payments for all the reasons you talked about. Our approach is going to be very much customer-centric. It will be about innovating around customer experience and providing customers a totally unique and differentiated experience using the help of AI. So we'll have more to come more to say on that later on. But I think we -- the key message I could just simply provide here is our approach is not frankly, brochure wear or press releases or putting a bunch of stuff on the website for the name sake. Our approach has always been very substantive improvements to customer experience and value creation there by improving the customer experience itself and through innovation. So we feel -- we believe bill payments, representing a majority of a typical household spend will be a big factor when it comes to improving the lives of customers and frankly, even businesses as well. As I shared in my opening remarks, we serve tens of millions of -- a big portion of actually, a substantial portion of U.S. households and businesses, they're already interacting on our platform. So it's top of our mind, and we will -- we are making progress in that area. We'll talk more about that in the future. Operator: Next question comes from the line of Craig Maurer with FT Partners. Craig Maurer: Just a quick modeling question. OpEx was a little higher than we had expected, and you mentioned that was consistent with spending to convert the pipeline. So I was just hoping you could help us with thinking about cadence for the year. in terms of how you expect that spending to progress through '26? Dushyant Sharma: Sure, Craig. I would say if you look at the trends of the past quarters, say, '24 and '25. And I think using that particular trend will be useful to draw a line, if you want kind of the quarterly trend, I'm understanding for 2026, how does the OpEx grow from Q1 to Q4, I think if you make a gradual improvement over the quarters, that would be reasonable. We definitely always analyze how the pipeline is at any end of -- particular end of the month and where we want to deploy the resources of sales and marketing. So that could fluctuate, but that kind of fluctuation, I think, is reasonable. But at this point in time, at the beginning of the year, it's fair to use the past trends to analyze the quarterly growth. Operator: There are currently no questions registered. [Operator Instructions] There are no further questions waiting at this time. I would now like to pass the conference back for any closing remarks. Dushyant Sharma: Well, thank you, everyone. I appreciate your time. Have a great day. Operator: That concludes today's call. Thank you for your participation, and enjoy the rest of your day.

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